[Federal Register Volume 81, Number 81 (Wednesday, April 27, 2016)]
[Proposed Rules]
[Pages 24946-25322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09120]
[[Page 24945]]
Vol. 81
Wednesday,
No. 81
April 27, 2016
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 412, 413, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2017 Rates;
Quality Reporting Requirements for Specific Providers; Graduate Medical
Education; Hospital Notification Procedures Applicable to Beneficiaries
Receiving Observation Services; and Technical Changes Relating to Costs
to Organizations and Medicare Cost Reports; Proposed Rule
Federal Register / Vol. 81 , No. 81 / Wednesday, April 27, 2016 /
Proposed Rules
[[Page 24946]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, and 485
[CMS-1655-P]
RIN 0938-AS77
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2017 Rates;
Quality Reporting Requirements for Specific Providers; Graduate Medical
Education; Hospital Notification Procedures Applicable to Beneficiaries
Receiving Observation Services; and Technical Changes Relating to Costs
to Organizations and Medicare Cost Reports
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems for FY 2017. Some of the
proposed changes would implement certain statutory provisions contained
in the Pathway for Sustainable Growth (SGR) Reform Act of 2013, the
Improving Medicare Post-Acute Care Transformation Act of 2014, the
Notice of Observation Treatment and Implications for Care Eligibility
Act of 2015, and other legislation. We also are providing the estimated
market basket update to apply to the rate-of-increase limits for
certain hospitals excluded from the IPPS that are paid on a reasonable
cost basis subject to these limits for FY 2017.
We are proposing to update the payment policies and the annual
payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs) for FY 2017.
In addition, we are proposing to make changes relating to direct
graduate medical education (GME) and indirect medical education (IME)
payments to hospitals with rural track training programs. We are
proposing to establish new requirements or revise requirements for
quality reporting by specific providers (acute care hospitals, PPS-
exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities)
that are participating in Medicare, including related provisions for
eligible hospitals and critical care hospitals (CAHs) participating in
the Electronic Health Record (EHR) Incentive Program. We are proposing
to update policies relating to the Hospital Value-Based Purchasing
(VBP) Program, the Hospital Readmissions Reduction Program, and the
Hospital-Acquired Condition (HAC) Reduction Program. We also are
proposing to: Implement statutory provisions that require hospitals and
CAHs to furnish notification to Medicare beneficiaries, including
Medicare Advantage enrollees, when the beneficiaries receive outpatient
observation services for more than 24 hours; announce the
implementation of the Frontier Community Health Integration Project
Demonstration; and make technical corrections and changes to
regulations relating to costs to organizations and Medicare cost
reports.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on June 17, 2016.
ADDRESSES: In commenting, please refer to file code CMS-1655-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-1655-P, P.O. Box 8011,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1655-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: Ing Jye Cheng, (410) 786-4548, and
Donald Thompson, (410) 786-4487, Operating Prospective Payment, MS-
DRGs, Wage Index, New Medical Service and Technology Add-On Payments,
Hospital Geographic Reclassifications, Graduate Medical Education,
Capital Prospective Payment, Excluded Hospitals, Medicare
Disproportionate Share Hospital (DSH) Issues, Medicare-Dependent Small
Rural Hospital (MDH) Program, and Low-Volume Hospital Payment
Adjustment Issues.
Michele Hudson, (410) 786-4487, and Emily Lipkin, (410) 786-3633,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
Mollie Knight (410) 786-7948, and Bridget Dickensheets, (410) 786-
8670, Rebasing and Revising the LTCH Market Basket Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jason Pteroski, (410) 786-4681, and Siddhartha Mazumdar, (410) 786-
6673, Frontier Community Health Integration Project Demonstration
Issues.
Kathryn McCann Smith, (410) 786-7623, Hospital Notification
Procedures for Beneficiaries Receiving Outpatient Observation Services
Issues; or
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Stephanie Simons, (206) 615-2420, only for Related Medicare Health
Plans Issues.
Lein Han, (617) 879-0129, Hospital Readmissions Reduction Program--
Readmission Measures for Hospitals Issues.
Delia Houseal, (410) 786-2724, Hospital-Acquired Condition
Reduction Program and Hospital Readmissions Reduction Program--Program
Administration Issues.
Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction
Program--Measures Issues.
James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting
and Hospital Value-Based Purchasing--Program Administration,
Validation, and Reconsideration Issues.
Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality
Reporting--Measures Issues Except Hospital Consumer Assessment of
Healthcare Providers and Systems Issues; and Readmission Measures for
Hospitals Issues.
Kim Spaulding Bush, (410) 786-3232, Hospital Value-Based Purchasing
Efficiency Measures Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting--Hospital Consumer Assessment of Healthcare Providers and
Systems Measures Issues.
James Poyer, (410) 786-2261, PPS-Exempt Cancer Hospital Quality
Reporting Issues.
Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data
Reporting Issues.
Jeffrey Buck, (410) 786-0407 and Cindy Tourison (410) 786-1093,
Inpatient Psychiatric Facilities Quality Data Reporting Issues.
Deborah Krauss, (410) 786-5264, and Lisa Marie Gomez, (410) 786-
1175, EHR Incentive Program Clinical Quality Measure Related Issues.
Elizabeth Myers, (410) 786-4751, EHR Incentive Program Nonclinical
Quality Measure Related Issues.
Lauren Wu, (202) 690-7151, Certified EHR Technology Related Issues.
Kellie Shannon, (410) 786-0416, Technical Changes Relating to Costs
to Organizations and Medicare Cost Reports Issues.
SUPPLEMENTARY INFORMATION:
Electronic Access
Inspection of Public Comments: All public 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 public 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.
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.
Tables Available Only Through the Internet on the CMS Web Site
In the past, a majority of the tables referred to throughout this
preamble and in the Addendum to the proposed rule and the final rule
were published in the Federal Register as part of the annual proposed
and final rules. However, beginning in FY 2012, some of the IPPS tables
and LTCH PPS tables are no longer published in the Federal Register.
Instead, these tables generally will be available only through the
Internet. The IPPS tables for this proposed rule are available through
the Internet on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on
the link on the left side of the screen titled, ``FY 2017 IPPS Proposed
Rule Home Page'' or ``Acute Inpatient--Files for Download''. The LTCHy
PPS tables for this FY 2017 proposed rule are available through the
Internyet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the
list item for Regulation Number CMS-1655-P. For further details on the
contents of the tables referenced in this proposed rule, we refer
readers to section VI. of the Addendum to this proposed rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS Web sites identified above should contact
Michael Treitel at (410) 786-4552.
Acronyms
3M 3M Health Information System
AAMC Association of American Medical Colleges
ACGME Accreditation Council for Graduate Medical Education
ACoS American College of Surgeons
AHA American Hospital Association
AHIC American Health Information Community
AHIMA American Health Information Management Association
AHRQ Agency for Healthcare Research and Quality
AJCC American Joint Committee on Cancer
ALOS Average length of stay-
ALTHA Acute Long-Term Hospital Association
AMA American Medical Association
AMGA American Medical Group Association
AMI Acute myocardial infarction
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
APRN Advanced practice registered nurse
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASCA Administrative Simplification Compliance Act of 2002, Public
Law 107-105
ASITN American Society of Interventional and Therapeutic
Neuroradiology
ASPE Assistant Secretary for Planning and Evaluation (DHHS)
ATRA American Taxpayer Relief Act of 2012, Public Law 112-240
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS Bureau of Labor Statistics
CABG Coronary artery bypass graft [surgery]
CAH Critical access hospital
CARE [Medicare] Continuity Assessment Record & Evaluation
[Instrument]
CART CMS Abstraction & Reporting Tool
CAUTI Catheter-associated urinary tract infection
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction Center
CDAD Clostridium difficile-associated disease
CDC Centers for Disease Control and Prevention
CERT Comprehensive error rate testing
CDI Clostridium difficile [C. difficile] infection
CFR Code of Federal Regulations
CLABSI Central line-associated bloodstream infection
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law
99-272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
COPD Chronic obstructive pulmonary disease
CPI Consumer price index
CQL Clinical quality language
CQM Clinical quality measure
CY Calendar year
DACA Data Accuracy and Completeness Acknowledgement
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DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Public Law 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
EBRT External beam radiotherapy
ECE Extraordinary circumstances exemption
ECI Employment cost index
eCQM Electronic clinical quality measure
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
EMTALA Emergency Medical Treatment and Labor Act of 1986, Public Law
99-272
EP Eligible professional
FAH Federation of American Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FPL Federal poverty line
FQHC Federally qualified health center
FR Federal Register
FTE Full-time equivalent
FY Fiscal year
GAF Geographic Adjustment Factor
GME Graduate medical education
HAC Hospital-acquired condition
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCO High-cost outlier
HCP Healthcare personnel
HCRIS Hospital Cost Report Information System
HF Heart failure
HHA Home health agency
HHS Department of Health and Human Services
HICAN Health Insurance Claims Account Number
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
HwH Hospital-within-hospital
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
ICR Information collection requirement
ICU Intensive care unit
IGI IHS Global Insight, Inc.
IHS Indian Health Service
IME Indirect medical education
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of
2014, Public Law 113-185
I-O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPFQR Inpatient Psychiatric Facility Quality Reporting [Program]
IPPS [Acute care hospital] inpatient prospective payment system
IRF Inpatient rehabilitation facility
IQR [Hospital] Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LEP Limited English proficiency
LOC Limitation on charges
LOS Length of stay
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
LTCH QRP Long-Term Care Hospital Quality Reporting Program
MA Medicare Advantage
MAC Medicare Administrative Contractor
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public
Law 114-10
MAP Measure Application Partnership
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and Health Care Act of 2006, Public Law 109-432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
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
MOON Medicare Outpatient Observation Notice
MRHFP Medicare Rural Hospital Flexibility Program
MRSA Methicillin-resistant Staphylococcus aureus
MSA Metropolitan Statistical Area
MS-DRG Medicare severity diagnosis-related group
MS-LTC-DRG Medicare severity long-term care diagnosis-related group
MU Meaningful Use [EHR Incentive Program]
MUC Measure under consideration
NAICS North American Industrial Classification System
NALTH National Association of Long Term Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NHSN National Healthcare Safety Network
NOP Notice of Participation
NOTICE Act Notice of Observation Treatment and Implication for Care
Eligibility Act, Public Law 114-42
NQF National Quality Forum
NQS National Quality Strategy
NTIS National Technical Information Service
NTTAA National Technology Transfer and Advancement Act of 1991,
Public Law 104-113
NUBC National Uniform Billing Code
NVHRI National Voluntary Hospital Reporting Initiative
OACT [CMS'] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation Act of 1986, Public Law 99-509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB [Executive] Office of Management and Budget
ONC Office of the National Coordinator for Health Information
Technology
OPM [U.S.] Office of Personnel Management
OQR [Hospital] Outpatient Quality Reporting
O.R. Operating room
OSCAR Online Survey Certification and Reporting [System]
PAC Post-acute care
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCH PPS-exempt cancer hospital
PCHQR PPS-exempt cancer hospital quality reporting
PMSAs Primary metropolitan statistical areas
POA Present on admission
PPI Producer price index
PPR Potentially Preventable Readmissions
PPS Prospective payment system
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PRTFs Psychiatric residential treatment facilities
PSF Provider-Specific File
PSI Patient safety indicator
PS&R Provider Statistical and Reimbursement [System]
PQRS Physician Quality Reporting System
PUF Public use file
QDM Quality data model
QIES ASAP Quality Improvement Evaluation System Assessment
Submission and Processing
QIG Quality Improvement Group [CMS]
QIO Quality Improvement Organization
QM Quality measure
QRDA Quality Reporting Document Architecture
RFA Regulatory Flexibility Act, Public Law 96-354
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RIM Reference information model
RNHCI Religious nonmedical health care institution
RPL Rehabilitation psychiatric long-term care (hospital)
RRC Rural referral center
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RSMR Risk-standard mortality rate
RSP Risk-standardized payment
RSSR Risk-standard readmission rate
RTI Research Triangle Institute, International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SCHIP State Child Health Insurance Program
SCIP Surgical Care Improvement Project
SFY State fiscal year
SGR Sustainable Growth Rate
SIC Standard Industrial Classification
SIR Standardized infection ratio
SNF Skilled nursing facility
SNF QRP Skilled Nursing Facility Quality Reporting Program
SNF VBP Skilled Nursing Facility Value-Based Purchasing
SOCs Standard occupational classifications
SOM State Operations Manual
SRR Standardized risk ratio
SSI Surgical site infection
SSI Supplemental Security Income
SSO Short-stay outlier
SUD Substance use disorder
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TEP Technical expert panel
THA/TKA Total hip arthroplasty/total knee arthroplasty
TMA TMA [Transitional Medical Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs Extension Act of 2007, Public
Law 110-90
TPS Total Performance Score
UHDDS Uniform hospital discharge data set
UR Utilization review
VBP [Hospital] Value Based Purchasing [Program]
VTE Venous thromboembolism
Table of Contents
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded from the IPPS
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical Education (GME)
C. Summary of Provisions of Recent Legislation Proposed to be
Implemented in this Proposed Rule
1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)
2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
3. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
4. The Medicare Access and CHIP Reauthorization Act (MACRA) of
2015 (Pub. L. 114-10)
5. The Consolidated Appropriations Act, 2016 (Pub. L. 114-113)
6. The Notice of Observation Treatment and Implication for Care
Eligibility Act (the NOTICE Act) of 2015 (Pub. L. 114-42)
D. Summary of the Provisions of this Proposed Rule
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
C. Adoption of the MS-DRGs in FY 2008
D. Proposed FY 2017 MS-DRG Documentation and Coding Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
2. Adjustment to the Average Standardized Amounts Required by
Public Law 110-90
a. Prospective Adjustment Required by Section 7(b)(1)(A) of
Public Law 110-90
b. Recoupment or Repayment Adjustments in FYs 2010 through 2012
Required by Section 7(b)(1)(B) of Public Law 110-90
3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by
Section 7(b)(1)(A) of Public Law 110-90
5. Recoupment or Repayment Adjustment Authorized by Section
7(b)(1)(B) of Public Law 110-90
6. Proposed Recoupment or Repayment Adjustment Authorized by
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
2. Discussion of Policy for FY 2017
F. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
b. Basis for Proposed FY 2017 MS-DRG Updates
2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial
Heart Replacement
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Endovascular Embolization (Coiling) or Occlusion of Head and
Neck Procedures
b. Mechanical Complication Codes
4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and
Throat)
a. Proposed Reassignment of Diagnosis Code R22.2 (Localized
Swelling, Mass and Lump, Trunk)
b. Pulmonary Embolism with tPA or Other Thrombolytic Therapy
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Implant of Loop Recorder
b. Endovascular Thrombectomy of the Lower Limbs
c. Pacemaker Procedures Code Combinations
d. Transcatheter Mitral Valve Repair with Implant
e. MS-DRG 245 (AICD Generator Procedures)
6. MDC 6 (Diseases and Disorders of the Digestive System):
Excision of Ileum
7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and
Pancreas): Bypass Procedures of the Veins
8. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Proposed Updates to MS-DRGs 469 and 470 (Major Joint
Replacement or Reattachment of Lower Extremity with and without MCC,
respectively)
(1) Total Ankle Replacement (TAR) Procedures
(2) Hip Replacements Procedures with Principal Diagnosis of Hip
Fracture
b. Revision of Total Ankle Replacement Procedures
(1) Revision of Total Ankle Replacement Procedures
(2) Combination Codes for Removal and Replacement of Knee Joints
c. Decompression Laminectomy
d. Lordosis
9. MDC 13 (Diseases and Disorders of the Female Reproductive
System): Pelvic Evisceration
10. MDC 19 (Mental Diseases and Disorders): Proposed
Modification of Title of MS-DRG 884 (Organic Disturbances and Mental
Retardation)
11. MDC 23 (Factors Influencing Health Status and Other Contacts
with Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation
with and without CC/MCC, Respectively)
12. Proposed Medicare Code Editor (MCE) Changes
a. Age Conflict Edit
(1) Newborn Diagnosis Category
(2) Pediatric Diagnosis Category
b. Sex Conflict Edit
c. Non-Covered Procedure Edit
(1) Endovascular Mechanical Thrombectomy
(2) Radical Prostatectomy
d. Unacceptable Principal Diagnosis Edit
(1) Liveborn Infant
(2) Multiple Gestation
(3) Supervision of High Risk Pregnancy
e. Other MCE Issues
(1) Procedure Inconsistent with Length of Stay Edit
(2) Maternity Diagnoses
(3) Manifestation Codes Not Allowed as Principal Diagnosis Edit
(4) Questionable Admission Edit
(5) Removal of Edits and Future Enhancement
13. Proposed Changes to Surgical Hierarchies
14. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2017
15. Proposed Complications or Comorbidity (CC) Exclusions List
a. Background of the CC List and the CC Exclusions List
b. Proposed CC Exclusions List for FY 2017
16. Review of Procedure Codes in MS DRGs 981 through 983; 984
through 986; and 987 through 989
a. Moving Procedure Codes from MS-DRGs 981 through 983 or MS-
DRGs 987 through 989 into MDCs
b. Reassignment of Procedures among MS-DRGs 981 through 983, 984
through 986, and 987 through 989
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c. Adding Diagnosis or Procedure Codes to MDCs
(1) Angioplasty of Extracranial Vessel
(2) Excision of Abdominal Arteries
(3) Excision of Retroperitoneal Tissue
(4) Occlusion of Vessels: Esophageal Varices
(5) Excision of Vulva
(6) Lymph Node Biopsy
(7) Obstetrical Laceration Repair
17. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding
Systems
a. ICD-10 Coordination and Maintenance Committee
b. Code Freeze
18. Replaced Devices Offered without Cost or With a Credit
a. Background
b. Proposed Changes for FY 2017
19. Other Proposed Policy Changes
a. MS-DRG GROUPER Logic
(1) Operations on Products of Conception
(2) Other Heart Revascularization
(3) Procedures on Vascular Bodies: Chemoreceptors
(4) Repair of the Intestine
(5) Insertion of Infusion Pump
(6) Procedures on the Bursa
(7) Procedures on the Breast
(8) Excision of Subcutaneous Tissue and Fascia
(9) Shoulder Replacement
(10) Reposition
(11) Insertion of Infusion Device
(12) Bladder Neck Repair
(13) Future Consideration
b. Issues Relating to MS-DRG 999 (Ungroupable)
c. Other Operating Room (O.R.) and Non-O.R. Issues
(1) O.R. Procedures to Non-O.R. Procedures
(a) Endoscopic/Transorifice Insertion
(b) Endoscopic/Transorifice Removal
(c) Tracheostomy Device Removal
(d) Endoscopic/Percutaneous Insertion
(e) Percutaneous Removal
(f) Percutaneous Drainage
(g) Percutaneous Inspection
(h) Inspection without Incision
(i) Dilation of Stomach
(j) Endoscopic/Percutaneous Occlusion
(k) Infusion Device
(2) Non-O.R. Procedures to O.R. Procedures
(a) Drainage of Pleural Cavity
(b) Drainage of Cerebral Ventricle
G. Recalibration of the Proposed FY 2017 MS-DRG Relative Weights
1. Data Sources for Developing the Proposed Relative Weights
2. Methodology for Calculation of the Proposed Relative Weights
3. Development of National Average CCRs
H. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical
Services and Technologies
4. Proposed FY 2017 Status of Technologies Approved for FY 2016
Add-On Payments
a. KcentraTM
b. Argus[supreg] II Retinal Prosthesis System
c. CardioMEMSTM HF (Heart Failure) Monitoring System
d. MitraClip[supreg] System
e. Responsive Neurostimulator (RNS[supreg]) System
f. Blinatumomab (BLINCYTOTM Trade Brand)
g. Lutonix[supreg] Drug Coated Balloon PTA Catheter and
In.PACTTM AdmiralTM Pacliaxel Coated
Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter
5. Proposed FY 2017 Applications for New Technology Add-On
Payments
a. MAGEC[supreg] Spinal Bracing and Distraction System
(MAGEC[supreg] Spine)
b. MIRODERM Biologic Wound Matrix (MIRODERM)
c. Idarucizumab
d. Titan Spine (Titan Spine Endoskeleton[supreg]
nanoLOCKTM Interbody Device)
e. Andexanet Alfa
f. Defitelio[supreg] (Defibrotide)
g. EDWARDS INTUITY EliteTM Valve System
h. GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis
(IBE)
i. VistogardTM (Uridine Triacetate)
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
1. Legislative Authority
2. Core-Based Statistical Areas (CBSAs) Revisions for the
Proposed FY 2017 Hospital Wage Index
B. Worksheet S-3 Wage Data for the Proposed FY 2017 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Providers Other Than Acute Care
Hospitals under the IPPS
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the Proposed FY 2017 Unadjusted Wage
Index
E. Proposed Occupational Mix Adjustment to the FY 2017 Wage
Index
1. Use of 2013 Occupational Mix Survey for the Proposed FY 2017
Wage Index
2. Development of the 2016 Medicare Wage Index Occupational Mix
Survey for the FY 2019 Wage Index
3. Calculation of the Proposed Occupational Mix Adjustment for
FY 2017
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2017 Occupational Mix Adjusted Wage
Index
G. Transitional Wage Indexes
1. Background
2. Transition for Hospitals in Urban Areas That Became Rural
3. Transition for Hospitals Deemed Urban under Section
1886(d)(8)(B) of the Act Where the Urban Area Became Rural under the
New OMB Delineations
4. Budget Neutrality
H. Proposed Application of the Proposed Rural, Imputed, and
Frontier Floors
1. Proposed Rural Floor
2. Proposed Imputed Floor for FY 2017
3. Proposed State Frontier Floor for FY 2017
I. Proposed FY 2017 Wage Index Tables
J. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
1. General Policies and Effects of Reclassification and
Redesignation
2. MGCRB Reclassification and Redesignation Issues for FY 2017
a. FY 2017 Reclassification Requirements and Approvals
b. Requirements for FY 2018 Applications and Proposed Revisions
Regarding Paper Application Requirements
c. Other Policy Regarding Reclassifications for Terminated
Hospitals
3. Redesignation of Hospitals Under Section 1886(d)(8)(B) of the
Act
4. Waiving Lugar Redesignation for the Out-Migration Adjustment
K. Proposed Out-Migration Adjustment Based on Commuting Patterns
of Hospital Employees for FY 2017
L. Notification Regarding Proposed CMS ``Lock-In'' Date for
Urban to Rural Reclassifications Under Sec. 412.103
M. Process for Requests for Wage Index Data Corrections
N. Proposed Labor Market Share for the Proposed FY 2017 Wage
Index
O. Solicitation of Comments on Treatment of Overhead and Home
Office Costs in the Wage Index Calculation
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and Graduate Medical Education (GME) Costs
A. Changes to Operating Payments for Subsection (d) Puerto Rico
Hospitals as a Result of Section 601 of Public Law 114-113
B. Proposed Changes in the Inpatient Hospital Updates for FY
2017 (Sec. Sec. 412.64(d) and 412.211(c))
1. Proposed FY 2017 Inpatient Hospital Update
2. Proposed FY 2017 Puerto Rico Hospital Update
3. Electronic Health Records (EHR) Adjustment to IPPS Market
Basket
C. Rural Referral Centers (RRCs): Proposed Annual Updates to
Case-Mix Index (CMI) and Discharge Criteria (Sec. 412.96)
1. Case-Mix Index (CMI)
2. Discharges
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.
412.101)
E. Indirect Medical Education (IME) Payment Adjustment (Sec.
412.105)
1. IME Adjustment Factor for FY 2017
2. Other Proposed Policy Changes Affecting IME
F. Proposed Payment Adjustment for Medicare Disproportionate
Share Hospitals (DSHs) for FY 2017 and Subsequent Years (Sec.
412.106)
1. General Discussion
2. Eligibility for Empirically Justified Medicare DSH Payments
and Uncompensated Care Payments
3. Empirically Justified Medicare DSH Payments
4. Uncompensated Care Payments
a. Calculation of Proposed Factor 1 for FY 2017
b. Calculation of Proposed Factor 2 for FY 2017
c. Calculation of Proposed Factor 3 for FY 2017
[[Page 24951]]
d. Proposed Calculation of Factor 3 for FY 2018 and Subsequent
Fiscal Years
(1) Background
(2) Proposed Data Source and Time Period for FY 2018 and
Subsequent Years, Including Methodology for Incorporating Worksheet
S-10 Data
(3) Proposed Definition of Uncompensated Care for FY 2018 and
Subsequent Fiscal Years
(4) Other Methodological Considerations for FY 2018 and
Subsequent Fiscal Years
G. Hospital Readmissions Reduction Program: Proposed Updates and
Changes (Sec. Sec. 412.150 through 412.154)
1. Statutory Basis for the Hospital Readmissions Reduction
Program
2. Regulatory Background
3. Proposed Policies for the FY 2017 Hospital Readmissions
Reduction Program
4. Maintenance of Technical Specifications for Quality Measures
5. Proposed Applicable Period for FY 2017
6. Proposed Calculation of Aggregate Payments for Excess
Readmissions for FY 2017
7. Extraordinary Circumstance Exception Policy
8. Timeline for Public Reporting of Excess Readmission Ratios on
Hospital Compare for the FY 2017 Payment Determination
H. Hospital Value-Based Purchasing (VBP) Program: Proposed
Policy Changes for the FY 2018 Program Year and Subsequent Years
1. Background
a. Statutory Background and Overview of Past Program Years
b. FY 2017 Program Year Payment Details
2. PSI 90 Measure in the FY 2018 and Future Program Years
a. Proposed PSI 90 Measure Performance Period Change for the FY
2018 Program Year
b. Intent To Propose in Future Rulemaking To Adopt the Modified
PSI 90 Measure
3. Retention Policy, Domain Name Proposal, and Updating of
Quality Measures for the FY 2019 Program Year
a. Retention of Previously Adopted Hospital VBP Program Measures
b. Proposed Domain Name Change
c. Proposed Inclusion of Selected Ward Non-Intensive Care Unit
(ICU) Locations in Certain NHSN Measures Beginning With the FY 2019
Program Year
d. Summary of Previously Adopted Measures and Newly Proposed
Measure Refinements for the FY 2019 Program Year
4. Newly Proposed Measures and Measure Refinements for the FY
2021 Program Year and Subsequent Years
a. Condition-Specific Hospital Level, Risk-Standardized Payment
Measures
b. Proposed Update to an Existing Measure for the FY 2021
Program Year: Hospital 30-Day, All-Cause, Risk-Standardized
Mortality Rate (RSMR) Following Pneumonia (PN) Hospitalization (NQF
#0468) (Updated Cohort)
5. Proposed New Measure for the FY 2022 Program Year: Hospital
30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following
Coronary Artery Bypass Graft (CABG) Surgery (NQF #2558)
6. Previously Adopted and Newly Proposed Baseline and
Performance Periods
a. Background
b. Patient- and Caregiver-Centered Experience of Care/Care
Coordination Domain (Proposed Person and Community Engagement
Domain)
c. Efficiency and Cost Reduction Domain
d. Safety Domain
e. Clinical Care Domain
f. Summary of Previously Adopted and Newly Proposed Baseline and
Performance Periods for the FY 2018, FY 2019, FY 2020, FY 2021, and
FY 2022 Program Years
7. Proposed Immediate Jeopardy Policy Changes
a. Background
b. Proposed Increase of Immediate Jeopardy Citations From Two to
Three Surveys
c. EMTALA-Related Immediate Jeopardy Citations
8. Proposed Performance Standards for the Hospital VBP Program
a. Background
b. Previously Adopted and Proposed Performance Standards for the
FY 2019 Program Year
c. Previously Adopted Performance Standards for Certain Measures
for the FY 2020 Program Year
d. Previously Adopted and Newly Proposed Performance Standards
for Certain Measures for the FY 2021 Program Year
e. Proposed Performance Standards for Certain Measures for the
FY 2022 Program Year
9. FY 2019 Program Year Scoring Methodology
a. Domain Weighting for the FY 2019 Program Year for Hospitals
That Receive a Score on All Domains
b. Domain Weighting for the FY 2019 Program Year for Hospitals
Receiving Scores on Fewer Than Four Domains
I. Proposed Changes to the Hospital-Acquired Condition (HAC)
Reduction Program
1. Background
2. Statutory Basis for the HAC Reduction Program
3. Overview of Previous HAC Reduction Program Rulemaking
4. Implementation of the HAC Reduction Program for FY 2017
a. Clarification of Complete Data Requirements for Domain 1
b. Clarification of NHSN CDC HAI Data Submission Requirements
for Newly Opened Hospitals
5. Implementation of the HAC Reduction Program for FY 2018
a. Proposed Adoption of PSI 90: Patient Safety and Adverse
Events Composite (NQF # 0531)
b. Applicable Time Periods for the FY 2018 HAC Reduction Program
and the FY 2019 HAC Reduction Program
c. Proposed Changes to the HAC Reduction Program Scoring
Methodology
6. Request for Comments on Additional Measures for Potential
Future Adoption
7. Maintenance of Technical Specifications for Quality Measures
8. Extraordinary Circumstance Exception Policy for the HAC
Reduction Program Beginning in FY 2016 and for Subsequent Years
J. Payment for Graduate Medical Education (GME) and Indirect
Medical Education (IME) Costs (Sec. Sec. 412.105, 413.75 through
413.83)
1. Background
2. Change in New Program Growth From 3 Years to 5 Years
a. Urban and Rural Hospitals
b. Proposed Policy Changes Relating to Rural Training Tracks at
Urban Hospitals
c. Proposed Effective Date
K. Rural Community Hospital Demonstration Program
1. Background
2. Budget Neutrality Offset Adjustments: Fiscal Years 2005
Through 2016
a. Fiscal Years 2005 Through 2013
b. Fiscal Years 2014 and 2015
c. Fiscal Year 2016
3. Proposed Budget Neutrality Methodology for FY 2017
L. Proposed Hospital and CAH Notification Procedures for
Outpatients Receiving Observation Services
1. Background
a. Statutory Authority
b. Proposed Effective Date
2. Proposed Implementation of the NOTICE Act Provisions
a. Proposed Notice Process
b. Proposed Notification Recipients
c. Proposed Timing of Notice Delivery
d. Proposed Requirements for Written Notice
e. Outpatient Observation Services and Beneficiary Financial
Liability
f. Delivering the Medicare Outpatient Observation Notice
g. Proposed Oral Notice
h. Proposed Signature Requirements
i. No Appeal Rights Under the NOTICE Act
M. Proposed Technical Changes and Correction of Typographical
Errors in Certain Regulations Under 42 CFR part 413 Relating to
Costs to Related Organizations and Medicare Cost Reports
1. General Background
2. Proposed Technical Change to Regulations at 42 CFR
413.17(d)(1) on Cost to Related Organizations
3. Proposed Changes to 42 CFR 413.24(f)(4)(i) Relating to
Electronic Submission of Cost Reports
4. Proposed Technical Changes to 42 CFR 413.24(f)(4)(ii)
Relating to Electronic Submission of Cost Reports and Due Dates
5. Proposed Technical Changes to 42 CFR 413.24(f)(4)(iv)
Relating to Reporting Entities, Cost Report Certification Statement,
Electronic Submission and Cost Reports Due Dates
6. Proposed Technical Correction to 42 CFR 413.200(c)(1)(i)
Relating to Medicare Cost Report Due Dates for Organ Procurement
Organizations and Histocompatibility Laboratories
N. Clarification Regarding the Medicare Utilization Requirement
for Medicare-
[[Page 24952]]
Dependent, Small Rural Hospitals (MDHs) (Sec. 412.108)
1. Background
2. Clarification of Medicare Utilization Criterion for MDH
Classification
O. Adjustment to IPPS Rates Resulting From 2-Midnight Policy
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Proposed Changes in Payments for Hospitals Located in Puerto
Rico
C. Proposed Annual Update for FY 2017
VI. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals
for FY 2017
B. Critical Care Hospitals (CAHs)
1. Background
2. Frontier Community Health Integration Project (FCHIP)
Demonstration
VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2015
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as a LTCH
a. Classification as a LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification Compliance Act (ASCA) and
Health Insurance Portability and Accountability Act (HIPAA)
Compliance
B. Proposed Modifications to the Application of the Site Neutral
Payment Rate (Sec. 412.522)
1. Background
2. Technical Correction of Definition of ``Subsection (d)
Hospital'' for the Site Neutral Payment Rate (Sec. 412.503)
C. Proposed Medicare Severity Long-Term Care Diagnosis-Related
Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2017
1. Background
2. Patient Classifications Into MS-LTC-DRGs
a. Background
b. Proposed Changes to the MS-LTC-DRGs for FY 2017
3. Development of the Proposed FY 2017 MS-LTC-DRG Relative
Weights
a. General Overview of the Development of the MS-LTC-DRG
Relative Weights
b. Development of the Proposed MS-LTC-DRG Relative Weights for
FY 2017
c. Data
d. Hospital-Specific Relative Value (HSRV) Methodology
e. Treatment of Severity Levels in Developing the MS-LTC-DRG
Relative Weights
f. Proposed Low-Volume MS-LTC-DRGs
g. Steps for Determining the Proposed FY 2017 MS-LTC-DRG
Relative Weights
D. Proposed Rebasing of the LTCH Market Basket
1. Background
2. Overview of the Proposed 2013-Based LTCH Market Basket
3. Development of the Proposed 2013-Based LTCH Market Basket
Cost Categories and Weights
a. Use of Medicare Cost Report Data
(1) Wages and Salaries Costs
(2) Employee Benefit Costs
(3) Contract Labor Costs
(4) Pharmaceutical Costs
(5) Professional Liability Insurance Costs
(6) Capital Costs
b. Final Major Cost Category Computation
c. Derivation of the Detailed Operating Cost Weights
d. Derivation of the Detailed Capital Cost Weights
e. Proposed 2013-Based LTCH Market Basket Cost Categories and
Weights
4. Selection of Proposed Price Proxies
a. Price Proxies for the Operating Portion of the Proposed 2013-
Based LTCH Market Basket
(1) Wages and Salaries
(2) Employee Benefits
(3) Electricity
(4) Fuel, Oil, and Gasoline
(5) Water and Sewage
(6) Professional Liability Insurance
(7) Pharmaceuticals
(8) Food: Direct Purchases
(9) Food: Contract Services
(10) Chemicals
(11) Medical Instruments
(12) Rubber and Plastics
(13) Paper and Printing Products
(14) Miscellaneous Products
(15) Professional Fees: Labor-Related
(16) Administrative and Facilities Support Services
(17) Installation, Maintenance, and Repair Services
(18) All Other: Labor-Related Services
(19) Professional Fees: Nonlabor-Related
(20) Financial Services
(21) Telephone Services
(22) All Other: Nonlabor-Related Services
b. Price Proxies for the Capital Portion of the Proposed 2013-
Based LTCH Market Basket
(1) Capital Price Proxies Prior to Vintage Weighting
(2) Vintage Weights for Price Proxies
c. Summary of Price Proxies of the Proposed 2013-Based LTCH
Market Basket
d. Proposed FY 2017 Market Basket Update for LTCHs
e. Proposed FY 2017 Labor-Related Share
E. Proposed Changes to the LTCH PPS Payment Rates and Other
Proposed Changes to the LTCH PPS for FY 2017
1. Overview of Development of the LTCH PPS Standard Federal
Payment Rates
2. Proposed FY 2017 LTCH PPS Standard Federal Payment Rate
Annual Market Basket Update
a. Overview
b. Proposed Market Basket Under the LTCH PPS for FY 2017
c. Revision of Certain Market Basket Updates as Required by the
Affordable Care Act
d. Proposed Adjustment to the LTCH PPS Standard Federal Payment
Rate Under the Long-Term Care Hospital Quality Reporting Program
(LTCH QRP)
e. Proposed Annual Market Basket Update Under the LTCH PPS for
FY 2017
3. Proposed Update Under the Payment Adjustment for ``Subclause
(II)'' LTCHs
F. Proposed Modifications to the ``25-Percent Threshold Policy''
Payment Adjustments (Sec. Sec. 412.534 and 412.536)
G. Proposed Refinement to the Payment Adjustment for ``Subclause
II'' LTCHs
VIII. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Hospital Inpatient Quality Reporting (IQR) Program
1. Background
a. History of the Hospital IQR Program
b. Maintenance of Technical Specifications for Quality Measures
c. Public Display of Quality Measures
2. Process for Retaining Previously Adopted Hospital IQR Program
Measures for Subsequent Payment Determinations
3. Removal and Suspension of Hospital IQR Program Measures
a. Considerations in Removing Quality Measures From the Hospital
IQR Program
b. Proposed Removal of Hospital IQR Program Measures for the FY
2019 Payment Determination and Subsequent Years
4. Previously Adopted Hospital IQR Program Measures for the FY
2018 and FY 2019 Payment Determination and Subsequent Years
5. Expansion and Updating of Quality Measures
6. Proposed Refinements to Existing Measures in the Hospital IQR
Program
a. Proposed Expansion of the Cohort for the PN Payment Measure:
Hospital-Level, Risk-Standardized Payment Associated With a 30-Day
Episode-of-Care for Pneumonia (NQF # 2579)
b. Proposed Adoption of Modified PSI 90: Patient Safety and
Adverse Events Composite Measure (NQF #0531)
7. Proposed Additional Hospital IQR Program Measures for the FY
2019 Payment Determinations and Subsequent Years
a. Proposed Adoption of Three Clinical Episode-Based Payment
Measures
b. Proposed Adoption of Excess Days in Acute Care After
Hospitalization for Pneumonia (PN Excess Days) Measure
c. Summary of Previously Adopted and Newly Proposed Hospital IQR
Program Measures for the FY 2019 Payment Determination and
Subsequent Years
8. Proposed Changes to Policies on Reporting of eCQMs
a. Proposed Requirement That Hospitals Report on All eCQMs in
the Hospital IQR Program Measure Set for the CY 2017 Reporting
Period/FY 2019 Payment Determination and Subsequent Years
b. Proposed Requirement That Hospitals Report a Full Year of
eCQM Data
c. Clarification Regarding Data Submission for ED-1, ED-2, PC-
01, STK-4, VTE-5, and VTE-6
9. Possible New Quality Measures and Measure Topics for Future
Years
a. Potential Inclusion of the National Institutes of Health
(NIH) Stroke Scale for the Hospital 30-Day Mortality Following Acute
Ischemic Stroke Hospitalization Measure Beginning as Early as the FY
2022 Payment Determination
[[Page 24953]]
b. Potential Inclusion of National Healthcare Safety Network
(NHSN) Antimicrobial Use Measure (NQF #2720)
c. Potential Measures for Behavioral Health in the Hospital IQR
Program
d. Potential Public Reporting of Quality Measures Data
Stratified by Race, Ethnicity, Sex, and Disability and Future
Hospital Quality Measures That Incorporate Health Equity
10. Form, Manner, and Timing of Quality Data Submission
a. Background
b. Procedural Requirements for the FY 2019 Payment Determination
and Subsequent Years
c. Data Submission Requirements for Chart-Abstracted Measures
d. Proposed Alignment of the Hospital IQR Program With the
Medicare and Medicaid EHR Incentive Programs for Eligible Hospitals
and CAHs
e. Sampling and Case Thresholds for the FY 2019 Payment
Determination and Subsequent Years
f. HCAHPS Requirements for the FY 2019 Payment Determination and
Subsequent Years
g. Data Submission Requirements for Structural Measures for the
FY 2019 Payment Determination and Subsequent Years
h. Data Submission and Reporting Requirements for HAI Measures
Reported via NHSN
11. Proposed Modifications to the Existing Processes for
Validation of Hospital IQR Program Data
a. Background
b. Proposed Modifications to the Existing Processes for
Validation of Hospital IQR Program Data
12. Data Accuracy and Completeness Acknowledgement (DACA)
Requirements for the FY 2019 Payment Determination and Subsequent
Years
13. Public Display Requirements for the FY 2019 Payment
Determination and Subsequent Years
14. Reconsideration and Appeal Procedures for the FY 2019
Payment Determination and Subsequent Years
15. Proposed Changes to the Hospital IQR Program Extraordinary
Circumstances Extensions or Exemptions (ECE) Policy
a. Proposal To Extend the General ECE Request Deadline for Non-
eCQM Circumstances
b. Proposal To Establish a Separate Submission Deadline for ECE
Requests Related to eCQMs
B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
1. Background
2. Proposed Criteria for Removal and Retention of PCHQR Program
Measures
3. Retention and Proposed Update to Previously Finalized Quality
Measures for PCHs Beginning With the FY 2019 Program Year
a. Background
b. Proposed Update of Oncology: Radiation Dose Limits to Normal
Tissues (NQF #0382) Measure for FY 2019 Program Year and Subsequent
Years
4. Proposed New Quality Measure Beginning With the FY 2019
Program Year
a. Considerations in the Selection of Quality Measures
b. Admissions and Emergency Department (ED) Visits for Patients
Receiving Outpatient Chemotherapy
5. Possible New Quality Measure Topics for Future Years
6. Maintenance of Technical Specifications for Quality Measures
7. Public Display Requirements
a. Background
b. Proposed Additional Public Display Requirements
c. Proposed Public Display of Additional PCHQR Measure
d. Proposed Public Display of Updated Measure
e. Proposed Postponement of Public Display of Two Measures
8. Form, Manner, and Timing of Data Submission
9. Exceptions From PCHQR Program Requirements
C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
1. Background and Statutory Authority
2. General Considerations Used for Selection of Quality,
Resource Use, and Other Measures for the LTCH QRP
3. Policy for Retention of LTCH QRP Measures Adopted for
Previous Payment Determinations
4. Policy for Adopting Changes to LTCH QRP Measures
5. Quality Measures Previously Finalized for and Currently Used
in the LTCH QRP
6. LTCH QRP Quality, Resource Use and Other Measures Proposed
for the FY 2018 Payment Determination and Subsequent Years
a. Proposal To Address the IMPACT Act Domain of Resource Use and
Other Measures: Total Estimated MSPB--PAC LTCH QRP
b. Proposal To Address the IMPACT Act Domain of Resource Use and
Other Measures: Discharge to Community-Post-Acute Care (PAC) Long-
Term Care Hospital Quality Reporting Program
c. Proposal To Address the IMPACT Act Domain of Resource Use and
Other Measures: Potentially Preventable 30-Day Post-Discharge
Readmission Measure for the Long-Term Care Hospital Quality
Reporting Program
7. LTCH QRP Quality Measure Proposed for the FY 2020 Payment
Determination and Subsequent Years
a. Background
b. Quality Measure Addressing the IMPACT Act Domain of
Medication Reconciliation: Drug Regimen Review Conducted With
Follow-Up for Identified Issues-Post-Acute Care LTCH QRP
8. LTCH QRP Quality Measures and Measure Concepts Under
Consideration for Future Years
9. Proposed Form, Manner, and Timing of Quality Data Submission
for the FY 2018 Payment Determination and Subsequent Years
a. Background
b. Timeline for Data Submission Under the LTCH QRP for the FY
2018 and Subsequent Years Payment Determinations
c. Proposed Timeline and Data Submission Mechanisms for the FY
2018 Payment Determination and Subsequent Years for New LTCH QRP
Resource Use and Other Measures--Claims-Based Measures
d. Proposal To Revise the Previously Adopted Data Collection
Period and Submission Deadlines for Percent of Residents or Patients
Who Were Assessed and Appropriately Given the Seasonal Influenza
Vaccine (Short Stay) (NQF #0680) for the FY 2019 Payment
Determination and Subsequent Years
e. Proposed Timeline and Data Submission Mechanisms for the
Proposed LTCH QRP Quality Measure for the FY 2020 Payment
Determination and Subsequent Years
10. LTCH QRP Data Completion Thresholds for the FY 2016 Payment
Determination and Subsequent Years
11. LTCH QRP Data Validation Process for the FY 2016 Payment
Determination and Subsequent Years
12. Proposed Change to Previously Codified LTCH QRP Submission
Exception and Extension Policies
13. Previously Finalized LTCH QRP Reconsideration and Appeals
Procedures
14. Proposals and Policies Regarding Public Display of Measure
Data for the LTCH QRP and Procedures for the Opportunity To Review
and Correct Data and Information
a. Public Display of Measures
b. Procedures for the Opportunity To Review and Correct Data and
Information
15. Proposed Mechanism for Providing Feedback Reports to LTCHs
D. Inpatient Psychiatric Facility Quality Reporting (IPFQR)
Program
1. Background
a. Statutory Authority
b. Covered Entities
c. Considerations in Selecting Quality Measures
2. Retention of IPFQR Program Measures Adopted in Previous
Payment Determinations
3. Proposed Update to Previously Finalized Measure: Screening
for Metabolic Disorders
4. Proposed New Quality Measures for the FY 2019 Payment
Determination and Subsequent Years
a. SUB-3--Alcohol and Other Drug Use Disorder Treatment Provided
or Offered at Discharge and the Subset Measure SUB-3a--Alcohol and
Other Drug Use Disorder Treatment at Discharge (NQF #1664)
b. Thirty-Day All-Cause Unplanned Readmission Following
Psychiatric Hospitalization in an IPF
5. Summary of Proposed Measures for the FY 2019 Payment
Determination and Subsequent Years
6. Possible IPFQR Program Measures and Topics for Future
Consideration
7. Public Display and Review Requirements
[[Page 24954]]
8. Form, Manner, and Timing of Quality Data Submission
a. Procedural and Submission Requirements
b. Proposed Change to the Reporting Periods and Submission
Timeframes
c. Population and Sampling
d. Data Accuracy and Completeness Acknowledgement (DACA)
Requirements
9. Reconsideration and Appeals Procedures
10. Exceptions to Quality Reporting Requirements
E. Clinical Quality Measurement for Eligible Hospitals and
Critical Access Hospitals (CAHs) Participating in the EHR Incentive
Programs in 2017
1. Background
2. CQM Reporting for the Medicare and Medicaid EHR Incentive
Programs in 2017
a. Background
b. CQM Reporting Period for the Medicare and Medicaid EHR
Incentive Programs in CY 2017
c. CQM Reporting Form and Method for the Medicare EHR Incentive
Program in 2017
IX. MedPAC Recommendations
X. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
1. Statutory Requirement for Solicitation of Comments
2. ICRs for Add-On Payments for New Services and Technologies
3. ICRs for the Occupational Mix Adjustment to the Proposed FY
2017 Wage Index (Hospital Wage Index Occupational Mix Survey)
4. Hospital Applications for Geographic Reclassifications by the
MGCRB
5. ICRs for the Notice of Observation Treatment by Hospitals and
CAHs
6. ICRs for the Hospital Inpatient Quality Reporting (IQR)
Program
7. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR)
Program
8. ICRs for Hospital Value-Based Purchasing (VBP) Program
9. ICRs for the Long-Term Care Hospital Quality Reporting
Program (LTCH QRP)
10. ICRs for the Inpatient Psychiatric Facility Quality
Reporting (IPFQR) Program
11. ICRs for the Electronic Health Record (EHR) Incentive
Program and Meaningful Use
C. Response to Public Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
and Rate-of-Increase Percentages Effective With Cost Reporting
Periods Beginning on or After October 1, 2016 and Payment Rates for
LTCHs Effective With Discharges Occurring on or After October 1,
2016
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2017
A. Calculation of the Adjusted Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2017
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Proposed Inpatient Capital-Related
Prospective Payments for FY 2017
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-
of-Increase Percentages for FY 2017
V. Proposed Updates to the Payment Rates for the LTCH PPS for FY
2017
A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2017
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2017
1. Background
2. Proposed Geographic Classifications (Labor Market Areas) for
the LTCH PPS Standard Federal Payment Rate
3. Proposed Labor-Related Share for the LTCH PPS Standard
Federal Payment Rate
4. Proposed Wage Index for FY 2017 for the LTCH PPS Standard
Federal Payment Rate
5. Proposed Budget Neutrality Adjustment for Changes to the LTCH
PPS Standard Federal Payment Rate Area Wage Level Adjustment
C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs
Located in Alaska and Hawaii
D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
E. Proposed Update to the IPPS Comparable/Equivalent Amounts to
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment
Methodology
F. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2017
VI. Tables Referenced in This Proposed Rulemaking and Available
Through the Internet on the CMS Web site
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
B. Need
C. Objectives of the IPPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Effects on Hospitals and Hospital Units Excluded From the
IPPS
G. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
3. Impact Analysis of Table II
H. Effects of Other Proposed Policy Changes
1. Effects of Proposed Policy Relating to New Medical Service
and Technology Add-On Payments
2. Effect of Proposed Changes Relating to Payment Adjustment for
Medicare Disproportionate Share Hospitals
3. Effects of Proposed Reduction Under the Hospital Readmissions
Reduction Program
4. Effects of Proposed Changes Under the FY 2017 Hospital Value-
Based Purchasing (VBP) Program
5. Effects of the Proposed Changes to the HAC Reduction Program
for FY 2017
6. Effects of Proposed Policy Changes Relating to Direct GME and
IME Payments for Rural Training Tracks at Urban Hospitals
7. Effects of Implementation of Rural Community Hospital
Demonstration Program
8. Effects of Proposed Implementation of the Notice of
Observation Treatment and Implications for Care Eligibility Act
(NOTICE Act)
9. Effects of Proposed Technical Changes and Correction of
Typographical Errors in Certain Regulations Under 42 CFR part 413
Relating to Costs to Related Organizations and Medicare Cost Reports
10. Effects of Proposed Implementation of the Frontier Community
Health Integration Project (FCHIP) Demonstration
I. Effects of Proposed Changes in the Capital IPPS
1. General Considerations
2. Results
J. Effects of Proposed Payment Rate Changes and Policy Changes
Under the LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of Proposed LTCH PPS Payment Rate Changes
and Policy Changes
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
K. Effects of Proposed Requirements for Hospital Inpatient
Quality Reporting (IQR) Program
L. Effects of Proposed Requirements for the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program
M. Effects of Proposed Requirements for the Long-Term Care
Hospital Quality Reporting Program (LTCH QRP) for the FY 2018
Payment Determination and Subsequent Years
N. Effects of Proposed Updates to the Inpatient Psychiatric
Facility Quality Reporting (IPFQR) Program
O. Effects of Proposed Requirements Regarding Electronic Health
Record (EHR) Meaningful Use Program
P. Alternatives Considered
Q. Overall Conclusion
1. Acute Care Hospitals
2. LTCHs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2017
A. Proposed FY 2017 Inpatient Hospital Update
B. Proposed Update for SCHs and MDHs for FY 2017
[[Page 24955]]
C. Proposed FY 2017 Puerto Rico Hospital Update
D. Proposed Update for Hospitals Excluded From the IPPS
E. Proposed Update for LTCHs for FY 2017
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This proposed rule would make payment and policy changes under the
Medicare inpatient prospective payment systems (IPPS) for operating and
capital-related costs of acute care hospitals as well as for certain
hospitals and hospital units excluded from the IPPS. In addition, it
would make payment and policy changes for inpatient hospital services
provided by long-term care hospitals (LTCHs) under the long-term care
hospital prospective payment system (LTCH PPS). It also would make
policy changes to programs associated with Medicare IPPS hospitals,
IPPS-excluded hospitals, and LTCHs.
We are proposing to establish new requirements or revise
requirements for quality reporting by specific providers (acute care
hospitals, PPS-exempt cancer hospitals, LTCHs, and inpatient
psychiatric facilities) that are participating in Medicare, including
related provisions for eligible hospitals and critical assess hospitals
(CAHs) participating in the Electronic Health Record (EHR) Incentive
Program. We are proposing to update policies relating to the Hospital
Value-Based Purchasing (VBP) Program, the Hospital Readmissions
Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction
Program. We also are proposing to: Implement statutory provisions that
require hospitals and CAHs to furnish notification to Medicare
beneficiaries, including Medicare Advantage enrollees, when the
beneficiaries receive outpatient observation services for more than 24
hours; announce the implementation of the Frontier Community Health
Integration Project Demonstration; make technical corrections and
changes to regulations relating to costs to organizations and Medicare
cost reports.
Under various statutory authorities, we are proposing to make
changes to the Medicare IPPS, to the LTCH PPS, and to other related
payment methodologies and programs for FY 2017 and subsequent fiscal
years. These statutory authorities include, but are not limited to, the
following:
Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates. Section 1886(g) of the Act
requires that, instead of paying for capital-related costs of inpatient
hospital services on a reasonable cost basis, the Secretary use a
prospective payment system (PPS).
Section 1886(d)(1)(B) of the Act, which specifies that
certain hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; LTCHs;
psychiatric hospitals and units; children's hospitals; and cancer
hospitals. Religious nonmedical health care institutions (RNHCIs) are
also excluded from the IPPS.
Sections 123(a) and (c) of Public Law 106-113 and section
307(b)(1) of Public Law 106-554 (as codified under section 1886(m)(1)
of the Act), which provide for the development and implementation of a
prospective payment system for payment for inpatient hospital services
of long-term care hospitals (LTCHs) described in section
1886(d)(1)(B)(iv) of the Act.
Sections 1814(l), 1820, and 1834(g) of the Act, which
specify that payments are made to critical access hospitals (CAHs)
(that is, rural hospitals or facilities that meet certain statutory
requirements) for inpatient and outpatient services and that these
payments are generally based on 101 percent of reasonable cost.
Section 1866(k) of the Act, as added by section 3005 of
the Affordable Care Act, which establishes a quality reporting program
for hospitals described in section 1886(d)(1)(B)(v) of the Act,
referred to as ``PPS-exempt cancer hospitals.''
Section 1886(a)(4) of the Act, which specifies that costs
of approved educational activities are excluded from the operating
costs of inpatient hospital services. Hospitals with approved graduate
medical education (GME) programs are paid for the direct costs of GME
in accordance with section 1886(h) of the Act.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase in payments to a
subsection (d) hospital for a fiscal year if the hospital does not
submit data on measures in a form and manner, and at a time, specified
by the Secretary.
Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value-Based Purchasing (VBP) Program under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
Section 1886(p) of the Act, as added by section 3008 of
the Affordable Care Act, which establishes a Hospital-Acquired
Condition (HAC) Reduction Program, under which payments to applicable
hospitals are adjusted to provide an incentive to reduce hospital-
acquired conditions.
Section 1886(q) of the Act, as added by section 3025 of
the Affordable Care Act and amended by section 10309 of the Affordable
Care Act, which establishes the ``Hospital Readmissions Reduction
Program'' effective for discharges from an ``applicable hospital''
beginning on or after October 1, 2012, under which payments to those
hospitals under section 1886(d) of the Act will be reduced to account
for certain excess readmissions.
Section 1886(r) of the Act, as added by section 3133 of
the Affordable Care Act, which provides for a reduction to
disproportionate share hospital (DSH) payments under section
1886(d)(5)(F) of the Act and for a new uncompensated care payment to
eligible hospitals. Specifically, section 1886(r) of the Act requires
that, for fiscal year 2014 and each subsequent fiscal year, subsection
(d) hospitals that would otherwise receive a DSH payment made under
section 1886(d)(5)(F) of the Act will receive two separate payments:
(1) 25 percent of the amount they previously would have received under
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified
amount''), and (2) an additional payment for the DSH hospital's
proportion of uncompensated care, determined as the product of three
factors. These three factors are: (1) 75 percent of the payments that
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1
minus the percent change in the percent of individuals under the age of
65 who are uninsured (minus 0.1 percentage points for FY 2014, and
minus 0.2 percentage points for FY 2015 through FY 2017); and (3) a
hospital's uncompensated care amount relative to the uncompensated care
amount of all DSH hospitals expressed as a percentage.
Section 1886(m)(6) of the Act, as added by section
1206(a)(1) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67),
which provided for the establishment of site neutral payment rate
criteria under the LTCH PPS with implementation beginning in FY 2016.
Section 1886(m)(5)(D)(iv) of the Act, as added by section
1206 (c) of the Pathway for SGR Reform Act of 2013, which provides for
the establishment of a functional status quality measure under the LTCH
QRP for change in
[[Page 24956]]
mobility among inpatients requiring ventilator support.
Section 1899B of the Act, as added by the Improving
Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act),
which imposes data reporting requirements for certain post-acute care
providers, including LTCHs.
Section 1886(d)(12) of the Act, as amended by section 204
of the Medicare Access and CHIP Reauthorization Act of 2015, which
extended, through FY 2017, changes to the inpatient hospital payment
adjustment for certain low-volume hospitals; and section 1886(d)(5)(G)
of the Act, as amended by section 205 of the Medicare Access and CHIP
Reauthorization Act of 2015, which extended, through FY 2017, the
Medicare-dependent, small rural hospital (MDH) program.
2. Summary of the Major Provisions
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act (ATRA, Pub. L. 112-
240) amended section 7(b)(1)(B) of Public Law 110-90 to require the
Secretary to make a recoupment adjustment to the standardized amount of
Medicare payments to acute care hospitals to account for changes in MS-
DRG documentation and coding that do not reflect real changes in case-
mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016,
and 2017. This adjustment represents the amount of the increase in
aggregate payments as a result of not completing the prospective
adjustment authorized under section 7(b)(1)(A) of Public Law 110-90
until FY 2013. Prior to the ATRA, this amount could not have been
recovered under Public Law 110-90.
While our actuaries estimated that a -9.3 percent adjustment to the
standardized amount would be necessary if CMS were to fully recover the
$11 billion recoupment required by section 631 of the ATRA in one year,
it is often our practice to delay or phase in rate adjustments over
more than one year, in order to moderate the effects on rates in any
one year. Therefore, consistent with the policies that we have adopted
in many similar cases, we made a -0.8 percent recoupment adjustment to
the standardized amount in FY 2014, FY 2015, and FY 2016. For FY 2017,
we are proposing to make an additional -1.5 percent recoupment
adjustment to the standardized amount.
b. Adjustment to IPPS Rates Resulting From 2-Midnight Policy
In this proposed rule, we are proposing a permanent adjustment of
(1/0.998) to the standardized amount, the hospital-specific payment
rates, and the national capital Federal rate using our authority under
sections 1886(d)(5)(I)(i) and 1886(g) of the Act to prospectively
remove the 0.2 percent reduction to the rate put in place in FY 2014 to
offset the estimated increase in IPPS expenditures as a result of the
2-midnight policy. In addition, we are proposing a temporary one-time
prospective increase to the FY 2017 standardized amount, the hospital-
specific payment rates, and the national capital Federal rate of 0.6
percent by including a temporary one-time factor of 1.006 in the
calculation of the standardized amount, the hospital-specific payment
rates, and the national capital Federal rate using our authority under
sections 1886(d)(5)(I)(i) and 1886(g) of the Act, to address the
effects of the 0.2 percent reduction to the rate for the 2-midnight
policy in effect for FYs 2014, 2015, and 2016.
c. Reduction of Hospital Payments for Excess Readmissions
We are proposing to make changes to policies for the Hospital
Readmissions Reduction Program, which is established under section
1886(q) of the Act, as added by section 3025 of the Affordable Care
Act, as amended by section 10309 of the Affordable Care Act. The
Hospital Readmissions Reduction Program requires a reduction to a
hospital's base operating DRG payment to account for excess
readmissions of selected applicable conditions. For FY 2017 and
subsequent years, the reduction is based on a hospital's risk-adjusted
readmission rate during a 3-year period for acute myocardial infarction
(AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary
disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/
TKA), and coronary artery bypass graft (CABG). In this proposed rule,
to align with other quality reporting programs and allow us to post
data as soon as possible, we are clarifying our public reporting policy
so that excess readmission rates will be posted to the Hospital Compare
Web site as soon as feasible following the preview period, and we are
proposing the methodology to include the addition of the CABG
applicable condition in the calculation of the readmissions payment
adjustment for FY 2017.
d. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year.
In this proposed rule, we are proposing to refine two previously
adopted measures beginning with the FY 2019 program year, to update one
previously adopted measure beginning with the FY 2021 program year, to
adopt two new measures beginning with the FY 2021 program year, and to
adopt one new measure beginning with the FY 2022 program year. We also
are proposing to change the performance period for one previously
adopted measure for the FY 2018 program year and to change the name of
the Patient- and Caregiver-Centered Experience of Care/Care
Coordination domain to the Person and Community Engagement domain
beginning with the FY 2019 program year. In addition, we are proposing
changes to the immediate jeopardy citation policy.
e. Hospital-Acquired Condition (HAC) Reduction Program
Section 1886(p) of the Act, as added under section 3008(a) of the
Affordable Care Act, establishes an incentive to hospitals to reduce
the incidence of hospital-acquired conditions by requiring the
Secretary to make an adjustment to payments to applicable hospitals
effective for discharges beginning on October 1, 2014. This 1-percent
payment reduction applies to a hospital whose ranking is in the top
quartile (25 percent) of all applicable hospitals, relative to the
national average, of conditions acquired during the applicable period
and on all of the hospital's discharges for the specified fiscal year.
In this proposed rule, we are proposing the following HAC Reduction
Program policies: (1) Establishing NHSN CDC HAI data submission
requirements for newly opened hospitals; (2) a clarification of data
requirements for Domain 1 scoring; (3) establishing performance periods
for the FY 2018 and FY 2019 HAC Reduction Programs, including revising
our regulations to accommodate variable timeframes; (4) adopting the
refined PSI 90: Patient Safety and Adverse Events Composite (NQF
#0531); and (5) changing the program scoring methodology from the
current decile-based scoring to a continuous scoring methodology.
f. DSH Payment Adjustment and Additional Payment for Uncompensated Care
Section 3133 of the Affordable Care Act modified the Medicare
disproportionate share hospital (DSH) payment methodology beginning in
FY
[[Page 24957]]
2014. Under section 1886(r) of the Act, which was added by section 3133
of the Affordable Care Act, starting in FY 2014, DSHs will receive 25
percent of the amount they previously would have received under the
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of
the Act. The remaining amount, equal to 75 percent of what otherwise
would have been paid as Medicare DSH payments, will be paid as
additional payments after the amount is reduced for changes in the
percentage of individuals that are uninsured. Each Medicare DSH will
receive an additional payment based on its share of the total amount of
uncompensated care for all Medicare DSHs for a given time period.
In this proposed rule, we are proposing to update our estimates of
the three factors used to determine uncompensated care payments for FY
2017 and proposing to continue our methodology of using a hospital's
share of insured low-income days for purposes of determining Factor 3.
For Puerto Rico hospitals, we are proposing to use 14 percent of
Medicaid days as a proxy for SSI days in the calculation of Factor 3.
We are proposing to continue to use the methodology we established in
FY 2015 to calculate the uncompensated care payment amounts for merged
hospitals such that we combine uncompensated care data for the
hospitals that have undergone a merger in order to calculate their
relative share of uncompensated care. We are proposing to expand the
time period of the data used to calculate the uncompensated care
payment amounts to be distributed, from one cost reporting period to
three cost reporting periods. We also are proposing a future transition
to using Worksheet S-10 data to determine the amounts and distribution
of uncompensated care payments. Specifically, we are proposing a 3-year
transition beginning in FY 2018 where we use a combination of Worksheet
S-10 and proxy data until FY 2020 when all data used in computing the
uncompensated care payment amounts to be distributed would come from
Worksheet S-10.
g. Payments for Capital-Related Costs for Hospitals Located in Puerto
Rico
Capital IPPS payments to hospitals located in Puerto Rico are
currently computed based on a blend of 25 percent of the capital IPPS
Puerto Rico rate and 75 percent of the capital IPPS Federal rate.
Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-
113) increased the applicable Federal percentage of the operating IPPS
payment for hospitals located in Puerto Rico from 75 percent to 100
percent and decreased the applicable Puerto Rico percentage of the
operating IPPS payments for hospitals located in Puerto Rico from 25
percent to zero percent, applicable to discharges occurring on or after
January 1, 2016. In this proposed rule, we are proposing to revise the
calculation of capital IPPS payments to hospitals located in Puerto
Rico to parallel the change in the statutory calculation of operating
IPPS payments to hospitals located in Puerto Rico, beginning in FY
2017.
h. Proposed Changes to the LTCH PPS
In this proposed rule, we are proposing to revise and rebase the
market basket used under the LTCH PPS (currently the 2009-based LTCH-
specific market basket) to reflect a 2013 base year. In addition, in
this proposed rule, we are proposing to change our 25-percent threshold
policy by proposing to sunset our existing regulations at 42 CFR
412.534 and 412.536 and replace them with a single consolidated 25-
percent threshold policy at proposed Sec. 412.538. We also are
proposing to change our existing regulations limiting allowable charges
to beneficiaries for Subclause (II) LTCHs and proposing to make
technical corrections to Sec. 412.503.
i. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, hospitals are
required to report data on measures selected by the Secretary for the
Hospital IQR Program in order to receive the full annual percentage
increase in payments. In past years, we have established measures for
reporting data and the process for submittal and validation of the
data.
In this proposed rule, we are making several proposals. First, we
are proposing to remove 15 measures for the FY 2019 payment
determination and subsequent years. Thirteen of these measures are
electronic clinical quality measures (eCQMs), two of which we are
proposing also to remove in their chart-abstracted form, because they
are ``topped-out,'' and two others are structural measures.
Second, we are proposing to refine two previously adopted measures
beginning with the FY 2018 payment determination: (1) The Hospital-
level, Risk-standardized Payment Associated with a 30-day Episode-of-
Care for Pneumonia (NQF #2579); and (2) the Patient Safety and Adverse
Events Composite (NQF #0531).
Third, we are proposing to add four new claims-based measures: (1)
Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure; (2)
Cholecystectomy and Common Duct Exploration Clinical Episode-Based
Payment Measure; (3) Spinal Fusion Clinical Episode-Based Payment
Measure; and (4) Excess Days in Acute Care after Hospitalization for
Pneumonia for the FY 2019 payment determination and subsequent years.
Fourth, we are inviting public comment on potential new quality
measures under consideration for future inclusion in the Hospital IQR
Program: (1) A refined version of the NIH Stroke Scale for the Hospital
30-Day Mortality Following Acute Ischemic Stroke Hospitalization
Measure beginning as early as the FY 2022 payment determination; (2)
the National Healthcare Safety Network (NHSN) Antimicrobial Use Measure
(NQF #2720); and (3) one or more measures of behavioral health for the
inpatient hospital setting, including measures previously adopted for
the IPFQR Program (80 FR 46417). Also, we are seeking public comment on
the possibility of future stratification of Hospital IQR Program data
by race, ethnicity, sex, and disability on Hospital Compare, as well as
on potential future hospital quality measures that incorporate health
equity.
Fifth, we are proposing to require hospitals to submit all
available eCQMs included in the Hospital IQR Program measure set for
four quarters of data, on an annual basis, beginning with the CY 2017
reporting period/FY 2019 payment determination, in order to align the
Hospital IQR Program with the Medicare and Medicaid EHR Incentive
Programs. Also, we are proposing related eCQM submission requirements
beginning with the FY 2019 payment determination.
Sixth, we are proposing to modify the existing validation process
for Hospital IQR Program data to include validation of eCQMs beginning
with the FY 2020 payment determination.
Seventh, we are proposing to update our Extraordinary Circumstances
Extensions or Exemptions (ECE) policy by: (1) Extending the ECE request
deadline for non-eCQM circumstances from 30 to 90 calendar days
following an extraordinary circumstance, beginning in FY 2017 as
related to extraordinary circumstance events that occur on or after
October 1, 2016; and (2) establishing a separate submission deadline of
April 1 following the end of the reporting calendar year for ECEs
related to eCQMs beginning with an April 1, 2017 deadline and applying
for subsequent eCQM reporting years.
[[Page 24958]]
j. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
Section 3004(a) of the Affordable Care Act amended section
1886(m)(5) of the Act to require the Secretary to establish the Long-
Term Care Hospital Quality Reporting Program (LTCH QRP). This program
applies to all hospitals certified by Medicare as LTCHs. Beginning with
the FY 2014 payment determination and subsequent years, the Secretary
is required to reduce any annual update to the LTCH PPS standard
Federal rate for discharges occurring during such fiscal year by 2
percentage points for any LTCH that does not comply with the
requirements established by the Secretary.
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) amended the Act in ways that affect the LTCH QRP.
Specifically, section 2(a) of the IMPACT Act amended title XVIII of the
Act by adding section 1899B, titled Standardized Post-Acute Care (PAC)
Assessment Data for Quality, Payment, and Discharge Planning. The Act
requires that each LTCH submit, for FYs beginning on or after the
specified application date (as defined in section 1899B(a)(2)(E) of the
Act), data on quality measures specified under section 1899B(c)(1) of
the Act and data on resource use and other measures specified under
section 1899B(d)(1) of the Act in a manner and within the timeframes
specified by the Secretary. In addition, each LTCH is required to
submit standardized patient assessment data required under section
1899B(b)(1) of the Act in a manner and within the timeframes specified
by the Secretary. Sections 1899B(c)(1) and 1899B(d)(1) of the Act
require the Secretary to specify quality measures and resource use and
other measures with respect to certain domains no later than the
specified application date in section 1899B(a)(2)(E) of the Act that
applies to each measure domain and PAC provider setting.
In this proposed rule, we are proposing three new measures for the
FY 2018 payment determination and subsequent years to meet the
requirements as set forth by the IMPACT Act. These proposed measures
are: (1) MSPB-PAC LTCH QRP; (2) Discharge to Community-PAC LTCH QRP;
and (3) Potentially Preventable 30-Day Post-Discharge Readmission
Measure for the PAC LTCH QRP. We also are proposing one new quality
measure to meet the requirements of the IMPACT Act for the FY 2020
determination and subsequent years. The proposed measure, Drug Regimen
Review Conducted with Follow-Up for Identified Issues-PAC LTCH QRP,
addresses the IMPACT Act domain of Medication Reconciliation.
In addition, we will publicly report LTCH quality data beginning in
fall 2016, on a CMS Web site, such as Hospital Compare. We will
initially publicly report quality data on four quality measures. In
this proposed rule, we are proposing to publicly report data in 2017 on
four additional measures. We are proposing additional details regarding
procedures that would allow individual LTCHs to review and correct
their data and information on measures that are to be made public
before those measure data are made public. We also are proposing to
provide confidential feedback reports to LTCHs on their performance on
the specified measures, beginning 1 year after the specified
application date that applies to such measures and LTCHs.
Finally, we are proposing to change the timing for submission of
exception and extension requests from 30 days to 90 days from the date
of the qualifying event which is preventing an LTCH from submitting
their quality data for the LTCH QRP.
k. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program
Section 1886(s)(4) of the Act, as added and amended by sections
3401(f) and 10322(a) of the Affordable Care Act, requires the Secretary
to implement a quality reporting program for inpatient psychiatric
hospitals and psychiatric units. Section 1886(s)(4)(C) of the Act
requires that, for FY 2014 (October 1, 2013 through September 30, 2014)
and each subsequent year, each psychiatric hospital and psychiatric
unit must submit to the Secretary data on quality measures as specified
by the Secretary. The data must be submitted in a form and manner and
at a time specified by the Secretary. In this proposed rule, for the
IPFQR Program, we are making several proposals. We are proposing two
new measures beginning with the FY 2019 payment determination:
SUB-3 Alcohol & Other Drug Use Disorder Treatment Provided
or Offered at Discharge and SUB-3a Alcohol and Other Drug Use Disorder
Treatment at Discharge (NQF #1664); and
Thirty-day all-cause unplanned readmission following
psychiatric hospitalization in an IPF.
We also are proposing a technical update to the previously
finalized measure, ``Screening for Metabolic Disorder.'' In addition,
we are proposing to no longer specify in rulemaking the date of the
public display of the program's data or that the preview period will be
approximately 12 weeks before the public display date.
3. Summary of Costs and Benefits
Adjustment for MS-DRG Documentation and Coding Changes. We
are proposing to make a -1.5 percent recoupment adjustment to the
standardized amount for FY 2017 to implement, in part, the requirement
of section 631 of the ATRA that the Secretary make an adjustment
totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and
2017. This recoupment adjustment represents the amount of the increase
in aggregate payments as a result of not completing the prospective
adjustment authorized under section 7(b)(1)(A) of Public Law 110-90
until FY 2013. Prior to the ATRA, this amount could not have been
recovered under Public Law 110-90.
While our actuaries estimated that a -9.3 percent recoupment
adjustment to the standardized amount would be necessary if CMS were to
fully recover the $11 billion recoupment required by section 631 of the
ATRA in FY 2014, it is often our practice to delay or phase in rate
adjustments over more than one year, in order to moderate the effects
on rates in any one year. Taking into account the cumulative effects of
this proposed adjustment and the adjustments made in FYs 2014, 2015,
and 2016, we estimate that we would recover the full $11 billion
required under section 631 of the ATRA by the end of FY 2017. We note
that section 414 of the MACRA (Pub. L. 114-10), enacted on April 16,
2015, requires us to not make the single positive adjustment we
intended to make in FY 2018, but instead make a 0.5 percent positive
adjustment for each of FYs 2018 through 2023. The provision under
section 414 of the MACRA does not impact our proposed FY 2017
recoupment adjustment, and we will address this MACRA provision in
future rulemaking.
Proposed Adjustment to IPPS Payment Rates as a Result of
the 2-Midnight Policy. The proposed adjustment to IPPS rates resulting
from the 2-midnight policy would increase IPPS payment rates by (1/
0.998) * 1.006 for FY 2017. The 1.006 is a one-time factor that would
be applied to the standardized amount, the hospital-specific rates, and
the national capital Federal rate for FY 2017 only. Therefore, for FY
2018, we would apply a one-time factor of (1/1.006) in the calculation
of the rates to remove this one-time prospective increase.
Proposed Changes to the Hospital Readmissions Reduction
Program. For FY 2017 and subsequent years, the
[[Page 24959]]
reduction is based on a hospital's risk-adjusted readmission rate
during a 3-year period for acute myocardial infarction (AMI), heart
failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD),
total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary
artery bypass graft (CABG). Overall, in this proposed rule, we estimate
that 2,603 hospitals will have their base operating DRG payments
reduced by their proposed proxy FY 2017 hospital-specific readmission
adjustment. As a result, we estimate that the Hospital Readmissions
Reduction Program will save approximately $532 million in FY 2017, an
increase of approximately $100 million over the estimated FY 2016
savings. This increase in the estimated savings for the Hospital
Readmissions Reduction Program in FY 2017 as compared to FY 2016 is
primarily due to the inclusion of the refinement of the pneumonia
readmissions measure, which expanded the measure cohort, along with the
addition of the CABG readmission measure, in the calculation of the
payment adjustment.
Value-Based Incentive Payments under the Hospital VBP
Program. We estimate that there will be no net financial impact to the
Hospital VBP Program for the FY 2017 program year in the aggregate
because, by law, the amount available for value-based incentive
payments under the program in a given year must be equal to the total
amount of base operating MS-DRG payment amount reductions for that
year, as estimated by the Secretary. The estimated amount of base
operating MS-DRG payment amount reductions for the FY 2017 program year
and, therefore, the estimated amount available for value-based
incentive payments for FY 2017 discharges is approximately $1.7
billion.
Proposed Changes to the HAC Reduction Program. In regard
to the five proposed changes to existing HAC Reduction Program policies
described earlier, because a hospital's Total HAC score and its ranking
in comparison to other hospitals in any given year depends on several
different factors, any significant impact due to the HAC Reduction
Program proposed changes for FY 2017, including which hospitals receive
the adjustment, would depend on actual experience.
Medicare DSH Payment Adjustment and Additional Payment for
Uncompensated Care. Under section 1886(r) of the Act (as added by
section 3133 of the Affordable Care Act), DSH payments to hospitals
under section 1886(d)(5)(F) of the Act are reduced and an additional
payment for uncompensated care is made to eligible hospitals beginning
in FY 2014. Hospitals that receive Medicare DSH payments will receive
25 percent of the amount they previously would have received under the
current statutory formula for Medicare DSH payments in section
1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75
percent of what otherwise would have been paid as Medicare DSH
payments, will be the basis for determining the additional payments for
uncompensated care after the amount is reduced for changes in the
percentage of individuals that are uninsured and additional statutory
adjustments. Each hospital that receives Medicare DSH payments will
receive an additional payment for uncompensated care based on its share
of the total uncompensated care amount reported by Medicare DSHs. The
reduction to Medicare DSH payments is not budget neutral.
For FY 2017, we are providing that the 75 percent of what otherwise
would have been paid for Medicare DSH is adjusted to approximately
56.74 percent of the amount to reflect changes in the percentage of
individuals that are uninsured and additional statutory adjustments. In
other words, approximately 42.56 percent (the product of 75 percent and
56.74 percent) of our estimate of Medicare DSH payments, prior to the
application of section 3133 of the Affordable Care Act, is available to
make additional payments to hospitals for their relative share of the
total amount of uncompensated care. We project that estimated Medicare
DSH payments, and additional payments for uncompensated care made for
FY 2017, would reduce payments overall by approximately 0.3 percent as
compared to the estimate of Medicare DSH payments and uncompensated
care payments that will be distributed in FY 2016. The additional
payments have redistributive effects based on a hospital's
uncompensated care amount relative to the uncompensated care amount for
all hospitals that are estimated to receive Medicare DSH payments, and
the proposed payment amount is not directly tied to a hospital's number
of discharges.
Proposed Update to the LTCH PPS Payment Rates and Other
Payment Factors. Based on the best available data for the 419 LTCHs in
our data base, we estimate that the proposed changes to the payment
rates and factors that we are presenting in the preamble and Addendum
of this proposed rule, which includes the second year under the
transition of the statutory application of the new site neutral payment
rate required by section 1886(m)(6)(A) of the Act, the proposed update
to the LTCH PPS standard Federal payment rate for FY 2017, the proposed
update to the LTCH PPS adjustment for differences in area wage levels
(which includes the proposed update to the labor-related share based on
the proposed revised and rebased LTCH PPS market basket) and estimated
changes to the site neutral payment rate and short-stay outlier (SSO)
and high-cost outlier (HCO) payments would result in an estimated
decrease in payments from FY 2016 of approximately $355 million.
Hospital Inpatient Quality Reporting (IQR) Program. In
this proposed rule, we are proposing to remove 15 measures for the FY
2019 payment determination and subsequent years. We are proposing to
add four new claims-based measures to the Hospital IQR Program for the
FY 2019 payment determination and subsequent years. We also are
proposing to require hospitals to report on all Hospital IQR Program
electronic clinical quality measures that align with the Medicare EHR
Incentive Program for four quarters of data on an annual basis for the
FY 2019 payment determination and subsequent years. In addition, we are
proposing to modify the existing validation process for the Hospital
IQR Program data to include a random sample of up to 200 hospitals for
validation of eCQMs. We estimate that our policies for the adoption and
removal of measures will result in total hospital costs of $30 million
across 3,300 IPPS hospitals.
Proposed Changes Related to the LTCH QRP. In this proposed
rule, we are proposing four quality measures for the LTCH QRP. We
estimate that the total cost related to one of these proposed measures,
the Drug Regimen Review Conducted with Follow-up for Identified Issues-
PAC measure, would be $3,080 per LTCH annually, or $1,330,721 for all
LTCHs annually. We also estimate that while there will be some
additional burden associated with our proposal to expand data
collection for the measure NQF #0680 Percent of Residents or Patients
Who Were Assessed and Appropriately Given the Seasonal Influenza
Vaccine (77 FR 53624 through 53627), this burden has been previously
accounted for in PRA submissions approved under OMB control number
0938-1163. For a detailed explanation, we refer readers to section I.M.
of Appendix A (Economic Analyses) of this proposed rule. There is no
additional burden for the three other claims-based measures proposed
for adoption. Overall, we estimate the total cost for the 13 previously
adopted measures and the four proposed new
[[Page 24960]]
measures would be $27,905 per LTCH annually or $12,054,724 for all
LTCHs annually. These estimates were based on 432 LTCHs that are
currently certified by Medicare. This is an average increase of 14
percent over the burden for FY 2016. This increase includes all quality
measures that LTCHs are required to report, with the exception of the
four proposed measures for FY 2017. Section VIII.C. of this proposed
rule includes a detailed discussion of the policies.
Proposed Changes to the IPFQR Program. In this proposed
rule, we are proposing to add two new measures beginning with the FY
2019 payment determination and for subsequent years. One of these
measures, the 30-Day All-Cause Unplanned Readmissions following
Psychiatric Hospitalization in an Inpatient Psychiatric Facility
measure, is calculated from administrative claims data. For the second
measure, we estimate that our proposed policies would result in total
costs of $11,834,748 for 1,684 IPFs nationwide.
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to use a prospective payment system (PPS) to pay for the
capital-related costs of inpatient hospital services for these
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for
hospital inpatient operating and capital-related costs is made at
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations. The Affordable Care Act revised
the Medicare DSH payment methodology and provides for a new additional
Medicare payment that considers the amount of uncompensated care
beginning on October 1, 2013.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. SCHs are the sole source of care in their areas.
Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a
hospital that is located more than 35 road miles from another hospital
or that, by reason of factors such as isolated location, weather
conditions, travel conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of hospital inpatient
services reasonably available to Medicare beneficiaries. In addition,
certain rural hospitals previously designated by the Secretary as
essential access community hospitals are considered SCHs.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2017. Through and including FY
2006, an MDH received the higher of the Federal rate or the Federal
rate plus 50 percent of the amount by which the Federal rate was
exceeded by the higher of its FY 1982 or FY 1987 hospital-specific
rate. For discharges occurring on or after October 1, 2007, but before
October 1, 2017, an MDH receives the higher of the Federal rate or the
Federal rate plus 75 percent of the amount by which the Federal rate is
exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-
specific rate. MDHs are a major source of care for Medicare
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act
defines an MDH as a hospital that is located in a rural area, has not
more than 100 beds, is not an SCH, and has a high percentage of
Medicare discharges (not less than 60 percent of its inpatient days or
discharges in its cost reporting year beginning in FY 1987 or in two of
its three most recently settled Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital IPPS, payments are adjusted by the same DRG for the case as
they are under the operating IPPS. Capital IPPS payments are also
adjusted for IME and DSH, similar to the adjustments made under the
operating IPPS. In addition, hospitals may receive outlier payments for
those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; and cancer hospitals.
Religious nonmedical health care institutions (RNHCIs) are also
excluded from the IPPS. Various sections of the Balanced Budget Act of
[[Page 24961]]
1997 (BBA, Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State
Children's Health Insurance Program] Balanced Budget Refinement Act of
1999 (BBRA, Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554)
provide for the implementation of PPSs for IRF hospitals and units,
LTCHs, and psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)). (We note that the annual updates to the
LTCH PPS are now included as part of the IPPS annual update document.
Updates to the IRF PPS and IPF PPS are issued as separate documents.)
Children's hospitals, cancer hospitals, and RNHCIs continue to be paid
solely under a reasonable cost-based system subject to a rate-of-
increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). During the 5-year (optional) transition period,
a LTCH's payment under the PPS was based on an increasing proportion of
the LTCH Federal rate with a corresponding decreasing proportion based
on reasonable cost principles. Effective for cost reporting periods
beginning on or after October 1, 2006, all LTCHs are paid 100 percent
of the Federal rate. Section 1206(a) of Public Law 113-67 established
the site neutral payment rate under the LTCH PPS, which made the LTCH
PPS a dual rate payment system beginning in FY 2016. Under this
statute, based on a rolling effective date that is linked to the date
on which a given LTCH's Federal FY 2016 cost reporting period begins,
LTCHs are paid for LTCH discharges at the site neutral payment rate
unless the discharge meets the patient criteria for payment at the LTCH
PPS standard Federal payment rate. The existing regulations governing
payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS
in the same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts
413 and 415.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
C. Summary of Provisions of Recent Legislation Proposed To Be
Implemented in This Proposed Rule
1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)
The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240),
enacted on January 2, 2013, made a number of changes that affect the
IPPS. In this proposed rule, we are proposing to make policy changes to
implement section 631 of the American Taxpayer Relief Act of 2012,
which amended section 7(b)(1)(B) of Public Law 110-90 and requires a
recoupment adjustment to the standardized amounts under section 1886(d)
of the Act based upon the Secretary's estimates for discharges
occurring in FY 2014 through FY 2017 to fully offset $11 billion (which
represents the amount of the increase in aggregate payments from FYs
2008 through 2013 for which an adjustment was not previously applied).
2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced
new payment rules in the LTCH PPS. Under section 1206 of this law,
discharges in cost reporting periods beginning on or after October 1,
2015 under the LTCH PPS will receive payment under a site neutral rate
unless the discharge meets certain patient-specific criteria. In this
proposed rule, we are providing clarifications to prior policy changes
that implemented provisions under section 1206 of the Pathway for SGR
Reform Act.
3. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act (Pub. L. 113-185), enacted on October 6, 2014, made a
number of changes that affect the Long-Term Care Quality Reporting
Program (LTCH QRP). In this proposed rule, we are continuing to
implement portions of section 1899B of the Act, as added by section 2
of the IMPACT Act, which, in part, requires LTCHs, among other
postacute care providers, to report standardized patient assessment
data, data on quality measures, and data on resource use and other
measures.
4. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10)
The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10) extended the MDH program and changes to the payment adjustment
for low-volume hospitals through FY 2017. In this proposed rule, we are
proposing to update the low-volume hospital payment adjustment for FY
2017 under the extension of the temporary changes to the low-volume
hospital payment adjustment provided for by section 204 of Public Law
114-10. We also state our intention to finalize in the FY 2017 IPPS/
LTCH PPS final rule the provisions of the FY 2016 IPPS/LTCH PPS interim
final rule with comment period (80 FR 49594 through 49597) that
implemented sections 204 and 205 of Public Law 114-10.
5. The Consolidated Appropriations Act, 2016 (Pub. L. 114-113)
The Consolidated Appropriations Act, 2016 (Pub. L. 114-113),
enacted on December 18, 2015, made changes that affect the IPPS and the
LTCH PPS. Section 231 of Public Law 114-113 provides for a temporary
exception for certain wound care discharges from the application of the
site neutral payment rate under the LTCH PPS for certain LTCHs, which
is being implemented in an interim final rule with comment period.
Section 601 of Public Law 114-113 made changes to the payment
calculation for operating IPPS payments for hospitals located in Puerto
Rico. Section 602 of Public Law 114-113 specifies that Puerto Rico
hospitals are eligible for incentive payments for the
[[Page 24962]]
meaningful use of certified EHR technology, effective beginning FY
2016, and also applies the adjustments to the applicable percentage
increase under the statute for Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. In this proposed rule, we are
proposing conforming changes to our regulations to reflect the
provisions of section 601 of Public Law 114-113, which increased the
applicable Federal percentage of the operating IPPS payment for
hospitals located in Puerto Rico from 75 percent to 100 percent and
decreased the applicable Puerto Rico percentage of the operating IPPS
payments for hospitals located in Puerto Rico from 25 percent to zero
percent, applicable to discharges occurring on or after January 1,
2016.
6. The Notice of Observation Treatment and Implication for Care
Eligibility Act (the NOTICE Act) (Pub. L. 114-42)
The Notice of Observation Treatment and Implication for Care
Eligibility Act (the NOTICE Act) (Pub. L. 114-42) enacted on August 6,
2015, amended section 1866(a)(1) of the Act by adding new subparagraph
(Y) that requires hospitals and CAHs to provide written notification
and an oral explanation of such notification to individuals receiving
observation services as outpatients for more than 24 hours at the
hospitals or CAHs. In this proposed rule, we are proposing to implement
the provisions of Public Law 114-42.
D. Summary of the Provisions of This Proposed Rule
In this proposed rule, we are setting forth proposed payment and
policy changes to the Medicare IPPS for FY 2017 operating costs and for
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS, including proposed changes
relating to payments for IME and direct GME to certain hospitals that
continue to be excluded from the IPPS and paid on a reasonable cost
basis. In addition, in this proposed rule, we are setting forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2017.
Below is a summary of the major changes that we are proposing to
make:
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we include--
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2017.
Proposed application of the documentation and coding
adjustment for FY 2017 resulting from implementation of the MS-DRG
system.
Proposed recalibrations of the MS-DRG relative weights.
A discussion of the FY 2017 status of new technologies
approved for add-on payments for FY 2016 and a presentation of our
evaluation and analysis of the FY 2017 applicants for add-on payments
for high-cost new medical services and technologies (including public
input, as directed by Public Law 108-173, obtained in a town hall
meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to this proposed rule, we are
proposing revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed include, but
not limited to, the following:
The proposed FY 2017 wage index update using wage data
from cost reporting periods beginning in FY 2013.
Calculation of the proposed occupational mix adjustment
for FY 2017 based on the 2013 Occupational Mix Survey.
Analysis and implementation of the proposed FY 2017
occupational mix adjustment to the wage index for acute care hospitals.
Proposed application of the rural floor, the proposed
imputed floor, and the proposed frontier State floor.
Transitional wage indexes relating to the continued use of
the revised OMB labor market area delineations based on 2010 Decennial
Census data.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications under
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
Notification regarding proposed CMS ``lock-in'' date for
urban to rural reclassifications under Sec. 412.103.
The proposed adjustment to the wage index for acute care
hospitals for FY 2017 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Determination of the labor-related share for the proposed
FY 2017 wage index.
Solicitation of Comments on Treatment of Overhead and Home
Office Costs in the Wage Index Calculation
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble of this proposed rule, we discuss
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR parts 412 and 413, including the following:
Proposed conforming changes to our regulations to reflect
the changes to operating payments for subsection (d) Puerto Rico
hospitals in accordance with the provisions of section 601 of Public
Law 114-113.
Proposed changes to the inpatient hospital update for FY
2017.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
Proposed payment adjustment for low-volume hospitals for
FY 2017.
The statutorily required IME adjustment factor for FY
2017.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Proposed changes to the rules for payment adjustments
under the Hospital Readmissions Reduction Program based on hospital
readmission measures and the process for hospital review and correction
of those rates for FY 2017.
Proposed changes to the requirements and provision of
value-based incentive payments under the Hospital Value-Based
Purchasing Program for FY 2017.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2017.
Proposed changes relating to direct GME and IME payments
to urban hospitals with rural track training programs.
Discussion of the Rural Community Hospital Demonstration
Program and a proposal for making a budget neutrality adjustment for
the demonstration program.
Proposed implementation of the Notice of Observation
Treatment and Implications for Care Eligibility Act (the NOTICE Act)
for hospitals and CAHs.
Proposed technical changes and corrections to regulations
relating to cost to related organizations and Medicare cost reports.
4. Proposed FY 2017 Policy Governing the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discuss the
proposed payment policy requirements for capital-related costs and
capital
[[Page 24963]]
payments to hospitals for FY 2017. In addition, we discuss proposed
changes to the calculation of capital IPPS payments to hospitals
located in Puerto Rico to parallel the change in the statutory
calculation of operating IPPS payments to hospitals located in Puerto
Rico, beginning in FY 2017.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VI. of the preamble of this proposed rule, we discuss--
Proposed changes to payments to certain excluded hospitals
for FY 2017.
Proposed implementation of the Frontier Community Health
Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of this proposed rule, we set
forth--
Proposed changes to the LTCH PPS Federal payment rates,
factors, and other payment rate policies under the LTCH PPS for FY
2017.
Proposals to sunset our existing 25-percent threshold
policy regulations, and replace them with single consolidated 25
percent threshold policy regulation.
Proposed changes to the limitation on charges (LOC) to
beneficiaries and related billing requirements for ``subclause (II)''
LTCHs to align those LTCH PPS payment adjustment policies with the LOC
policies applied in the TEFRA payment context.
Proposed technical corrections to certain definitions to
correct and clarify their use under the application of the site neutral
payment rate and proposed additional definitions in accordance with our
proposed modifications to the 25-percent policy.
Proposed rebasing and revising of the LTCH market basket
to update the LTCH PPS, effective for FY 2017.
7. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section VIII. of the preamble of the proposed rule, we address--
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program as a condition for receiving the full
applicable percentage increase.
Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting Program (LTCH QRP).
Proposed changes to the requirements under the Inpatient
Psychiatric Facility Quality Reporting (IPFQR) Program.
Proposed changes relating to clinical quality measures for
the Medicare Electronic Health Record (EHR) Incentive Program and
eligible hospitals and CAHs.
8. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2017
prospective payment rates for operating costs and capital-related costs
for acute care hospitals. We are proposing to establish the threshold
amounts for outlier cases. In addition, we address the update factors
for determining the rate-of-increase limits for cost reporting periods
beginning in FY 2017 for certain hospitals excluded from the IPPS.
9. Determining Prospective Payment Rates for LTCHs
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2017
LTCH PPS standard Federal payment rate and other factors used to
determine LTCH PPS payments under both the LTCH PPS standard Federal
payment rate and the site neutral payment rate in FY 2017. We are
proposing to establish the adjustments for wage levels, the labor-
related share, the cost-of-living adjustment, and high-cost outliers,
including the applicable fixed-loss amounts and the LTCH cost-to-charge
ratios (CCRs) for both payment rates. We also are providing the
estimated market basket update to apply to the ceiling used to
determine payments under the existing payment adjustment for
``subclause (II)'' LTCHs for cost reporting periods beginning in FY
2017.
10. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs, PCHs, and IPFs.
11. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2017 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
12. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2016 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We addressed these recommendations in Appendix B of this proposed rule.
For further information relating specifically to the MedPAC March 2016
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's Web site at: http://www.medpac.gov.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of
[[Page 24964]]
the Act requires that the Secretary adjust the DRG classifications and
relative weights at least annually. These adjustments are made to
reflect changes in treatment patterns, technology, and any other
factors that may change the relative use of hospital resources.
B. MS-DRG Reclassifications
For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766), the FY 2011 IPPS/LTCH PPS final rule (75 FR 50053
through 50055), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51485
through 51487), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53273), the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50512), the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49871), and the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49342).
C. Adoption of the MS-DRGs in FY 2008
For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189).
D. Proposed FY 2017 MS-DRG Documentation and Coding Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
In the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189), we adopted the MS-DRG patient classification system for
the IPPS, effective October 1, 2007, to better recognize severity of
illness in Medicare payment rates for acute care hospitals. The
adoption of the MS-DRG system resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in FY 2008. (Currently, for FY 2016,
there are 756 MS-DRGs.) By increasing the number of MS-DRGs and more
fully taking into account patient severity of illness in Medicare
payment rates for acute care hospitals, MS-DRGs encourage hospitals to
improve their documentation and coding of patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percent to
the national standardized amount. We provided for phasing in this -4.8
percent adjustment over 3 years. Specifically, we established
prospective documentation and coding adjustments of -1.2 percent for FY
2008, -1.8 percent for FY 2009, and -1.8 percent for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percent for FY 2008
and -0.9 percent for FY 2009, and we finalized the FY 2008 adjustment
through rulemaking, effective October 1, 2007 (72 FR 66886).
For FY 2009, section 7(a) of Public Law 110-90 required a
documentation and coding adjustment of -0.9 percent, and we finalized
that adjustment through rulemaking effective October 1, 2008 (73 FR
48447). The documentation and coding adjustments established in the FY
2008 IPPS final rule with comment period, which reflected the
amendments made by section 7(a) of Public Law 110-90, are cumulative.
As a result, the -0.9 percent documentation and coding adjustment for
FY 2009 was in addition to the -0.6 percent adjustment for FY 2008,
yielding a combined effect of -1.5 percent.
2. Adjustment to the Average Standardized Amounts Required by Public
Law 110-90
a. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law
110-90
Section 7(b)(1)(A) of Public Law 110-90 requires that, if the
Secretary determines that implementation of the MS-DRG system resulted
in changes in documentation and coding that did not reflect real
changes in case-mix for discharges occurring during FY 2008 or FY 2009
that are different than the prospective documentation and coding
adjustments applied under section 7(a) of Public Law 110-90, the
Secretary shall make an appropriate adjustment under section
1886(d)(3)(A)(vi) of the Act.
Section 1886(d)(3)(A)(vi) of the Act authorizes adjustments to the
average standardized amounts for subsequent fiscal years in order to
eliminate the effect of such coding or classification changes. These
adjustments are intended to ensure that future annual aggregate IPPS
payments are the same as the payments that otherwise would have been
made had the prospective adjustments for documentation and coding
applied in FY 2008 and FY 2009 reflected the change that occurred in
those years.
b. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Section 7(b)(1)(B) Public Law 110-90
If, based on a retroactive evaluation of claims data, the Secretary
determines that implementation of the MS-DRG system resulted in changes
in documentation and coding that did not reflect real changes in case-
mix for discharges occurring during FY 2008 or FY 2009 that are
different from the prospective documentation and coding adjustments
applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of
Public Law 110-90 requires the Secretary to make an additional
adjustment to the standardized amounts under section 1886(d) of the
Act. This adjustment must offset the estimated increase or decrease in
aggregate payments for FYs 2008 and 2009 (including interest) resulting
from the difference between the estimated actual documentation and
coding effect and the documentation and coding adjustment applied under
section 7(a) of Public Law 110-90. This adjustment is in addition to
making an appropriate adjustment to the standardized amounts under
section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A)
of Public Law 110-90. That is, these adjustments are intended to recoup
(or repay, in the case of underpayments) spending in excess of (or less
than) spending that would have occurred had the prospective adjustments
for changes in documentation and coding applied in FY 2008 and FY 2009
matched the changes that occurred in those years. Public Law 110-90
requires that the Secretary only make these recoupment or repayment
adjustments for discharges occurring during FYs 2010, 2011, and 2012.
3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
In order to implement the requirements of section 7 of Public Law
110-90, we performed a retrospective
[[Page 24965]]
evaluation of the FY 2008 data for claims paid through December 2008
using the methodology first described in the FY 2009 IPPS/LTCH PPS
final rule (73 FR 43768 and 43775) and later discussed in the FY 2010
IPPS/RY 2010 LTCH PPS final rule (74 FR 43768 through 43772). We
performed the same analysis for FY 2009 claims data using the same
methodology as we did for FY 2008 claims (75 FR 50057 through 50068).
The results of the analysis for the FY 2011 IPPS/LTCH PPS proposed and
final rules, and subsequent evaluations in FY 2012, supported that the
5.4 percent estimate accurately reflected the FY 2009 increases in
documentation and coding under the MS-DRG system. We were persuaded by
both MedPAC's analysis (as discussed in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50064 through 50065)) and our own review of the
methodologies proposed by various commenters that the methodology we
employed to determine the required documentation and coding adjustments
was sound.
As in prior years, the FY 2008, FY 2009, and FY 2010 MedPAR files
are available to the public to allow independent analysis of the FY
2008 and FY 2009 documentation and coding effects. Interested
individuals may still order these files through the CMS Web site at:
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ by clicking on MedPAR Limited Data Set (LDS)--
Hospital (National). This CMS Web page describes the file and provides
directions and further detailed instructions for how to order.
Persons placing an order must send the following: A Letter of
Request, the LDS Data Use Agreement and Research Protocol (refer to the
Web site for further instructions), the LDS Form, and a check (refer to
the Web site for the required payment amount) to:
Mailing address if using the U.S. Postal Service:
Centers for Medicare & Medicaid Services, RDDC Account, Accounting
Division, P.O. Box 7520, Baltimore, MD 21207-0520.
Mailing address if using express mail:
Centers for Medicare & Medicaid Services, OFM/Division of Accounting--
RDDC, 7500 Security Boulevard, C3-07-11, Baltimore, MD 21244-1850.
4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by
Section 7(b)(1)(A) of Public Law 110-90
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43767
through 43777), we opted to delay the implementation of any
documentation and coding adjustment until a full analysis of case-mix
changes based on FY 2009 claims data could be completed. We refer
readers to the FY 2010 IPPS/RY LTCH PPS final rule for a detailed
description of our proposal, responses to comments, and finalized
policy. After analysis of the FY 2009 claims data for the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50057 through 50073), we found a total
prospective documentation and coding effect of 5.4 percent. After
accounting for the -0.6 percent and the -0.9 percent documentation and
coding adjustments in FYs 2008 and 2009, we found a remaining
documentation and coding effect of 3.9 percent. As we have discussed,
an additional cumulative adjustment of -3.9 percent would be necessary
to meet the requirements of section 7(b)(1)(A) of Public Law 110-90 to
make an adjustment to the average standardized amounts in order to
eliminate the full effect of the documentation and coding changes that
do not reflect real changes in case-mix on future payments. Unlike
section 7(b)(1)(B) of Public Law 110-90, section 7(b)(1)(A) does not
specify when we must apply the prospective adjustment, but merely
requires us to make an ``appropriate'' adjustment. Therefore, as we
stated in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50061), we
believed the law provided some discretion as to the manner in which we
applied the prospective adjustment of -3.9 percent. As we discussed
extensively in the FY 2011 IPPS/LTCH PPS final rule, it has been our
practice to moderate payment adjustments when necessary to mitigate the
effects of significant downward adjustments on hospitals, to avoid what
could be widespread, disruptive effects of such adjustments on
hospitals. Therefore, we stated that we believed it was appropriate to
not implement the -3.9 percent prospective adjustment in FY 2011
because we finalized a -2.9 percent recoupment adjustment for that
fiscal year. Accordingly, we did not propose a prospective adjustment
under section 7(b)(1)(A) of Public Law 110-90 for FY 2011 (75 FR 23868
through 23870). We noted that, as a result, payments in FY 2011 (and in
each future fiscal year until we implemented the requisite adjustment)
would be higher than they would have been if we had implemented an
adjustment under section 7(b)(1)(A) of Public Law 110-90.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51489 and 51497), we
indicated that, because further delay of this prospective adjustment
would result in a continued accrual of unrecoverable overpayments, it
was imperative that we implement a prospective adjustment for FY 2012,
while recognizing CMS' continued desire to mitigate the effects of any
significant downward adjustments to hospitals. Therefore, we
implemented a -2.0 percent prospective adjustment to the standardized
amount instead of the full -3.9 percent.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through
53276), we completed the prospective portion of the adjustment required
under section 7(b)(1)(A) of Public Law 110-90 by finalizing a -1.9
percent adjustment to the standardized amount for FY 2013. We stated
that this adjustment would remove the remaining effect of the
documentation and coding changes that do not reflect real changes in
case-mix that occurred in FY 2008 and FY 2009. We believed that it was
imperative to implement the full remaining adjustment, as any further
delay would result in an overstated standardized amount in FY 2013 and
any future fiscal years until a full adjustment was made.
We noted again that delaying full implementation of the prospective
portion of the adjustment required under section 7(b)(1)(A) of Public
Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY
2012 being overstated. These overpayments could not be recovered by
CMS, as section 7(b)(1)(B) of Public Law 110-90 limited recoupments to
overpayments made in FY 2008 and FY 2009.
5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B)
of Public Law 110-90
Section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to
make an adjustment to the standardized amounts under section 1886(d) of
the Act to offset the estimated increase or decrease in aggregate
payments for FY 2008 and FY 2009 (including interest) resulting from
the difference between the estimated actual documentation and coding
effect and the documentation and coding adjustments applied under
section 7(a) of Public Law 110-90. This determination must be based on
a retrospective evaluation of claims data. Our actuaries estimated that
there was a 5.8 percentage point difference resulting in an increase in
aggregate payments of approximately $6.9 billion. Therefore, as
discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50062 through
50067), we determined that an aggregate adjustment of -5.8 percent in
FYs 2011 and 2012 would be necessary in order to meet the requirements
of section 7(b)(1)(B) of Public Law 110-90
[[Page 24966]]
to adjust the standardized amounts for discharges occurring in FYs
2010, 2011, and/or 2012 to offset the estimated amount of the increase
in aggregate payments (including interest) in FYs 2008 and 2009.
It is often our practice to phase in payment rate adjustments over
more than one year in order to moderate the effect on payment rates in
any one year. Therefore, consistent with the policies that we have
adopted in many similar cases, in the FY 2011 IPPS/LTCH PPS final rule,
we made an adjustment to the standardized amount of -2.9 percent,
representing approximately half of the aggregate adjustment required
under section 7(b)(1)(B) of Public Law 110-90, for FY 2011. An
adjustment of this magnitude allowed us to moderate the effects on
hospitals in one year while simultaneously making it possible to
implement the entire adjustment within the timeframe required under
section 7(b)(1)(B) of Public Law 110-90 (that is, no later than FY
2012). For FY 2012, in accordance with the timeframes set forth by
section 7(b)(1)(B) of Public Law 110-90, and consistent with the
discussion in the FY 2011 IPPS/LTCH PPS final rule, we completed the
recoupment adjustment by implementing the remaining -2.9 percent
adjustment, in addition to removing the effect of the -2.9 percent
adjustment to the standardized amount finalized for FY 2011 (76 FR
51489 and 51498). Because these adjustments, in effect, balanced out,
there was no year-to-year change in the standardized amount due to this
recoupment adjustment for FY 2012. In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53276), we made a final +2.9 percent adjustment to the
standardized amount, completing the recoupment portion of section
7(b)(1)(B) of Public Law 110-90. We note that with this positive
adjustment, according to our estimates, all overpayments made in FY
2008 and FY 2009 have been fully recaptured with appropriate interest,
and the standardized amount has been returned to the appropriate
baseline.
6. Proposed Recoupment or Repayment Adjustment Authorized by Section
631 of the American Taxpayer Relief Act of 2012 (ATRA)
Section 631 of the ATRA amended section 7(b)(1)(B) of Public Law
110-90 to require the Secretary to make a recoupment adjustment or
adjustments totaling $11 billion by FY 2017. This adjustment represents
the amount of the increase in aggregate payments as a result of not
completing the prospective adjustment authorized under section
7(b)(1)(A) of Public Law 110-90 until FY 2013. As discussed earlier,
this delay in implementation resulted in overstated payment rates in
FYs 2010, 2011, and 2012. The resulting overpayments could not have
been recovered under Public Law 110-90.
Similar to the adjustments authorized under section 7(b)(1)(B) of
Public Law 110-90, the adjustment required under section 631 of the
ATRA is a one-time recoupment of a prior overpayment, not a permanent
reduction to payment rates. Therefore, we anticipated that any
adjustment made to reduce payment rates in one year would eventually be
offset by a positive adjustment in 2018, once the necessary amount of
overpayment was recovered. However, section 414 of the Medicare Access
and CHIP Reauthorization Act (MACRA) of 2015, Public Law 114-10,
enacted on April 16, 2015, replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percent positive adjustment for
each of FYs 2018 through 2023. We stated in the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49345) that we will address this MACRA provision in
future rulemaking.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515
through 50517), our actuaries estimate that a -9.3 percent adjustment
to the standardized amount would be necessary if CMS were to fully
recover the $11 billion recoupment required by section 631 of the ATRA
in FY 2014. It is often our practice to phase in payment rate
adjustments over more than one year, in order to moderate the effect on
payment rates in any one year. Therefore, consistent with the policies
that we have adopted in many similar cases, and after consideration of
the public comments we received, in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517), we implemented a -0.8 percent
recoupment adjustment to the standardized amount in FY 2014. We stated
that if adjustments of approximately -0.8 percent are implemented in
FYs 2014, 2015, 2016, and 2017, using standard inflation factors, we
estimate that the entire $11 billion will be accounted for by the end
of the statutory 4-year timeline. As estimates of any future
adjustments are subject to slight variations in total savings, we did
not provide for specific adjustments for FYs 2015, 2016, or 2017 at
that time. We stated that we believed that this level of adjustment for
FY 2014 was a reasonable and fair approach that satisfies the
requirements of the statute while mitigating extreme annual
fluctuations in payment rates.
Consistent with the approach discussed in the FY 2014 rulemaking
for recouping the $11 billion required by section 631 of the ATRA, in
the FY 2015 IPPS/LTCH PPS final rule (79 FR 49874) and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49345), we implemented additional -0.8
percent recoupment adjustments to the standardized amount in FY 2015
and FY 2016, respectively. We estimated that these adjustments,
combined with leaving the prior -0.8 percent adjustments in place,
would recover up to $2 billion in FY 2015 and another $3 billion in FY
2016. When combined with the approximately $1 billion adjustment made
in FY 2014, we estimated that approximately $5 to $6 billion would be
left to recover under section 631 of the ATRA by the end of FY 2016.
However, due to lower than previously estimated inpatient spending,
an adjustment of -0.8 percent in FY 2017 would not recoup the $11
billion under section 631 of the ATRA. Based on the FY 2017 President's
Budget, our actuaries currently estimate that FY 2014 through FY 2016
spending subject to the documentation and coding recoupment adjustment
in the absence of the -0.8 percent adjustments made in FYs 2014 through
2016 would have been $123.783 billion in FY 2014, $124.361 billion in
FY 2015, and $127.060 billion in FY 2016. As shown in the following
table, the amount recouped in each of those fiscal years is therefore
calculated as the difference between those amounts and the amounts
determined to have been spent in those years with the -0.8 percent
adjustment applied, namely $122.801 billion in FY 2014, $122.395
billion in FY 2015, and $124.059 billion in FY 2016. This yields an
estimated total recoupment through the end of FY 2016 of $5.950
billion.
Recoupment Made Under Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)
----------------------------------------------------------------------------------------------------------------
Cumulative Adjusted IPPS Recoupment
IPPS Spending adjustment spending amount
* (billions) factor (billions) (billions)
----------------------------------------------------------------------------------------------------------------
FY 2014......................................... $122.801 1.00800 $123.783 $0.98
[[Page 24967]]
FY 2015......................................... 122.395 1.01606 124.361 1.97
FY 2016......................................... 124.059 1.02419 127.060 3.00
---------------------------------------------------------------
Total....................................... .............. .............. .............. 5.95
----------------------------------------------------------------------------------------------------------------
* Based on FY 2017 President's Budget, including capital, IME, and DSH payments.
These estimates and the estimate of FY 2017 spending subject to the
documentation and coding recoupment adjustment also will be contained
in a memorandum from the Office of the Actuary that we will make
publicly available on the CMS Web site. A description of the
President's Budget for FY 2017 is currently available on the OMB Web
site at: https://www.whitehouse.gov/omb/budget.
Our actuaries currently estimate that the FY 2017 spending subject
to the documentation and coding recoupment adjustment (including
capital, IME, and DSH payment) would be $129.625 billion in the absence
of any documentation and recoupment adjustments from FY 2014 through FY
2017. Therefore, our actuaries currently estimate that, to the nearest
tenth of a percent, the FY 2017 documentation and coding adjustment
factor that will recoup as closely as possible $11 billion from FY 2014
through FY 2017 without exceeding this amount is -1.5 percent. This
adjustment factor yields an estimated spending amount in FY 2017 of
$124.693 billion, calculated as $129.625/(1.008*1.008*1.008*1.015).
This estimated -1.5 percent adjustment factor will be updated for the
final rule based on the FY 2017 President's Budget Midsession Review.
It is possible that, based on updated estimates, the necessary
adjustment factor to the nearest tenth of a percent could be different
than our actuaries' current estimate of -1.5 percent. The proposed -1.5
percent adjustment would be the final adjustment required under section
631 of the ATRA, and when combined with the effects of previous
adjustments made in FY 2014, FY 2015, and FY 2016, we estimate will
satisfy the section 631 of the ATRA recoupment. As stated earlier, once
the recoupment was complete, we had anticipated making a single
positive adjustment in FY 2018 to offset the reductions required to
recoup the $11 billion under section 631 of the ATRA. However, as
stated earlier, section 414 of the MACRA requires that we not make the
single positive adjustment we intended to make in FY 2018, but instead
make a 0.5 percent positive adjustment for each of FYs 2018 through
2023. The provision under section 414 of the MACRA does not impact our
proposed FY 2017 adjustment, and we will address this MACRA provision
in future rulemaking.
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
Beginning in FY 2007, we implemented relative weights for DRGs
based on cost report data instead of charge information. We refer
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed
discussion of our final policy for calculating the cost-based DRG
relative weights and to the FY 2008 IPPS final rule with comment period
(72 FR 47199) for information on how we blended relative weights based
on the CMS DRGs and MS-DRGs.
As we implemented cost-based relative weights, some public
commenters raised concerns about potential bias in the weights due to
``charge compression,'' which is the practice of applying a higher
percentage charge markup over costs to lower cost items and services,
and a lower percentage charge markup over costs to higher cost items
and services. As a result, the cost-based weights would undervalue
high-cost items and overvalue low-cost items if a single cost-to-charge
ratio (CCR) is applied to items of widely varying costs in the same
cost center. To address this concern, in August 2006, we awarded a
contract to the Research Triangle Institute, International (RTI) to
study the effects of charge compression in calculating the relative
weights and to consider methods to reduce the variation in the CCRs
across services within cost centers. For a detailed summary of RTI's
findings, recommendations, and public comments that we received on the
report, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR
48452 through 48453). In addition, we refer readers to RTI's July 2008
final report titled ``Refining Cost to Charge Ratios for Calculating
APC and MS-DRG Relative Payment Weights'' (http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_Final.pdf).
In the FY 2009 IPPS final rule (73 FR 48458 through 48467), in
response to the RTI's recommendations concerning cost report
refinements, we discussed our decision to pursue changes to the cost
report to split the cost center for Medical Supplies Charged to
Patients into one line for ``Medical Supplies Charged to Patients'' and
another line for ``Implantable Devices Charged to Patients.'' We
acknowledged, as RTI had found, that charge compression occurs in
several cost centers that exist on the Medicare cost report. However,
as we stated in the FY 2009 IPPS final rule, we focused on the CCR for
Medical Supplies and Equipment because RTI found that the largest
impact on the MS-DRG relative weights could result from correcting
charge compression for devices and implants. In determining the items
that should be reported in these respective cost centers, we adopted
the commenters' recommendations that hospitals use revenue codes
established by the AHA's National Uniform Billing Committee to
determine the items that should be reported in the ``Medical Supplies
Charged to Patients'' and the ``Implantable Devices Charged to
Patients'' cost centers. Accordingly, a new subscripted line for
``Implantable Devices Charged to Patients'' was created in July 2009.
This new subscripted cost center has been available for use for cost
reporting periods beginning on or after May 1, 2009.
As we discussed in the FY 2009 IPPS final rule (73 FR 48458) and in
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519
through 68527), in addition to the findings regarding implantable
devices, RTI found that the costs and charges of computed tomography
(CT) scans, magnetic resonance imaging (MRI), and cardiac
catheterization differ significantly from the costs and charges of
other services included in the standard associated cost center. RTI
also concluded that both the IPPS and the
[[Page 24968]]
OPPS relative weights would better estimate the costs of those services
if CMS were to add standard cost 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 costs from charges on claims data. In the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080), we
finalized our proposal to create standard cost centers for CT scans,
MRIs, and cardiac catheterization, and to require that hospitals report
the costs and charges for these services under new cost centers on the
revised Medicare cost report Form CMS-2552-10. (We refer readers to the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a
detailed discussion of 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
are effective for cost reporting periods beginning on or after May 1,
2010, on the revised cost report Form CMS-2552-10.
In the FY 2009 IPPS final rule (73 FR 48468), we stated that, due
to what is typically a 3-year lag between the reporting of cost report
data and the availability for use in ratesetting, we anticipated that
we might be able to use data from the new ``Implantable Devices Charged
to Patients'' cost center to develop a CCR for ``Implantable Devices
Charged to Patients'' in the FY 2012 or FY 2013 IPPS rulemaking cycle.
However, as noted in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74
FR 43782), due to delays in the issuance of the revised cost report
Form CMS 2552-10, we determined that a new CCR for ``Implantable
Devices Charged to Patients'' might not be available before FY 2013.
Similarly, when we finalized the decision in the FY 2011 IPPS/LTCH PPS
final rule to add new cost centers for CT scans, MRIs, and cardiac
catheterization, we explained that data from any new cost centers that
may be created will not be available until at least 3 years after they
are first used (75 FR 50077). In preparation for the FY 2012 IPPS/LTCH
PPS rulemaking, we checked the availability of data in the
``Implantable Devices Charged to Patients'' cost center on the FY 2009
cost reports, but we did not believe that there was a sufficient amount
of data from which to generate a meaningful analysis in this particular
situation. Therefore, we did not propose to use data from the
``Implantable Devices Charged to Patients'' cost center to create a
distinct CCR for ``Implantable Devices Charged to Patients'' for use in
calculating the MS-DRG relative weights for FY 2012. We indicated that
we would reassess the availability of data for the ``Implantable
Devices Charged to Patients'' cost center for the FY 2013 IPPS/LTCH PPS
rulemaking cycle and, if appropriate, we would propose to create a
distinct CCR at that time.
During the development of the FY 2013 IPPS/LTCH PPS proposed and
final rules, hospitals were still in the process of transitioning from
the previous cost report Form CMS-2552-96 to the new cost report Form
CMS-2552-10. Therefore, we were able to access only those cost reports
in the FY 2010 HCRIS with fiscal year begin dates on or after October
1, 2009, and before May 1, 2010; that is, those cost reports on Form
CMS-2552-96. Data from the Form CMS-2552-10 cost reports were not
available because cost reports filed on the Form CMS-2552-10 were not
accessible in the HCRIS. Further complicating matters was that, due to
additional unforeseen technical difficulties, the corresponding
information regarding charges for implantable devices on hospital
claims was not yet available to us in the MedPAR file. Without the
breakout in the MedPAR file of charges associated with implantable
devices to correspond to the costs of implantable devices on the cost
report, we believed that we had no choice but to continue computing the
relative weights with the current CCR that combines the costs and
charges for supplies and implantable devices. We stated in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53281 through 53283) that when we do
have the necessary data for supplies and implantable devices on the
claims in the MedPAR file to create distinct CCRs for the respective
cost centers for supplies and implantable devices, we hoped that we
would also have data for an analysis of creating distinct CCRs for CT
scans, MRIs, and cardiac catheterization, which could then be finalized
through rulemaking. In the FY 2013 IPPS/LTCH PPS final rule (77 FR
53281), we stated that, prior to proposing to create these CCRs, we
would first thoroughly analyze and determine the impacts of the data,
and that distinct CCRs for these new cost centers would be used in the
calculation of the relative weights only if they were first finalized
through rulemaking.
At the time of the development of the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27506 through 27507), we had a substantial number
of hospitals completing all, or some, of these new cost centers on the
FY 2011 Medicare cost reports, compared to prior years. We stated that
we believed that the analytic findings described using the FY 2011 cost
report data and FY 2012 claims data supported our original decision to
break out and create new cost centers for implantable devices, MRIs, CT
scans, and cardiac catheterization, and we saw no reason to further
delay proposing to implement the CCRs of each of these cost centers.
Therefore, beginning in FY 2014, we proposed a policy to calculate the
MS-DRG relative weights using 19 CCRs, creating distinct CCRs from cost
report data for implantable devices, MRIs, CT scans, and cardiac
catheterization.
We refer readers to the FY 2014 IPPS/LTCH PPS proposed rule (78 FR
27507 through 27509) and final rule (78 FR 50518 through 50523) in
which we presented data analyses using distinct CCRs for implantable
devices, MRIs, CT scans, and cardiac catheterization. The FY 2014 IPPS/
LTCH PPS final rule also set forth our responses to public comments we
received on our proposal to implement these CCRs. As explained in more
detail in the FY 2014 IPPS/LTCH PPS final rule, we finalized our
proposal to use 19 CCRs to calculate MS-DRG relative weights beginning
in FY 2014--the then existing 15 cost centers and the 4 new CCRs for
implantable devices, MRIs, CT scans, and cardiac catheterization.
Therefore, beginning in FY 2014, we calculate the IPPS MS-DRG relative
weights using 19 CCRs, creating distinct CCRs for implantable devices,
MRIs, CT scans, and cardiac catheterization.
2. Discussion of Policy for FY 2017
Consistent with our established policy, we calculated the proposed
MS-DRG relative weights for FY 2017 using two data sources: The MedPAR
file as the claims data source and the HCRIS as the cost report data
source. We adjusted the charges from the claims to costs by applying
the 19 national average CCRs developed from the cost reports. The
description of the calculation of the proposed 19 CCRs and the proposed
MS-DRG relative weights for FY 2017 is included in section II.G. of the
preamble of this proposed rule. As we did with the FY 2016 IPPS/LTCH
PPS final rule, we are providing the version of the HCRIS from which we
calculated these proposed 19 CCRs on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the
screen titled, ``FY 2017 IPPS Proposed Rule Home Page'' or ``Acute
Inpatient Files for Download.''
[[Page 24969]]
F. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the Official ICD-10-CM and ICD-10-PCS Guidelines for Coding and
Reporting. The ICD-10 coding system was initially adopted for
transactions conducted on or after October 1, 2013, as described in the
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Administrative Simplification: Modifications to Medical Data Code Set
Standards to Adopt ICD-10-CM and ICD-10-PCS Final Rule published in the
Federal Register on January 16, 2009 (74 FR 3328 through 3362)
(hereinafter referred to as the ``ICD-10-CM and ICD-10-PCS final
rule''). However, the Secretary of Health and Human Services (the
Secretary) issued a final rule that delayed the compliance date for
ICD-10 from October 1, 2013, to October 1, 2014. That final rule,
entitled ``Administrative Simplification: Adoption of a Standard for a
Unique Health Plan Identifier; Addition to the National Provider
Identifier Requirements; and a Change to the Compliance Date for ICD-
10-CM and ICD-10-PCS Medical Data Code Sets,'' CMS-0040-F, was
published in the Federal Register on September 5, 2012 (77 FR 54664)
and is available for viewing on the Internet at: http://www.gpo.gov/fdsys/pkg/FR-2012-09-05/pdf/2012-21238.pdf. On April 1, 2014, the
Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93) was
enacted, which specified that the Secretary may not adopt ICD-10 prior
to October 1, 2015. Accordingly, the U.S. Department of Health and
Human Services released a final rule in the Federal Register on August
4, 2014 (79 FR 45128 through 45134) that included a new compliance date
that required the use of ICD-10 beginning October 1, 2015. The rule
also required HIPAA-covered entities to continue to use ICD-9-CM
through September 30, 2015.
The anticipated move to ICD-10 necessitated the development of an
ICD-10-CM/ICD-10-PCS version of the MS-DRGs. CMS began a project to
convert the ICD-9-CM-based MS-DRGs to ICD-10 MS-DRGs. In response to
the FY 2011 IPPS/LTCH PPS proposed rule, we received public comments on
the creation of the ICD-10 version of the MS-DRGs to be implemented at
the same time as ICD-10 (75 FR 50127 and 50128). While we did not
propose an ICD-10 version of the MS-DRGs in the FY 2011 IPPS/LTCH PPS
proposed rule, we noted that we have been actively involved in
converting current MS-DRGs from ICD-9-CM codes to ICD-10 codes and
sharing this information through the ICD-10 (previously ICD-9-CM)
Coordination and Maintenance Committee. We undertook this early
conversion project to assist other payers and providers in
understanding how to implement their own conversion projects. We posted
ICD-10 MS-DRGs based on Version 26.0 (FY 2009) of the MS-DRGs. We also
posted a paper that describes how CMS went about completing this
project and suggestions for other payers and providers to follow.
Information on the ICD-10 MS-DRG conversion project can be found on the
ICD-10 MS-DRG Conversion Project Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We have
continued to keep the public updated on our maintenance efforts for
ICD-10-CM and ICD-10-PCS coding systems, as well as the General
Equivalence Mappings that assist in conversion through the ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee.
Information on these committee meetings can be found on the CMS Web
site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.
During FY 2011, we developed and posted Version 28.0 of the ICD-10
MS-DRGs based on the FY 2011 MS-DRGs (Version 28.0) that we finalized
in the FY 2011 IPPS/LTCH PPS final rule on the CMS Web site. This ICD-
10 MS-DRGs Version 28.0 also included the CC Exclusion List and the
ICD-10 version of the hospital-acquired conditions (HACs), which was
not posted with Version 26. We also discussed this update at the
September 15-16, 2010 and the March 9-10, 2011 meetings of the ICD-9-CM
Coordination and Maintenance Committee. The minutes of these two
meetings are posted on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.
We reviewed comments on the ICD-10 MS-DRGs Version 28 and made
updates as a result of these comments. We called the updated version
the ICD-10 MS-DRGs Version 28-R1. We posted a Definitions Manual of
ICD-10 MS-DRGs Version 28-R1 on our ICD-10 MS-DRG Conversion Project
Web site. To make the review of Version 28-R1 updates easier for the
public, we also made available pilot software on a CD ROM that could be
ordered through the National Technical Information Service (NTIS). A
link to the NTIS ordering page was provided on the CMS ICD-10 MS-DRGs
Web site. We stated that we believed that, by providing the ICD-10 MS-
DRGs Version 28-R1 Pilot Software (distributed on CD ROM), the public
would be able to more easily review and provide feedback on updates to
the ICD-10 MS-DRGs. We discussed the updated ICD-10 MS-DRGs Version 28-
R1 at the September 14, 2011 ICD-9-CM Coordination and Maintenance
Committee meeting. We encouraged the public to continue to review and
provide comments on the ICD-10 MS-DRGs so that CMS could continue to
update the system.
In FY 2012, we prepared the ICD-10 MS-DRGs Version 29, based on the
FY 2012 MS-DRGs (Version 29.0) that we finalized in the FY 2012 IPPS/
LTCH PPS final rule. We posted a Definitions Manual of ICD-10 MS-DRGs
Version 29 on our ICD-10 MS-DRG Conversion Project Web site. We also
prepared a document that describes changes made from Version 28 to
Version 29 to facilitate a review. The ICD-10 MS-DRGs Version 29 was
discussed at the ICD-9-CM Coordination and Maintenance Committee
meeting on March 5, 2012. Information was provided on the types of
updates made. Once again the public was encouraged to review and
comment on the most recent update to the ICD-10 MS-DRGs.
CMS prepared the ICD-10 MS-DRGs Version 30 based on the FY 2013 MS-
DRGs (Version 30) that we finalized in the FY 2013 IPPS/LTCH PPS final
rule. We posted a Definitions Manual of the ICD-10 MS-DRGs Version 30
on our ICD-10 MS-DRG Conversion Project Web site. We also prepared a
document that describes changes made from Version 29 to Version 30 to
facilitate a review. We produced mainframe and computer software for
Version 30, which was made available to the public in February 2013.
Information on ordering the mainframe and computer software through
NTIS was posted on the ICD-10 MS-DRG Conversion Project
[[Page 24970]]
Web site. The ICD-10 MS-DRGs Version 30.0 computer software facilitated
additional review of the ICD-10 MS-DRGs conversion.
We provided information on a study conducted on the impact of
converting the MS-DRGs to ICD-10. Information on this study is
summarized in a paper entitled ``Impact of the Transition to ICD-10 on
Medicare Inpatient Hospital Payments.'' This paper was posted on the
CMS ICD-10 MS-DRGs Conversion Project Web site and was distributed and
discussed at the September 15, 2010 ICD-9-CM Coordination and
Maintenance Committee meeting. The paper described CMS' approach to the
conversion of the MS-DRGs from ICD-9-CM codes to ICD-10 codes. The
study was undertaken using the ICD-9-CM MS-DRGs Version 27.0 (FY 2010),
which was converted to the ICD-10 MS-DRGs Version 27.0. The study
estimated the impact on aggregate payment to hospitals and the
distribution of payments across hospitals. The impact of the conversion
from ICD-9-CM to ICD-10 on Medicare MS-DRG hospital payments was
estimated using FY 2009 Medicare claims data. The study found a
hospital payment increase of 0.05 percent using the ICD-10 MS-DRGs
Version 27.
CMS provided an overview of this hospital payment impact study at
the March 5, 2012 ICD-9-CM Coordination and Maintenance Committee
meeting. This presentation followed presentations on the creation of
ICD-10 MS-DRGs Version 29.0. A summary report of this meeting can be
found on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html. At this March 2012 meeting, CMS
announced that it would produce an update on this impact study based on
an updated version of the ICD-10 MS-DRGs. This update of the impact
study was presented at the March 5, 2013 ICD-9-CM Coordination and
Maintenance Committee meeting. The study found that moving from an ICD-
9-CM-based system to an ICD-10 MS-DRG replicated system would lead to
DRG reassignments on only 1 percent of the 10 million MedPAR sample
records used in the study. Ninety-nine percent of the records did not
shift to another MS-DRG when using an ICD-10 MS-DRG system. For the 1
percent of the records that shifted, 45 percent of the shifts were to a
higher-weighted MS-DRG, while 55 percent of the shifts were to lower-
weighted MS-DRGs. The net impact across all MS-DRGs was a reduction by
4/10000 or minus 4 pennies per $100. The updated paper is posted on the
CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Downloads'' section.
Information on the March 5, 2013 ICD-9-CM Coordination and Maintenance
Committee meeting can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html. This update of the impact paper and the ICD-
10 MS-DRG Version 30 software provided additional information to the
public who were evaluating the conversion of the MS-DRGs to ICD-10 MS-
DRGs.
CMS prepared the ICD-10 MS-DRGs Version 31 based on the FY 2014 MS-
DRGs (Version 31) that we finalized in the FY 2014 IPPS/LTCH PPS final
rule. In November 2013, we posted a Definitions Manual of the ICD-10
MS-DRGs Version 31 on the ICD-10 MS-DRG Conversion Project Web site at:
http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described changes made
from Version 30 to Version 31 to facilitate a review. We produced
mainframe and computer software for Version 31, which was made
available to the public in December 2013. Information on ordering the
mainframe and computer software through NTIS was posted on the CMS Web
site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This ICD-
10 MS-DRGs Version 31.0 computer software facilitated additional review
of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to
CMS any comments on areas where they believed the ICD-10 MS-DRGs did
not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs
Version 31.
We reviewed public comments received and developed an update of
ICD-10 MS-DRGs Version 31, which we called ICD-10 MS-DRGs Version 31-R.
We posted a Definitions Manual of the ICD-10 MS-DRGs Version 31-R on
the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that describes changes made
from Version 31 to Version 31-R to facilitate a review. We continued to
share ICD-10 MS-DRG conversion activities with the public through this
Web site.
CMS prepared the ICD-10 MS-DRGs Version 32 based on the FY 2015 MS-
DRGs (Version 32) that we finalized in the FY 2015 IPPS/LTCH PPS final
rule. In November 2014, we made available a Definitions Manual of the
ICD-10 MS DRGs Version 32 on the ICD-10 MS-DRG Conversion Project Web
site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described
changes made from Version 31-R to Version 32 to facilitate a review. We
produced mainframe and computer software for Version 32, which was made
available to the public in January 2015. Information on ordering the
mainframe and computer software through NTIS was made available on the
CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This
ICD-10 MS-DRGs Version 32 computer software facilitated additional
review of the ICD-10 MS-DRGs conversion. We encouraged the public to
submit to CMS any comments on areas where they believed the ICD-10 MS-
DRGs did not accurately reflect grouping logic found in the ICD-9-CM
MS-DRGs Version 32. We discussed five requests from the public to
update the ICD-10 MS-DRGs Version 32 to better replicate the ICD-9-CM
MS-DRGs in section II.G.3., 4., and 5. of the preamble of the FY 2016
IPPS/LTCH PPS final rule. In the FY 2016 IPPS/LTCH PPS proposed rule
(80 FR 24351), we proposed to implement the MS-DRG code logic in the
ICD-10 MS-DRGs Version 32 along with any finalized updates to the ICD-
10 MS-DRGs Version 32 for the final ICD-10 MS-DRGs Version 33. In the
proposed rule, we proposed the ICD-10 MS-DRGs Version 33 as the
replacement logic for the ICD-9-CM based MS-DRGs Version 32 as part of
the proposed MS-DRG updates for FY 2016. We invited public comments on
how well the ICD-10 MS-DRGs Version 32 replicated the logic of the MS-
DRGs Version 32 based on ICD-9-CM codes.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49356 through 49357
and 49363 through 49407), we addressed the public comments we received
on the replication in the ICD-10 MS-DRGs Version 32 of the logic of the
MS-DRGs Version 32 based on ICD-9-CM codes. We refer readers to that
final rule for a discussion of the changes we made in response to
public comments.
b. Basis for Proposed FY 2017 MS-DRG Updates
CMS encourages input from our stakeholders concerning the annual
IPPS updates when that input is made available to us by December 7 of
the year prior to the next annual proposed rule update. For example, to
be considered for any updates or changes
[[Page 24971]]
in FY 2017, comments and suggestions should have been submitted by
December 7, 2015. The comments that were submitted in a timely manner
for FY 2017 are discussed in this section of the proposed rule.
Interested parties should submit any comments and suggestions for FY
2018 by December 7, 2016, via the new CMS MS-DRG Classification Change
Requests Mailbox located at: [email protected].
Following are the changes we are proposing to the MS-DRGs for FY
2017. We are inviting public comment on each of the MS-DRG
classification proposed changes described in this rule, as well as our
proposals to maintain certain existing MS-DRG classifications, which
are also discussed later in this section of the proposed rule. In some
cases, we are proposing changes to the MS-DRG classifications based on
our analysis of claims data. In other cases, we are proposing to
maintain the existing MS-DRG classification based on our analysis of
claims data. For this FY 2017 proposed rule, our MS-DRG analysis is
based on claims data from the December 2015 update of the FY 2015
MedPAR file, which contains hospital bills received through September
30, 2015, for discharges occurring through September 30, 2015. In our
discussion of the proposed MS-DRG reclassification changes that
follows, we refer to our analysis of claims data from the ``December
2015 update of the FY 2015 MedPAR file.''
As explained in previous rulemaking (76 FR 51487), in deciding
whether to propose to make further modification to the MS-DRGs for
particular circumstances brought to our attention, we consider whether
the resource consumption and clinical characteristics of the patients
with a given set of conditions are significantly different than the
remaining patients in the MS-DRG. We evaluate patient care costs using
average costs and lengths of stay and rely on the judgment of our
clinical advisors to decide whether patients are clinically distinct or
similar to other patients in the MS-DRG. In evaluating resource costs,
we consider both the absolute and percentage differences in average
costs between the cases we select for review and the remainder of cases
in the MS-DRG. We also consider variation in costs within these groups;
that is, whether observed average differences are consistent across
patients or attributable to cases that are extreme in terms of costs or
length of stay, or both. Further, we consider the number of patients
who will have a given set of characteristics and generally prefer not
to create a new MS-DRG unless it would include a substantial number of
cases.
In our examination of the claims data, we apply the following
criteria established in FY 2008 (72 FR 47169) to determine if the
creation of a new complication or comorbidity (CC) or major
complication or comorbidity (MCC) subgroup within a base MS-DRG is
warranted:
A reduction in variance of costs of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average costs
between subgroups.
There is a $2,000 difference in average costs between
subgroups.
In order to warrant creation of a CC or MCC subgroup within a base
MS-DRG, the subgroup must meet all five of the criteria.
We note that some of the issues being evaluated for the FY 2017 MS-
DRGs update continue to relate to the need for the ICD-10 MS-DRGs to
accurately replicate the logic of the ICD-9-CM based version of the MS-
DRGs. Replication is important because both the logic for the proposed
MS-DRGs and the data source used to calculate and develop proposed
relative payment weights are based on the same MedPAR claims data. In
other words, as the logic for the proposed FY 2017 ICD-10 MS-DRGs is
based upon the FY 2015 ICD-9-CM MedPAR claims data, the data source
used to calculate and develop the proposed FY 2017 relative payment
weights is also based on the FY 2015 ICD-9-CM MedPAR claims data,
including any proposed MS-DRG classification changes discussed in this
proposed rule. This is consistent with how the current FY 2016 relative
payment weights are based on the ICD-9-CM diagnosis and procedure codes
from the FY 2014 MedPAR claims data that were grouped through the ICD-
9-CM version of the FY 2016 GROUPER Version 33. We note that we made
the MS-DRG GROUPER and Medicare Code Editor (MCE) ICD-9-CM Software
Version 33 available to the public for use in analyzing ICD-9-CM data
to create relative payment weights using ICD-9-CM data on our CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html?DLSort=0&DLEntries=10&DLPage=1&DLSortDir=ascending.
Therefore, as discussed in section II.G. of the preamble of this
proposed rule, ICD-9-CM data were used for computing the proposed FY
2017 MS-DRG relative payment weights. If the ICD-9 and ICD-10 versions
of MS-DRGs cease to be replications of each other, the relative payment
weights computed using the ICD-9 claims data and MS-DRGs would be
inconsistent with the relative payment weights assigned for the ICD-10
MS-DRGs, causing unintended payment redistributions. Thus, if the
findings of our data analyses and the recommendations of our clinical
advisors supported modifications to the current ICD-10 MS-DRG
structure, prior to proposing any changes, we first evaluated whether
the requested change could be replicated in the ICD-9-CM MS-DRGs. If
the answer was ``yes,'' from a replication perspective, the change was
considered feasible. If the answer was ``no,'' we examined whether the
change in the ICD-10 MS-DRGs was likely to cause a significant number
of patient cases to change or ``shift'' ICD-10 MS-DRGs. If relatively
few patient cases would be impacted, we evaluated if it would be
feasible to propose the change even though it could not be replicated
by the ICD-9 MS-DRGs because it would not cause a material payment
redistribution. For the ICD-10 MS-DRG classification change requests
that could not be replicated in ICD-9-CM and that would cause a
significant number of patient cases to shift MS-DRG assignment, we
considered other alternatives.
2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial Heart
Replacement
An ICD-10 MS-DRG replication issue regarding the assignment of two
ICD-10-PCS procedure codes was identified after the October 1, 2015
implementation of the Version 33 ICD-10 MS-DRGs. ICD-10-PCS procedure
codes 02RK0JZ (Replacement of right ventricle with synthetic
substitute, open approach) and 02RL0JZ (Replacement of left ventricle
with synthetic substitute, open approach), when reported together,
describe a biventricular heart replacement (artificial heart). Under
the Version 32 ICD-9-CM based MS-DRGs, this procedure was described by
ICD-9-CM procedure code 37.52 (Implantation of total internal
biventricular heart replacement system) and grouped to MS-DRGs 001 and
002 (Heart Transplant or Implant of Heart Assist System with and
without MCC, respectively).
As discussed in section II.F.1.a. of the preamble of this proposed
rule, to assist in the conversion from the ICD-9-CM
[[Page 24972]]
based MS-DRGs to ICD-10, beginning in FY 2011, draft versions of the
ICD-10 based MS-DRGs were developed and made available for public
comment. The two ICD-10-PCS procedure codes (02RK0JZ and 02RL0JZ) were
assigned as a ``cluster'' to the draft ICD-10 based MS-DRGs 001 and 002
in prior draft versions of the ICD-10 MS-DRGs. In ICD-10-PCS, a cluster
is the term used to describe when a combination of ICD-10-PCS procedure
codes are needed to fully satisfy the equivalent meaning of an ICD-9-CM
procedure code for it to be considered a plausible translation. Upon
review of prior draft versions of the ICD-10 MS-DRGs, it was determined
that Version 30 was the last version to include ICD-10-PCS procedure
codes 02RK0JZ and 02RL0JZ as a code cluster (from ICD-9-CM procedure
code 37.52) that grouped to the draft ICD-10 based MS-DRGs 001 and 002.
Subsequent draft versions of the ICD-10 MS-DRGs inadvertently omitted
this code cluster from those MS-DRGs.
Therefore, for FY 2017, we are proposing to assign ICD-10-PCS
procedure codes 02RK0JZ and 02RL0JZ as a code cluster to ICD-10 Version
34 MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist
System with and without MCC, respectively) to accurately replicate the
Version 32 ICD-9-CM based MS-DRG logic of procedure code 37.52. We are
inviting public comments on our proposal.
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Endovascular Embolization (Coiling) or Occlusion of Head and Neck
Procedures
We received a repeat request to change the MS-DRG assignment for
procedure codes describing endovascular embolization (coiling) or
occlusion of the head and neck. This topic was discussed in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR 28005 through 28007); the FY 2015
IPPS/LTCH PPS final rule (79 FR 49883 through 49886); the FY 2016 IPPS/
LTCH PPS proposed rule (80 FR 24351 through 24356); and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49358 through 49363). For these 2
fiscal years, we did not change the MS-DRG assignment for procedure
codes describing endovascular embolization (coiling) or occlusion of
the head and neck for the reasons discussed in these proposed and final
rules.
For FY 2017, the requestor again asked that CMS change the MS-DRG
assignment for procedure codes describing endovascular embolization or
occlusion of the head and neck as well as several other codes
describing endovascular procedures of the head and neck.
The ICD-10-PCS procedure codes listed in the following table
capture endovascular embolization or occlusion of the head and neck
procedures that are assigned to the following MS-DRGs in ICD-10 Version
33 MS-DRGs: MS-DRG 020 (Intracranial Vascular Procedures with Principal
Diagnosis of Hemorrhage with MCC); MS-DRG 021 (Intracranial Vascular
Procedures with Principal Diagnosis of Hemorrhage with CC); MS-DRG 022
(Intracranial Vascular Procedures with Principal Diagnosis of
Hemorrhage without CC/MCC); MS-DRG 023 (Craniotomy with Major Device
Implant/Acute Complex CNS Principal Diagnosis with MCC or Chemo
Implant); MS-DRG 024 (Craniotomy with Major Device Implant/Acute
Complex CNS Principal Diagnosis without MCC); MS-DRG 025 (Craniotomy
and Endovascular Intracranial Procedures with MCC); MS-DRG 026
(Craniotomy and Endovascular Intracranial Procedures with CC); and MS-
DRG 027 (Craniotomy and Endovascular Intracranial Procedures without
CC/MCC):
ICD-10-PCS Codes for Endovascular Embolization or Occlusion of the Head
and Neck Procedures Assigned to MS-DRGs 020 Through 027 in ICD-10 MS-
DRGs Version 33
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
03LG3BZ.................. Occlusion of intracranial artery with
bioactive intraluminal device, percutaneous
approach.
03LG3DZ.................. Occlusion of intracranial artery with
intraluminal device, percutaneous approach.
03LG4BZ.................. Occlusion of intracranial artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03LG4DZ.................. Occlusion of intracranial artery with
intraluminal device, percutaneous endoscopic
approach.
03LH3BZ.................. Occlusion of right common carotid artery with
bioactive intraluminal device, percutaneous
approach.
03LH3DZ.................. Occlusion of right common carotid artery with
intraluminal device, percutaneous approach.
03LH4BZ.................. Occlusion of right common carotid artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03LH4DZ.................. Occlusion of right common carotid artery with
intraluminal device, percutaneous endoscopic
approach.
03LJ3BZ.................. Occlusion of left common carotid artery with
bioactive intraluminal device, percutaneous
approach.
03LJ3DZ.................. Occlusion of left common carotid artery with
intraluminal device, percutaneous approach.
03LJ4BZ.................. Occlusion of left common carotid artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03LJ4DZ.................. Occlusion of left common carotid artery with
intraluminal device, percutaneous endoscopic
approach.
03LK3BZ.................. Occlusion of right internal carotid artery
with bioactive intraluminal device,
percutaneous approach.
03LK3DZ.................. Occlusion of right internal carotid artery
with intraluminal device, percutaneous
approach.
03LK4BZ.................. Occlusion of right internal carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03LK4DZ.................. Occlusion of right internal carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03LL3BZ.................. Occlusion of left internal carotid artery
with bioactive intraluminal device,
percutaneous approach.
03LL3DZ.................. Occlusion of left internal carotid artery
with intraluminal device, percutaneous
approach.
03LL4BZ.................. Occlusion of left internal carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03LL4DZ.................. Occlusion of left internal carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03LM3BZ.................. Occlusion of right external carotid artery
with bioactive intraluminal device,
percutaneous approach.
03LM3DZ.................. Occlusion of right external carotid artery
with intraluminal device, percutaneous
approach.
03LM4BZ.................. Occlusion of right external carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03LM4DZ.................. Occlusion of right external carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03LN3BZ.................. Occlusion of left external carotid artery
with bioactive intraluminal device,
percutaneous approach.
03LN3DZ.................. Occlusion of left external carotid artery
with intraluminal device, percutaneous
approach.
03LN4BZ.................. Occlusion of left external carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03LN4DZ.................. Occlusion of left external carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03LP3BZ.................. Occlusion of right vertebral artery with
bioactive intraluminal device, percutaneous
approach.
03LP3DZ.................. Occlusion of right vertebral artery with
intraluminal device, percutaneous approach.
03LP4BZ.................. Occlusion of right vertebral artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
[[Page 24973]]
03LP4DZ.................. Occlusion of right vertebral artery with
intraluminal device, percutaneous endoscopic
approach.
03LQ3BZ.................. Occlusion of left vertebral artery with
bioactive intraluminal device, percutaneous
approach.
03LQ3DZ.................. Occlusion of left vertebral artery with
intraluminal device, percutaneous approach.
03LQ4BZ.................. Occlusion of left vertebral artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03LQ4DZ.................. Occlusion of left vertebral artery with
intraluminal device, percutaneous endoscopic
approach.
03LR3DZ.................. Occlusion of face artery with intraluminal
device, percutaneous approach.
03LR4DZ.................. Occlusion of face artery with intraluminal
device, percutaneous endoscopic approach.
03LS3DZ.................. Occlusion of right temporal artery with
intraluminal device, percutaneous approach.
03LS4DZ.................. Occlusion of right temporal artery with
intraluminal device, percutaneous endoscopic
approach.
03LT3DZ.................. Occlusion of left temporal artery with
intraluminal device, percutaneous approach.
03LT4DZ.................. Occlusion of left temporal artery with
intraluminal device, percutaneous endoscopic
approach.
03VG3BZ.................. Restriction of intracranial artery with
bioactive intraluminal device, percutaneous
approach.
03VG3DZ.................. Restriction of intracranial artery with
intraluminal device, percutaneous approach.
03VG4BZ.................. Restriction of intracranial artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03VG4DZ.................. Restriction of intracranial artery with
intraluminal device, percutaneous endoscopic
approach.
03VH3BZ.................. Restriction of right common carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VH3DZ.................. Restriction of right common carotid artery
with intraluminal device, percutaneous
approach.
03VH4BZ.................. Restriction of right common carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VH4DZ.................. Restriction of right common carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VJ3BZ.................. Restriction of left common carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VJ3DZ.................. Restriction of left common carotid artery
with intraluminal device, percutaneous
approach.
03VJ4BZ.................. Restriction of left common carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VJ4DZ.................. Restriction of left common carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VK3BZ.................. Restriction of right internal carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VK3DZ.................. Restriction of right internal carotid artery
with intraluminal device, percutaneous
approach.
03VK4BZ.................. Restriction of right internal carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VK4DZ.................. Restriction of right internal carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VL3BZ.................. Restriction of left internal carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VL3DZ.................. Restriction of left internal carotid artery
with intraluminal device, percutaneous
approach.
03VL4BZ.................. Restriction of left internal carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VL4DZ.................. Restriction of left internal carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VM3BZ.................. Restriction of right external carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VM3DZ.................. Restriction of right external carotid artery
with intraluminal device, percutaneous
approach.
03VM4BZ.................. Restriction of right external carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VM4DZ.................. Restriction of right external carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VN3BZ.................. Restriction of left external carotid artery
with bioactive intraluminal device,
percutaneous approach.
03VN3DZ.................. Restriction of left external carotid artery
with intraluminal device, percutaneous
approach.
03VN4BZ.................. Restriction of left external carotid artery
with bioactive intraluminal device,
percutaneous endoscopic approach.
03VN4DZ.................. Restriction of left external carotid artery
with intraluminal device, percutaneous
endoscopic approach.
03VP3BZ.................. Restriction of right vertebral artery with
bioactive intraluminal device, percutaneous
approach.
03VP3DZ.................. Restriction of right vertebral artery with
intraluminal device, percutaneous approach.
03VP4BZ.................. Restriction of right vertebral artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03VP4DZ.................. Restriction of right vertebral artery with
intraluminal device, percutaneous endoscopic
approach.
03VQ3BZ.................. Restriction of left vertebral artery with
bioactive intraluminal device, percutaneous
approach.
03VQ3DZ.................. Restriction of left vertebral artery with
intraluminal device, percutaneous approach.
03VQ4BZ.................. Restriction of left vertebral artery with
bioactive intraluminal device, percutaneous
endoscopic approach.
03VQ4DZ.................. Restriction of left vertebral artery with
intraluminal device, percutaneous endoscopic
approach.
03VR3DZ.................. Restriction of face artery with intraluminal
device, percutaneous approach.
03VR4DZ.................. Restriction of face artery with intraluminal
device, percutaneous endoscopic approach.
03VS3DZ.................. Restriction of right temporal artery with
intraluminal device, percutaneous approach.
03VS4DZ.................. Restriction of right temporal artery with
intraluminal device, percutaneous endoscopic
approach.
03VT3DZ.................. Restriction of left temporal artery with
intraluminal device, percutaneous approach.
03VT4DZ.................. Restriction of left temporal artery with
intraluminal device, percutaneous endoscopic
approach.
03VU3DZ.................. Restriction of right thyroid artery with
intraluminal device, percutaneous approach.
03VU4DZ.................. Restriction of right thyroid artery with
intraluminal device, percutaneous endoscopic
approach.
03VV3DZ.................. Restriction of left thyroid artery with
intraluminal device, percutaneous approach.
03VV4DZ.................. Restriction of left thyroid artery with
intraluminal device, percutaneous endoscopic
approach.
------------------------------------------------------------------------
Cases reporting any of the ICD-10-PCS procedures codes listed in
the table above that are assigned to MS-DRGs 020, 021, and 022 under
MDC 1 require a principal diagnosis of hemorrhage. Cases reporting any
of the ICD-10-PCS procedure codes listed in the table above that are
assigned to MS-DRGs 023 and 024 require the insertion of a major
implant or an acute complex central nervous system (CNS) principal
diagnosis. Cases reporting any of the ICD-10-PCS procedure codes listed
in the table above that are assigned to MS-DRGs 025, 026, and 027 do
not have a principal diagnosis of hemorrhage, an acute complex CNS
principal diagnosis, or a major device implant.
The requestor expressed concerns about the appropriateness of the
MS-DRG assignment for the endovascular embolization or occlusion of
head and neck procedures. The requestor stated that past data
demonstrated that the cost of cases involving endovascular coils
[[Page 24974]]
exceeds the average cost of all cases within each of the MS-DRGs to
which these procedures are assigned. The requestor pointed out that
these procedures were formerly captured by the following ICD-9-CM codes
that were assigned to MS-DRGs 020 through 027:
39.72 (Endovascular (total) embolization or occlusion of
head and neck vessels);
39.75 (Endovascular embolization or occlusion of vessel(s)
of head or neck using bare coils); and
39.76 (Endovascular embolization or occlusion of vessel(s)
of head or neck using bioactive coils).
The commenter also expressed concern about the appropriateness of
the current ICD-10 MS-DRG assignment of the following ICD-9-CM codes
that describe other endovascular procedures of head and neck that were
previously assigned to MS-DRGs 023 through 027 in the ICD-9-CM MS-DRGs
Version 32. The commenter stated that these procedures are more
clinically complex than other procedures assigned to these MS-DRGs.
00.62 (Percutaneous angioplasty of intracranial
vessels(s));
39.74 (Endovascular removal of obstruction from head and
neck vessel(s)); and
39.79 (Other endovascular procedures on other vessels).
We examined claims data from the December 2015 update of the FY
2015 MedPAR file for the endovascular embolization or occlusion of the
head and neck procedures or other endovascular procedures reported
under ICD-9-CM procedure codes 00.62, 39.72, 39.74, 39.75, 39.76, and
39.79 in MS-DRGs 020 through 027. The table below shows our findings.
Endovascular Embolization or Occlusion of the Head and Neck Procedures and Other Endovascular Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 020--All cases........................................... 1,213 16.44 $70,716
MS-DRG 020--Cases with procedure code 00.62, 39.72, 39.74, 895 16.15 72,357
39.75, 39.76, or 39.79.........................................
MS-DRG 021--All cases........................................... 350 13.74 53,289
MS-DRG 021--Cases with procedure code 00.62, 39.72, 39.74, 272 13.21 53,478
39.75, 39.76, or 39.79.........................................
MS-DRG 022--All cases........................................... 84 7.83 33,598
MS-DRG 022--Cases with procedure code 00.62, 39.72, 39.74, 63 7.27 33,606
39.75, 39.76, or 39.79.........................................
MS-DRG 023--All cases........................................... 6,360 10.63 38,204
MS-DRG 023--Cases with procedure code 00.62, 39.72, 39.74, 2,183 8.57 38,935
39.75, 39.76, or 39.79.........................................
MS-DRG 024--All cases........................................... 2,376 5.52 28,270
MS-DRG 024--Cases with procedure code 00.62, 39.72, 39.74, 1,402 5.46 28,543
39.75, 39.76, or 39.79.........................................
MS-DRG 025--All cases........................................... 17,756 9.19 29,657
MS-DRG 025--Cases with procedure code 00.62, 39.72, 39.74, 671 9.20 47,579
39.75, 39.76 or 39.79..........................................
MS-DRG 026--All cases........................................... 7,630 5.80 21,441
MS-DRG 026--Cases with procedure code 00.62, 39.72, 39.74, 825 3.11 27,429
39.75, 39.76, or 39.79.........................................
MS-DRG 027--All cases........................................... 9,628 2.99 17,158
MS-DRG 027--Cases with procedure code 00.62, 39.72, 39.74, 1,847 1.62 22,845
39.75, 39.76 or 39.79..........................................
----------------------------------------------------------------------------------------------------------------
As can be seen from the table, most of the cases of endovascular
embolization or occlusion of the head and neck procedures and other
endovascular procedures reported with procedure codes 00.62, 39.72,
39.74, 39.75, 39.76, and 39.79 occur in MS-DRGs 023, 024, and 027.
There were 2,183 of these procedure cases reported in MS-DRG 023 with
an average length of stay of 8.57 days and average costs of $38,935,
compared to an average length of stay of 10.63 days and average costs
of $38, 204 for all 6,360 cases reported in MS-DRG 023. There were
1,402 of these cases reported in MS-DRG 024 with an average length of
stay of 5.46 days and average costs of $28,543, compared to an average
length of stay of 5.52 days and average costs of $28,270 for all 2,376
cases reported in MS-DRG 024. There were 1,847 of these cases reported
in MS-DRG 027 with an average length of stay of 1.62 days and average
costs of $22,845, compared to an average length of stay of 2.99 days
and average costs of $17,158 for all 9,628 cases reported in MS-DRG
027. The average costs for endovascular embolization or occlusion of
the head and neck procedures and other endovascular procedures cases
reported in MS-DRGs 023 and 024 are not significantly different from
the average costs for all cases reported in MS-DRGs 023 and 024. The
average costs for endovascular embolization or occlusion of the head
and neck procedures and other endovascular procedures cases reported in
MS-DRG 027 are higher ($22,845) than the average costs of all cases
reported in MS-DRG 027 ($17,158). However, average costs are not
significantly different for the endovascular embolization or occlusion
of the head and neck procedures and other endovascular procedures cases
reported in MS-DRG 020 ($72,357) compared to the average costs for all
cases ($70,716) reported in MS-DRS 020; for the endovascular
embolization or occlusion of the head and neck procedures and other
endovascular procedures cases reported in MS-DRG 021 ($53,478) compared
to the average costs for all cases ($53,289) reported in MS-DRG 021;
and for the endovascular embolization or occlusion of the head and neck
procedures and other endovascular procedures cases reported in MS-DRG
022 ($33,606) compared to the average costs for all cases ($33,598)
reported in MS-DRG 022.
Average costs were higher for the 671 endovascular embolization or
occlusion of the head and neck procedures and other endovascular
procedures cases reported in MS-DRG 025 ($47,579) compared to the
average costs for all 17,756 cases ($29,657) reported in MS-DRG 025.
The average costs also were higher for the 825 endovascular
embolization or occlusion of the head and neck procedures and other
endovascular procedures cases reported in MS-DRG 26 ($27,429) compared
to the average costs for all 7,630 cases ($21,441) reported in MS-DRG
26. Given that average costs are similar for most endovascular
embolization or occlusion of the head and neck
[[Page 24975]]
procedures and other endovascular procedures cases reported in MS-DRGs
020, 021, 022, 023, 024, 025, 026, and 027, we do not believe that all
endovascular embolization or occlusion of the head and neck procedures
and other endovascular procedures should be reassigned from these eight
MS-DRGs.
We also examined the average costs for each specific ICD-9-CM code
compared to the average costs of all cases within each of the eight MS-
DRGs. The following table shows our findings.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 020--All cases........................................... 1,213 16.44 $70,716
MS-DRG 020--Cases with code 00.62............................... 11 16.09 95,422
MS-DRG 020--Cases with code 39.72............................... 422 16.31 74,951
MS-DRG 020--Cases with code 39.74............................... 9 16.78 71,478
MS-DRG 020--Cases with code 39.75............................... 424 15.79 69,081
MS-DRG 020--Cases with code 39.76............................... 39 18.26 71,630
MS-DRG 020--Cases with code 39.79............................... 25 16.64 73,043
MS-DRG 021--All cases........................................... 350 13.74 53,289
MS-DRG 021--Cases with code 00.62............................... 1 11.00 75,492
MS-DRG 021--Cases with code 39.72............................... 130 13.12 54,715
MS-DRG 021--Cases with code 39.74............................... 1 11.00 75,492
MS-DRG 021--Cases with code 39.75............................... 133 13.46 52,819
MS-DRG 021--Cases with code 39.76............................... 7 10.57 48,749
MS-DRG 021--Cases with code 39.79............................... 3 12.00 40,458
MS-DRG 022--All cases........................................... 84 7.83 33,598
MS-DRG 022--Cases with code 00.62............................... 0 0 0
MS-DRG 022--Cases with code 39.72............................... 40 6.43 32,598
MS-DRG 022--Cases with code 39.74............................... 0 0 0
MS-DRG 022--Cases with code 39.75............................... 21 8.81 32,690
MS-DRG 022--Cases with code 39.76............................... 3 10.00 62,417
MS-DRG 022--Cases with code 39.79............................... 0 0 0
MS-DRG 023--All cases........................................... 6,360 10.63 38,204
MS-DRG 023--Cases with code 00.62............................... 67 9.30 43,741
MS-DRG 023--Cases with code 39.72............................... 56 11.14 52,589
MS-DRG 023--Cases with code 39.74............................... 2,016 8.30 38,047
MS-DRG 023--Cases with code 39.75............................... 20 12.65 53,837
MS-DRG 023--Cases with code 39.76............................... 3 23.00 84,947
MS-DRG 023--Cases with code 39.79............................... 71 13.08 50,720
MS-DRG 024--All cases........................................... 2,376 5.52 28,270
MS-DRG 024--Cases with code 00.62............................... 76 6.74 32,415
MS-DRG 024--Cases with code 39.72............................... 31 6.35 29,977
MS-DRG 024--Cases with code 39.74............................... 1,284 5.35 28,268
MS-DRG 024--Cases with code 39.75............................... 8 6.50 50,333
MS-DRG 024--Cases with code 39.76............................... 2 1.50 19,567
MS-DRG 024--Cases with code 39.79............................... 27 6.74 28,019
MS-DRG 025--All cases........................................... 17,756 9.19 29,657
MS-DRG 025--Cases with code 00.62............................... 17 5.88 29,036
MS-DRG 025--Cases with code 39.72............................... 380 9.46 51,082
MS-DRG 025--Cases with code 39.74............................... 55 9.87 45,895
MS-DRG 025--Cases with code 39.75............................... 139 8.94 52,188
MS-DRG 025--Cases with code 39.76............................... 25 5.84 38,654
MS-DRG 025--Cases with code 39.79............................... 82 11.04 39,839
MS-DRG 026--All cases........................................... 7,630 5.80 21,441
MS-DRG 026--Cases with code 00.62............................... 31 3.48 25,611
MS-DRG 026--Cases with code 39.72............................... 481 3.00 27,180
MS-DRG 026--Cases with code 39.74............................... 16 4.69 27,519
MS-DRG 026--Cases with code 39.75............................... 253 2.77 26,863
MS-DRG 026--Cases with code 39.76............................... 31 3.32 27,891
MS-DRG 026--Cases with code 39.79............................... 45 5.42 37,410
MS-DRG 027--All cases........................................... 9,628 2.99 17,158
MS-DRG 027--Cases with code 00.62............................... 61 2.23 21,337
MS-DRG 027--Cases with code 39.72............................... 1,159 1.58 22,893
MS-DRG 027--Cases with code 39.74............................... 13 1.62 69,081
MS-DRG 027--Cases with code 39.75............................... 580 1.63 23,296
MS-DRG 027--Cases with code 39.76............................... 61 1.74 27,403
MS-DRG 027--Cases with code 39.79............................... 30 1.53 17,740
----------------------------------------------------------------------------------------------------------------
As can be seen from the table above, there are a large number of
cases reporting procedure code 39.74 in MS-DRGs 023 and 024. There were
2,016 cases that reported procedure code 39.74 in MS-DRG 023 compared
to 6,360 total cases reported in the MS-DRG. The cases that reported
procedure code 39.74 in MS-DRG 023 had an average length of stay of
8.30 days and average costs of $38,047, compared to an average length
of stay of 10.63 days and average costs of $38,204 for all cases
reported in MS-DRG 023. There were 1,284 cases that reported
[[Page 24976]]
procedure code 39.74 in MS-DRG 024 compared to 2,376 total cases
reported in MS-DRG 024. The cases that reported procedure code 39.74 in
MS-DRG 024 had an average length of stay of 5.35 days and average costs
of $28,268, compared to an average length of stay of 5.52 days and
average costs of $28,270 for all cases reported in MS-DRG 024. The
average length of stay and average costs for cases that reported
procedure code 39.74 are very similar to the average length of stay and
average costs for all cases reported in MS-DRGs 023 and 024. The only
other group of endovascular embolization or occlusion of the head and
neck procedures and other endovascular procedures cases that exceeded
1,000 in number was reported in MS-DRG 027. There were 1,159 cases that
reported procedure code 39.72 in MS-DRG 027, compared to 9,628 total
cases reported in MS-DRG 027. The cases that reported procedure code
39.72 in MS-DRG 027 had an average length of stay of 1.58 days and
average costs of $22,893, compared to an average length of stay of 2.99
days and average costs of $17,158 for all cases reported in MS-DRG 027.
In other words, the cases that reported procedure code 39.72 in MS-DRG
027 had a shorter average length of stay and average costs that were
$5,735 higher than the average costs for all cases reported in MS-DRG
027. The cases that reported procedure code 39.72 in MS-DRG 020 had a
shorter average length of stay and average costs that were $4,235
higher than the average costs for all cases reported in MS-DRG 020.
However, the average costs for the cases that reported procedure code
39.72 in MS-DRGs 021, 022, and 024 were close to the average costs for
all cases reported in the three MS-DRGs ($54,715 compared to $53,289 in
MS-DRG 021; $32,598 compared to $33,598 in MS-DRG 022; and $29,997
compared to $28,270 in MS-DRG 024).
Our clinical advisors reviewed this issue and advised us that the
endovascular embolization or occlusion of head and neck procedures and
other endovascular procedures currently are appropriately assigned to
MS-DRGs 020 through 027. They did not support reassigning these
procedures from MS-DRGs 020 through 027 to another MS-DRG or creating a
new MS-DRG for these procedures. Our clinical advisors stated that
these procedures are all clinically similar to other procedures in
these MS-DRGs. In addition, they stated that the surgical techniques
are all designed to correct the same clinical problem and advised us
against reassigning the procedures from MS-DRGs 020 through 027.
Based on the findings from our data analyses and the
recommendations from our clinical advisors, we are not proposing to
reassign the cited endovascular embolization or occlusion of head and
neck procedures and other endovascular procedures from MS-DRGs 020
through 027 to another MS-DRG or to create a new MS-DRG for these
procedures for FY 2017. We are inviting public comments on our proposal
to maintain the current MS-DRG assignments of these procedures in MS-
DRGs 020 through 027.
b. Mechanical Complication Codes
We received a request to reassign the following four ICD-10-CM
diagnosis codes from MDC 21 (Injuries, Poisonings and Toxic Effects of
Drugs) under MS-DRGs 919, 920, and 921 (Complications of Treatment with
MCC, with CC, and without CC/MCC, respectively) to MDC 1 (Diseases and
Disorders of the Nervous System) under MS-DRGs 091, 092, and 093 (Other
Disorders of the Nervous System with MCC, with CC, and without CC/MCC,
respectively):
T85.610A (Breakdown (mechanical) of epidural and subdural
infusion catheter, initial encounter);
T85.620A (Displacement of epidural and subdural infusion
catheter, initial encounter);
T85.630A (Leakage of epidural and subdural infusion
catheter, initial encounter); and
T85.690A (Other mechanical complication of epidural and
subdural infusion catheter, initial encounter).
The requestor stated that these ICD-10-CM diagnosis code titles
clearly describe mechanical complications of nervous system devices,
implants, or grafts and are unquestionably nervous system codes.
Therefore, the requestor recommended that these diagnosis codes be
reassigned to MDC 1 under MS-DRGs 091, 092, and 093.
We examined ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A,
and T85.690A that are currently assigned to MDC 21 under MS-DRGs 919,
920, and 921. We note that the predecessor ICD-9-CM diagnosis code for
these four ICD-10-CM diagnosis codes was diagnosis code 996.59
(Mechanical complication due to other implant and internal device, not
elsewhere classified), which also was assigned to MDC 21 under MS-DRGs
919, 920, and 921. ICD-9-CM diagnosis code 996.59 did not describe the
location of the device. However, ICD-10-CM diagnosis codes T85.610A,
T85.620A, T85.630A, and T85.690A provide additional detail that
describes the location of the mechanical complication as being within
the nervous system.
Based on the results of our examination, we agree with the
requestor that ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A,
and T85.690A describe conditions occurring within the nervous system.
Within the ICD-9-CM MS-DRGs, codes describing nervous system disorders
were assigned to MDC 1. The prior ICD-9-CM codes for mechanical
complications did not indicate the type of complication and therefore
could not be assigned to a specific MDC. Therefore, the nonspecific
complication codes were assigned to MDC 21. These new ICD-10-CM
diagnosis codes describe concepts not previously captured by the ICD-9-
CM codes and capture nervous system conditions. Therefore, ICD-10-CM
diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A should be
reassigned from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under
MS-DRGs 091, 092, and 093. Our clinical advisors reviewed this issue
and also agree that the four ICD-10-CM diagnosis codes describe
conditions occurring within the nervous system and therefore should be
reassigned from MDC 21 to MDC 1. Based on the results of our analysis
and the recommendations of our clinical advisors, we are proposing to
reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and
T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-
DRGs 091, 092, and 093.
We are inviting public comments on our proposal.
4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)
a. Proposed Reassignment of Diagnosis Code R22.2 (Localized Swelling,
Mass and Lump, Trunk)
We received a request to reassign ICD-10-CM diagnosis code R22.2
(Localized swelling, mass and lump, trunk) from MDC 4 (Diseases and
Disorders of the Respiratory System) to MDC 9 (Diseases and Disorders
of the Skin, Subcutaneous Tissue and Breast). The requestor stated that
this code is used to capture a buttock mass. The requestor pointed out
that the ICD-10-CM index for localized swelling and localized mass
directs the coder to diagnosis code R22.2 for both the chest and the
trunk as sites.
We reviewed this issue and note that diagnosis code R22.2 is
included in a category of ICD-10-CM codes describing symptoms and signs
[[Page 24977]]
involving the skin and subcutaneous tissue (categories R20 through
R23). Diagnosis code R22.2 is clearly designated within the ICD-10
coding system as a code that describes a condition of the skin and
subcutaneous tissue. Therefore, we agree with the requester that ICD-
10-CM diagnosis code R22.2 should be reassigned from MDC 4 to MDC 9.
One of the predecessor ICD-9-CM codes for ICD-10-CM diagnosis code
R22.2 was diagnosis code 782.2 (Localized superficial swelling, mass,
or lump), which is assigned to MS-DRG 606 and 607 (Minor Skin Disorders
with and without MCC, respectively). Our clinical advisors reviewed
this issue and agree that ICD-10-CM diagnosis code R22.2 captures a
skin diagnosis. Therefore, for FY 2017, we are proposing to reassign
ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606
and 607 (Minor Skin Disorders with and without MCC, respectively).
We are inviting public comments on our proposal to reassign ICD-10-
CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607.
b. Pulmonary Embolism With tPA or Other Thrombolytic Therapy
We received a request to create a new MS-DRG or to reassign cases
with a principal diagnosis of pulmonary embolism where tPA or other
thrombolytic therapy was administered from MS-DRGs 175 and 176
(Pulmonary Embolism with and without MCC, respectively) to a higher
paying MS-DRG. The requestor suggested that CMS review cases reporting
the following ICD-9-CM diagnosis codes describing pulmonary embolism:
415.11 (Iatrogenic pulmonary embolism and infarction), 415.12 (Septic
pulmonary embolism), 415.13 (Saddle embolus of pulmonary artery), and
415.19 (Other pulmonary embolism and infarction), when reported in
combination with ICD-9-CM procedure code 99.10 (Injection or infusion
of thrombolytic agent), to identify that thrombolytic therapy was
administered.
The comparable ICD-10-CM diagnosis code translations for the ICD-9-
CM pulmonary embolism diagnosis codes to which the requestor cited
consist of the following:
------------------------------------------------------------------------
ICD-10-CM diagnosis code Description
------------------------------------------------------------------------
I26.01................... Septic pulmonary embolism with acute cor
pulmonale.
I26.02................... Saddle embolus of pulmonary artery with acute
cor pulmonale.
I26.09................... Other pulmonary embolism with acute cor
pulmonale.
I26.90................... Septic pulmonary embolism without acute cor
pulmonale.
I26.92................... Saddle embolus of pulmonary artery without
acute cor pulmonale.
I26.99................... Other pulmonary embolism without acute cor
pulmonale.
------------------------------------------------------------------------
Thrombolytic therapy is identified with the following ICD-10-PCS
procedure codes:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
3E03017.................. Introduction of other thrombolytic into
peripheral vein, open approach.
3E03317.................. Introduction of other thrombolytic into
peripheral vein, percutaneous approach.
3E04017.................. Introduction of other thrombolytic into
central vein, open approach.
3E04317.................. Introduction of other thrombolytic into
central vein, percutaneous approach.
3E05017.................. Introduction of other thrombolytic into
peripheral artery, open approach.
3E05317.................. Introduction of other thrombolytic into
peripheral artery, percutaneous approach.
3E06017.................. Introduction of other thrombolytic into
central artery, open approach.
3E06317.................. Introduction of other thrombolytic into
central artery, percutaneous approach.
------------------------------------------------------------------------
A pulmonary embolism is an obstruction of pulmonary vasculature
most commonly caused by a venous thrombus, and less commonly by fat or
tumor tissue or air bubbles or both. Risk factors for a pulmonary
embolism include prolonged immobilization from any cause, obesity,
cancer, fractured hip or leg, use of certain medications such as oral
contraceptives, presence of certain medical conditions such as heart
failure, sickle cell anemia, or certain congenital heart defects.
Common symptoms of pulmonary embolism include shortness of breath with
or without chest pain, tachycardia, hemoptysis, low grade fever,
pleural effusion, and depending on the etiology of the embolus, might
include lower extremity pain or swelling, syncope, jugular venous
distention, and finally a pulmonary embolus could be asymptomatic.
We examined the claims data from the December 2015 update of the FY
2015 MedPAR file for ICD-9-CM MS-DRGs 175 and 176 for cases with a
principal diagnosis of pulmonary embolism where tPA or other
thrombolytic therapy (procedure code 99.10) was administered and cases
of a principal diagnosis of pulmonary embolism where no tPA or other
thrombolytic therapy was administered. Our findings are shown in the
table below.
Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy Administered
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 175--All MCC cases....................................... 19,274 5.76 $10,479
[[Page 24978]]
MS-DRG 175--MCC cases with principal diagnosis of pulmonary 630 6.31 19,419
embolism with tPA or other thrombolytic therapy administered...
MS-DRG 175--MCC cases with principal diagnosis of pulmonary 18,529 5.74 10,181
embolism without tPA or other thrombolytic therapy administered
MS-DRG 176--All Without MCC cases............................... 33,565 3.81 6,645
MS-DRG 176--Without MCC cases with principal diagnosis of 544 5.07 16,345
pulmonary embolism with tPA or other thrombolytic therapy
administered...................................................
MS-DRG 176--Without MCC cases with principal diagnosis of 32,789 3.79 6,483
pulmonary embolism without tPA or other thrombolytic therapy
administered...................................................
----------------------------------------------------------------------------------------------------------------
As shown in the table above, for MS-DRG 175, there were a total of
19,274 cases with an average length of stay of 5.76 days and average
costs of $10,479. Of the 19,274 cases in MS-DRG 175, there were 630
cases that reported a principal diagnosis of pulmonary embolism where
tPA or other thrombolytic therapy was also reported with an average
length of stay of 6.31 days and average costs of $19,419. For MS-DRG
176, there were a total of 33,565 cases with an average length of stay
of 3.81 days and average costs of $6,645. Of the 33,565 cases reported
in MS-DRG 176, there were 544 cases that reported a principal diagnosis
of pulmonary embolism where tPA or other thrombolytic therapy also was
reported with an average length of stay of 5.07 days and average costs
of $16,345.
To address the request we received to create a new MS-DRG, we
reviewed the data for the 1,174 total cases (630 and 544, respectively)
that reported a principal diagnosis of pulmonary embolism that received
tPA or other thrombolytic therapy in MS-DRGs 175 and 176. As shown in
the table above, our data analysis demonstrates the average costs for
these cases are higher ($19,419 compared to $10,479 for MS-DRG 175, and
$16,345 compared to $6,645 for MS-DRG 176) and the length of stay is
slightly longer (6.31 days compared to 5.76 days for MS-DRG 175, and
5.07 days compared to 3.81 days for MS-DRG 176) compared to all cases
reported in MS-DRGs 175 and 176. Out of a total of 52,492 cases (630 +
18,529 + 544 + 32,789) in MS-DRGs 175 and 176 reporting a principal
diagnosis of pulmonary embolism, 1,174 (2.24 percent) of these cases
also received tPA or other thrombolytic therapy. While we recognize the
differences in average costs and length of stay for these cases, the
volume of these cases as well as the potential creation of a new MS-DRG
for this subset of patients raised some concerns with our clinical
advisors. We present our clinical advisors' concerns following the
additional data analysis discussions below.
We then conducted additional data analyses to determine if
reassignment of cases with a principal diagnosis of pulmonary embolism
where tPA or other thrombolytic therapy was administered to a higher
paying MS-DRG was supported. As displayed in the data findings in the
tables below, we explored reassigning cases with a principal diagnosis
of pulmonary embolism that received tPA or other thrombolytic therapy
from MS-DRG 176 to the higher severity level MS-DRG 175. The data do
not adequately support this reassignment, as the cases with a principal
diagnosis of pulmonary embolism where tPA or other thrombolytic therapy
is administered would continue to be underpaid.
As shown in the data findings in the table below, the initial data
analysis for MS-DRG 175 found the average costs for cases that reported
a principal diagnosis of pulmonary embolism that received tPA or other
thrombolytic therapy were $19,419, and for MS-DRG 176, the average
costs for these cases were $16,345.
Principal Diagnosis of Pulmonary Embolism With tPA or Other Thrombolytic Therapy Administered
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 175--All MCC cases....................................... 19,274 5.76 $10,479
MS-DRG 175--MCC cases with principal diagnosis of pulmonary 630 6.31 19,419
embolism with tPA or other thrombolytic therapy administered...
MS-DRG 176--All without MCC cases............................... 33,565 3.81 6,645
MS-DRG 176--Without MCC cases with principal diagnosis of 544 5.07 16,345
pulmonary embolism with tPA or other thrombolytic therapy
administered...................................................
----------------------------------------------------------------------------------------------------------------
As displayed in the table below, if we reassigned the 544 cases
with a principal diagnosis of pulmonary embolism where tPA or other
thrombolytic therapy is administered from the ``without MCC'' level,
MS-DRG 176, to the ``with MCC'' severity level, MS-DRG 175, the average
costs for all cases in MS-DRG 175 would be approximately $10,640. This
figure continues to result in a difference of approximately $9,000 for
the MCC cases and $6,000 for the without MCC cases when compared to
findings for the average costs of these cases from the initial data
analysis ($19,419-$10,640 = $8,779 and $16,345-$10,640 = $5,705,
respectively). In addition, our clinical advisors had concerns about
the prospect of moving the subset of 544 patients from the ``without
MCC'' level to the ``with MCC'' level. We present these concerns
following the additional data analysis discussion below.
[[Page 24979]]
Option of Reassignment of Cases of Principal Diagnosis of Pulmonary Embolism With and Without tPA
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
MS-DRG 175--Cases with pulmonary embolism with MCC or tPA or 19,818 5.74 $10,640
other thrombolytic therapy.....................................
MS-DRG 176--Cases with pulmonary embolism without MCC........... 33,021 3.79 6,486
----------------------------------------------------------------------------------------------------------------
We also reviewed claims data in considering the option of adding
another severity level to the current structure of MS-DRGs 175 and 176
and assigning the cases with a principal diagnosis of pulmonary
embolism that receive tPA or other thrombolytic therapy to the highest
level. This option would involve modifying the current 2-way severity
level split of ``with MCC'' and ``without MCC'' to a 3-way severity
level split of ``with MCC or tPA, with CC, and without CC/MCC.''
Therefore, it would include proposing new MS-DRGs if the data and our
clinical advisors supported creation of new MS-DRGs. However, as
displayed in the data findings in the table below, the data did not
support this option. In addition to similar results from the previous
option's discussion regarding continued differences in average costs
for these cases, the data failed to meet the criterion that there be at
least a $2,000 difference between the ``with CC'' and ``without CC/
MCC'' subgroups. Our data analysis shows the average costs in the
hypothetical ``with CC'' subgroup of $6,932 and the average costs in
the hypothetical ``without CC/MCC'' subgroup of $5,309. The difference
only amounts to $1,623 ($6,932 minus $5,309 = $1,623).
Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy
----------------------------------------------------------------------------------------------------------------
Number of Average length
Optional new MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX--Pulmonary embolism with MCC or tPA or other 19,819 5.74 $10,641
thrombolytic therapy...........................................
MS-DRG XXX--Pulmonary embolism with CC.......................... 23,929 4.04 6,932
MS-DRG XXX--Pulmonary embolism without CC/MCC................... 9,091 3.13 5,309
----------------------------------------------------------------------------------------------------------------
Lastly, we explored reassigning cases with a principal diagnosis of
pulmonary embolism that receive tPA or other thrombolytic therapy to
other MS-DRGs within MDC 4. However, our review did not support
reassignment of these cases to any other medical MS-DRGs as these cases
would not be clinically coherent with the cases assigned to those other
MS-DRGs.
In addition to the results of the various data analyses we
performed for creating a new MS-DRG or for reassignment of cases of
pulmonary embolism with tPA or other thrombolytic therapy to another
higher paying MS-DRG, our clinical advisors also expressed a number of
concerns. They pointed out that all patients with a diagnosis of
pulmonary embolism are considered high risk and the small subset of
patients receiving thrombolytic therapy does not necessarily warrant a
separate MS-DRG or reassignment at this time. Our clinical advisors
noted that it is unclear if: (1) The higher costs associated with
receiving tPA or other thrombolytic therapy are due to a different
subset of patients or complications; (2) if those patients treated with
tPA or other thrombolytic therapy for pulmonary embolism are indeed
sicker patients; (3) if the cost of tPA or other thrombolytic therapy
for patients with pulmonary embolism is the reason for the higher costs
seen with these cases; or (4) if the increased average costs for cases
of pulmonary embolism with tPA or other thrombolytic therapy is a
combination of numbers (1) through (3). They recommended maintaining
the current structure of MS-DRGs 175 and 176 at this time.
As a result of the data analysis and the concerns expressed by our
clinical advisors, we are not proposing to create a new MS-DRG or to
reassign cases with a principal diagnosis of pulmonary embolism with
tPA or other thrombolytic therapy for FY 2017. We are inviting public
comment on our proposal.
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Implant of Loop Recorder
We received a request to examine a potential ICD-9 to ICD-10
replication issue for procedures describing implantation or revision of
loop recorder that were reported using ICD-9-CM procedure code 37.79
(Revision or relocation of cardiac device pocket). A loop recorder is
also known as an implantable cardiac monitor. It is indicated for
patients who experience episodes of unexplained syncope (fainting),
heart palpitations, or patients at risk for various types of cardiac
arrhythmias, such as atrial fibrillation or ventricular
tachyarrhythmia. Loop recorders function by detecting and monitoring
potential episodes of these kinds of conditions. The requestor
acknowledged that these implantation procedures are frequently
performed in the outpatient setting. However, the requestor also noted
that the implantation procedures are often performed in the inpatient
setting and suggested that they be recognized under the ICD-10 MS-DRGs
as they had been under the ICD-9-CM based MS-DRG logic.
The requestor stated that, under the ICD-9-CM based MS-DRGs,
procedure code 37.79 was designated as an operating room (O.R.)
procedure in the Definitions Manual under Appendix E--Operating Room
Procedures and Procedure Code/MS-DRG Index and grouped to MS-DRGs 040,
041, and 042 (Peripheral, Cranial Nerve and Other Nervous System
Procedures with MCC, with CC or peripheral neurostimulator, and without
CC/MCC, respectively); MS-DRGs 260, 261, and 262 (Cardiac Pacemaker
Revision Except Device Replacement with MCC, with CC, and without CC/
MCC, respectively); MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous
Tissue and Breast Procedures with MCC, with CC and without CC/MCC,
respectively); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for
Injuries with MCC, with CC, and without CC/MCC, respectively); and MS-
DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant
Trauma with MCC, with CC, and without CC/MCC, respectively).
Under the current Version 33 ICD-10 MS-DRGs, there are two
comparable ICD-10-PCS code translations for ICD-9-CM code 37.79. They
are procedure codes 0JWT0PZ (Revision of cardiac
[[Page 24980]]
rhythm related device in trunk subcutaneous tissue and fascia, open
approach) and 0JWT3PZ (Revision of cardiac rhythm related device in
trunk subcutaneous tissue and fascia, percutaneous approach), which are
designated as O.R. procedures and group to the above listed MS-DRGs.
According to the requestor, the following six ICD-10-PCS procedure
codes identify the implantation or revision of a loop recorder and were
not replicated appropriately because they are currently designated as
nonoperating room (non-O.R.) procedures under the ICD-10 MS-DRGs. The
requestor suggested that these codes be designated as O.R. procedures
and assigned to the same MS-DRGs as the former ICD-9-CM procedure code
37.79:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0JH602Z.................. Insertion of monitoring device into chest
subcutaneous tissue and fascia, open
approach.
0JH632Z.................. Insertion of monitoring device into chest
subcutaneous tissue and fascia, percutaneous
approach.
0JH802Z.................. Insertion of monitoring device into abdomen
subcutaneous tissue and fascia, open
approach.
0JH832Z.................. Insertion of monitoring device into abdomen
subcutaneous tissue and fascia, percutaneous
approach.
0JWT02Z.................. Revision of monitoring device in trunk
subcutaneous tissue and fascia, open
approach.
0JWT32Z.................. Revision of monitoring device in trunk
subcutaneous tissue and fascia, percutaneous
approach.
------------------------------------------------------------------------
We examined the six ICD-10-PCS procedure codes that the commenter
recommended be designated as O.R. procedures and assigned to the same
MS-DRGs as ICD-9-CM procedure code 37.79. As discussed in section
II.F.1.b. of the preamble of this proposed rule, in evaluating
requested MS-DRG changes, we determined if they could be replicated in
the ICD-9-CM MS-DRGs so as not to affect the FY 2017 relative payment
weights. If the answer was ``no,'' we examined whether the change in
the ICD-10 MS-DRGs was likely to cause a significant number of patient
cases to change or ``shift'' ICD-10 MS-DRGs. If relatively few patient
cases would be impacted, we evaluated if it would be feasible to
propose the change even though it could not be replicated by the ICD-9
MS-DRGs logic because it would not cause a material payment
redistribution.
Under our review, we recognized that the six ICD-10-PCS procedure
codes are currently identified as comparable translations of ICD-9-CM
procedure code 86.09 (Other incision of skin and subcutaneous tissue),
which was designated as a non-O.R. procedure code under the ICD-9-CM
based MS-DRGs. Therefore, changing the designation of the six ICD-10-
PCS procedure codes from non-O.R. to O.R. for the ICD-10 MS-DRGs cannot
be replicated in the ICD-9-CM based MS-DRGs. In other words, we cannot
designate ICD-9-CM procedure code 86.09 as an O.R. code. However, we
believe that if we limit the change in designation to four of the six
identified ICD-10-PCS procedure codes from non-O.R. to O.R., the change
would not have any impact. We are not including the two ICD-10-PCS
procedure codes that describe the insertion of a monitoring device into
the abdomen in our proposal because a loop recorder is not inserted
into that location and it would not be clinically appropriate.
Therefore, for FY 2017, we are proposing to designate the following
four ICD-10-PCS codes as O.R. procedures within Appendix E of the
Version 34 ICD-10 MS-DRG Definitions Manual:
0JH602Z (Insertion of monitoring device into chest
subcutaneous tissue and fascia, open approach);
0JH632Z (Insertion of monitoring device into chest
subcutaneous tissue and fascia, percutaneous approach);
0JWT02Z (Revision of monitoring device in trunk
subcutaneous tissue and fascia, open approach); and
0JWT32Z (Revision of monitoring device in trunk
subcutaneous tissue and fascia, percutaneous approach).
We also are proposing that the ICD-10 MS-DRG assignment for these
four ICD-10-PCS codes replicate the ICD-9-CM based MS-DRG assignment
for procedure code 37.79; that is, MS-DRGs 040, 041, 042, 260, 261,
262, 579,580, 581, 907, 908, 909, 957, 958, and 959 as cited earlier in
this section.
We are inviting public comments on our proposals.
b. Endovascular Thrombectomy of the Lower Limbs
We received a comment stating that the logic for ICD-10 MS-DRGs
Version 33 is not compatible with the ICD-9-CM MS-DRGs Version 32 for
the assignment of procedures describing endovascular thrombectomy of
the lower limbs. The commenter asked CMS to reconfigure the MS-DRG
structure within the ICD-10 MS-DRGs for endovascular thrombectomy of
the lower limbs, specifically MS-DRGs 270, 271, and 272 (Endovascular
Thrombectomy of the Lower Limbs with MCC, with CC, and without CC/MCC,
respectively). The commenter believed that this requested restructuring
would be consistent with the MS-DRG assignments for the other
procedures describing lower extremity thrombectomy, and would
accurately replicate the logic of the ICD-9-CM MS-DRGs Version 32.
Under the ICD-9-CM, endovascular thrombectomy of the lower limbs is
described by procedure code 39.79 (Other endovascular procedures on
other vessels). The commenter stated that, with deep vein thrombosis
(DVT) or any other circulatory system disorders as the principal
diagnosis, cases involving procedures described by procedure code 39.79
grouped to ICD-9-CM MS-DRGs 237 and 238 (Major Cardiovascular
Procedures with and without MCC, respectively). However, the commenter
pointed out that, for FY 2016, ICD-9-CM MS-DRGs 237 and 238 were
deleted and replaced with ICD-10 Version 33 MS-DRGs 268 and 269 (Aortic
and Heart Assist Procedures Except Pulsation Balloon with and without
MCC, respectively), for the higher complexity procedures, and MS-DRGs
270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with
CC, and without CC/MCC, respectively), for the lower complexity
procedures (80 FR 49389). The commenter stated that ICD-9-CM procedure
code 39.79 describes the lower complexity procedures assigned to ICD-
10-PCS MS-DRGs 270, 271, and 272. The commenter believed that the
comparable ICD-10-PCS procedure codes also should have been assigned to
MS-DRGs 270, 271, and 272.
We agree with the requestor that procedures describing endovascular
thrombectomy of the lower limbs should be assigned to ICD-10 MS-DRGs
270, 271, and 272. Therefore, for implementation October 1, 2016, we
are proposing to restructure the ICD-10-PCS MS-DRG configuration and
add the ICD-10-PCS code translations listed in the following chart
(which would
[[Page 24981]]
capture procedures describing endovascular thrombectomy of the lower
limbs) to ICD-10-PCS Version 34 MS-DRGs 270, 271, and 272.
ICD-10-PCS Endovascular Thrombectomy Procedure Codes Proposed To Be
Assigned to MS-DRGs 270, 271, and 272 for FY 2017
------------------------------------------------------------------------
------------------------------------------------------------------------
03C53ZZ.................. Extirpation of matter from right axillary
artery, percutaneous approach.
03C63ZZ.................. Extirpation of matter from left axillary
artery, percutaneous approach.
03C73ZZ.................. Extirpation of matter from right brachial
artery, percutaneous approach.
03C83ZZ.................. Extirpation of matter from left brachial
artery, percutaneous approach.
03C93ZZ.................. Extirpation of matter from right ulnar
artery, percutaneous approach.
03CA3ZZ.................. Extirpation of matter from left ulnar artery,
percutaneous approach.
03CB3ZZ.................. Extirpation of matter from right radial
artery, percutaneous approach.
03CC3ZZ.................. Extirpation of matter from left radial
artery, percutaneous approach.
03CD3ZZ.................. Extirpation of matter from right hand artery,
percutaneous approach.
03CF3ZZ.................. Extirpation of matter from left hand artery,
percutaneous approach.
03CY3ZZ.................. Extirpation of matter from upper artery,
percutaneous approach.
04CK3ZZ.................. Extirpation of matter from right femoral
artery, percutaneous approach.
04CL3ZZ.................. Extirpation of matter from left femoral
artery, percutaneous approach.
04CM3ZZ.................. Extirpation of matter from right popliteal
artery, percutaneous approach.
04CN3ZZ.................. Extirpation of matter from left popliteal
artery, percutaneous approach.
04CP3ZZ.................. Extirpation of matter from right anterior
tibial artery, percutaneous approach.
04CQ3ZZ.................. Extirpation of matter from left anterior
tibial artery, percutaneous approach.
04CR3ZZ.................. Extirpation of matter from right posterior
tibial artery, percutaneous approach.
04CS3ZZ.................. Extirpation of matter from left posterior
tibial artery, percutaneous approach.
04CT3ZZ.................. Extirpation of matter from right peroneal
artery, percutaneous approach.
04CU3ZZ.................. Extirpation of matter from left peroneal
artery, percutaneous approach.
04CV3ZZ.................. Extirpation of matter from right foot artery,
percutaneous approach.
04CW3ZZ.................. Extirpation of matter from left foot artery,
percutaneous approach.
04CY3ZZ.................. Extirpation of matter from lower artery,
percutaneous approach.
05C73ZZ.................. Extirpation of matter from right axillary
vein, percutaneous approach.
05C83ZZ.................. Extirpation of matter from left axillary
vein, percutaneous approach.
05C93ZZ.................. Extirpation of matter from right brachial
vein, percutaneous approach.
05CA3ZZ.................. Extirpation of matter from left brachial
vein, percutaneous approach.
05CB3ZZ.................. Extirpation of matter from right basilic
vein, percutaneous approach.
05CC3ZZ.................. Extirpation of matter from left basilic vein,
percutaneous approach.
05CD3ZZ.................. Extirpation of matter from right cephalic
vein, percutaneous approach.
05CF3ZZ.................. Extirpation of matter from left cephalic
vein, percutaneous approach.
05CG3ZZ.................. Extirpation of matter from right hand vein,
percutaneous approach.
05CH3ZZ.................. Extirpation of matter from left hand vein,
percutaneous approach.
05CL3ZZ.................. Extirpation of matter from intracranial vein,
percutaneous approach.
05CM3ZZ.................. Extirpation of matter from right internal
jugular vein, percutaneous approach.
05CN3ZZ.................. Extirpation of matter from left internal
jugular vein, percutaneous approach.
05CP3ZZ.................. Extirpation of matter from right external
jugular vein, percutaneous approach.
05CQ3ZZ.................. Extirpation of matter from left external
jugular vein, percutaneous approach.
05CR3ZZ.................. Extirpation of matter from right vertebral
vein, percutaneous approach.
05CS3ZZ.................. Extirpation of matter from left vertebral
vein, percutaneous approach.
05CT3ZZ.................. Extirpation of matter from right face vein,
percutaneous approach.
05CV3ZZ.................. Extirpation of matter from left face vein,
percutaneous approach.
05CY3ZZ.................. Extirpation of matter from upper vein,
percutaneous approach.
06C33ZZ.................. Extirpation of matter from esophageal vein,
percutaneous approach.
06CM3ZZ.................. Extirpation of matter from right femoral
vein, percutaneous approach.
06CN3ZZ.................. Extirpation of matter from left femoral vein,
percutaneous approach.
06CP3ZZ.................. Extirpation of matter from right greater
saphenous vein, percutaneous approach.
06CQ3ZZ.................. Extirpation of matter from left greater
saphenous vein, percutaneous approach.
06CR3ZZ.................. Extirpation of matter from right lesser
saphenous vein, percutaneous approach.
06CS3ZZ.................. Extirpation of matter from left lesser
saphenous vein, percutaneous approach.
06CT3ZZ.................. Extirpation of matter from right foot vein,
percutaneous approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal to assign the ICD-
10-PCS procedures describing the endovascular thrombectomy of the lower
limbs listed in the table above to ICD-10 Version 34 MS-DRGs 270, 271,
and 272 for FY 2017.
c. Pacemaker Procedures Code Combinations
We received a request that CMS examine the list of ICD-10-PCS
procedure code combinations that describe procedures involving
pacemakers to determine if some procedure code combinations were
excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and
244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without
CC/MCC). The requestor believed that some ICD-10-PCS procedure code
combinations describing procedures involving pacemaker devices and
leads are not included in the current list.
We reviewed the list of ICD-10-PCS procedure code combinations
describing procedures involving pacemakers assigned to ICD-10 MS-DRGs
242, 243, and 244, and determined that our initial approach of using
specified procedure code combinations to identify procedures involving
pacemakers and leads was overly complex and may have led to inadvertent
omissions of qualifying procedure code combinations. Under our initial
approach, we developed a list of
[[Page 24982]]
possible ICD-10-PCS procedure code combinations that describe
procedures involving pacemaker devices and leads as well as ICD-10-PCS
procedure code combinations for procedures describing the removal and
replacement of pacemaker devices. We now believe that a more
appropriate approach would be to compile a list of all procedure codes
describing procedures involving pacemaker devices and a list of all
procedure codes describing procedures involving pacemaker leads. If a
procedure code from the list of procedure codes describing procedures
involving pacemaker devices and a procedure code from the list of
procedure codes describing procedures involving pacemaker leads are
reported in combination with one another, the case would be assigned to
ICD-10 MS-DRGs 242, 243, and 244. We believe that this more generic
approach would capture a wider range of possible reported procedure
codes describing procedures involving pacemaker devices and leads.
Therefore, we are proposing to modify the ICD-10 MS-DRG logic so that
if one of the ICD-10-PCS procedure codes describing procedures
involving pacemaker devices listed in column 1 of the table below is
reported in combination with one of the ICD-10-PCS procedure codes
describing procedures involving leads listed in column 3 of the table
below, the case would be assigned to MS-DRGs 242, 243, and 244. We
believe that this proposed simplified approach would capture all
possible cases reporting procedure code combinations describing
procedures involving pacemaker devices and leads to ensure that these
cases would be assigned to MS-DRGs 242, 243, and 244.
----------------------------------------------------------------------------------------------------------------
ICD-10-PCS Procedure codes describing ICD-10-PCS Procedure codes describing
procedures involving cardiac pacemaker devices procedures involving cardiac pacemaker leads
(any one code reported from this column list) In combination (any one code reported from this column list)
(1) with (2) (3)
------------------------------------------------ -----------------------------------------------
Procedure code Code description Procedure code Code description
----------------------------------------------------------------------------------------------------------------
0JH604Z................ Insertion of ............... 02H40JZ Insertion of
pacemaker, single pacemaker lead into
chamber into chest coronary vein, open
subcutaneous tissue approach.
and fascia, open
approach.
0JH605Z................ Insertion of ............... 02H40MZ Insertion of cardiac
pacemaker, single lead into coronary
chamber rate vein, open approach.
responsive into chest
subcutaneous tissue
and fascia, open
approach.
0JH606Z................ Insertion of ............... 02H43JZ Insertion of
pacemaker, dual pacemaker lead into
chamber into chest coronary vein,
subcutaneous tissue percutaneous
and fascia, open approach.
approach.
0JH607Z................ Insertion of cardiac ............... 02H43MZ Insertion of cardiac
resynchronization lead into coronary
pacemaker pulse vein, percutaneous
generator into chest approach.
subcutaneous tissue
and fascia, open
approach.
0JH60PZ................ Insertion of cardiac ............... 02H44JZ Insertion of
rhythm related device pacemaker lead into
into chest coronary vein,
subcutaneous tissue percutaneous
and fascia, open endoscopic approach.
approach.
0JH634Z................ Insertion of ............... 02H44MZ Insertion of cardiac
pacemaker, single lead into coronary
chamber into chest vein, percutaneous
subcutaneous tissue endoscopic approach.
and fascia,
percutaneous approach.
0JH635Z................ Insertion of ............... 02H60JZ Insertion of
pacemaker, single pacemaker lead into
chamber rate right atrium, open
responsive into chest approach.
subcutaneous tissue
and fascia,
percutaneous approach.
0JH636Z................ Insertion of ............... 02H60MZ Insertion of cardiac
pacemaker, dual lead into right
chamber into chest atrium, open
subcutaneous tissue approach.
and fascia,
percutaneous approach.
0JH637Z................ Insertion of cardiac ............... 02H63JZ Insertion of
resynchronization pacemaker lead into
pacemaker pulse right atrium,
generator into chest percutaneous
subcutaneous tissue approach.
and fascia,
percutaneous approach.
0JH63PZ................ Insertion of cardiac ............... 02H63MZ Insertion of cardiac
rhythm related device lead into right
into chest atrium, percutaneous
subcutaneous tissue approach.
and fascia,
percutaneous approach.
0JH804Z................ Insertion of ............... 02H64JZ Insertion of
pacemaker, single pacemaker lead into
chamber into abdomen right atrium,
subcutaneous tissue percutaneous
and fascia, open endoscopic approach.
approach.
0JH805Z................ Insertion of ............... 02H64MZ Insertion of cardiac
pacemaker, single lead into right
chamber rate atrium, percutaneous
responsive into endoscopic approach.
abdomen subcutaneous
tissue and fascia,
open approach.
0JH806Z................ Insertion of ............... 02H70JZ Insertion of
pacemaker, dual pacemaker lead into
chamber into abdomen left atrium, open
subcutaneous tissue approach.
and fascia, open
approach.
0JH807Z................ Insertion of cardiac ............... 02H70MZ Insertion of cardiac
resynchronization lead into left
pacemaker pulse atrium, open
generator into approach.
abdomen subcutaneous
tissue and fascia,
open approach.
0JH80PZ................ Insertion of cardiac ............... 02H73JZ Insertion of
rhythm related device pacemaker lead into
into abdomen left atrium,
subcutaneous tissue percutaneous
and fascia, open approach.
approach.
0JH834Z................ Insertion of ............... 02H73MZ Insertion of cardiac
pacemaker, single lead into left
chamber into abdomen atrium, percutaneous
subcutaneous tissue approach.
and fascia,
percutaneous approach.
[[Page 24983]]
0JH835Z................ Insertion of ............... 02H74JZ Insertion of
pacemaker, single pacemaker lead into
chamber rate left atrium,
responsive into percutaneous
abdomen subcutaneous endoscopic approach.
tissue and fascia,
percutaneous approach.
0JH836Z................ Insertion of ............... 02H74MZ Insertion of cardiac
pacemaker, dual lead into left
chamber into abdomen atrium, percutaneous
subcutaneous tissue endoscopic approach.
and fascia,
percutaneous approach.
0JH837Z................ Insertion of cardiac ............... 02HK0JZ Insertion of
resynchronization pacemaker lead into
pacemaker pulse right ventricle,
generator into open approach.
abdomen subcutaneous
tissue and fascia,
percutaneous approach.
0JH83PZ................ Insertion of cardiac ............... 02HK0MZ Insertion of cardiac
rhythm related device lead into right
into abdomen ventricle, open
subcutaneous tissue approach.
and fascia,
percutaneous approach.
02HK3JZ Insertion of
pacemaker lead into
right ventricle,
percutaneous
approach.
02HK3MZ Insertion of cardiac
lead into right
ventricle,
percutaneous
approach.
02HK4JZ Insertion of
pacemaker lead into
right ventricle,
percutaneous
endoscopic approach.
02HK4MZ Insertion of cardiac
lead into right
ventricle,
percutaneous
endoscopic approach.
02HL0JZ Insertion of
pacemaker lead into
left ventricle, open
approach.
02HL0MZ Insertion of cardiac
lead into left
ventricle, open
approach.
02HL3JZ Insertion of
pacemaker lead into
left ventricle,
percutaneous
approach.
02HL3MZ Insertion of cardiac
lead into left
ventricle,
percutaneous
approach.
02HL4JZ Insertion of
pacemaker lead into
left ventricle,
percutaneous
endoscopic approach.
02HL4MZ Insertion of cardiac
lead into left
ventricle,
percutaneous
endoscopic approach.
02HN0JZ Insertion of
pacemaker lead into
pericardium, open
approach.
02HN0MZ Insertion of cardiac
lead into
pericardium, open
approach.
02HN3JZ Insertion of
pacemaker lead into
pericardium,
percutaneous
approach.
02HN3MZ Insertion of cardiac
lead into
pericardium,
percutaneous
approach.
02HN4JZ Insertion of
pacemaker lead into
pericardium,
percutaneous
endoscopic approach.
02HN4MZ Insertion of cardiac
lead into
pericardium,
percutaneous
endoscopic approach.
----------------------------------------------------------------------------------------------------------------
We are inviting public comments on our proposal to modify the MS-
DRG logic for MS-DRGs 242, 243, and 244 to establish that cases
reporting one ICD-10-PCS code from the list of procedure codes
describing procedures involving pacemaker devices and one ICD-10-PCS
code from the list of procedure codes describing procedures involving
pacemaker leads in combination with one another would qualify the case
for assignment to MS-DRGs 242, 243, and 244.
We also examined our GROUPER logic for MS-DRGs 258 and 259 (Cardiac
Pacemaker Device Replacement with and without MCC, respectively).
Assignments of cases to these MS-DRGs also include qualifying ICD-10-
PCS procedure code combinations describing procedures that involve the
removal of pacemaker devices and the insertion of new devices. We
believe that this logic may also be overly complex. Moreover, we
believe that a more simplified approach would be to compile a list of
all ICD-10-PCS procedure codes describing procedures involving cardiac
pacemaker device insertions. Therefore, we are proposing this approach
for FY 2017. Under the proposed approach, if one of the procedure codes
describing procedures involving pacemaker device insertions is
reported, and there are no other procedure codes describing procedures
involving the insertion of a pacemaker lead reported in combination
with one of these procedures, the case would be assigned to MS-DRG 258
and 259. Cases reporting any one of the following ICD-10-PCS procedure
codes describing procedures involving pacemaker device insertions would
be assigned to MS-DRG 258 and 259.
[[Page 24984]]
Procedure Codes Describing Procedures Involving Cardiac Pacemaker Device
Insertions Reported Without Any Other Pacemaker Device Procedure Code
Proposed To Be Assigned to ICD-10 MS-DRGs 258 and 259
------------------------------------------------------------------------
Procedure code Description
------------------------------------------------------------------------
0JH604Z.................. Insertion of pacemaker, single chamber into
chest subcutaneous tissue and fascia, open
approach.
0JH605Z.................. Insertion of pacemaker, single chamber rate
responsive into chest subcutaneous tissue
and fascia, open approach.
0JH606Z.................. Insertion of pacemaker, dual chamber into
chest subcutaneous tissue and fascia, open
approach.
0JH607Z.................. Insertion of cardiac resynchronization
pacemaker pulse generator into chest
subcutaneous tissue and fascia, open
approach.
0JH60PZ.................. Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
open approach.
0JH634Z.................. Insertion of pacemaker, single chamber into
chest subcutaneous tissue and fascia,
percutaneous approach.
0JH635Z.................. Insertion of pacemaker, single chamber rate
responsive into chest subcutaneous tissue
and fascia, percutaneous approach.
0JH636Z.................. Insertion of pacemaker, dual chamber into
chest subcutaneous tissue and fascia,
percutaneous approach.
0JH637Z.................. Insertion of cardiac resynchronization
pacemaker pulse generator into chest
subcutaneous tissue and fascia, percutaneous
approach.
0JH63PZ.................. Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
percutaneous approach.
0JH804Z.................. Insertion of pacemaker, single chamber into
abdomen subcutaneous tissue and fascia, open
approach.
0JH805Z.................. Insertion of pacemaker, single chamber rate
responsive into abdomen subcutaneous tissue
and fascia, open approach.
0JH806Z.................. Insertion of pacemaker, dual chamber into
abdomen subcutaneous tissue and fascia, open
approach.
0JH807Z.................. Insertion of cardiac resynchronization
pacemaker pulse generator into abdomen
subcutaneous tissue and fascia, open
approach.
0JH80PZ.................. Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and fascia,
open approach.
0JH834Z.................. Insertion of pacemaker, single chamber into
abdomen subcutaneous tissue and fascia,
percutaneous approach.
0JH835Z.................. Insertion of pacemaker, single chamber rate
responsive into abdomen subcutaneous tissue
and fascia, percutaneous approach.
0JH836Z.................. Insertion of pacemaker, dual chamber into
abdomen subcutaneous tissue and fascia,
percutaneous approach.
0JH837Z.................. Insertion of cardiac resynchronization
pacemaker pulse generator into abdomen
subcutaneous tissue and fascia, percutaneous
approach.
0JH83PZ.................. Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and fascia,
percutaneous approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal to modify the
GROUPER logic for MS-DRGs 258 and 259 to establish that a case
reporting one procedure code from the above list of ICD-10-PCS
procedure codes describing procedures involving pacemaker device
insertions without any other procedure codes describing procedures
involving pacemaker leads reported would be assigned to MS-DRGs 258 and
259.
We also examined our GROUPER logic for MS-DRGs 260, 261, and 262
(Cardiac Pacemaker Revision Except Device with MCC, with CC, and
without CC/MCC, respectively). Cases assigned to MS-DRGs 260, 261, and
262 also include lists of procedure code combinations describing
procedures involving the removal of pacemaker leads and the insertion
of new leads, in addition to lists of single procedure codes describing
procedures involving the insertion of pacemaker leads, removal of
devices, and revision of devices. We believe that this logic may also
be overly complex. Moreover, we believe that a more simplified approach
would be to provide a single list of procedure codes describing
procedures involving cardiac pacemaker lead insertions and other
related procedures involving device insertions that would be assigned
to MS-DRGs 260, 261, and 262. If one of these procedure codes
describing procedures involving the insertion of pacemaker leads is
reported, and there are no other procedure codes describing procedures
involving the insertion of a device reported, the case would be
assigned to MS-DRG 260, 261, and 262. We are proposing that the list of
ICD-10-PCS procedure codes describing procedures involving pacemaker
lead insertion, removal, or revisions and insertion of hemodynamic
devices in the following table would be assigned to MS-DRGs 260, 261,
and 262. We are simply proposing to use a single list of ICD-10-PCS
procedure codes to determine the MS-DRG assignment.
List of Procedure Codes Proposed To Be Assigned to MS-DRGs 260, 261, and
262
------------------------------------------------------------------------
Procedure code Description
------------------------------------------------------------------------
02H40JZ.................. Insertion of pacemaker lead into coronary
vein, open approach.
02H40MZ.................. Insertion of cardiac lead into coronary vein,
open approach.
02H43JZ.................. Insertion of pacemaker lead into coronary
vein, percutaneous approach.
02H43MZ.................. Insertion of cardiac lead into coronary vein,
percutaneous approach.
02H44JZ.................. Insertion of pacemaker lead into coronary
vein, percutaneous endoscopic approach.
02H44MZ.................. Insertion of cardiac lead into coronary vein,
percutaneous endoscopic approach.
02H60MZ.................. Insertion of pacemaker lead into right
atrium, open approach.
02H63JZ.................. Insertion of cardiac lead into right atrium,
open approach.
02H63MZ.................. Insertion of pacemaker lead into right
atrium, percutaneous approach.
02H64JZ.................. Insertion of cardiac lead into right atrium,
percutaneous approach.
02H64MZ.................. Insertion of pacemaker lead into right
atrium, percutaneous endoscopic approach.
02H70JZ.................. Insertion of cardiac lead into right atrium,
percutaneous endoscopic approach.
02H70MZ.................. Insertion of pacemaker lead into left atrium,
open approach.
02H73JZ.................. Insertion of cardiac lead into left atrium,
open approach.
02H73MZ.................. Insertion of pacemaker lead into left atrium,
percutaneous approach.
02H74JZ.................. Insertion of cardiac lead into left atrium,
percutaneous approach.
02H74MZ.................. Insertion of pacemaker lead into left atrium,
percutaneous endoscopic approach.
02HK00Z.................. Insertion of cardiac lead into left atrium,
percutaneous endoscopic approach.
[[Page 24985]]
02HK02Z.................. Insertion of pressure sensor monitoring
device into right ventricle, open approach.
02HK0JZ.................. Insertion of monitoring device into right
ventricle, open approach.
02HK0MZ.................. Insertion of pacemaker lead into right
ventricle, open approach.
02HK30Z.................. Insertion of cardiac lead into right
ventricle, open approach.
02HK32Z.................. Insertion of pressure sensor monitoring
device into right ventricle, percutaneous
approach.
02HK3JZ.................. Insertion of monitoring device into right
ventricle, percutaneous approach.
02HK3MZ.................. Insertion of pacemaker lead into right
ventricle, percutaneous approach.
02HK40Z.................. Insertion of cardiac lead into right
ventricle, percutaneous approach.
02HK42Z.................. Insertion of pressure sensor monitoring
device into right ventricle, percutaneous
endoscopic approach.
02HK4JZ.................. Insertion of monitoring device into right
ventricle, percutaneous endoscopic approach.
02HK4MZ.................. Insertion of pacemaker lead into right
ventricle, percutaneous endoscopic approach.
02HL0JZ.................. Insertion of cardiac lead into right
ventricle, percutaneous endoscopic approach.
02HL0MZ.................. Insertion of pacemaker lead into left
ventricle, open approach.
02HL3JZ.................. Insertion of cardiac lead into left
ventricle, open approach.
02HL3MZ.................. Insertion of pacemaker lead into left
ventricle, percutaneous approach.
02HL4JZ.................. Insertion of cardiac lead into left
ventricle, percutaneous approach.
02HL4MZ.................. Insertion of pacemaker lead into left
ventricle, percutaneous endoscopic approach.
02HN0JZ.................. Insertion of cardiac lead into left
ventricle, percutaneous endoscopic approach.
02HN0MZ.................. Insertion of pacemaker lead into pericardium,
open approach.
02HN3JZ.................. Insertion of cardiac lead into pericardium,
open approach.
02HN3MZ.................. Insertion of pacemaker lead into pericardium,
percutaneous approach.
02HN4JZ.................. Insertion of cardiac lead into pericardium,
percutaneous approach.
02HN4MZ.................. Insertion of pacemaker lead into pericardium,
percutaneous endoscopic approach.
02PA0MZ.................. Insertion of cardiac lead into pericardium,
percutaneous endoscopic approach.
02PA3MZ.................. Removal of cardiac lead from heart, open
approach.
02PA4MZ.................. Removal of cardiac lead from heart,
percutaneous approach.
02PAXMZ.................. Removal of cardiac lead from heart,
percutaneous endoscopic approach.
02WA0MZ.................. Revision of cardiac lead in heart, open
approach.
02WA3MZ.................. Revision of cardiac lead in heart,
percutaneous approach.
02WA4MZ.................. Revision of cardiac lead in heart,
percutaneous endoscopic approach.
0JH600Z.................. Insertion of hemodynamic monitoring device
into chest subcutaneous tissue and fascia,
open approach.
0JH630Z.................. Insertion of hemodynamic monitoring device
into chest subcutaneous tissue and fascia,
percutaneous approach.
0JH800Z.................. Insertion of hemodynamic monitoring device
into abdomen subcutaneous tissue and fascia,
open approach.
0JH830Z.................. Insertion of hemodynamic monitoring device
into abdomen subcutaneous tissue and fascia,
percutaneous approach.
0JPT0PZ.................. Removal of cardiac rhythm related device from
trunk subcutaneous tissue and fascia, open
approach.
0JPT3PZ.................. Removal of cardiac rhythm related device from
trunk subcutaneous tissue and fascia,
percutaneous approach.
0JWT0PZ.................. Revision of cardiac rhythm related device in
trunk subcutaneous tissue and fascia, open
approach.
0JWT3PZ.................. Revision of cardiac rhythm related device in
trunk subcutaneous tissue and fascia,
percutaneous approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal to modify the
GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any
one of the ICD-10-PCS procedure codes describing procedures involving
pacemakers and related procedures and associated devices listed in the
table above would be assigned to MS-DRGs 260, 261, and 262.
d. Transcatheter Mitral Valve Repair With Implant
As we did for the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28008
through 28010), for FY 2017, we received a request to modify the MS-DRG
assignment for transcatheter mitral valve repair with implant
procedures. We refer readers to detailed discussions of the
MitraClip[supreg] System (hereafter referred to as MitraClip[supreg])
for transcatheter mitral valve repair in previous rulemakings,
including the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25822) and
final rule (76 FR 51528 through 51529) and the FY 2013 IPPS/LTCH PPS
proposed rule (77 FR 27902 through 27903) and final rule (77 FR 53308
through 53310), in response to requests for MS-DRG reclassification, as
well as the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27547 through
27552), under the new technology add-on payment policy. In the FY 2014
IPPS/LTCH PPS final rule (78 FR 50575), the application for a new
technology add-on payment for MitraClip[supreg] was unable to be
considered further due to lack of FDA approval by the July 1, 2013
deadline.
In the FY 2015 IPPS/LTCH PPS final rule, we finalized our proposal
to not create a new MS-DRG or to reassign cases reporting procedures
involving the MitraClip[supreg] to another MS-DRG (79 FR 49890 through
49892). Under a separate process, the request for a new technology add-
on payment for the MitraClip[supreg] System was approved (79 FR 49941
through 49946). As discussed in section II.I.4.e. of the preamble of
this proposed rule, we are proposing to discontinue the new technology
add-on payment for MitraClip[supreg] for FY 2017.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), we finalized
a modification to the MS-DRGs to which the procedure involving the
MitraClip[supreg] System was assigned. For the ICD-10 based MS-DRGs to
fully replicate the ICD-9-CM based MS-DRGs, ICD-10-PCS code 02UG3JZ
(Supplement mitral valve with synthetic substitute, percutaneous
approach), which identifies the use of the MitraClip[supreg] technology
and is the ICD-10-PCS code translation for ICD-9-CM procedure code
35.97 (Percutaneous mitral valve repair with implant), was assigned to
new MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and
without MCC, respectively) and continued to be assigned to MS-DRGs 231
and 232 (Coronary Bypass with PTCA with MCC and without MCC,
respectively). According to the requestor, there are substantial
clinical and resource differences between the transcatheter mitral
valve repair procedure and other procedures currently grouping to MS-
DRGs 273 and 274, which are the focus of the request.
[[Page 24986]]
The requestor submitted three options for CMS to consider for FY
2017. The first option was to create a new MS-DRG for endovascular
cardiac valve repair with implant; the second option was to reassign
cases for the MitraClip[supreg] implant from MS-DRGs 273 and 274 to MS-
DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with and
without MCC, respectively); and the third option was to reassign cases
involving the MitraClip[supreg] system to another higher paying MS-DRG.
We analyzed claims data from the December 2015 update of the FY
2015 MedPAR file on reported cases of percutaneous mitral valve repair
with implant (ICD-9-CM procedure code 35.97) in MS-DRGs 273 and 274.
Our findings are shown in the table below.
Percutaneous Mitral Valve Repair With Implant
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 273--All cases........................................... 6,620 8.01 $27,625
MS-DRG 273--Cases with procedure code 35.97..................... 457 7.57 50,560
MS-DRG 274--All cases........................................... 14,220 3.46 19,316
MS-DRG 274--Cases with procedure code 35.97..................... 693 2.67 37,686
----------------------------------------------------------------------------------------------------------------
As shown in the table, the total number of cases reported in MS-DRG
273 was 6,620 and had an average length of stay of 8.01 days and
average costs of $27,625. The number of cases reporting the ICD-9-CM
procedure code 35.97 in MS-DRG 273 totaled 457 and had an average
length of stay of 7.57 days and average costs of $50,560. For MS-DRG
274, there were a total of 14,220 cases with an average length of stay
of 3.46 days and average costs of $19,316. There were a total of 693
cases in MS-DRG 274 that reported procedure code 35.97; these cases had
an average length of stay of 2.67 days and average costs of $37,686. We
recognize that the cases reporting procedure code 35.97 had a shorter
length of stay and higher average costs in comparison to all the cases
within MS-DRGs 273 and 274.
As stated above, the first option of the requestor was that we
create a new MS-DRG for endovascular cardiac valve repair with implant
procedures for all cardiac valve repairs. We reviewed the following
list of ICD-10-PCS procedure codes that the requestor submitted to
comprise this proposed new MS-DRG.
------------------------------------------------------------------------
ICD-10-PCS Code Description
------------------------------------------------------------------------
02UF37Z.................. Supplement aortic valve with autologous
tissue substitute, percutaneous approach.
02UF38Z.................. Supplement aortic valve with zooplastic
tissue, percutaneous approach.
02UF3JZ.................. Supplement aortic valve with synthetic
substitute, percutaneous approach.
02UF3KZ.................. Supplement aortic valve with nonautologous
tissue substitute, percutaneous approach.
02UG37Z.................. Supplement mitral valve with autologous
tissue substitute, percutaneous approach.
02UG38Z.................. Supplement mitral valve with zooplastic
tissue, percutaneous approach.
02UG3JZ.................. Supplement mitral valve with synthetic
substitute, percutaneous approach.
02UG3KZ.................. Supplement mitral valve with nonautologous
tissue substitute, percutaneous approach.
02UH37Z.................. Supplement pulmonary valve with autologous
tissue substitute, percutaneous approach.
02UH38Z.................. Supplement pulmonary valve with zooplastic
tissue, percutaneous approach.
02UH3JZ.................. Supplement pulmonary valve with synthetic
substitute, percutaneous approach.
02UH3KZ.................. Supplement pulmonary valve with nonautologous
tissue substitute, percutaneous approach.
02UJ37Z.................. Supplement tricuspid valve with autologous
tissue substitute, percutaneous approach.
02UJ38Z.................. Supplement tricuspid valve with zooplastic
tissue, percutaneous approach.
02UJ3JZ.................. Supplement tricuspid valve with synthetic
substitute, percutaneous approach.
02UJ3KZ.................. Supplement tricuspid valve with nonautologous
tissue substitute, percutaneous approach.
------------------------------------------------------------------------
The above list of ICD-10-PCS procedure codes are currently assigned
to MS-DRGs 216 through 221 (Cardiac Valve and Other Major
Cardiovascular Procedures with and without Cardiac Catheterization with
MCC, with CC, and without CC/MCC, respectively), with the exception of
procedure code 02UG3JZ, which is assigned to MS-DRGs 273 and 274, as
noted earlier in this section.
All 16 of the ICD-10-PCS procedure codes submitted by the requester
are comparable translations of ICD-9-CM procedure code 35.33
(Annuloplasty), which also grouped to MS-DRGs 216 through 221. However,
ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with
synthetic substitute, percutaneous approach) is the comparable
translation for both ICD-9-CM procedure code 35.33 and ICD-9-CM
procedure code 35.97 (Percutaneous mitral valve repair with implant),
which grouped to MS-DRGs 273 and 274 as mentioned previously.
Upon review of the 16 ICD-10-PCS procedure codes submitted for
consideration by the requestor, we determined that we cannot propose
the suggested change because the resulting ICD-10 MS-DRG logic would
not be an accurate replication of the ICD-9-CM based MS-DRG logic.
Specifically, it is not possible to replicate reassigning the
percutaneous annuloplasty codes from ICD-9-CM based MS-DRGs 216 through
221 to a new MS-DRG because we cannot isolate those cases from
procedure code 35.33. Under ICD-9-CM, procedure code 35.33 does not
differentiate the specific type of approach used to perform the
procedure. This is in contrast to the 60 comparable ICD-10 code
translations that do differentiate among various approaches (open,
percutaneous, and percutaneous endoscopic).
As stated previously, if the ICD-9-CM and ICD-10 versions of the
MS-DRGs cease to be replications of each other, the relative payment
weights (computed using the ICD-9-CM based MS-DRGs) would be
inconsistent with the ICD-10 MS-DRG assignment, which may cause
unintended payment redistribution. Therefore, we are not proposing to
[[Page 24987]]
create a new MS-DRG for transcatheter mitral valve repair with implant
procedures for FY 2017.
The second option in the request was to evaluate reassigning cases
involving the MitraClip[supreg] to MS-DRGs 266 and 267. This option is
not supported for the same reasons provided in previous rulemaking
regarding differences between valve replacements and valve repairs. Our
clinical advisors do not believe that these procedures are clinically
coherent or similar in terms of resource consumption because the
MitraClip[supreg] technology is utilized for a percutaneous mitral
valve repair, while the other technologies assigned to MS-DRGs 266 and
267 are utilized for transcatheter/endovascular cardiac valve
replacements. In addition, if cases involving the MitraClip[supreg]
were reassigned to MS-DRGs 266 and 267, they would be overpaid by
approximately $10,000 as shown in the table below. Our clinical
advisors agree that we should not propose to reassign endovascular
cardiac valve repair procedures to the endovascular cardiac valve
replacement MS-DRGs.
Endovascular Cardiac Valve Replacement With and Without MCC
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
MS-DRG 266--All cases........................................... 7,436 8.54 $59,675
MS-DRG 267--All cases........................................... 8,480 4.45 47,013
----------------------------------------------------------------------------------------------------------------
Next, we analyzed claims data from the December 2015 update of the
FY 2015 MedPAR file relating to the possible reassignment of cases
involving the MitraClip[supreg] (identified by ICD-9-CM procedure code
35.97) to MS-DRGs 228, 229, and 230 (Other Cardiothoracic Procedures
with MCC, with CC, and without CC/MCC, respectively). However, as shown
in the findings in the table below, the claims data did not support
this option under the current 3-way severity level split. That is, the
data findings based on reassignment of MitraClip[supreg] cases (ICD-9-
CM procedure code 35.97) to MS-DRGs 228, 229, and 230 did not support
the required criterion that there be at least a $2,000 difference
between subgroups. A reassignment would not meet the requirement for
the ``with CC'' and ``without CC/MCC'' subgroups ($34,461 - $33,216 =
$1,245).
Other Cardiothoracic Procedures (With Procedure Code 35.97)
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 228--with MCC............................................ 1,966 11.53 $51,634
MS-DRG 229--with CC............................................. 2,318 6.28 34,461
MS-DRG 230--without CC/MCC...................................... 709 3.76 33,216
----------------------------------------------------------------------------------------------------------------
We then performed additional analysis consisting of the base DRG
report for MS-DRGs 228, 229 and 230. As shown in the table below, the
average costs between the ``with CC'' and the ``without CC/MCC''
subgroups no longer meet the criterion that there be at least a 20-
percent difference in average costs between subgroups. These data
findings support collapsing MS-DRGs 228, 229, and 230 from a 3-way
severity level split into a 2-way severity level split (with MCC and
without MCC) based on 2 years (FY 2014 and FY 2015) of MedPAR data.
This option would involve the deletion of an MS-DRG.
Other Cardiothoracic Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average length Average length
MS-DRG Number of of stay FY Average costs Number of of stay FY Average costs
cases FY 2015 2015 FY 2015 cases FY 2014 2014 FY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
MS-DRG 228--with MCC.................................... 1,509 12.73 $51,960 1,486 12.75 $50,688
MS-DRG 229--with CC..................................... 1,835 7.16 33,786 1,900 7.46 33,277
MS-DRG 230--without CC/MCC.............................. 499 4.52 30,697 443 4.84 31,053
--------------------------------------------------------------------------------------------------------------------------------------------------------
In the additional analysis, we evaluated if reassignment of cases
reporting ICD-9-CM procedure code 35.97 to this proposed 2-way severity
split was supported. We confirmed that the reassignment of ICD-9-CM
procedure code 35.97 could be replicated under the ICD-9 MS-DRGs. We
believe that deleting MS-DRG 230, revising MS-DRG 229, and reassigning
cases with procedure code 35.97 from MS-DRGs 273 and 274 to this new
structure would reflect these procedures more accurately in the ICD-10
MS-DRGs. Our clinical advisors agreed with a proposal to delete MS-DRG
230 and reassign cases involving percutaneous mitral valve repair with
implant (MitraClip[supreg]) to MS-DRG 228 and revised MS-DRG 229. We
believe that this approach would maintain clinical coherence for these
MS-DRGs and reflect more appropriate payment for procedures involving
percutaneous mitral valve repair. The proposed revisions to the MS-
DRGs, which include the MitraClip[supreg] cases, are shown in the table
below.
[[Page 24988]]
Other Cardiothoracic Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
Proposed revised MS-DRGs cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 228--with MCC............................................ 1,966 11.53 $51,634
MS-DRG 229--without MCC......................................... 3,027 5.69 34,169
----------------------------------------------------------------------------------------------------------------
For FY 2017, we are proposing to collapse MS-DRGs 228, 229, and 230
from three severity levels to two severity levels by deleting MS-DRG
230 and revising MS-DRG 229. We also are proposing to reassign ICD-9-CM
procedure code 35.97 and the cases reporting ICD-10-PCS procedure code
02UG3JZ (Supplement mitral valve with synthetic substitute,
percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and
proposed revised MS-DRG 229. The title of MS-DRG 229 would be modified
as follows to reflect the ``without MCC'' designation. The title of
proposed revised MS-DRG 229 would be ``Other Cardiothoracic Procedures
without MCC''. The title for MS-DRG 228 would remain the same: MS-DRG
228 (Other Cardiothoracic Procedures with MCC). We are inviting public
comments on our proposals.
We also note that, as discussed earlier in this section, in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49371), ICD-10-PCS code 02UG3JZ
(Supplement mitral valve with synthetic substitute, percutaneous
approach) was assigned to MS-DRGs 231 and 232 (Coronary Bypass with
PTCA with MCC and without MCC, respectively), in addition to new MS-
DRGs 273 and 274, to fully replicate the ICD-9-CM based MS-DRG logic
for ICD-9-CM procedure code 35.97. If our proposal in this FY 2017
proposed rule to reassign ICD-10-PCS code 02UG3JZ to MS-DRGs 228 and
proposed revised MS-DRG 229 is finalized in the FY 2017 IPPS/LTCH PPS
final rule, it will eliminate the need to continue having ICD-10-PCS
code 02UG3JZ and ICD-9-CM code 35.97 group to MS-DRGs 231 and 232. This
is due to the fact that, currently, MS-DRGs 228, 229, and 230 are
listed higher than MS-DRGs 231 through 236 in the surgical hierarchy,
as shown in the ICD-9 and ICD-10 MS-DRGs Definitions Manual Files in
Appendix D--MS-DRG Surgical Hierarchy by MDC and MS-DRG, which is
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.
Therefore, if the proposal is finalized for FY 2017, cases reporting
ICD-10-PCS procedure code 02UG3JZ will group to MS-DRGs 228 and revised
MS-DRG 229 versus MS-DRGs 231 and 232 because of the surgical hierarchy
GROUPER logic.
As a result, we are proposing to remove ICD-10-PCS procedure code
02UG3JZ and ICD-9-CM procedure code 35.97 from the PTCA list in MS-DRGs
231 and 232 (Coronary Bypass with PTCA with MCC and without MCC,
respectively) for FY 2017 if the proposal to reassign ICD-9-CM
procedure code 35.97 and the cases reporting ICD-10-PCS procedure codes
02UG3JZ from MS-DRGs 273 and 274 to MS-DRGs 228 and proposed revised
MS-DRG 229 is finalized. We are inviting public comments on our
proposals.
e. MS-DRG 245 (AICD Generator Procedures)
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49369), we stated
that we would continue to monitor MS-DRG 245 (AICD Generator
Procedures) to determine if the data supported subdividing this base
MS-DRG into severity levels. As displayed in the table below, the
results of the FY 2015 data analysis showed there were a total of 1,464
cases, with an average length of stay of 5.5 days and average costs of
$34,564 for MS-DRG 245.
AICD Generator Procedures
----------------------------------------------------------------------------------------------------------------
Average length
MS-DRG Number of cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 245................................................... 1,464 5.5 $34,564
----------------------------------------------------------------------------------------------------------------
We applied the five criteria established in the FY 2008 IPPS final
rule (72 FR 47169), as described in section II.F.1.b. of the preamble
of this proposed rule to determine if it was appropriate to subdivide
MS-DRG 245 into severity levels. The table below illustrates our
findings.
AICD Generator Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG by suggested severity level cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 245--with MCC............................................ 449 8.37 $40,175
MS-DRG 245--with CC............................................. 861 4.59 32,518
MS-DRG 245--without CC/MCC...................................... 154 2.86 29,646
----------------------------------------------------------------------------------------------------------------
Based on our analysis of claims data from the December 2015 update
of the FY 2015 MedPAR file, the data findings do not support creating
new severity levels. The findings show that the data do not meet the
criteria for a 3-way severity level split as the criterion that there
be at least a 20-percent difference in average costs between subgroups
is
[[Page 24989]]
not met for the ``with CC'' and ``without CC/MCC'' severity levels. We
also looked at the prospect of a 2-way severity level split.
AICD Generator Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG by suggested severity level cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 245--with MCC............................................ 449 8.37 $40,175
MS-DRG 245--without MCC......................................... 1,015 4.33 32,081
----------------------------------------------------------------------------------------------------------------
The findings do show that the data are close to meeting the
criteria for a 2-way severity level split of ``with MCC and without
MCC.'' However, the required criterion that there must be at least 500
cases in the MCC group is not met.
Therefore, for FY 2017, we are not proposing to subdivide MS-DRG
245 into severity levels. We are inviting public comments on our
proposal to maintain the current structure for MS-DRG 245.
6. MDC 6 (Diseases and Disorders of the Digestive System): Excision of
Ileum
We received a request to analyze an MS-DRG replication issue from
the ICD-9-CM based MS-DRGs to the ICD-10 based MS-DRGs for excision
procedures performed on the ileum. Under ICD-9-CM, procedure code 45.62
(Other partial resection of small intestine) was assigned to MS-DRGs
329, 330 and 331 (Major Small and Large Bowel Procedures with MCC, with
CC, and without CC/MCC, respectively). Under the current ICD-10 MS-DRGs
Version 33, ICD-10-PCS procedure code 0DBB0ZZ (Excision of ileum, open
approach) is assigned to MS-DRGs 347, 348, and 349 (Anal and Stomal
Procedures with MCC, with CC, and without CC/MCC, respectively). The
requestor indicated that, despite the variation in terms for
``excision'' and ``resection'' between the two code sets, the surgical
procedure to remove a portion of the small intestine, whether it is the
ileum, duodenum, or jejunum, has not changed and should not result in
different MS-DRG assignments when translated from ICD-9-CM to ICD-10.
We agree that this is a replication error. In addition to ICD-10-
PCS code 0DBB0ZZ, we also reviewed the MS-DRG assignments for ICD-10-
PCS code 0DBA0ZZ (Excision of jejunum, open approach) and determined
the MS-DRG assignment for this code resulted in the same replication
error. Therefore, we are proposing to reassign ICD-10-PCS codes 0DBB0ZZ
and 0DBA0ZZ from MS-DRGs 347, 348, and 349 to MS-DRGs 329, 330, and
331, effective with the ICD-10 MS-DRGs Version 34 on October 1, 2016.
We are inviting public comments on our proposal.
7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and
Pancreas): Bypass Procedures of the Veins
We received a request to assign ICD-10-PCS code 06183DY (Bypass
portal vein to lower vein with intraluminal device, percutaneous
approach) to MDC 7 (Diseases and Disorders of the Hepatobiliary System
and Pancreas) under MS-DRGs 405, 406, and 407 (Pancreas Liver and Shunt
Procedures with MCC, with CC, and without CC/MCC, respectively). The
requestor described this code as capturing a transjugular intrahepatic
portosystem shunt procedure. The requestor stated that, under ICD-9-CM,
when a procedure for cirrhosis of the liver was performed, the
procedure was assigned to ICD-9-CM code 39.1 (Intra-abdominal venous
shunt). The requestor noted that when ICD-9-CM procedure code 39.1 is
reported with a principal diagnosis of cirrhosis of the liver, the
procedure was assigned to MS-DRG 405, 406, or 407 in the ICD-9-CM MS-
DRGs.
Currently, ICD-10-PCS procedure code 06183DY is assigned to only
MDC 5 (Diseases and Disorders of the Circulatory System) and MS-DRGs
270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with
CC, and without CC/MCC, respectively) under ICD-10 MS-DRGs Version 33.
The requestor stated that ICD-10-PCS procedure code 06183DY code should
also be assigned to MDC 7 and MS-DRGs 405, 406, and 407 to be
consistent with the ICD-9-CM MS-DRGs Version 32.
We analyzed this issue and agree that the ICD-10 MS-DRGs do not
fully replicate the ICD-9-CM MS-DRGs. We agree that ICD-10-PCS
procedure code 06183DY should be assigned to MDC 7 and MS-DRGs 405,
406, and 407 to replicate the ICD-9-CM MS-DRGs. Our clinical advisors
reviewed this issue and also agree that ICD-10-PCS procedure code
06183DY should be assigned to MDC 7 and MS-DRGs 405, 406, and 407.
Therefore, we are proposing to assign ICD-10-PCS procedure code 06183DY
to MDC 7 and MS-DRGs 405, 406, and 407 for FY 2017.
We are inviting public comments on our proposal.
8. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Proposed Updates to MS-DRGs 469 and 470 (Major Joint Replacement or
Reattachment of Lower Extremity With and Without MCC, respectively)
(1) Total Ankle Replacement (TAR) Procedures
We received a request to create a new MS-DRG for total ankle
replacement (TAR) procedures, which are currently assigned to MS-DRGs
469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity
with and without MCC, respectively). We previously discussed requested
changes to the MS-DRG assignment for TAR procedures in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR 28013 through 28015) and in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49896 through 49899). For FY 2015,
we did not change the MS-DRG assignment for total ankle replacements.
The requestor stated that reassigning total ankle replacement
procedures from MS-DRGs 469 and 470 to a new MS-DRG would have an
important benefit for the new Medicare Comprehensive Care for Joint
Replacement (CJR) model. The commenter noted that because total ankle
replacement cases currently are assigned to MS-DRGs 469 and 470, they
are included in the model.
Ankle replacement procedures were captured by ICD-9-CM code 81.56
(Total ankle replacement). We examined claims data for total ankle
procedures using the December 2015 update of the FY 2015 MedPAR file.
Our findings are displayed in the table below.
[[Page 24990]]
Total Ankle Replacement Cases Reported in MS-DRGs 469 and 470
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 469--All cases........................................... 25,729 6.92 $22,358
MS-DRG 469--Total ankle replacement cases....................... 30 5.40 34,889
MS-DRG 470--All cases........................................... 421,149 2.92 14,834
MS-DRG 470--Total ankle replacement cases....................... 1,626 1.94 20,019
----------------------------------------------------------------------------------------------------------------
As the total ankle replacement claims data analysis showed, these
procedures represent a small fraction of the total number of cases
reported in MS-DRGs 469 and 470. There were 30 total ankle replacement
cases reported in MS-DRG 469 and 1,626 total ankle replacement cases in
MS-DRG 470, compared to 25,729 total cases reported in MS-DRG 469 and
421,149 total cases reported in MS-DRG 470. The average length of stay
for total ankle replacement cases was 5.40 days and average costs for
total ankle replacement cases were $34,889 reported in MS-DRG 469,
compared to average length of stay of 6.92 days and average costs of
$22,358 for all cases reported in MS-DRG 469. The average length of
stay for total ankle replacement cases was 1.94 days and average costs
of total ankle replacement cases were $20,019 reported in MS-DRG 470,
compared to an average length of stay of 2.92 days and average costs of
$14,834 for all cases reported in MS-DRG 470.
Given the low volume of cases, we believe that these cost data may
not be a complete measure of actual differences in inpatient resource
utilization for beneficiaries receiving total ankle replacements. In
addition, these total ankle replacement cases may have been impacted by
other factors such as complication or comorbidities. Several expensive
cases could impact the average costs for a very small number of
patients. The average cost of total ankle replacement cases reported in
MS-DRG 469 was $12,531 higher than all cases reported in MS-DRG 469
($34,889 compared to $22,358 for all reported cases), but there were
only 30 cases compared to a total of 25,729 cases reported in MS-DRG
469. The average cost of total ankle replacement cases reported in MS-
DRG 470 was $5,185 higher than all cases reported in MS-DRG 470. There
were 1,626 total ankle replacement cases out of a total of 421,149
cases reported in MS-DRG 470. The average costs of the total ankle
replacement cases were higher than those for all cases reported in MS-
DRG 469 and 470. However, some cases have higher and some cases have
lower average costs within any MS-DRG. MS-DRGs are groups of clinically
similar cases that have similar overall costs. Within a group of cases,
one would expect that some cases have costs that are higher than the
overall average and some cases have costs that are lower than the
overall average.
The data do not support creating a new total ankle replacement MS-
DRG for this small number of cases. Also, our clinical advisors pointed
out that creating a new MS-DRG for total ankle replacements would
result in combining cases reporting an MCC with an average length of
stay of 5.40 days and cases not reporting an MCC with an average length
of stay of 1.94 days. Our clinical advisors did not recommend the
creation of a new MS-DRG for this single procedure with such a small
number of cases. They also stated that patients undergoing total ankle
replacement have similar clinical features compared to other patients
undergoing procedures included in MS-DRGs 469 and 470. Furthermore, we
believe that the volume of total ankle replacement procedures performed
relative to hip and knee replacement procedures minimizes the benefit
that a new MS-DRG would have on the Medicare CJR model. Our clinical
advisors determined that the cases involving total ankle replacements
are more appropriately assigned to MS-DRGs 469 and 470 with the two
severity levels.
Based on the findings from our data analysis and the
recommendations from our clinical advisors, we are not proposing to
create a new MS-DRG for total ankle replacement procedures. We are
proposing to maintain the current MS-DRG structure for MS-DRGs 469 and
470.
We are inviting public comments on this proposal.
(2) Hip Replacement Procedures With Principal Diagnosis of Hip Fracture
We received several requests to remove hip replacement procedures
with a principal diagnosis of hip fracture from MS-DRGs 469 and 470
(Major Joint Replacement or Reattachment of Lower Extremity with and
without MCC, respectively) and to create a new MS-DRG for assignment of
these hip replacement procedures. One requestor suggested that if such
a new MS-DRG could not be created, CMS consider reassigning all hip
replacement procedures with a principal diagnosis of hip fracture only
to MS-DRG 469, even if there were no reported MCC.
The requestors stated that hip replacement procedures performed on
patients with hip fractures involve a more fragile population of
patients than the typical patient population who undergo elective hip
or knee replacement and that these more fragile patient cases also are
assigned to MS-DRGs 469 and 470. The requestors stated that cases of
patients who have hip replacements with hip fractures may have
significant comorbidities not present in patients who undergo elective
hip replacements. One requestor stated that the absolute number of
hospitalizations for hip fractures in the United States is currently
more than 350,000 and the number is rising. The requestor stated that
90 percent of hip fractures result from a simple fall, and that hip
fracture rates increase with age. According to the requestor, the 1-
year mortality rate for patients who undergo hip replacement procedures
after a hip fracture was approximately 20 percent, and the 3-year
mortality rate was up to 50 percent. The requestor also stated that one
out of three adults who lived independently before their hip fracture
remains in a nursing home for at least a year after the hip fracture.
In contrast, the requestor noted that patients under elective hip
replacement procedures for arthritis have fewer comorbidities, improved
health after the procedure, low rates of readmission, and less
postacute needs. The requestor believed that there are many factors
that impact the outcome of hip replacements for hip fractures,
including patient factors, fracture type, surgeon and hospital factors,
treatment decisions, complication rates, and rehabilitation factors/
access. The requestor added that, despite the commitment to
standardization, the use of protocol-driven care, early surgery (<24
hours) after surgical optimization, prevention of recurrent fractures,
and comanagement with medical/surgical teams, many patients who undergo
hip replacement procedures for hip
[[Page 24991]]
fractures have serious renal, cardiovascular, and liver disease, as
well as multiple medical comorbidities. The rates of postoperative
infections, readmissions, and postacute care for the patients who
undergo hip replacements for hip fractures are higher than for patients
who undergo elective hip replacement. Some requestors referenced the
Bundled Payments for Care Improvement Initiative (BPCI) and believed
that their requested changes to MS-DRGs 469 and 470 would support this
effort. The requestors stated that the MS-DRG assignment for the hip
replacement procedures with hip fractures has tremendous implications
for successful participation in the BPCI because the BPCI's clinical
episodes track to MS-DRG assignment, and the Major Joint Replacement of
the Lower Extremity Clinical Episode encompasses procedures assigned to
MS-DRGs 469 and 470. Alternatively, the requestors suggested that CMS
reassign all cases of hip replacement procedures with a principal
diagnosis of hip fracture to MS-DRG 469 to recognize the more
significant adverse health profile of these types of cases.
We examined claims data for cases reporting hip replacement
procedures for patients admitted with hip fractures under MS-DRGs 469
and 470 in the December 2015 update of the FY 2015 MedPAR file. We used
the following list of ICD-9-CM diagnosis codes to identify cases
representing hip replacements for hip fractures:
ICD-9-CM Diagnosis Codes Reviewed for Cases Representing Hip Replacement
for Hip Fractures
------------------------------------------------------------------------
ICD-9-CM diagnosis code Descriptions
------------------------------------------------------------------------
733.14................... Pathological fracture of neck of femur.
733.15................... Pathological fracture of other specified part
of femur.
733.81................... Malunion of fracture.
733.82................... Nonunion of fracture.
733.96................... Stress fracture of femoral neck.
808.0.................... Closed fracture of acetabulum.
808.1.................... Open fracture of acetabulum.
820.8.................... Fracture of unspecified part of neck of femur
closed.
820.9.................... Fracture of unspecified part of neck of femur
open.
820.00................... Fracture of unspecified intracapsular section
of neck of femur closed.
820.01................... Fracture of epiphysis (separation) (upper) of
neck of femur closed.
820.02................... Fracture of midcervical section of femur
closed.
820.03................... Fracture of base of neck of femur closed.
820.09................... Other transcervical fracture of femur closed.
820.10................... Fracture of unspecified intracapsular section
of neck of femur open.
820.11................... Fracture of epiphysis (separation) (upper) of
neck of femur open.
820.12................... Fracture of midcervical section of femur
open.
820.13................... Fracture of base of neck of femur open.
820.19................... Other transcervical fracture of femur open.
820.20................... Fracture of unspecified trochanteric section
of femur closed.
820.21................... Fracture of intertrochanteric section of
femur closed.
820.22................... Fracture of subtrochanteric section of femur
closed.
820.30................... Fracture of unspecified trochanteric section
of femur open.
820.31................... Fracture of intertrochanteric section of
femur open.
820.32................... Fracture of subtrochanteric section of femur
open.
------------------------------------------------------------------------
Our findings from our examination of the data are shown in the
table below.
Cases of Hip Replacements With and Without Principal Diagnosis of Hip Fracture
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 469--All cases........................................... 25,729 6.9 $22,358
MS-DRG 469--Hip replacement cases with hip fractures............ 14,459 7.9 22,852
MS-DRG 469--Hip replacement cases without hip fractures......... 4,714 5.7 22,430
MS-DRG 470--All cases........................................... 421,149 2.9 14,834
MS-DRG 470--Hip replacement cases with hip fractures............ 49,703 4.7 15,795
MS-DRG 470--Hip replacement cases without hip fractures......... 125,607 2.6 14,870
----------------------------------------------------------------------------------------------------------------
For MS-DRG 469, the average costs of all 25,729 reported cases were
$22,358 and the average length of stay was 6.9 days. Within MS-DRG 469,
there were 14,459 cases of hip replacements with hip fractures
reported, with average costs of $22,852 and an average length of stay
of 7.9 days. Within MS-DRG 469, there were 4,714 cases of hip
replacements without hip fractures reported, with average costs of
$22,430 and an average length of stay of 5.7 days. The average costs of
reported cases of hip replacements with hip fractures are similar to
the average costs of all cases reported within MS-DRG 469 ($22,852
compared to $22,358), and to the average costs of reported cases of hip
replacements without hip fractures ($22,852 compared to $22,430).
However, the average length of stay for cases of hip replacements with
hip fractures reported in MS-DRG 469 is higher than the average length
of stay for all cases reported in MS-DRG 469 and for cases of hip
replacements without hip fractures reported in MS-
[[Page 24992]]
DRG 469 (7.9 days compared to 6.9 days and 5.7 days, respectively.)
For MS-DRG 470, the average costs of all 421,149 cases reported
were $14,834 and the average length of stay was 2.9 days. Within MS-DRG
470, there were 49,703 reported cases of hip replacements with hip
fractures, with average costs $15,795 and an average length of stay of
4.7 days. Within MS-DRG 470, there were 125,607 cases of hip
replacements without hip fractures reported, with average costs of
$14,870 and an average length of stay of 2.6 days. However, the average
length of stay for cases of hip replacements with hip fractures
reported in MS-DRG 470 was higher than the average length of stay for
all cases and for cases of hip replacements without hip fractures
reported in MS-DRG 470 (4.7 days compared to 2.9 days and 2.6 days,
respectively). Therefore, the average costs of cases of hip
replacements with hip fractures were similar for both MS-DRG 469 and
MS-DRG 470 ($22,852 compared to $22,358 and $15,795 compared to
$14,834, respectively). However, the average lengths of stay are longer
for cases of hip replacements with hip fractures compared to all cases
reported in both MS-DRGs 469 and 470 (7.9 days compared to 6.9 days and
4.7 days compared to 2.9 days, respectively).
The claims data do not support creating a new MS-DRG for the
assignment of cases of hip replacements with hip fractures. As
discussed earlier, the average costs for cases of hip replacements with
hip fractures reported in MS-DRG 469 and MS-DRG 470 are similar to the
average costs for all cases reported in MS-DRG 469 and MS-DRG 470.
While the average length of stay is longer for cases of hip
replacements with hip fractures than for cases of hip replacements
without hip fractures reported within MS-DRGs 469 and 470, the
increased length of stay did not impact the average costs of reported
cases in either MS-DRG 469 or 470. The data showed that cases of hip
replacement procedures are clearly influenced by the presence of an
MCC. The average costs of all cases reported in MS-DRG 469, which
identifies an MCC, were $22,358, compared to average costs of $14,834
for all cases reported in MS-DRG 470, which did not identify an MCC.
The data showed that the presence of a principal diagnosis of a hip
fracture did not impact the average costs of cases reported in either
MS-DRG 469 or MS-DRG 470.
We also examined the data in relation to the request to reassign
all procedures of hip replacement with hip fractures from MS-DRG 470 to
MS-DRG 469, even if there is no MCC present. The data showed that the
49,703 cases of hip replacements with hip fractures reported in MS-DRG
470 have average costs of $15,795 and an average length of stay of 4.7
days. The 25,729 total cases of hip replacements reported in MS-DRG 469
have average costs of $22,358 and an average length of stays of 6.9
days. Therefore, the data for average costs and average length of stay
for all cases involving hip replacement procedures with hip fractures
reported in MS-DRG 470 do not support reassigning all cases of hip
replacement procedures with hip fractures to MS-DRG 469, even if there
is no MCC present.
Our clinical advisors reviewed this issue and agree that the hip
replacement procedures performed for patients with hip fractures are
appropriately assigned to MS-DRGs 469 and 470. They did not support
reassigning these procedures from MS-DRGs 469 and 470 to a new MS-DRG
or reassigning all cases of hip replacement procedures with hip
fractures to MS-DRG 469, even if the case does not have an MCC. Our
clinical advisors stated that the surgical techniques used for hip
replacements are similar for all patients. They advised that the fact
that some patients also had a hip fracture would not justify creating a
new MS-DRG or reassigning all cases of hip replacement procedures with
hip fractures to MS-DRG 469. Our clinical advisors noted that the costs
of cases of hip replacements are more directly impacted by the presence
or absence of an MCC than the presence or absence of a hip fracture.
Based on the findings from our data analyses and the
recommendations from our clinical advisors, we are not proposing to
create a new MS-DRG for the assignment of procedures involving hip
replacement in patients who have hip fractures or to reassign all
procedures involving hip replacements with hip fractures to MS-DRG 469
even if there is no MCC present. We are proposing to maintain the
current MS-DRG structure for MS-DRGs 469 and 470.
We are inviting public comments on our proposals.
b. Revision of Total Ankle Replacement Procedures
(1) Revision of Total Ankle Replacement Procedures
We received a request to modify the MS-DRG assignment for revision
of total ankle replacement procedures. Currently, these procedures are
assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and
Connective Tissue O.R. Procedures with MCC, with CC and without CC/MCC,
respectively). This topic was discussed in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28013 through 28015) and the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49896 through 49899). However, at that time, we did
not change the MS-DRG assignment for revisions of total ankle
replacement procedures.
The requestor presented two options for consideration for modifying
the MS-DRG assignment for the revisions of total ankle replacement
procedures. The requestor's first option was to create a new MS-DRG for
the assignment of revision of total ankle replacement procedures. The
requestor believed that a new MS-DRG would be justified based on the
distinct costs, resources, and utilization associated with ankle joint
revision cases. The requestor's second option was to reassign revision
of total ankle replacement procedures to MS-DRGs 466, 467, and 468
(Revision of Hip or Knee Replacement with MCC, with CC, and without CC/
MCC, respectively) and rename MS-DRGs 466, 467, and 468 as ``Revision
of Hip, Knee, or Ankle with MCC, with CC, and without CC/MCC'',
respectively. The requestor believed that this second option would be
justified because it is a reasonable, temporary approach until CMS has
sufficient utilization and cost data for revision of total ankle
replacement procedures based on the reporting of the new and more
specific ICD-10-PCS procedure codes. The requestor pointed out that the
following more specific ICD-10-PCS procedure codes were implemented
effective October 1, 2015, with the implementation of ICD-10. The
requestor stated that these new codes will provide improved data on
these procedures that can be analyzed for future MS-DRG updates.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0SWF0JZ.................. Revision of synthetic substitute in right
ankle joint, open approach.
0SWF3JZ.................. Revision of synthetic substitute in right
ankle joint, percutaneous approach.
0SWF4JZ.................. Revision of synthetic substitute in right
ankle joint, percutaneous endoscopic
approach.
[[Page 24993]]
0SWFXJZ.................. Revision of synthetic substitute in right
ankle joint, external approach.
0SWG0JZ.................. Revision of synthetic substitute in left
ankle joint, open approach.
0SWG3JZ.................. Revision of synthetic substitute in left
ankle joint, percutaneous approach.
0SWG4JZ.................. Revision of synthetic substitute in left
ankle joint, percutaneous endoscopic
approach.
0SWGXJZ.................. Revision of synthetic substitute in left
ankle joint, external approach.
------------------------------------------------------------------------
We agree with the requestor that the previous code used to identify
revisions of total ankle replacement procedures, ICD-9-CM procedure
code 81.59 (Revision of joint replacement of lower extremity, not
elsewhere classified), is not as precise as the new ICD-10-PCS
procedure codes that were implemented on October 1, 2015. As discussed
in the FY 2015 IPPS/LTCH PPS proposed rule and final rule, ICD-9-CM
procedure code 81.59 included procedures involving revisions of joint
replacements of a variety of lower extremity joints, including the
ankle, foot, and toe. Therefore, the ICD-9-CM procedure code does not
provide precise information on the number of revisions of total ankle
replacement procedures as do the ICD-10-PCS procedure codes listed
above. We also agree that the ICD-10-PCS procedure codes will provide
more precise data on revisions of ankle replacements.
We examined claims data from the December 2015 update of the FY
2015 MedPAR file on cases reporting procedure code 81.59 in MS-DRGs
515, 516, and 517. The table below shows our findings.
Revisions of Joint Replacements Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 515--All cases........................................... 3,852 8.54 $21,900
MS-DRG 515--Cases reporting procedure code 81.59................ 2 7.00 36,983
MS-DRG 516--All cases........................................... 8,567 5.24 14,839
MS-DRG 516--Cases reporting procedure code 81.59................ 19 3.74 14,957
MS-DRG 517--All cases........................................... 5,664 3.20 12,979
MS-DRG 517--Cases reporting procedure code 81.59................ 47 1.89 16,524
----------------------------------------------------------------------------------------------------------------
As can be seen from the data in the above table, there were only 68
total cases reported with procedure code 81.59 among MS-DRGs 515, 516,
and 517: 2 Cases in MS-DRG 515; 19 cases in MS-DRG 516; and 47 in MS-
DRG 517. We point out that while there were 68 total cases reported
with procedure code 81.59 in MS-DRGs 515, 516, and 517, we are unable
to determine how many of these cases were actually revisions of ankle
replacements versus other revisions of joint replacement of lower
extremities such as those of the foot or toe. This small number of
cases does not justify creating a new MS-DRG as suggested by the
requestor in its first option.
While the average costs of cases reporting procedure code 81.59 in
MS-DRG 515 were $36,983, compared to $21,900 for all cases reported in
MS-DRG 515, there were only 2 cases reporting procedure code 81.59 in
MS-DRG 515, of the 3,852 total cases reported in MS-DRG 515. In MS-DRG
516, the average costs of the 19 cases reporting procedure code 81.59
cases were $14,957, which is very close to the average costs of $14,839
for all 8,567 cases reported in MS-DRG 516. The average costs for cases
reporting procedure code 81.59 in MS-DRG 517 were higher than the
average costs for all cases reported in MS-DRG 517 ($16,524 for cases
reporting procedure code 81.59 cases compared to $12,979 for all cases
reported in MS-DRG 517). While the average costs for cases reporting
procedure code 81.59 were $3,545 higher than all cases reported in MS-
DRG 517, we point out that there were only 47 cases that reported
procedure code 81.59 out of the 5,664 total cases reported in MS-DRG
517. The relatively small number of cases may have been impacted by
other factors. Several expensive cases could impact the average costs
for a very small number of patients.
As stated by the requestor, we do not yet have data using the more
precise ICD-10-PCS revisions of total ankle replacement procedure codes
that were implemented on October 1, 2015. These new codes will more
precisely identify the number of patients who had a revision of total
ankle replacement procedure and the number of patients who had
revisions of other lower joint replacement procedures such as the foot
or toe. The available clinical data from the December 2015 update of
the FY 2015 MedPAR file do not support the creation of a new MS-DRG for
the assignment of revisions of total ankle replacement procedures or
the reassignment of these cases to other MS-DRGs, such as MS-DRGs 466,
467, and 468, because there were so few cases and because we could not
determine how many of these cases were revisions of ankle replacements.
Claims data on the ICD-10-PCS codes will not be available until 2 years
after the implementation of the codes, which was October 1, 2015.
Our clinical advisors reviewed this issue and determined that the
revision of total ankle replacement procedures are appropriately
classified within MS-DRGs 515, 516, and 517 along with other orthopedic
procedures captured by nonspecific codes. They do not support
reassignment of the procedures to MS-DRGs 466, 467, and 468 until such
time as detailed data for ICD-10-PCS claims are available to evaluate
revision of total ankle replacement procedures. Therefore, based on the
findings of our analysis of claims data and the advice of our clinical
advisors, we are proposing to maintain the current MS-DRG assignment
for revision of total ankle replacement procedures for FY 2017.
We are inviting public comments on our proposal.
(2) Combination Codes for Removal and Replacement of Knee Joints
We received several requests asking CMS to examine whether
additional combinations of procedure codes for the removal and
replacements of knee joints should be added to MS-DRGs 466, 467,
[[Page 24994]]
and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and
without CC/MCC, respectively). This topic was discussed in the FY 2016
IPPS/LTCH PPS proposed rule (80 FR 24379 through 24395) and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49390 through 49406). One requestor
stated that the procedure codes in the following table were not
included in the code pairs that group to MS-DRGs 466, 467, and 468 in
the ICD-10 MS-DRGs Version 33.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0SPD08Z.................. Removal of spacer from left knee joint, open
approach.
0SPD38Z.................. Removal of spacer from left knee joint,
percutaneous approach.
0SPD48Z.................. Removal of spacer from left knee joint,
percutaneous endoscopic approach.
0SPC08Z.................. Removal of spacer from right knee joint, open
approach.
0SPC38Z.................. Removal of spacer from right knee joint,
percutaneous approach.
0SPC48Z.................. Removal of spacer from right knee joint,
percutaneous approach.
------------------------------------------------------------------------
Other requestors stated that the procedure codes in the following
table are not included in the list of combinations that group to MS-
DRGs 466, 467, and 468 when reported in conjunction with an ICD-10-PCS
code for the removal of synthetic substitute from the joint in the ICD-
10 MS-DRGs Version 33.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0SRC0J9.................. Replacement of right knee joint with
synthetic substitute, cemented, open
approach.
0SRC0JA.................. Replacement of right knee joint with
synthetic substitute, uncemented, open
approach.
0SRC0JZ.................. Replacement of right knee joint with
synthetic substitute, open approach.
0SRC07Z.................. Replacement of right knee joint with
autologous tissue substitute, open approach.
0SRC0KZ.................. Replacement of right knee joint with
nonautologous tissue substitute, open
approach.
------------------------------------------------------------------------
We agree that the joint revision cases involving the removal of a
spacer and subsequent insertion of a new knee joint prosthesis should
be assigned to MS-DRGs 466, 467, and 468. We examined knee joint
revision combination codes that are not currently assigned to MS-DRGs
466, 467, and 468 in ICD-10 MS-DRGs Version 33 and identified 58
additional combinations that also should be included so that the same
logic is used in the ICD-10 version of the MS-DRGs as is used in the
ICD-9-CM version. We are proposing to add the following 58 new code
combinations that capture the joint revisions to the Version 34 MS DRG
structure for MS-DRGs 466, 467, and 468, effective October 1, 2016.
ICD-10-PCS Code Pairs Proposed To Be Added to Version 34 ICD-10 MS-DRGs 466, 467, and 468: Proposed New Knee
Revision ICD-10-PCS Combinations
----------------------------------------------------------------------------------------------------------------
Code Code description Code Code description
----------------------------------------------------------------------------------------------------------------
0SPC08Z.................. Removal of Spacer from and 0SRC0J9.................. Replacement of Right
Right Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Cemented, Open
Approach.
0SPC08Z.................. Removal of Spacer from and 0SRC0JA.................. Replacement of Right
Right Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Uncemented, Open
Approach.
0SPC08Z.................. Removal of Spacer from and 0SRC0JZ.................. Replacement of Right
Right Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Open Approach.
0SPC08Z.................. Removal of Spacer from and 0SRT0J9.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPC08Z.................. Removal of Spacer from and 0SRT0JA.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPC08Z.................. Removal of Spacer from and 0SRT0JZ.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPC08Z.................. Removal of Spacer from and 0SRV0J9.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPC08Z.................. Removal of Spacer from and 0SRV0JA.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPC08Z.................. Removal of Spacer from and 0SRV0JZ.................. Replacement of Right
Right Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRC0J9.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Cemented, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRC0JA.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Uncemented, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRC0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Open Approach.
[[Page 24995]]
0SPC38Z.................. Removal of Spacer from and 0SRT0J9.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPC38Z.................. Removal of Spacer from and 0SRT0JA.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRT0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRV0J9.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPC38Z.................. Removal of Spacer from and 0SRV0JA.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPC38Z.................. Removal of Spacer from and 0SRV0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRC0J9.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Cemented, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRC0JA.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Uncemented, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRC0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Open Approach.
0SPC48Z.................. Removal of Spacer from and 0SRT0J9.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Cemented,
Open Approach.
0SPC48Z.................. Removal of Spacer from and 0SRT0JA.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute,
Uncemented, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRT0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRV0J9.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Cemented,
Open Approach.
0SPC48Z.................. Removal of Spacer from and 0SRV0JA.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute,
Uncemented, Open
Approach.
0SPC48Z.................. Removal of Spacer from and 0SRV0JZ.................. Replacement of Right
Right Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Open
Approach.
0SPC4JZ.................. Removal of Synthetic and 0SRT0JZ.................. Replacement of Right
Substitute from Right Knee Joint, Femoral
Knee Joint, Surface with Synthetic
Percutaneous Endoscopic Substitute, Open
Approach. Approach.
0SPC4JZ.................. Removal of Synthetic and 0SRV0JZ.................. Replacement of Right
Substitute from Right Knee Joint, Tibial
Knee Joint, Surface with Synthetic
Percutaneous Endoscopic Substitute, Open
Approach. Approach.
0SPD08Z.................. Removal of Spacer from and 0SRD0J9.................. Replacement of Left
Left Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Cemented, Open
Approach.
0SPD08Z.................. Removal of Spacer from and 0SRD0JA.................. Replacement of Left
Left Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Uncemented, Open
Approach.
0SPD08Z.................. Removal of Spacer from and 0SRD0JZ.................. Replacement of Left
Left Knee Joint, Open Knee Joint with
Approach. Synthetic Substitute,
Open Approach.
0SPD08Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPD08Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPD08Z.................. Removal of Spacer from and 0SRU0JZ.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Femoral
Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPD08Z.................. Removal of Spacer from and 0SRW0J9.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPD08Z.................. Removal of Spacer from and 0SRW0JA.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPD08Z.................. Removal of Spacer from and 0SRW0JZ.................. Replacement of Left
Left Knee Joint, Open Knee Joint, Tibial
Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRD0J9.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Cemented, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRD0JA.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Uncemented, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRD0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Approach. Synthetic Substitute,
Open Approach.
[[Page 24996]]
0SPD38Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPD38Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRU0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRW0J9.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute, Cemented,
Open Approach.
0SPD38Z.................. Removal of Spacer from and 0SRW0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute,
Uncemented, Open
Approach.
0SPD38Z.................. Removal of Spacer from and 0SRW0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Approach. Surface with Synthetic
Substitute, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRD0J9.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Cemented, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRD0JA.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Uncemented, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRD0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint with
Percutaneous Endoscopic Synthetic Substitute,
Approach. Open Approach.
0SPD48Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Cemented,
Open Approach.
0SPD48Z.................. Removal of Spacer from and 0SRU0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute,
Uncemented, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRU0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint, Femoral
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRW0J9.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Cemented,
Open Approach.
0SPD48Z.................. Removal of Spacer from and 0SRW0JA.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute,
Uncemented, Open
Approach.
0SPD48Z.................. Removal of Spacer from and 0SRW0JZ.................. Replacement of Left
Left Knee Joint, Knee Joint, Tibial
Percutaneous Endoscopic Surface with Synthetic
Approach. Substitute, Open
Approach.
0SPD4JZ.................. Removal of Synthetic and 0SRU0JZ.................. Replacement of Left
Substitute from Left Knee Joint, Femoral
Knee Joint, Surface with Synthetic
Percutaneous Endoscopic Substitute, Open
Approach. Approach.
----------------------------------------------------------------------------------------------------------------
We are inviting public comments on our proposal to add the joint
revision code combinations listed above to the ICD-10 Version 34 MS-
DRGs 466, 467, and 468.
c. Decompression Laminectomy
Currently, under ICD-10-PCS, the procedure describing a
decompression laminectomy is coded for the ``release'' of a specified
area of the spinal cord. These decompression codes are assigned to MS-
DRGs 028, 029, and 030 (Spinal Procedures with MCC, with CC or Spinal
Neurostimulators, or without CC/MCC, respectively) and to MS-DRGs 518,
519, and 520 (Back and Neck Procedures Except Spinal Fusion with MCC or
Disc Device or Neurostimulator, with CC, or without CC/MCC,
respectively) in the ICD-10 MS-DRGs Version 33. A commenter brought to
our attention that codes describing release of specific peripheral
nerve are assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal
System and Connective Tissue O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively). The commenter suggested that a subset of
these codes also be assigned to MS-DRGs 028 through 030 and MS-DRGs 518
through 520 for clinical coherence purposes. The commenter stated, for
example, that ICD-10-PCS procedure code 00NY0ZZ (Release lumbar spinal
cord, open approach) is assigned to MS-DRGs 028 through 030 and MS-DRGs
518 through 520. However, ICD-10-PCS procedure code 01NB0ZZ (Release
lumbar nerve, open approach) is assigned to MS-DRGs 515 through 517.
We agree with the commenter's suggestion. Therefore, for FY 2017,
we are proposing to reassign the ICD-10-PCS procedure codes listed in
the following table from MS-DRGs 515 through 517 to MS-DRGs 028 through
030 and MS-DRGs 518 through 520 under the ICD-10 MS-DRGs Version 34.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
01N00ZZ...................... Release cervical plexus, open approach.
01N03ZZ...................... Release cervical plexus, percutaneous
approach.
01N04ZZ...................... Release cervical plexus, percutaneous
endoscopic approach.
01N10ZZ...................... Release cervical nerve, open approach.
01N13ZZ...................... Release cervical nerve, percutaneous
approach.
[[Page 24997]]
01N14ZZ...................... Release cervical nerve, percutaneous
endoscopic approach.
01N80ZZ...................... Release thoracic nerve, open approach.
01N83ZZ...................... Release thoracic nerve, percutaneous
approach.
01N84ZZ...................... Release thoracic nerve, percutaneous
endoscopic approach.
01N90ZZ...................... Release lumbar plexus, open approach.
01N93ZZ...................... Release lumbar plexus, percutaneous
approach.
01N94ZZ...................... Release lumbar plexus, percutaneous
endoscopic approach.
01NA0ZZ...................... Release lumbosacral plexus, open
approach.
01NA3ZZ...................... Release lumbosacral plexus, percutaneous
approach.
01NA4ZZ...................... Release lumbosacral plexus, percutaneous
approach.
01NB0ZZ...................... Release lumbar nerve, open approach.
01NB3ZZ...................... Release lumbar nerve, percutaneous
approach.
01NB4ZZ...................... Release lumbar nerve, percutaneous
endoscopic approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal.
d. Lordosis
An ICD-10 replication issue involving four diagnosis codes related
to lordosis (excessive curvature of the lower spine) was discovered in
MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or Extensive Fusions with MCC,
with CC, and without CC/MCC). These MS-DRGs contain specific logic that
requires a principal diagnosis describing a spinal curvature, a
malignancy, or infection or a secondary diagnosis that describes a
spinal curvature disorder related to another condition.
Under the ICD-10 MS-DRGs Version 33, the following diagnosis codes
were listed on the principal diagnosis list and the secondary diagnosis
list for MS-DRGs 456, 457, and 458:
M40.50 (Lordosis, unspecified, site unspecified);
M40.55 (Lordosis, unspecified, thoracolumbar region);
M40.56 (Lordosis, unspecified, lumbar region); and
M40.57 (Lordosis, unspecified, lumbosacral region).
We are proposing to remove the above four diagnosis codes from the
secondary diagnosis list. We also are proposing to maintain these same
four codes in the logic for the principal diagnosis list. This proposed
change for MS-DRGs 456, 457, and 458 would be effective October 1,
2016, in the ICD-10 MS-DRGs Version 34.
We are inviting public comments on our proposals.
9. MDC 13 (Diseases and Disorders of the Female Reproductive System):
Pelvic Evisceration
In the ICD-10 MS-DRG Definitions Manual Version 33, the GROUPER
logic for ICD-10 MS-DRGs 332, 333, and 334 (Rectal Resection with MCC,
with CC and without CC/MCC, respectively) under MDC 6 (Diseases and
Disorders of the Digestive System) and the GROUPER logic for MS-DRGs
734 and 735 (Pelvic Evisceration, Radical Hysterectomy and Radical
Vulvectomy with CC/MCC and without CC/MCC, respectively) under MDC 13
(Diseases and Disorders of the Female Reproductive System) include a
``cluster'' of ICD-10-PCS procedure codes that describe pelvic
evisceration. A ``cluster'' is the term used to describe a circumstance
when a combination of ICD-10-PCS procedure codes is needed to fully
satisfy the equivalent meaning of an ICD-9-CM procedure code for it to
be considered a plausible code translation. The code cluster in MS-DRGs
332, 333, and 334 and MS-DRGs 734 and 735 is shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS procedure code
in cluster Description
------------------------------------------------------------------------
0TTB0ZZ.................. Resection of bladder, open approach.
0TTD0ZZ.................. Resection of urethra, open approach.
0UT20ZZ.................. Resection of bilateral ovaries, open
approach.
0UT70ZZ.................. Resection of bilateral fallopian tubes, open
approach.
0UT90ZZ.................. Resection of uterus, open approach.
0UTC0ZZ.................. Resection of cervix, open approach.
0UTG0ZZ.................. Resection of vagina, open approach.
------------------------------------------------------------------------
Pelvic evisceration (or exenteration) is a procedure performed to
treat gynecologic cancers (cervical, uterine, vulvar, and vaginal,
among others) and involves resection of pelvic structures such as the
procedures described by the cluster of procedure codes listed above.
Under the ICD-9-CM MS-DRGs Version 32, procedure code 68.8 (Pelvic
evisceration) was used to report pelvic evisceration. ICD-9-CM
procedure code 68.8 also was assigned to ICD-9-CM MS-DRGs 332, 333, and
334 and MS-DRGs 734 and 735 in MDCs 6 and 13, respectively. The
inclusion term in the ICD-9-CM Tabular List of Diseases for pelvic
evisceration (procedure code 68.8) was ``Removal of ovaries, tubes,
uterus, vagina, bladder, and urethra (with removal of sigmoid colon and
rectum).'' In the ICD-9-CM Tabular List, the terms shown in parentheses
are called a ``non-essential modifier''. A ``non-essential modifier''
is used in the classification to identify a supplementary word that
may, or may not, be present in the statement of a disease or procedure.
In other words, the terms in parentheses do not have to be documented
to report the code.
Because the removal of sigmoid colon and the removal of rectum were
classified as non-essential modifiers under ICD-9-CM, documentation
that identified that removal of those body sites occurred was not
required to report the procedure code describing pelvic evisceration
(procedure code 68.8). In other words, when a pelvic evisceration
procedure was performed and included removal of other body sites
(ovaries and tubes, among others) listed in the
[[Page 24998]]
inclusion term, absent the terms in parentheses, procedure code 68.8
could be reported and grouped appropriately to MDC 13 under MS-DRGs 734
and 735. When a pelvic evisceration procedure was performed and removal
of the body sites listed in the inclusion term occurred, including the
terms in parentheses, procedure code 68.8 could be reported and grouped
appropriately to MDC 6 under MS-DRGs 332 through 334.
Under ICD-10-PCS, users are instructed to code separately the
organs or structures that are actually removed and for which there is a
distinctly defined body part. Therefore, the case of a patient who
undergoes a pelvic evisceration (exenteration) that involves the
removal of the sigmoid colon and rectum would have each of those
procedure sites (sigmoid colon and rectum) coded and reported
separately (in addition to the procedure codes displayed in the
cluster). In this scenario, if the principal diagnosis is a condition
from the MDC 6 diagnosis list, the case would group to MS-DRGs 332,
333, and 334, regardless of the code cluster. In other words, it would
not be necessary to retain the code cluster describing procedures
performed on female pelvic organs in MDC 6.
Therefore, for FY 2017, we are proposing to remove the procedure
code cluster for pelvic evisceration procedures from MDC 6 under the
ICD-10 MS-DRGs Version 34. The cluster would remain in ICD-10 MDC 13
under MS-DRGs 734 and 735 only. We are inviting public comments on our
proposal.
10. MDC 19 (Mental Diseases and Disorders): Proposed Modification of
Title of MS-DRG 884 (Organic Disturbances and Mental Retardation)
We received a request to change the title of MS-DRG 884 (Organic
Disturbances and Mental Retardation) under MDC 19 (Mental Diseases and
Disorders) to ``MS-DRG 884 (Organic Disturbances and Intellectual
Disability)'' to reflect more recent terminology used to appropriately
describe the latter medical condition in the MDC.
We agree with the requestor that the reference to the phrase
``Mental Retardation'' should be changed to ``Intellectual
Disability'', to reflect the current terminology used to describe the
condition. Therefore, we are proposing to change the title of MS-DRG
884 as requested by the requestor.
We are inviting public comments on our proposal to change the title
of MS-DRG 884 from ``Organic Disturbances and Mental Retardation'' to
``Organic Disturbances and Intellectual Disability'', effective October
1, 2016, in the ICD-10 MS-DRGs Version 34.
11. MDC 23 (Factors Influencing Health Status and Other Contacts With
Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation With and
Without CC/MCC, Respectively)
We received several requests to examine the MS-DRG logic for MS-
DRGs 945 and 946 (Rehabilitation with CC/MCC and without CC/MCC,
respectively). The requestors were concerned that ICD-9-CM codes that
clearly identified an encounter for rehabilitation services such as
procedure codes V57.89 (Care involving other specified rehabilitation
procedure) and V57.9 (Care involving unspecified rehabilitation
procedure) were not included in ICD-10-CM Version 33. In addition, the
requestors pointed out that ICD-10-CM has significantly changed the
guidelines for coding of admissions/encounters for rehabilitation. The
requestors pointed out that under ICD-9-CM, Section I.B.15. of the
Official Guidelines for Coding and Reporting indicates that ``when the
purpose for the admission/encounter is rehabilitation, sequence the
appropriate V code from category V57, Care involving use of
rehabilitation procedures, as the principal/first listed diagnosis.''
The requestors stated that the concept of the ICD-9-CM category V57
codes is no longer valid in ICD-10-CM and the guidelines have been
revised to provide greater specificity. Instead, the requestors added,
the ICD-10-CM guidelines state in Section II.K., ``When the purpose for
the admission/encounter is rehabilitation, sequence first the code for
the condition for which the service is being performed. For example,
for an admission/encounter for rehabilitation for right-sided dominant
hemiplegia following a cerebrovascular infarction, report code I69.351,
Hemiplegia and hemiparesis following cerebral infarction affecting
right dominant side, as the first-listed or principal diagnosis.''
Given this lack of ICD-10-CM codes to indicate that the reason for
the encounter was for rehabilitation, some requesters asked that CMS
review ICD-10-CM codes for conditions requiring rehabilitation (such as
codes from category I69) and add them to MS-DRGs 945 and 946 when
rehabilitation services are provided in order to replicate the logic
found in the ICD-9-CM MS-DRG GROUPER. The requestors did not suggest
any specific ICD-10-CM codes to add to MS-DRGs 945 and 946.
One requestor made a specific recommendation for updating MS-DRGs
945 and 946. The requestor previously recommended that CMS review
diagnosis codes in ICD-10-CM category I69 for possible addition to MS-
DRGs 945 and 946. The requestor stated that, upon further review, they
believe that a great number of diagnosis codes beyond sequelae of
stroke (ICD-10-CM category I69) would need to be added in order to
replicate the logic of the ICD-9-CM MS-DRGs. Therefore, they modified
their recommendation as follows:
Designate MS-DRGs 945 and 946 as pre-major diagnostic
categories (Pre-MDC) MS-DRGs so that cases are grouped to these MS-DRGs
on the basis of the procedure code rather than the principal diagnosis.
The requestor stated that the ICD-10-PCS rehabilitation codes (Section
F, Physical Rehabilitation and Diagnostic Audiology, Body system 0,
Rehabilitation) should be used to group cases to MS-DRGs 945 and 946
similar to how the MS-DRG GROUPER logic currently treats lung
transplants and tracheostomies. This would ensure that the
rehabilitation procedure codes drive the MS-DRG assignment.
Revise ICD-10-PCS Official Guidelines for Coding and
Reporting and designate that the ICD-10-PCS rehabilitation codes be
used only for admissions for rehabilitation therapy.
We acknowledge that ICD-10-CM does not have clear diagnosis codes
that indicate the reason for the encounter was for rehabilitation
services. For that reason, CMS had to modify the MS-DRG logic using
ICD-10-PCS procedure codes to assign these cases to MS-DRGs 945 and
946. The logic used in MS-DRGs 945 and 946 is shown in the Definitions
Manual Version 33, which is posted on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. We also
posted a Frequently Asked Question section to explain how inpatient
admissions are assigned to MS-DRGs 945 and 946, which is posted on the
CMS Web site at: https://questions.cms.gov/faq.php?id=5005&faqId=12548.
As indicated in the Frequently Asked Question section, the ICD-10-CM
codes required a different approach to make sure the same cases
captured with ICD-9-CM codes would be captured with ICD-10-CM codes. As
stated earlier, ICD-10-CM does not contain specific codes for
encounters for rehabilitation such as ICD-9-CM procedure codes V57.89
and V57.9. In order to replicate the ICD-9-CM MS-DRG logic using ICD-
10-CM and ICD-
[[Page 24999]]
10-PCS codes, CMS developed the new logic included in the MS-DRG
Version 33 Definitions Manual.
The Frequently Asked Question section explains that, in order to be
assigned to ICD-10 MS-DRG 945 or 946, a case must first have a
principal diagnosis from MDC 23 (Factors Influencing Health Status and
Other Contacts with Health Services), where MS-DRGs 945 and 946 are
assigned. This is currently the logic with the ICD-9-CM MS-DRGs Version
33 where one would first have to have a MDC 23 principal diagnosis. A
complete list of ICD-10-CM principal diagnoses for MDC 23 can be found
in the ICD-10 MS-DRGs Version 33 Definitions Manual which is posted on
the FY 2016 IPPS Final Rule Home Page under the link for the FY 2016
Final Rule Data Files at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html. Look under the Related
Links section and select the ICD-10-CM/PCS MS-DRG v33 Definitions
Manual Table of Contents Full Titles HTML Version file. Open this file
and the Table of Contents page will appear. Click on the link for MDC
23 (Factors Influencing Health Status and Other Contacts with Health
Services). On the next page that opens (MDC 23), click on the link
titled ``MDC 23 Assignment of Diagnosis Codes'' on the upper left side
of the screen. By using the navigation arrows at the top right hand
side of the page, users can review the 24 pages listing all of the
principal diagnosis codes assigned to MDC 23, including many injury
codes for subsequent encounters.
Under the GROUPER Logic, cases are assigned to MS-DRGs 945 and 946
in one of two ways as described in the Definitions Manual as follows:
The encounter has a principal diagnosis code Z44.8
(Encounter for fitting and adjustment of other external prosthetic
devices) or Z44.9 (Encounter for fitting and adjustment of unspecified
external prosthetic device). Both of these codes are included in the
list of principal diagnosis codes assigned to MDC 23.
The encounter has an MDC 23 principal diagnosis code and
one of the rehabilitation procedure codes listed under MS-DRGs 945 and
946.
If the case does not have a principal diagnosis code from the MDC
23 list, but does have a procedure code from the list included under
the Rehabilitation Procedures for MS-DRGs 945 and 946, the case will
not be assigned to MS-DRGs 945 or 946. The case will instead be
assigned to a MS-DRG within the MDC where the principal diagnosis code
is found.
Example: The encounter has a principal diagnosis code of
S02119D (Unspecified fracture of occiput, subsequent encounter for
fracture with routine healing). This code is included in MDC 8.
Therefore, diagnosis code S02119D and a procedure code from the MS-
DRG 945 and 946 Rehabilitation Procedure list, such as procedure
code F0706GZ (Therapeutic Exercise Treatment of Neurological
System--Head and Neck using Aerobic Endurance and Conditioning
Equipment) would not lead to assignment of the case to MS-DRGs 945
and 946 because the principal diagnosis code is not included in MDC
23.
Diagnosis code S02119D is included in MDC 8 as was the ICD-9-CM
predecessor code, V54.19 (Aftercare for healing traumatic fracture of
other bone). Therefore, these cases would be assigned to MS-DRGs 559,
560, and 561 (Aftercare, Musculoskeletal System and Connective Tissue
with MCC, with CC, and without MCC/CC, respectively) within MDC 8.
At this time, we do not have any claims data that indicate how well
this MS-DRG logic is working. We are hesitant to simply add more codes
from category I69 without evaluating the impact of doing so using
claims data. We also do not have claims data to indicate whether or not
there have been changes in the types or numbers of cases assigned to
MS-DRGs 945 and 946. We welcome specific suggestions of codes to be
added to MS-DRGs 945 and 946 based on hospitals' experience in coding
these cases. We would evaluate these suggestions once we have claims
data to study the impact.
We have major concerns about the recommendation to revise the ICD-
10-PCS Official Guidelines for Coding and Reporting and designate that
the ICD-10-PCS rehabilitation codes be assigned and reported only for
admissions for rehabilitation therapy. This would be a major new
precedent for developing coding and reporting guidelines based on one
specific payer's payment polices, in this case Medicare inpatient acute
care prospective payment system policies. Hospitals would need to know
who the payer was prior to knowing whether or not they could assign a
code for a rehabilitation service that they provided. If those payment
policies change, the hospital coder would need to be aware of those
changes in order to determine whether or not they could submit a code
that captures the fact that a rehabilitation service was provided. CMS
has worked with the Centers for Disease Control and Prevention (CDC),
the American Hospital Association (AHA), and the American Health
Information Management Association (AHIMA) to make ICD-10-PCS
guidelines generic and applicable to all types of inpatient facilities
and for all payer types. The current ICD-10-PCS Guidelines for Coding
and Reporting do not support this recommendation that rehabilitation
services could only be coded and reported if the admission was
specifically for rehabilitation therapy. The ICD-10-PCS codes were
created to accurately capture services provided.
We also have concerns about designating MS-DRGs 945 and 946 as pre-
MDCs so that cases are grouped to these MS-DRGs on the basis of a
rehabilitation procedure code rather than a principal diagnosis. Pre-
MDCs were an addition to Version 8 of the Diagnosis Related Groups.
This was the first departure from the use of principal diagnosis as the
initial variable in DRG and subsequently MS-DRG assignment. For Pre-MDC
DRGs, the initial step in DRG assignment was not the principal
diagnosis, but was instead certain surgical procedures with extremely
high costs such as heart transplant, liver transplant, bone marrow
transplant, and tracheostomies performed on patients on long-term
ventilation. These types of services were viewed as being very resource
intensive. Recognizing these resource intensive services and assigning
them to one of the high-cost MS-DRGs assures appropriate payment even
if the patient is admitted for a variety of principal diagnoses. We
believe it is inappropriate to consider rehabilitation services in the
same group as high-cost procedures such as heart transplants. There is
the significant potential of patients being classified out of higher
paying surgical MS-DRGs in other MDCs and into the lower paying MS-DRGs
945 and 946 based on the reporting of a rehabilitation procedure code
if these MS-DRGs are moved to the Pre-MDCs. We examined claims data for
cases reporting a rehabilitation therapy code and found cases assigned
to a wide variety of both medical and surgical MS-DRGs. The current
coding and reporting of rehabilitation procedure codes for services
provided suggest the potential of significant payment problems if MS-
DRGs 945 and 946 were assigned to the Pre-MDC section and the reporting
of cases with a rehabilitation code led to an inappropriate
reassignment to the lower paying medical MS-DRGs 945 and 946.
The following are only a few examples of current claims data that
showed the hospital reported a rehabilitation therapy procedure code
for services provided which did not impact the MS-DRG assignment. Under
the suggested approach of making MS-
[[Page 25000]]
DRGs 945 and 946 a Pre-MDC, these cases would move from the
appropriately assigned MS-DRGs which may have significantly higher
average costs, to MS-DRGs 945 and 946, which have much lower average
costs. Based on claims data from the December 2015 update of the FY
2015 MedPAR file, the average costs for cases reported in MS-DRGs 945
and 946 were $8,531 and $8,411, respectively.
Examples of cases reporting a rehabilitation therapy code that
would move to MS-DRGs 945 and 946 based on the suggested logic change
are as follows:
An MS-DRG 460 (Spinal Fusion Except Cervical with MCC)
case with average costs of $42,390;
An MS-DRG 464 (Wound Debridement and Skin Graft Excluding
Hand, for Musculoskeletal Tissue Disease with CC) case with average
costs of $55,633;
An MS-DRG 579 (Other Skin, Subcutaneous Tissue and Breast
Procedure with MCC) case with average costs of $63,834;
An MS-DRG 854 (Infectious and Parasitic Diseases with O.R.
procedure with MCC) case with average costs of $62,455; and
An MS-DRG 021 (Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage with CC) case with average costs of
$90,522.
Our clinical advisors reviewed this issue and agreed that we should
wait for ICD-10 claims data to become available prior to proposing
updates to MS-DRGs 945 and 946. They did not support adding MS-DRGs 945
and 946 to the Pre-MDCs because the rehabilitation services are not as
resource intensive as are the other MS-DRGs in the Pre-MDC section.
Considering these ICD-10-PCS guideline concerns, the structure of
the pre-MDC section, and the lack of any ICD-10 claims data for MS-DRGs
945 and 946, we are proposing to maintain the current structure of MS-
DRGs 945 and 946 and reconsider the issue when ICD-10 claims data
become available and prior to proposing any updates.
We are inviting public comments on our proposal to maintain the
current structure of MS-DRGs 945 and 946.
12. Proposed Medicare Code Editor (MCE) Changes
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49409 through
49412), we finalized the ICD-10 Definitions of Medicare Code Edits
(ICD-10 MCE) Version 33. ICD-10 MCE Version 33 was based on the FY 2015
ICD-9-CM MCE Version 32 and the draft ICD-10 MCE Version 32 that had
been made publicly available for comments in November 2014 on the ICD-
10 MS-DRG Conversion Project Web site at: https://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. In August 2015, we
posted the finalized FY 2016 ICD-10 MCE Version 33 manual file and an
ICD-9-CM MCE Version 33.0A manual file (for analysis purposes only).
The links to these MCE manual files, along with the links to purchase
the mainframe and computer software for the MCE Version 33 (and ICD-10
MS-DRGs) were posted on the CMS Web site through the FY 2016 IPPS Final
Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html?DLSort=0&DLEntries=10&DLPage=1&DLSortDir=ascending.
After implementation of the ICD-10 MCE Version 33, we received
several requests to examine specific code edit lists that the
requestors believed were incorrect and that affected claims processing
functions. We received requests to review the MCE relating specifically
to the Age conflict edit, the Sex conflict edit, the Non-covered
procedure edit, and the Unacceptable principal diagnosis code edit. We
discuss these code edit issues below.
a. Age Conflict Edit
In the MCE, the Age conflict edit exists to detect inconsistencies
between a patient's age and any diagnosis on the patient's record; for
example, a 5-year-old patient with benign prostatic hypertrophy or a
78-year-old patient coded with a delivery. In these cases, the
diagnosis is clinically and virtually impossible for a patient of the
stated age. Therefore, either the diagnosis or the age is presumed to
be incorrect. Currently, in the MCE, the following four age diagnosis
categories appear under the Age conflict edit and are listed in the
manual and written in the software program:
Newborn--Age of 0 years; a subset of diagnoses intended
only for newborns and neonates (e.g., fetal distress, perinatal
jaundice).
Pediatric--Age is 0-17 years inclusive (e.g., Reye's
syndrome, routine child health exam).
Maternity--Age range is 12-55 years inclusive (e.g.,
diabetes in pregnancy, antepartum pulmonary complication).
Adult--Age range is 15-124 years inclusive (e.g., senile
delirium, mature cataract).
(1) Newborn Diagnosis Category
Under the ICD-10-CM Official Guidelines for Coding and Reporting
(available on the Web site at: https://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-CM-and-GEMs.html), there are general guidelines and
chapter-specific coding guidelines. The chapter-specific guidelines
state that diagnosis codes from Chapter 16 (Certain Conditions
Originating in the Perinatal Period) may be reported throughout the
life of the patient if the condition is still present. The requestors
noted that several codes from this Chapter 16 appear on the ICD-10 MCE
Version 33 Age conflict edit for the newborn diagnosis category. Codes
from this chapter are included in the P00 through P96 code range.
Therefore, the requestors believed that because the chapter-specific
guidelines state that codes within this chapter may be reported
throughout the life of a patient, all codes within this range (P00
through P96) should be removed from the newborn diagnosis category on
the Age conflict edit code list.
We examined the newborn diagnosis category on the age conflict edit
list in the ICD-9-CM MCE Version 32 in comparison to the ICD-9-CM
chapter-specific guidelines. Under ICD-9-CM, Chapter 15 (Certain
Conditions Originating in the Perinatal Period) includes codes within
the 760 through 779 range. We found that the same chapter-specific
guideline under ICD-10 exists under ICD-9-CM: Diagnosis codes from
Chapter 15 may be reported throughout the life of the patient if the
condition is still present. Similar to the ICD-10 MCE Version 33
newborn diagnosis category in the Age conflict edit code list, we noted
that several codes from this Chapter 15 appear on the ICD-9-CM MCE
Version 32 Age conflict edit for the newborn diagnosis category.
Because the full definition of the chapter-specific guideline for
``Certain Conditions Originating in the Perinatal Period'' clearly
states the codes within the chapter may be reported throughout the life
of the patient if the condition is still present, we believe that,
historically, under ICD-9-CM, this was the rationale for inclusion of
the
[[Page 25001]]
diagnosis codes that were finalized for the newborn diagnosis category
under the Age conflict edit (in code range 760 through 779). For
example, under ICD-9-CM, there are four diagnosis codes in the 760.6x
series that specifically include the term ``newborn'' in the title.
These diagnosis codes are:
760.61 (Newborn affected by amniocentesis);
760.62 (Newborn affected by other in utero procedure);
760.63 (Newborn affected by other surgical operations on
mother during pregnancy); and
760.64 (Newborn affected by previous surgical procedure on
mother not associated with pregnancy).
Under the ICD-9-CM classification, the chapter-specific guidelines
in Chapter 15 (Certain Conditions Originating in the Perinatal Period)
state that, for coding and reporting purposes, the perinatal period is
defined as before birth through the 28th day following birth. As such,
for coding and reporting purposes, a patient that is beyond the 28th
day of life is no longer considered a newborn. Therefore, we believe
that the diagnosis codes listed on the newborn diagnosis category in
the Age conflict edit code list are, in fact, appropriate because they
identify what the title of Chapter 15 describes (certain conditions
specific to beginning in the perinatal period); that is, a newborn. The
intent of the diagnosis codes included on the Age conflict edit code
list is to identify claims where any one of the listed diagnoses is
reported for a patient who is beyond the 28th day of life. If that
definition is met according to the patient's date of birth, the edit is
correctly triggered in those cases.
Transitioning to the ICD-10 MCE was based on replication of the
ICD-9-CM based MCE (in parallel with the transition to the ICD-10 MS-
DRGs, which was based on replication of the ICD-9-CM MS-DRGs).
Therefore, the diagnosis codes included in the newborn diagnosis
category on the Age conflict edit code list in the ICD-10 MCE are a
replication of the diagnosis code descriptions included on the newborn
diagnosis category on the Age conflict edit code list under the ICD-9-
CM MCE. However, the chapter-specific guideline in ICD-10-CM Chapter
16, section C.16.e. (Low birth weight and immaturity status), specifies
that codes within category P07 (Disorders of newborn related to short
gestation and low birth weight, not elsewhere classified) are for use
for a child or adult who was premature or had a low birth weight as a
newborn and this condition is affecting the patient's current health
status. Therefore, we agree that codes within the range of P07.00
through P07.39 should not be listed under newborn diagnosis category on
the Age conflict edit code list in the ICD-10 MCE. It is unclear why
this range of codes within category P07 is distinguished separately
when under the General Perinatal Rules for Chapter 16 (Certain
Conditions Originating in the Perinatal Period), section I.C.16.a.1.
states that diagnosis codes from Chapter 16 may be reported throughout
the life of the patient if the condition is still present. In addition,
the guideline at section I.C.16.a.4. states that ``should a condition
originate in the perinatal period, and continue throughout the life of
the patient, the perinatal code should continue to be used regardless
of the patient's age.'' According to these general guidelines, we could
assume that potentially all codes within Chapter 16 in the code range
of P00 through P96 should be considered for removal from the newborn
diagnosis category on the Age conflict edit code list. However, a
subsequent section of Chapter 16, section 1.C.16.c.2. (Codes for
conditions specified as having implication for future health care
needs), instructs users to assign codes for conditions that have been
specified by the provider as having implications for future health care
needs. Immediately below that instruction is a note which states:
``This guideline should not be used for adult patients.''
The ICD-10-CM Official Guidelines for Coding and Reporting are
updated separately from the IPPS rulemaking process. Due to the
confusion with the chapter-specific guidelines for codes in Chapter 16
and how they impact the newborn diagnosis category on the Age conflict
edit code list, we believe it would be beneficial to fully evaluate the
intent of these guidelines with the Centers for Disease Control's
(CDC's) National Center for Health Statistics (NCHS) because NCHS has
the lead responsibility for the ICD-10-CM diagnosis codes.
In the meantime, to address claims processing concerns related to
the newborn diagnosis category on the Age conflict edit code list, we
are proposing to remove all the ICD-10-CM diagnoses in the code range
of P00 through P96 from the newborn diagnosis category in the Age
conflict code edit list for the ICD-10 MCE for FY 2017. We are inviting
public comments on our proposal. We also are soliciting public comments
on the appropriateness of the other diagnosis codes currently listed
under the newborn diagnosis category in the Age conflict edit in the
ICD-10 MCE Version 33. We refer readers to Table 6P.1a. associated with
this proposed rule (which is available via the Internet on the CMs Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for review of the diagnosis codes we are
proposing to remove. In addition, for FY 2017, we are examining the
need to revise the description for the newborn diagnosis category in
the Age conflict edit under the MCE. The current description as
written, Newborn--Age of 0 years; a subset of diagnoses intended only
for newborns and neonates (e.g., fetal distress, perinatal jaundice),
is not consistent with the instructions for reporting the diagnosis
codes in Chapter 16. We are inviting public comments on our proposal to
revise the description of the newborn diagnosis category in the Age
conflict edit under the MCE.
(2) Pediatric Diagnosis Category
Under the ICD-10 MCE Version 33, the pediatric diagnosis category
for the Age conflict edit considers the age range of 0 to 17 years
inclusive. For that reason, the diagnosis codes on this Age conflict
edit list would be expected to apply to conditions or disorders
specific to that age group only. The code list for the pediatric
diagnosis category in the Age conflict edit currently includes 12
diagnosis codes that fall within the F90 through F98 code range. These
codes were included as a result of replication from the ICD-9-CM MCE
Version 32 and the draft ICD-10 MCE Version 32.
We received a request to review the 12 ICD-10-CM diagnosis codes
listed in the following table because they appear to conflict with
guidance in the ICD-10-CM classification:
------------------------------------------------------------------------
ICD-10-CM diagnosis
code Description
------------------------------------------------------------------------
F93.0.................... Separation anxiety disorder of childhood.
F93.8.................... Other childhood emotional disorders.
F93.9.................... Childhood emotional disorder, unspecified.
[[Page 25002]]
F94.1.................... Reactive attachment disorder of childhood.
F94.2.................... Disinhibited attachment disorder of
childhood.
F94.8.................... Other childhood disorders of social
functioning.
F94.9.................... Childhood disorder of social functioning,
unspecified.
F98.21................... Rumination disorder of infancy.
F98.29................... Other feeding disorders of infancy and early
childhood.
F98.3.................... Pica of infancy and childhood.
F98.8.................... Other specified behavioral and emotional
disorders with onset usually occurring in
childhood and adolescence.
F98.9.................... Unspecified behavioral and emotional
disorders with onset usually occurring in
childhood and adolescence.
------------------------------------------------------------------------
Under the ICD-10-CM Tabular List of Diseases and Injuries, Chapter
5 (Mental, Behavioral and Neurodevelopmental Disorders) contains a
section titled ``Behavioral and emotional disorders with onset usually
occurring in childhood and adolescence'' which includes codes for the
F90 to F98 code range. At the beginning of this tabular section is an
instructional ``note'' that states: ``Codes within categories F90-F98
may be used regardless of the age of a patient. These disorders
generally have onset within the childhood or adolescent years, but may
continue throughout life or not be diagnosed until adulthood.''
Because the note specifically states that these codes may be used
regardless of the age of a patient, we believe they should not be
included on the pediatric diagnosis category on the Age conflict edit
code list. Therefore, we are proposing to remove the 12 codes that fall
within the F90 through F98 code range currently listed for the
pediatric diagnosis category on the ICD-10 MCE age conflict edit code
list, effective October 1, 2016, for FY 2017. We are inviting public
comments on our proposal.
We also received a request to review whether another group of
diagnosis codes is clinically incorrect for the ICD-10 MCE Version 33
pediatric diagnosis category in the Age conflict edit. The requestor
stated that ICD-10-CM diagnosis codes describing infantile and juvenile
cataracts, by their titles, appear to merit inclusion on the pediatric
diagnosis category on the Age conflict edit code list. However,
according to the requestor, the diagnosis is not constrained to a
patient's age, but rather the ``infantile'' versus ``juvenile''
reference is specific to the type of cataract the patient has. These
diagnosis codes that are currently listed for the pediatric diagnosis
category in the ICD-10 MCE Age conflict edit code list are as follows:
------------------------------------------------------------------------
ICD-10-CM diagnosis
code Description
------------------------------------------------------------------------
H26.001.................. Unspecified infantile and juvenile cataract,
right eye.
H26.002.................. Unspecified infantile and juvenile cataract,
left eye.
H26.003.................. Unspecified infantile and juvenile cataract,
bilateral.
H26.009.................. Unspecified infantile and juvenile cataract,
unspecified eye.
H26.011.................. Infantile and juvenile cortical, lamellar, or
zonular cataract, right eye.
H26.012.................. Infantile and juvenile cortical, lamellar, or
zonular cataract, left eye.
H26.013.................. Infantile and juvenile cortical, lamellar, or
zonular cataract, bilateral.
H26.019.................. Infantile and juvenile cortical, lamellar, or
zonular cataract, unspecified eye.
H26.031.................. Infantile and juvenile nuclear cataract,
right eye.
H26.032.................. Infantile and juvenile nuclear cataract, left
eye.
H26.033.................. Infantile and juvenile nuclear cataract,
bilateral.
H26.039.................. Infantile and juvenile nuclear cataract,
unspecified eye.
H26.041.................. Anterior subcapsular polar infantile and
juvenile cataract, right eye.
H26.042.................. Anterior subcapsular polar infantile and
juvenile cataract, left eye.
H26.043.................. Anterior subcapsular polar infantile and
juvenile cataract, bilateral.
H26.049.................. Anterior subcapsular polar infantile and
juvenile cataract, unspecified eye.
H26.051.................. Posterior subcapsular polar infantile and
juvenile cataract, right eye.
H26.052.................. Posterior subcapsular polar infantile and
juvenile cataract, left eye.
H26.053.................. Posterior subcapsular polar infantile and
juvenile cataract, bilateral.
H26.059.................. Posterior subcapsular polar infantile and
juvenile cataract, unspecified eye.
H26.061.................. Combined forms of infantile and juvenile
cataract, right eye.
H26.062.................. Combined forms of infantile and juvenile
cataract, left eye.
H26.063.................. Combined forms of infantile and juvenile
cataract, bilateral.
H26.069.................. Combined forms of infantile and juvenile
cataract, unspecified eye.
H26.09................... Other infantile and juvenile cataract.
------------------------------------------------------------------------
Our clinical advisors reviewed the list of diagnoses presented
above and confirmed that these diagnosis codes are appropriate to
include in the ICD-10 MCE for the pediatric diagnosis category in the
Age conflict edit because the diseases described by these codes are
typically diagnosed in early childhood and treated very rapidly to
prevent amblyopia. Therefore, for FY 2017, we are not proposing to
remove these codes under the pediatric diagnosis category in the Age
conflict edit. We are proposing to maintain this list in the ICD-10 MCE
Version 34, effective October 1, 2016. We are inviting public comments
on our proposal.
As stated earlier, for the pediatric diagnosis category in the Age
conflict edit, the MCE considers the age range of 0 through 17 years
inclusive. In the ICD-10 MCE Version 33, there are four diagnosis codes
describing the body
[[Page 25003]]
mass index (BMI) for pediatric patients in the pediatric diagnosis
category on the Age conflict edit code list. The four ICD-10-CM
diagnosis codes describing the BMI percentiles for pediatric patients
are as follows:
------------------------------------------------------------------------
ICD-10-CM diagnosis
code Description
------------------------------------------------------------------------
Z68.51................... Body mass index (BMI) pediatric, less than
5th percentile for age.
Z68.52................... Body mass index (BMI) pediatric, 5th
percentile to less than 85th percentile for
age.
Z68.53................... Body mass index (BMI) pediatric, 85th
percentile to less than 95th percentile for
age.
Z68.54................... Body mass index (BMI) pediatric, greater than
or equal to 95th percentile for age.
------------------------------------------------------------------------
Under the ICD-10-CM Tabular List of Diseases and Injuries, the BMI
pediatric diagnosis codes are designated for use in persons 2 through
20 years of age. The percentiles are based on the growth charts
published by the CDC. As a result of the age discrepancy between the
MCE pediatric diagnosis category in the Age conflict edit (ages 0
through 17) and the Tabular reference for the BMI pediatric codes (ages
2 through 20), we are proposing to remove ICD-10 diagnosis codes
Z68.51, Z68.52, Z68.53, and Z68.54 from the ICD-10 MCE pediatric
diagnosis category on the Age conflict edit code list for Version 34,
effective FY 2017. We are inviting public comments on our proposal.
One requestor also asked that CMS review the ICD-10-CM diagnosis
codes currently included in ICD-10-CM category R62 (Lack of expected
normal physiological development in childhood and adults) series.
Specifically, the requestor noted that there are adult patients
diagnosed with the conditions in subcategory R62.5 (Other and
unspecified lack of expected normal physiological development in
childhood) and that three of these conditions also were listed in the
ICD-10 MCE Version 33 pediatric diagnosis category on the Age conflict
edit code list. These three diagnosis codes are:
R62.50 (Unspecified lack of expected normal physiological
development in childhood);
R62.52 (Short stature (child)); and
R62.59 (Other lack of expected normal physiological
development in childhood).
We acknowledge that subcategory R62.5 can be confusing with regard
to how to appropriately report a condition diagnosed for an adult when
the titles reference the terms ``child'' or ``childhood''. Therefore,
we consulted with the ICD-10-CM classification staff at the NCHS to
determine the intended use and reporting of the diagnosis codes R62.50,
R62.52, and R62.59. The NCHS staff agreed that the three diagnosis
codes should not be restricted to the pediatric ages as defined by the
MCE. The NCHS staff stated the codes are appropriate to report for
adult patients, noting that if a patient is diagnosed with short
stature as a child, the patient could very well carry over that
diagnosis into adulthood.
During our review of the issue relating to the subcategory R62.5
pediatric diagnosis category on the Age conflict edit code list, we
identified another diagnosis code that also appeared appropriate to
report for an adult patient. ICD-10-CM diagnosis code Y93.6A (Activity,
physical games generally associated with school recess, summer camp and
children) is one of several activity codes included in ICD-10-CM
Chapter 20 (External Causes of Morbidity). This diagnosis code includes
games such as dodge ball and captures the flag, which one can
reasonably expect an adult to be engaged in for physical activity.
We discussed this diagnosis code with the NCHS staff to receive
their input on the intent for coding and reporting the code. They
agreed that ICD-10-CM diagnosis code Y93.6A is applicable for adults as
well as children. Therefore, for FY 2017, we are proposing to remove
ICD-10-CM diagnosis codes R62.50, R62.52, and R62.59 in subcategory
R62.5 and ICD-10-CM diagnosis code Y93.6A from the ICD-10 MCE pediatric
diagnosis category on the Age conflict edit code list. We are inviting
public comment on our proposal.
b. Sex Conflict Edit
In the MCE, the Sex conflict edit detects inconsistencies between a
patient's sex and any diagnosis or procedure on the patient's record;
for example, a male patient with cervical cancer (diagnosis) or a
female patient with a prostatectomy (procedure). In both instances, the
indicated diagnosis or the procedure conflicts with the stated sex of
the patient. Therefore, the patient's diagnosis, procedure, or sex is
presumed to be incorrect.
We received a request to review ICD-10-CM diagnosis code Z79.890
(Hormone replacement therapy (postmenopausal)). This code is listed on
the Diagnoses for females only edit code list. Therefore, when the
diagnosis is reported for a male patient, the edit will be triggered.
However, the requester noted that the term ``postmenopausal'' is
enclosed in parentheses and is a ``non-essential modifier.'' A ``non-
essential modifier'' is used in the ICD-10-CM classification to
identify a supplementary word that may, or may not be present in the
statement of a disease or procedure. In other words, the term in
parentheses does not have to be documented to report the code. If the
medical record documentation states a female patient is undergoing
hormone replacement therapy, the documentation supports assignment of
the case to ICD-10-CM diagnosis code Z79.890 (Hormone replacement
therapy (postmenopausal)). There does not need to be a diagnostic
statement that the patient is postmenopausal to assign the code. The
requester asked that CMS review why this diagnosis code is being
classified as applicable to females only because, in the absence of the
non-essential modifier (postmenopausal), the code could also apply to
males.
We note that the ICD-9-CM equivalent code, V07.4 Hormone
replacement therapy (postmenopausal) has been on the female only edit
since October 1, 1992 in the ICD-9-CM MCE. We consulted with the ICD-
10-CM classification staff at the NCHS to determine the intended use
and reporting of this diagnosis code. The staff at NCHS acknowledged
that, historically, the intent of the ICD-9-CM diagnosis code was for
females only. However, they agreed that, under ICD-10-CM, the diagnosis
code Z79.890 can be reported for both men and women. Therefore, we are
proposing to remove this diagnosis code from the Diagnoses for females
only edit code list effective October 1, 2016. We are inviting public
comments on our proposal.
We also considered the ICD-10-CM diagnosis codes listed in the
table below that are included on the Diagnoses for females only edit
code list.
[[Page 25004]]
------------------------------------------------------------------------
ICD-10-CM diagnosis
code Description
------------------------------------------------------------------------
Z44.30................... Encounter for fitting and adjustment of
external breast prosthesis, unspecified
breast.
Z44.31................... Encounter for fitting and adjustment of
external right breast prosthesis.
Z44.32................... Encounter for fitting and adjustment of
external left breast prosthesis).
Z45.811.................. Encounter for adjustment or removal of right
breast implant.
Z45.812.................. Encounter for adjustment or removal of left
breast implant.
Z45.819.................. Encounter for adjustment or removal of
unspecified breast implant).
------------------------------------------------------------------------
These codes describe encounters for breast implants or prostheses.
Our clinical advisors and the NCHS staff agree that diagnosis codes
Z44.30, Z44.31, Z44.32, Z45.811, Z45.812, and Z45.819 are clinically
appropriate to report for male patients and should not be restricted to
females. Therefore, we are proposing to remove these diagnosis codes
from the Diagnoses for females only edit code list in the ICD-10 MCE,
effective October 1, 2016. We are inviting public comments on our
proposal.
c. Non-Covered Procedure Edit
In the MCE, the Non-covered procedure edit identifies procedures
for which Medicare does not provide payment. Payment is not provided
due to specific criteria that are established in the National Coverage
Determination (NCD) process. We refer readers to the Web site at:
https://www.cms.gov/Medicare/Coverage/DeterminationProcess/howtorequestanNCD.html for additional information on this process. In
addition, there are procedures that would normally not be paid by
Medicare but, due to the presence of certain diagnoses, are paid.
(1) Endovascular Mechanical Thrombectomy
We received several requests to review ICD-10-PCS procedure code
03CG3ZZ (Extirpation of matter from intracranial artery, percutaneous
approach) which is currently listed as a non-covered procedure in the
ICD-10 MCE Non-covered procedure edit code list. The comparable ICD-9-
CM code translations for ICD-10-PCS code 03CG3ZZ are ICD-9-CM codes
17.54 (Percutaneous atherectomy of intracranial vessel(s)) and 39.74
(Endovascular removal of obstruction from head and neck vessel(s)).
The requestors noted that, under ICD-9-CM, endovascular mechanical
thrombectomy of a cerebral artery to remove a clot that is causing an
ischemic stroke was reported with procedure code 39.74 (Endovascular
removal of obstruction from head and neck vessel(s)) and is a well-
recognized procedure that has been covered by Medicare. After
implementation of ICD-10 on October 1, 2015, claims that were correctly
submitted for endovascular mechanical thrombectomy procedures with ICD-
10-PCS procedure code 03CG3ZZ were triggering the Non-covered procedure
edit. The requestors sought clarification as to whether there was a
change in coverage or if there was a replication issue.
Under the ICD-9-CM MCE Version 32, procedure code 00.62 is listed
on the Non-covered procedure edit code list. Percutaneous angioplasty
of an intracranial vessel procedure (with and without stent) may be
reported under ICD-10 with the ICD-10-PCS procedure codes listed in the
following table:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
037G34Z.................. Dilation of intracranial artery with drug-
eluting intraluminal device, percutaneous
approach.
037G3DZ.................. Dilation of intracranial artery with
intraluminal device, percutaneous approach.
037G3ZZ.................. Dilation of intracranial artery, percutaneous
approach.
037G44Z.................. Dilation of intracranial artery with drug-
eluting intraluminal device, percutaneous
endoscopic approach.
037G4DZ.................. Dilation of intracranial artery with
intraluminal device, percutaneous endoscopic
approach.
037G4ZZ.................. Dilation of intracranial artery, percutaneous
endoscopic approach.
057L3DZ.................. Dilation of intracranial vein with
intraluminal device, percutaneous approach.
057L4DZ.................. Dilation of intracranial vein with
intraluminal device, percutaneous endoscopic
approach.
------------------------------------------------------------------------
We discovered that a replication error occurred due to an outdated
ICD-9-CM entry for procedure code 00.62. This error led to ICD-10-PCS
procedure codes 03CG3ZZ (Extirpation of matter from intracranial
artery, percutaneous approach) and 05CL3ZZ (Extirpation of matter from
intracranial vein, percutaneous approach) being listed as comparable
translations for ICD-9-CM code 00.62. As a result, ICD-10-PCS procedure
code 03CG3ZZ was included on the ICD-10 MCE Version 33 Non-covered
procedure edit code list.
For FY 2017, we are proposing to remove the ICD-10-PCS procedure
codes listed in the following table from the ICD-10 MCE Version 34.0
Non-covered procedure edit code list.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
03CG3ZZ.................. Extirpation of matter from intracranial
artery, percutaneous approach.
03CG4ZZ.................. Extirpation of matter from intracranial
artery, percutaneous endoscopic approach.
05CL3ZZ.................. Extirpation of matter from intracranial vein,
percutaneous approach.
05CL4ZZ.................. Extirpation of matter from intracranial vein,
percutaneous endoscopic approach.
------------------------------------------------------------------------
[[Page 25005]]
We are inviting public comments on our proposal.
(2) Radical Prostatectomy
We received a request to review ICD-10-PCS procedure codes related
to a radical prostatectomy. Specifically, the requestor noted that when
coding cases where the removal of the vas deferens is also performed, a
Non-covered procedure edit is triggered. The requestor suggested that
the edit for this procedure may be intended for cases where the removal
of the vas deferens is being performed for sterilization (vasectomy)
purposes. According to the requester, removal of the vas deferens also
may be involved with removing the prostate in the radical prostatectomy
procedure. The requestor suggested that CMS address this issue by
revising the ICD-10 MCE Non-covered procedure edit code list to reflect
non-coverage of the procedure codes when the removal of vas deferens
procedure is being performed solely for sterilization (vasectomy)
purposes.
Because radical procedures can have different meanings, depending
on the procedure, the term ``radical'' is not always reliable
information for coding and reporting the procedure. Under ICD-10-PCS,
users are instructed to code separately the organs or structures that
were actually removed and for which there is a distinctly defined body
part. A radical prostatectomy is coded as a ``cluster'' under ICD-10-
PCS. A ``cluster'' is the term used to describe the circumstance when a
combination of ICD-10-PCS procedure codes are needed to fully satisfy
the equivalent meaning of an ICD-9-CM procedure code for it to be
considered a plausible translation.
The cluster definition for a radical prostatectomy in ICD-10-PCS
currently consists of the one of the following codes:
0VT00ZZ (Resection of prostate, open approach);
0VT04ZZ (Resection of prostate, percutaneous endoscopic
approach);
0VT07ZZ (Resection of prostate, via natural or artificial
opening); or
0VT08ZZ Resection of prostate, via natural or artificial
opening endoscopic; in combination with one of the following codes:
0VT30ZZ (Resection of bilateral seminal vesicles, open
approach); or
0VT34ZZ (Resection of bilateral seminal vesicles,
percutaneous endoscopic approach).
As stated earlier, under ICD-10-PCS, users are instructed to code
separately the organs or structures that were actually removed and for
which there is a distinctly defined body part. Therefore, a patient who
undergoes a radical prostatectomy that involves removal of the vas
deferens would have this procedure reported separately, in addition to
the options displayed in the ``cluster.''
The ICD-10-PCS procedure codes that may be reported for
sterilization and involve the bilateral vas deferens include the
following:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0V5Q0ZZ.................. Destruction of bilateral vas deferens, open
approach.
0V5Q3ZZ.................. Destruction of bilateral vas deferens,
percutaneous approach.
0V5Q4ZZ.................. Destruction of bilateral vas deferens,
percutaneous endoscopic approach.
0VBQ0ZZ.................. Excision of bilateral vas deferens, open
approach.
0VBQ3ZZ.................. Excision of bilateral vas deferens,
percutaneous approach.
0VBQ4ZZ.................. Excision of bilateral vas deferens,
percutaneous endoscopic approach.
0VTQ0ZZ.................. Resection of bilateral vas deferens, open
approach.
0VTQ4ZZ.................. Resection of bilateral vas deferens,
percutaneous endoscopic approach.
------------------------------------------------------------------------
The eight procedure codes listed above describing various methods
to remove the bilateral vas deferens are currently listed on the ICD-10
MCE Version 33 Non-covered procedure edit code list.
The requester is correct in stating that the codes related to
removal of the bilateral vas deferens are included on the ICD-10 MCE
Version 33 Non-covered procedure edit code list to reflect a
sterilization procedure. While the vast majority of sterilization
procedures will involve reporting the bilateral procedure codes, there
are instances where one vas deferens may have been previously removed
for other reasons and the remaining vas deferens requires
sterilization. Therefore, the procedure codes describing removal of a
unilateral vas deferens are also included on the ICD-10 MCE Version 33
Non-covered procedure edit code list to reflect a sterilization
procedure. We agree that revising the language in the edit will resolve
the issue of covered procedures being inappropriately subject to the
edit.
In addition, while reviewing the Non-covered procedure edit list of
codes that may be reported to identify sterilization procedures for
males, we considered the procedure codes that may be reported to
identify sterilization procedures for females. We examined the list of
ICD-10-PCS procedure codes included on the ICD-10 MCE Version 33 Non-
covered procedure edit code list that could reflect female
sterilization (removal of fallopian tubes) and determined those codes
also could be reported for other conditions and could be
inappropriately subject to the current edit as well.
Therefore, for FY 2017, we are proposing to create a new ICD-10 MCE
Version 34 Non-covered procedure edit to reflect that procedures
performed on males involving the unilateral or bilateral vas deferens
and procedures performed on females involving the fallopian tubes are
not covered procedures for sterilization purposes. The proposed new
ICD-10 MCE Version 34 Non-covered procedure edit would be displayed as
follows: ``G. Non-covered procedure. The procedure codes shown below
are identified as non-covered procedures only when ICD-10-CM diagnosis
code Z30.2 (Encounter for sterilization) is listed as the principal
diagnosis.''
We refer readers to Table 6P.1b. associated with this proposed rule
(which are available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) to review the proposed list of non-
covered procedure codes describing sterilization procedures for males
and females for this proposed Non-covered procedure edit. We are
inviting public comments on our proposal to create this new Non-covered
procedure edit and also invite public comments on the proposed list of
codes to describe sterilization procedures for the proposed edit.
d. Unacceptable Principal Diagnosis Edit
In the MCE, there are select codes that describe a circumstance
which influences an individual's health status
[[Page 25006]]
but does not actually describe a current illness or injury. There also
are codes that are not specific manifestations but may be due to an
underlying cause. These codes are considered unacceptable as a
principal diagnosis. In limited situations, there are a few codes on
the MCE Unacceptable principal diagnosis edit code list that are
considered ``acceptable'' when a specified secondary diagnosis is also
coded and reported on the claim.
(1) Liveborn Infant
We received a request to examine ICD-10-CM diagnosis codes Z38.1
(Single liveborn infant, born outside hospital), Z38.4 (Twin liveborn
infant, born outside hospital), and Z38.7 (Other multiple liveborn
infant, born outside hospital), all of which are currently listed on
the Unacceptable principal diagnosis edit code list for the ICD-10 MCE
Version 33. The requestor believed that these codes are listed in error
and suggested their removal.
The ICD-10-CM diagnosis code descriptions for liveborn infants
differ from the ICD-9-CM diagnosis code descriptions for liveborn
infants. The ICD-9-CM codes differentiate between a liveborn infant
that was born prior to admission and hospitalized versus a liveborn
infant that was born prior to admission and not hospitalized. The
following codes in the ICD-9-CM MCE Version 32 included on the
Unacceptable principal diagnosis edit code list are those that describe
a liveborn infant that was born outside the hospital and not
hospitalized:
------------------------------------------------------------------------
ICD-9-CM diagnosis code Description
------------------------------------------------------------------------
V30.2.................... Single liveborn, born outside hospital and
not hospitalized.
V31.2.................... Twin birth, mate liveborn, born outside
hospital and not hospitalized.
V32.2.................... Twin birth, mate stillborn, born outside
hospital and not hospitalized.
V33.2.................... Twin birth, unspecified whether mate liveborn
or stillborn, born outside hospital and not
hospitalized.
V34.2.................... Other multiple birth (three or more), mates
all liveborn, born outside hospital and not
hospitalized.
V35.2.................... Other multiple birth (three or more), mates
all stillborn, born outside of hospital and
not hospitalized.
V36.2.................... Other multiple birth (three or more), mates
liveborn and stillborn, born outside
hospital and not hospitalized.
V37.2.................... Other multiple birth (three or more),
unspecified whether mates liveborn or
stillborn, born outside of hospital.
V39.1.................... Liveborn, unspecified whether single, twin or
multiple, born before admission to hospital.
V39.2.................... Liveborn, unspecified whether single, twin or
multiple, born outside hospital and not
hospitalized.
------------------------------------------------------------------------
For replication purposes, the comparable ICD-10-CM diagnosis codes
for the above listed codes are: Z38.1 (Single liveborn infant, born
outside hospital); Z38.4 (Twin liveborn infant, born outside hospital);
and Z38.7 (Other multiple liveborn infant, born outside hospital).
There are no other ICD-10-CM diagnosis codes that describe a liveborn
infant born outside a hospital.
The liveborn infant codes are an example of where a particular
concept involving the place of birth is not the same between the ICD-9-
CM and ICD-10-CM classification systems. Because the ICD-10-CM
diagnosis codes do not include the same concept as the ICD-9-CM
diagnosis codes regarding whether the liveborn infant was hospitalized
or not, we agree it would not be appropriate to continue to include the
ICD-10-CM diagnosis codes on the Unacceptable principal diagnosis list.
For FY 2017, we are proposing to remove ICD-10-CM diagnosis codes
Z38.1, Z38.4, and Z38.7 from the Unacceptable principal diagnosis edit
in the ICD-10 MCE Version 34. We are inviting public comments on our
proposal.
(2) Multiple Gestation
We received a request to review the ICD-10-CM diagnosis codes
related to multiple gestation that are currently listed on the ICD-10
MCE Version 33 Unacceptable principal diagnosis edit code list. The
requestor expressed concern that these codes were included in the edit
and suggested that CMS evaluate further to determine if they were
appropriate.
In the ICD-10-CM classification, a single diagnosis code describes
a multiple gestation and contains information pertaining to the
placenta. This differs from the ICD-9-CM classification, where two
diagnosis codes are required to separately report (1) multiple
gestation with a delivery or complication and (2) multiple gestation
with the status of the placenta.
In the ICD-9-CM MCE Version 32, only the ICD-9-CM diagnosis codes
describing the status of the placenta are listed on the Unacceptable
principal diagnosis edit code list. These ICD-9-CM diagnosis codes are:
------------------------------------------------------------------------
ICD-9-CM diagnosis code Description
------------------------------------------------------------------------
V91.00................... Twin gestation, unspecified number of
placenta, unspecified number of amniotic
sacs.
V91.01................... Twin gestation, monochorionic/monoamniotic
(one placenta, one amniotic sac).
V91.02................... Twin gestation, monochorionic/diamniotic (one
placenta, two amniotic sacs).
V91.03................... Twin gestation, dichorionic/diamniotic (two
placentae, two amniotic sacs).
V91.09................... Twin gestation, unable to determine number of
placenta and number of amniotic sacs.
V91.10................... Triplet gestation, unspecified number of
placenta and unspecified number of amniotic
sacs.
V91.11................... Triplet gestation, with two or more
monochorionic fetuses.
V91.12................... Triplet gestation, with two or more
monoamniotic fetuses.
V91.19................... Triplet gestation, unable to determine number
of placenta and number of amniotic sacs.
V91.20................... (Quadruplet gestation, unspecified number of
placenta and unspecified number of amniotic
sacs.
V91.21................... Quadruplet gestation, with two or more
monochorionic fetuses.
V91.22................... Quadruplet gestation, with two or more
monoamniotic fetuses.
V91.29................... Quadruplet gestation, unable to determine
number of placenta and number of amniotic
sacs.
V91.90................... Other specified multiple gestation,
unspecified number of placenta and
unspecified number of amniotic sacs.
V91.91................... Other specified multiple gestation, with two
or more monochorionic fetuses.
V91.92................... Other specified multiple gestation, with two
or more monoamniotic fetuses.
[[Page 25007]]
V91.99................... Other specified multiple gestation, unable to
determine number of placenta and number of
amniotic sacs.
------------------------------------------------------------------------
There are 68 ICD-10-CM diagnosis codes included on the ICD-10 MCE
Version 33 Unacceptable principal diagnosis edit code list as
comparable translations that describe multiple gestation and status of
the placenta. The list of these codes is included in Table 6P.1c.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
Because only one, and not both, concepts from the ICD-9-CM
classification was considered to be an unacceptable principal diagnosis
(status of placenta) in the ICD-9-CM MCE, we agree this was a
replication error that incorrectly included the ICD-10-CM diagnosis
codes that identify both concepts (multiple gestation and status of
placenta) in a single code on the ICD-10 MCE. The edit cannot isolate
the status of placenta for the ICD-10 MCE because it is reported in
combination with the multiple gestation as a single code. Therefore, it
is inappropriate to include these codes on the Unacceptable principal
diagnosis edit code list.
For FY 2017, we are proposing to remove the ICD-10-CM diagnosis
codes listed in Table 6P.1c. associated with this proposed rule (which
is available via Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
from the ICD-10 MCE Version 34 Unacceptable principal diagnosis list.
We are inviting public comments on our proposal.
(3) Supervision of High Risk Pregnancy
We received a request to review the ICD-10-CM diagnosis codes
related to supervision of high risk pregnancy (elderly primigravida and
multigravida) that are currently listed on the ICD-10 MCE Version 33
Unacceptable principal diagnosis edit code list. The requestor stated
that these codes were not included in the edit under the ICD-9-CM MCE.
According to the requester, the codes describing these conditions
should be allowed for reporting as a principal diagnosis based on the
ICD-10-CM Tabular List of Diseases instructions for Chapter 15 (Certain
Conditions Originating in the Perinatal Period). The chapter-specific
guidelines for ICD-10-CM state that ``diagnosis code O80 (Encounter for
full-term uncomplicated delivery) should be assigned when a woman is
admitted for a full-term normal delivery and delivers a single, healthy
infant without any complications antepartum, during the delivery, or
postpartum during the delivery episode. Code O80 is always a principal
diagnosis. It is not to be used if any other code from Chapter 15 is
needed to describe a current complication of the antenatal, delivery,
or perinatal period.'' The requestor stated that obstetric patients
admitted as inpatients often meet the definition of an elderly
primigravida or elderly multigravida, \1\ which is the appropriate
condition to be reported as the principal diagnosis. However, because
the codes describing this condition are listed on the Unacceptable
principal diagnosis edit code list, they are unable to be reported.
---------------------------------------------------------------------------
\1\ The ICD-10-CM classification defines an elderly primigravida
or elderly multigravida as a complication of the pregnancy since the
management and care of the expectant mother is affected by the fact
they are an older patient.
---------------------------------------------------------------------------
The diagnosis codes describing high-risk patients admitted for
delivery differ between the ICD-10-CM and ICD-9-CM classifications.
Under ICD-9-CM, two diagnosis codes are required to separately report
concept 1 of elderly primigravida or elderly multigravida and whether a
delivery occurred and concept 2 of supervision of high-risk pregnancy
with elderly primigravida or elderly multigravida. We display the codes
that correspond to these concepts below and titled them as Code List 1
and Code List 2. A code from each list would be reported to fully
describe the circumstances of the admission and the patient.
Code List 1--We note that the following codes are listed on the
ICD-9-CM MCE Version 32 Unacceptable principal diagnosis edit code
list:
------------------------------------------------------------------------
ICD-9-CM diagnosis code Description
------------------------------------------------------------------------
V23.81................... Supervision of high-risk pregnancy with
elderly primigravida
V23.82................... Supervision of high-risk pregnancy with
elderly multigravida
------------------------------------------------------------------------
Code List 2--We note that the following codes are not listed on the
ICD-9-CM MCE Version 32 Unacceptable principal diagnosis edit code
list. However, we display them here for the benefit of the reader in
the discussion that follows.
------------------------------------------------------------------------
ICD-9-CM diagnosis code Description
------------------------------------------------------------------------
659.50................... Elderly primigravida, unspecified as to
episode of care or not applicable
659.51................... Elderly primigravida, delivered, with or
without mention of antepartum condition
659.53................... Elderly primigravida, antepartum condition or
complication
659.60................... Elderly multigravida, unspecified as to
episode of care or not applicable
659.61................... Elderly multigravida, delivered with or
without mention of antepartum condition
659.63................... Elderly multigravida, antepartum condition or
complication
------------------------------------------------------------------------
As noted above, in the ICD-9-CM MCE Version 32, only the ICD-9-CM
diagnosis codes describing the supervision of high-risk pregnancy are
listed on the Unacceptable principal diagnosis edit code list.
[[Page 25008]]
There are eight ICD-10-CM diagnosis codes included on the ICD-10
MCE Version 33 Unacceptable principal diagnosis edit code list that
describe the concept of elderly primigravida or elderly multigravida
and supervision of high-risk pregnancy, in a single code. As shown
below, the concept of whether a delivery occurred is not included in
the code description for the eight codes.
------------------------------------------------------------------------
ICD-10-CM diagnosis code Description
------------------------------------------------------------------------
O09.511.................. Supervision of elderly primigravida, first
trimester
O09.512.................. Supervision of elderly primigravida, second
trimester
O09.513.................. Supervision of elderly primigravida, third
trimester
O09.519.................. Supervision of elderly primigravida,
unspecified trimester
O09.521.................. Supervision of elderly multigravida, first
trimester
O09.522.................. Supervision of elderly multigravida, second
trimester
O09.523.................. Supervision of elderly multigravida, third
trimester
O09.529.................. Supervision of elderly multigravida,
unspecified trimester
------------------------------------------------------------------------
Because the concepts and coding guidelines between the ICD-9-CM and
ICD-10-CM classifications differ greatly in how they define this subset
of patients, we acknowledge that the eight ICD-10-CM diagnosis codes
listed above should be removed from the ICD-10 MCE Unacceptable
principal diagnosis edit code list to permit the reporting of these
codes as principal diagnosis when the documentation supports such
assignment.
We also note that during our analysis of the eight diagnosis codes
describing elderly primigravida and elderly multigravida high risk
pregnancy patients, we found additional codes on the ICD-10 MCE Version
33 Unacceptable principal diagnosis edit code list related to high-risk
pregnancy that we believe should also be removed so as to permit the
reporting of these codes as principal diagnosis when the documentation
supports such assignment.
For FY 2017, we are proposing to remove all the ICD-10-CM diagnosis
codes related to high-risk pregnancy currently listed in Table 6P.1d.
associated with this proposed rule (which is available via Internet on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) from the ICD-10 MCE
Version 34 Unacceptable principal diagnosis edit code list. We are
inviting public comment on our proposal.
e. Other MCE Issues
The following MCE discussion and proposals are the result of
internal review of other MCE issues.
(1) Procedure Inconsistent With Length of Stay Edit
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49411), we finalized
a revision for the language of the ICD-10 MCE Version 33 edit for
``Procedure inconsistent with length of stay'' with regard to ICD-10-
PCS procedure code 5A1955Z (Respiratory ventilation, greater than 96
consecutive hours). The current description of the code edit reads as
follows: ``The following procedure code should only be coded on claims
with a length of stay greater than four days.''
As we strive to assist providers with correct coding and reporting
of this service, we are proposing to further revise the description of
this code edit. For FY 2017, we are proposing to modify the edit
description to read as follows: ``The following procedure code should
only be coded on claims when the respiratory ventilation is provided
for greater than four consecutive days during the length of stay.''
We believe this modification will further clarify the appropriate
circumstances in which ICD-10-PCS code 5A1955Z may be reported. We are
inviting public comments on our proposal.
Also, consistent with the discussion in the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49411 through 49412), we believe it would be
beneficial to revise the title for ICD-10 MS-DRG 208 (Respiratory
System Diagnosis with Ventilator Support <96 Hours). Currently, this
ICD-10 MS-DRG title references terminology for mechanical ventilation
``< 96 hours'' based on the GROUPER logic for MS-DRG 208, which
includes ICD-10-PCS codes 5A1935Z (Respiratory ventilation, less than
24 consecutive hours) and 5A1945Z (Respiratory ventilation, 24-96
consecutive hours). Because ICD-10-PCS code 5A1945Z includes mechanical
ventilation up to and including 96 hours, we are proposing to modify
the title of MS-DRG 208 by adding an ``equal'' sign (=) after the
``less than'' (<) sign to better reflect the GROUPER logic. We are
proposing to revise the title of ICD-10 MS-DRG 208 as follows,
effective October 1, 2016: MS-DRG 208 (Respiratory System Diagnosis
with Ventilator Support <=96 Hours). We are inviting public comments on
our proposal.
(2) Maternity Diagnoses
We identified three ICD-10-CM diagnosis codes that describe
conditions related to pregnancy or the puerperium that are not
currently listed on the ICD-10 MCE Version 33 Age conflict edit code
list for maternity diagnoses. The diagnosis codes include:
C58 (Malignant neoplasm of placenta);
D39.2 (Neoplasm of uncertain behavior of placenta); and
F53 (Puerperal psychosis).
To be consistent with other related conditions currently included
on the Age conflict edit code list for maternity diagnoses, we are
proposing to add ICD-10-CM diagnosis codes C58, D39.2, and F53 to the
Age conflict edit code list for maternity diagnoses.
We are inviting public comments on our proposals for changes to the
FY 2017 ICD-10 MCE Version 34.
(3) Manifestation Codes Not Allowed as Principal Diagnosis Edit
Section I.A.13. of the FY 2016 ICD-10-CM Official Guidelines for
Coding and Reporting states that certain conditions have both an
underlying etiology and multiple body system manifestations due to the
underlying etiology. For such conditions, the classification has a
coding convention that requires the underlying condition be sequenced
first followed by the manifestation. Wherever such a combination
exists, there is a ``use additional code'' note at the etiology code,
and a ``code first'' note at the manifestation code. These
instructional notes indicate proper sequencing order of the codes,
etiology followed by manifestation.
We found that in the ICD-10-CM Tabular List of Diseases at category
M02- (Postinfective and reactive arthropathies), a ``Code first
underlying disease'' note exists. This would
[[Page 25009]]
indicate that there are codes in that category that are manifestations
of an underlying etiology. We then examined the ICD-10 MCE Version 33
to determine if diagnosis codes from that category were included on the
Manifestation codes not allowed as principal diagnosis edit code list.
Only three ICD-10-CM diagnosis codes from that category were listed:
M02.88 (Other reactive arthropathies, vertebrae);
M02.89 (Other reactive arthropathies, multiple sites); and
M02.9 (Reactive arthropathy, unspecified).
Based on the instructional note at the M02- category level, the
title at subcategory M02.8 (Other reactive arthropathies), and the
three diagnosis codes listed above on the current ICD-10 MCE Version 33
Manifestation codes not allowed as principal diagnosis edit code list,
it seems appropriate that all of the diagnosis codes in subcategory
M02.8 should be identified as manifestation codes.
We are proposing to add the ICD-10-CM diagnosis codes listed in the
following table to the ICD-10 MCE Version 34 Manifestation codes not
allowed as principal diagnosis edit code list.
------------------------------------------------------------------------
ICD-10-CM diagnosis code Description
------------------------------------------------------------------------
M02.80................... Other reactive arthropathies, unspecified
site.
M02.811.................. Other reactive arthropathies, right shoulder.
M02.812.................. Other reactive arthropathies, left shoulder.
M02.819.................. Other reactive arthropathies, unspecified
shoulder.
M02.821.................. Other reactive arthropathies, right elbow.
M02.822.................. Other reactive arthropathies, left elbow.
M02.829.................. Other reactive arthropathies, unspecified
elbow.
M02.831.................. Other reactive arthropathies, right wrist.
M02.832.................. Other reactive arthropathies, left wrist.
M02.839.................. Other reactive arthropathies, unspecified
wrist.
M02.841.................. Other reactive arthropathies, right hand.
M02.842.................. Other reactive arthropathies, left hand.
M02.849.................. Other reactive arthropathies, unspecified
hand.
M02.851.................. Other reactive arthropathies, right hip.
M02.852.................. Other reactive arthropathies, left hip.
M02.859.................. Other reactive arthropathies, unspecified
hip.
M02.861.................. Other reactive arthropathies, right knee.
M02.862.................. Other reactive arthropathies, left knee.
M02.869.................. Other reactive arthropathies, unspecified
knee.
M02.871.................. Other reactive arthropathies, right ankle and
foot.
M02.872.................. Other reactive arthropathies, left ankle and
foot.
M02.879.................. Other reactive arthropathies, unspecified
ankle and foot.
------------------------------------------------------------------------
We are inviting public comments on our proposal.
(4) Questionable Admission Edit
In the MCE, some diagnoses are not usually sufficient justification
for admission to an acute care hospital. For example, if a patient is
assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure
reading, without diagnosis of hypertension), the patient would have a
questionable admission because an elevated blood pressure reading is
not normally sufficient justification for admission to a hospital.
Upon review of the ICD-10-CM diagnosis codes listed under the ICD-
10 MCE Version 33 Questionable Admission edit, our clinical advisors
determined that certain diagnoses clinically warrant hospital
admission. Therefore, we are proposing to remove the following
diagnosis codes from the ICD-10 MCE Version 34.0 Questionable admission
edit.
T81.81XA (Complication of inhalation therapy, initial
encounter);
T88.4XXA (Failed or difficult intubation, initial
encounter);
T88.7XXA (Unspecified adverse effect of drug or
medicament, initial encounter);
T88.8XXA (Other specified complications of surgical and
medical care, not elsewhere classified, initial encounter); and
T88.9XXA (Complication of surgical and medical care,
unspecified, initial encounter).
We are inviting public comments on our proposal.
(5) Removal of Edits and Future Enhancement
With the implementation of ICD-10, it is clear that there are
several concepts that differ from the ICD-9-CM classification. These
differences are evident in the MCE as discussed earlier in this
section. Looking ahead to the needs and uses of coded data as the data
continue to evolve from the reporting, collection, processing,
coverage, payment and analysis aspect, we believe the need to ensure
the accuracy of the coded data becomes increasingly significant.
The purpose of the MCE is to ensure that errors and inconsistencies
in the coded data are recognized during Medicare claims processing. As
shown in the FY 2016 ICD-10 MCE Version 33 manual file and an ICD-9-CM
MCE Version 33.0A manual file (developed for analysis only), an edit
code list exists according to the definition or criteria set forth for
each specified type of edit. Over time, certain edits under the ICD-9-
CM MCE became discontinued as they were no longer needed. However, the
MCE manual has continued to make reference to these discontinued edits,
including through the replication process with transitioning to ICD-10.
Currently, the FY 2016 ICD-10 MCE Version 33 manual file displays
the following edits:
12. Open biopsy check. Effective October 1, 2010, the Open
biopsy check edit was discontinued and will appear for claims processed
using MCE Version 2.0-26.0 only.
13. Bilateral procedure. Effective with the ICD-10
implementation, the bilateral procedure edit will be discontinued.
Because these edits are no longer valid, we are proposing to remove
the reference to them, effective with the ICD-10 MCE manual and
software
[[Page 25010]]
Version 34.0, for FY 2017. We are inviting public comments on our
proposal.
As we continue to evaluate the purpose and function of the MCE with
respect to the transition to ICD-10, we encourage public input for
future discussion. For instance, we recognize a need to further examine
the current list of edits and the definitions of those edits. We
encourage public comments on whether there are additional concerns with
the current edits, including specific edits or language that should be
removed or revised, edits that should be combined, or new edits that
should be added to assist in detecting errors or inaccuracies in the
coded data.
13. Proposed Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of MS-DRG reclassification and recalibrations, for
FY 2017, we reviewed the surgical hierarchy of each MDC, as we have for
previous reclassifications and recalibrations, to determine if the
ordering of classes coincides with the intensity of resource
utilization.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we are proposing to make for FY 2017, as
discussed in section II.F.4.c. of the preamble of this FY 2017 IPPS/
LTCH PPS proposed rule, we are proposing to maintain the existing
surgical hierarchy in MDC 5 for proposed revised MS-DRGs 228 and 229
(Other Cardiothoracic Procedures with MCC and without MCC,
respectively).
We are inviting public comments on our proposals.
14. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2017
The tables identifying the proposed additions and deletions to the
MCC severity levels list and the proposed additions and deletions to
the CC severity levels list for FY 2017 are available via the Internet
on the CMS Web site at: http://cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as follows:
Table 6I.1--Proposed Additions to the MCC List--FY 2017;
Table 6I.2--Proposed Deletions to the MCC List--FY 2017;
Table 6J.1--Proposed Additions to the CC List--FY 2017;
and
Table 6J.2--Proposed Deletions to the CC List--FY 2017.
15. Proposed Complications or Comorbidity (CC) Exclusions List
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008
(72 FR 47152 through 47171).
[[Page 25011]]
b. Proposed CC Exclusions List for FY 2017
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As previously indicated,
we developed a list of diagnoses, using physician panels, to include
those diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity. In previous
years, we made changes to the list of CCs, either by adding new CCs or
deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541) for
detailed information regarding revisions that were made to the CC
Exclusion Lists under the ICD-9-CM MS-DRGs.
For FY 2017, we are proposing changes to the ICD-10 MS-DRGs Version
34 CC Exclusion List. Therefore, we have developed Table 6G.1.--
Proposed Secondary Diagnosis Order Additions to the CC Exclusions
List--FY 2017; Table 6G.2.--Proposed Principal Diagnosis Order
Additions to the CC Exclusions List--FY 2017; Table 6H.1.--Proposed
Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2017;
and Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2017. Each of these principal diagnosis codes for
which there is a CC exclusion is shown in Table 6G.2. with an asterisk
and the conditions that will not count as a CC are provided in an
indented column immediately following the affected principal diagnosis.
Beginning with discharges on or after October 1 of each year, the
indented diagnoses are not recognized by the GROUPER as valid CCs for
the asterisked principal diagnoses. Tables 6G and 6H associated with
this proposed rule are available via the Internet on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
To capture new and deleted diagnosis and procedure codes, for FY
2017, we have developed Table 6A.--New Diagnosis Codes, Table 6B.--New
Procedure Codes, and Table 6C--Invalid Diagnosis Codes to this proposed
rule. However, they are not published in the Addendum to this proposed
rule but are available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, as described in section VI. of the
Addendum to this proposed rule. We note that while we did not
specifically develop a Table 6E.--Revised Diagnosis Code Titles for
this proposed rule, a document containing the FY 2017 revised diagnosis
code titles, as well as new diagnosis codes that have been finalized to
date since implementation of the partial code freeze, was made
available in advance in response to requests from the health care
industry. During the March 9-10, 2016 ICD-10 Coordination and
Maintenance Committee meeting, a discussion regarding this document was
presented. Participants were informed that the document titled ``FY
2017 New Released ICD-10-CM Codes'' would contain the information that
would otherwise be included for this table. This document has been
posted along with the other March 9-10, 2016 ICD-10 Coordination and
Maintenance Committee meeting materials on the CDC Web site at: http://www.cdc.gov/nchs/icd/icd9cm_maintenance.htm.
In addition, we did not specifically develop a Table 6F.--Revised
Procedure Code Titles for this proposed rule. However, a document
containing the FY 2017 revised procedure code titles, as well as new
procedure codes that have been finalized to date since implementation
of the partial code freeze, was made available in advance in response
in response to requests from the health care industry. During the March
9-10, 2016 ICD-10 Coordination and Maintenance Committee meeting, a
discussion regarding this document was presented. Participants were
informed that the document titled ``FY 2017 New Revised ICD-10-PCS
Codes'' would contain the information that would otherwise be included
for this table. This document is posted on the CMS Web site at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2016-03-09-MeetingMaterials.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending.
As mentioned in section II.F.14. of this proposed rule, we are
proposing additions and deletions to the MS-DRG MCC and CC Lists for FY
2017 based on the creation of new ICD-10-CM codes. This information is
available in Tables 6I.1 (Proposed Additions to the MCC List--FY 2017),
6I.2 (Proposed Deletions to the MCC List--FY 2017), 6J.1 (Proposed
Additions to the CC List--FY 2017), and 6J.2 (Proposed Deletions to the
CC List--FY 2017). However, they are not published in the Addendum to
this proposed rule but are available via the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, as described in section VI. of the
Addendum to this proposed rule.
16. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned to MS-DRGs 981, 982, and 983
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively); MS-DRGs 984, 985, and 986
(Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively); and MS-DRGs 987, 988, and
989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) to determine whether it
would be appropriate to change the procedures assigned among these MS-
DRGs. MS-DRGs 981 through 983, 984 through 986, and 987 through 989 are
reserved for those cases in which none of the O.R. procedures performed
are related to the
[[Page 25012]]
principal diagnosis. These MS-DRGs are intended to capture atypical
cases, that is, those cases not occurring with sufficient frequency to
represent a distinct, recognizable clinical group. Under ICD-9-CM, MS-
DRGs 984 through 986 are assigned to those discharges in which one or
more of the following prostatic procedures are performed and are
unrelated to the principal diagnosis:
60.0 (Incision of prostate);
60.12 (Open biopsy of prostate);
60.15 (Biopsy of periprostatic tissue);
60.18 (Other diagnostic procedures on prostate and
periprostatic tissue);
60.21 (Transurethral prostatectomy);
60.29 (Other transurethral prostatectomy);
60.61 (Local excision of lesion of prostate);
60.69 (Prostatectomy, not elsewhere classified);
60.81 (Incision of periprostatic tissue);
60.82 (Excision of periprostatic tissue);
60.93 (Repair of prostate);
60.94 (Control of (postoperative) hemorrhage of prostate);
60.95 (Transurethral balloon dilation of the prostatic
urethra);
60.96 (Transurethral destruction of prostate tissue by
microwave thermotherapy);
60.97 (Other transurethral destruction of prostate tissue
by other thermotherapy); and
60.99 (Other operations on prostate).
Under the ICD-10 MS-DRGs Version 33, the comparable ICD-10-PCS code
translations for the above list of codes are available in Table 6P.2.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). All remaining O.R.
procedures are assigned to MS-DRGs 981 through 983 and 987 through 989,
with MS-DRGs 987 through 989 assigned to those discharges in which the
only procedures performed are nonextensive procedures that are
unrelated to the principal diagnosis.
We refer the reader to the FY 2014 IPPS/LTCH PPS final rule (78 FR
50544 through 50545) for detailed information regarding modifications
that were made to the former ICD-9-CM CMS DRG 468 (MS-DRGs 981 through
983), CMS DRG 476 (MS-DRGs 984 through 986), and CMS DRG 477 (MS-DRGs
987 through 989) with regard to the movement of procedure codes. We
note that no procedure codes were moved from these DRGs from FY 2008
through FY 2016.
Our review of MedPAR claims data showed that there are no cases
that merited movement or should logically be reassigned from ICD-10 MS-
DRGs 984 through 986 to any of the other MDCs. Therefore, for FY 2017,
we are not proposing to change the procedures assigned among these MS-
DRGs. We are inviting public comments on our proposal to maintain the
current structure of these MS-DRGs.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
Upon review of the claims data from the December 2015 update of the FY
2015 MedPAR file, we did not find any cases that merited movement or
that should logically be assigned to any of the other MDCs. Therefore,
for FY 2017, we are not proposing to remove any procedures from MS-DRGs
981 through 983 or MS-DRGs 987 through 989 into one of the surgical MS-
DRGs for the MDC into which the principal diagnosis is assigned. We are
inviting public comments on our proposal to maintain the current
structure of these MS-DRGs.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also reviewed the list of ICD-10-PCS procedures that, when in
combination with their principal diagnosis code, result in assignment
to MS-DRGs 981 through 983, 984 through 986, or 987 through 989, to
ascertain whether any of those procedures should be reassigned from one
of those three groups of MS-DRGs to another of the three groups of MS-
DRGs based on average costs and the length of stay. We look at the data
for trends such as shifts in treatment practice or reporting practice
that would make the resulting MS-DRG assignment illogical. If we find
these shifts, we would propose to move cases to keep the MS-DRGs
clinically similar or to provide payment for the cases in a similar
manner. Generally, we move only those procedures for which we have an
adequate number of discharges to analyze the data.
There are no cases representing shifts in treatment practice or
reporting practice that would make the resulting MS-DRG assignment
illogical, or that merited movement so that cases should logically be
assigned to any of the other MDCs. Therefore, for FY 2017, we are not
proposing to move any procedure codes among these MS-DRGs. We are
inviting public comments on our proposal.
c. Adding Diagnosis or Procedure Codes to MDCs
Based on the review of cases in the MDCs, we are proposing to add
multiple diagnosis and procedure codes to MDCs for FY 2017 to address
replication issues. We discuss each of these proposals below.
(1) Angioplasty of Extracranial Vessel
In the ICD-9-CM MS-DRGs Version 32, procedures describing
angioplasty of an extracranial vessel were assigned to MDC 1 (Diseases
and Disorders of the Nervous System) under MS-DRGs 037, 038, and 039
(Extracranial Procedures with MCC, with CC, or without CC/MCC,
respectively). Under ICD-9-CM, more than one ICD-9-CM code could be
reported for these procedures, depending on the approach that was
documented. For example, ICD-9-CM procedure code 00.61 (Percutaneous
angioplasty of extracranial vessel(s)) would have been appropriately
reported if the percutaneous approach was documented, and procedure
code 39.50 (Angioplasty of other non-coronary vessel(s)) would have
been appropriately reported if a specified approach was not documented.
A replication issue for 41 ICD-10-PCS procedure codes describing
angioplasty with the open approach was identified after implementation
of the ICD-10 MS-DRGs Version 33. In the code translation, these 41
ICD-10-PCS procedure codes were grouped and assigned to ICD-10 MS-DRGs
981 through 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with
[[Page 25013]]
MCC, with CC, and without CC/MCC, respectively). However, these
procedure codes should have been grouped to ICD-10 MS-DRGs 037 through
039 when a principal diagnosis was reported under MDC 1.
To resolve this replication issue, we are proposing to add the 41
ICD-10-PCS procedure codes listed in the following table to ICD-10 MS-
DRGs 037 through 039 under MDC 1.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
037H04Z.................. Dilation of right common carotid artery with
drug-eluting intraluminal device, open
approach.
037H0DZ.................. Dilation of right common carotid artery with
intraluminal device, open approach.
037H0ZZ.................. Dilation of right common carotid artery, open
approach.
037J04Z.................. Dilation of left common carotid artery with
drug-eluting intraluminal device, open
approach.
037J0DZ.................. Dilation of left common carotid artery with
intraluminal device, open approach.
037J0ZZ.................. Dilation of left common carotid artery, open
approach.
037K04Z.................. Dilation of right internal carotid artery
with drug-eluting intraluminal device, open
approach.
037K0DZ.................. Dilation of right internal carotid artery
with intraluminal device, open approach.
037K0ZZ.................. Dilation of right internal carotid artery,
open approach.
037L04Z.................. Dilation of left internal carotid artery with
drug-eluting intraluminal device, open
approach.
037L0DZ.................. Dilation of left internal carotid artery with
intraluminal device, open approach.
037L0ZZ.................. Dilation of left internal carotid artery,
open approach.
037M04Z.................. Dilation of right external carotid artery
with drug-eluting intraluminal device, open
approach.
037M0DZ.................. Dilation of right external carotid artery
with intraluminal device, open approach.
037M0ZZ.................. Dilation of right external carotid artery,
open approach.
037N04Z.................. Dilation of left external carotid artery with
drug-eluting intraluminal device, open
approach.
037N0DZ.................. Dilation of left external carotid artery with
intraluminal device, open approach.
037N0ZZ.................. Dilation of left external carotid artery,
open approach.
037P04Z.................. Dilation of right vertebral artery with drug-
eluting intraluminal device, open approach.
037P0DZ.................. Dilation of right vertebral artery with
intraluminal device, open approach.
037P0ZZ.................. Dilation of right vertebral artery, open
approach.
037Q04Z.................. Dilation of left vertebral artery with drug-
eluting intraluminal device, open approach.
037Q0DZ.................. Dilation of left vertebral artery with
intraluminal device, open approach.
037Q0ZZ.................. Dilation of left vertebral artery, open
approach.
037Y04Z.................. Dilation of upper artery with drug-eluting
intraluminal device, open approach.
037Y0DZ.................. Dilation of upper artery with intraluminal
device, open approach.
037Y0ZZ.................. Dilation of upper artery, open approach.
057M0DZ.................. Dilation of right internal jugular vein with
intraluminal device, open approach.
057M0ZZ.................. Dilation of right internal jugular vein, open
approach.
057N0DZ.................. Dilation of left internal jugular vein with
intraluminal device, open approach.
057N0ZZ.................. Dilation of left internal jugular vein, open
approach.
057P0DZ.................. Dilation of right external jugular vein with
intraluminal device, open approach.
057P0ZZ.................. Dilation of right external jugular vein, open
approach
057Q0DZ.................. Dilation of left external jugular vein with
intraluminal device, open approach.
057Q0ZZ.................. Dilation of left external jugular vein, open
approach.
057R0DZ.................. Dilation of right vertebral vein with
intraluminal device, open approach.
057R0ZZ.................. Dilation of right vertebral vein, open
approach.
057S0DZ.................. Dilation of left vertebral vein with
intraluminal device, open approach.
057S0ZZ.................. Dilation of left vertebral vein, open
approach.
057T0DZ.................. Dilation of right face vein with intraluminal
device, open approach.
057T0ZZ.................. Dilation of right face vein, open approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal to add the above
listed codes to ICD-10 MS-DRGs 037, 038, and 039 (Extracranial
Procedures with MCC, with CC, or without CC/MCC, respectively) under
MDC 1, effective October 1, 2016, for the ICD-10 MS-DRGs Version 34.
(2) Excision of Abdominal Arteries
In the ICD-9-CM MS-DRGs Version 32, procedures involving excision
of a vessel and anastomosis, such as those performed for the treatment
of an abdominal artery aneurysm (aneurysmectomy), are identified with
procedure code 38.36 (Resection of vessel with anastomosis, abdominal
arteries) and are assigned to the following MDCs and MS-DRGs:
MDC 5 (Diseases and Disorders of the Circulatory System):
MS-DRGs 270 through 272 (Other Major Cardiovascular Procedures with
MCC, with CC and without CC/MCC, respectively);
MDC 6 (Diseases and Disorders of the Digestive System):
MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with
MCC, with CC and without CC/MCC, respectively);
MDC 11 (Diseases and Disorders of the Kidney and Urinary
Tract): MS-DRGs 673 through 675 (Other Kidney and Urinary Tract
Procedures with MCC, with CC and without CC/MCC, respectively);
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs):
MS-DRGs 907 through 909 (Other O.R. Procedures for Injuries with MCC,
with CC, and without CC/MCC, respectively); and
MDC 24 (Multiple Significant Trauma): MS-DRG 957 through
959 (Other O.R. Procedures for Multiple Significant Trauma without CC/
MCC).
A replication issue for 34 ICD-10-PCS procedure codes describing
aneurysmectomy procedures with the open and percutaneous endoscopic
approach was identified after implementation of the ICD-10 MS-DRGs
Version 33. For example, cases with a principal diagnosis of I72.2
(Aneurysm of renal artery) and procedure code 04BA0ZZ (Excision of left
renal artery, open approach) are resulting in assignment to ICD-10 MS-
DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and
[[Page 25014]]
without CC/MCC, respectively) instead of to MDC 11 in MS-DRGs 673
through 675 (Other Kidney and Urinary Tract Procedures with MCC, with
CC, and without CC/MCC, respectively).
To resolve this replication issue, we are proposing to add the 34
ICD-10-PCS procedure codes listed in the following table that are
comparable translations of ICD-9-CM procedure code 38.36 to ICD-10 MDCs
6, 11, 21, and 24. We note that there is no replication issue related
to MDC 5 as the ICD-10-PCS procedure codes listed in the table below
group there appropriately.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
04B10ZZ.................. Excision of celiac artery, open approach.
04B14ZZ.................. Excision of celiac artery, percutaneous
endoscopic approach.
04B20ZZ.................. Excision of gastric artery, open approach.
04B24ZZ.................. Excision of gastric artery, percutaneous
endoscopic approach.
04B30ZZ.................. Excision of hepatic artery, open approach.
04B34ZZ.................. Excision of hepatic artery, percutaneous
endoscopic approach.
04B40ZZ.................. Excision of splenic artery, open approach.
04B44ZZ.................. Excision of splenic artery, percutaneous
endoscopic approach.
04B50ZZ.................. Excision of superior mesenteric artery, open
approach.
04B54ZZ.................. Excision of superior mesenteric artery,
percutaneous endoscopic approach.
04B60ZZ.................. Excision of right colic artery, open
approach.
04B64ZZ.................. Excision of right colic artery, percutaneous
endoscopic approach.
04B70ZZ.................. Excision of left colic artery, open approach.
04B74ZZ.................. Excision of left colic artery, percutaneous
endoscopic approach.
04B80ZZ.................. Excision of middle colic artery, open
approach.
04B84ZZ.................. Excision of middle colic artery, percutaneous
endoscopic approach.
04B90ZZ.................. Excision of right renal artery, open
approach.
04B94ZZ.................. Excision of right renal artery, percutaneous
endoscopic approach.
04BA0ZZ.................. Excision of left renal artery, open approach.
04BA4ZZ.................. Excision of left renal artery, percutaneous
endoscopic approach.
04BB0ZZ.................. Excision of inferior mesenteric artery, open
approach.
04BB4ZZ.................. Excision of inferior mesenteric artery,
percutaneous endoscopic approach.
04BC0ZZ.................. Excision of right common iliac artery, open
approach.
04BC4ZZ.................. Excision of right common iliac artery,
percutaneous endoscopic approach.
04BD0ZZ.................. Excision of left common iliac artery, open
approach.
04BD4ZZ.................. Excision of left common iliac artery,
percutaneous endoscopic approach.
04BE0ZZ.................. Excision of right internal iliac artery, open
approach.
04BE4ZZ.................. Excision of right internal iliac artery,
percutaneous endoscopic approach.
04BF0ZZ.................. Excision of left internal iliac artery, open
approach.
04BF4ZZ.................. Excision of left internal iliac artery,
percutaneous endoscopic approach.
04BH0ZZ.................. Excision of right external iliac artery, open
approach.
04BH4ZZ.................. Excision of right external iliac artery,
percutaneous endoscopic approach.
04BJ0ZZ.................. Excision of left external iliac artery, open
approach.
04BJ4ZZ.................. Excision of left external iliac artery,
percutaneous endoscopic approach.
------------------------------------------------------------------------
Adding these procedures to those MDCs in the ICD-10 MS-DRGs Version
34 will result in a more accurate replication for the same procedure
under the ICD-9-CM MS-DRGs Version 32. We also are proposing that these
procedure codes be assigned to the corresponding MS-DRGs in each
respective MDC as listed above. The proposed changes would eliminate
erroneous assignment to MS-DRGs 981 through 983 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) for these procedures.
We are inviting public comments on our proposal to add the above
listed codes to MDCs 6, 11, 21, and 24 in the corresponding MS-DRGs,
effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.
(3) Excision of Retroperitoneal Tissue
In the ICD-9-CM MS-DRGs Version 32, procedures involving excision
of a retroperitoneal lesion (or tissue), such as those performed for
the treatment of a neoplasm, are identified with procedure code 54.4
(Excision or destruction of peritoneal tissue) and are assigned to a
number of MDCs and MS-DRGs across a variety of body systems, some of
which include the following:
MDC 6 (Diseases and Disorders of the Digestive System):
MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with
MCC, with CC, and without CC/MCC, respectively);
MDC 7 (Diseases and Disorders of the Hepatobiliary System
and Pancreas): MS-DRGs 423 through 425 (Other Hepatobiliary or Pancreas
O.R. Procedures with MCC, with CC, and without CC/MCC, respectively);
and
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders): MS-DRGs 628 through 630 (Other Endocrine, Nutritional and
Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively).
A replication issue for the ICD-10-PCS procedure codes describing
excision of retroperitoneum that involves MDC 6 was identified after
implementation of the ICD-10 MS-DRGs Version 33. These procedure codes
are ICD-10-PCS codes 0WBH0ZZ (Excision of retroperitoneum, open
approach), 0WBH3ZZ (Excision of retroperitoneum, percutaneous
approach), and 0WBH4ZZ (Excision of retroperitoneum, percutaneous
endoscopic approach). For example, when an ICD-10-CM diagnosis code
such as D20.0 (Benign neoplasm of soft tissue of retroperitoneum) is
reported with any one of these three ICD-10-PCS procedure codes, the
case is assigned to MS-DRGs 981 through 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively).
To resolve this replication issue, we are proposing to add the
three ICD-10-PCS procedure codes to MDC 6 in MS-DRGs 356 through 358
(Other Digestive System O.R. Procedures with MCC, with CC, and without
CC/MCC, respectively). This would result in a more accurate replication
of the comparable procedure under the ICD-9-CM MS-DRGs Version
[[Page 25015]]
32. The proposed changes also would eliminate erroneous assignment to
MS-DRGs 981 through 983 for these procedures.
We are inviting public comments on our proposal to add the three
ICD-10-PCS codes describing excision of retroperitoneum to MDC 6 in MS-
DRGs 356 through 358, effective October 1, 2016, in the ICD-10 MS-DRGs
Version 34.
(4) Occlusion of Vessels: Esophageal Varices
In the ICD-9-CM MS-DRGs Version 32, procedures including ligation
or surgical occlusion of esophageal varices are identified with
procedure code 42.91 (Ligation of esophageal varices) and are assigned
to MDC 6 (Diseases and Disorders of the Digestive System) under MS-DRGs
326 through 328 (Stomach, Esophageal and Duodenal Procedures with MCC,
with CC, and without CC/MCC, respectively) and MDC 7 (Diseases and
Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 423
through 425 (Other Hepatobiliary or Pancreas O.R. procedures with MCC,
with CC, and without CC/MCC, respectively).
A replication issue for MDC 7 involving ICD-10-PCS procedure codes
06L30CZ (Occlusion of esophageal vein with extraluminal device, open
approach) and 06L30DZ (Occlusion of esophageal vein with intraluminal
device, open approach) was identified in the ICD-10 MS-DRGs Version 33
after implementation on October 1, 2015. For instance, when an ICD-10-
CM diagnosis code such as K70.30 (Alcoholic cirrhosis of liver without
ascites) is reported with either one of the ICD-10-PCS procedure codes,
it results in assignment to MS-DRGs 981 through 983 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively).
To resolve this replication issue, we are proposing to add the two
ICD-10-PCS procedure codes describing occlusion of esophageal vein to
MDC 7 under MS-DRGs 423 through 425. This will result in a more
accurate replication of the comparable procedure under the ICD-9-CM MS-
DRGs Version 32. The proposed changes also would eliminate erroneous
assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) for these procedures.
We are inviting public comments on our proposal to add ICD-10-PCS
procedure codes 06L30CZ and 06L30DZ to MDC 7 under MS-DRGs 423 through
425, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.
(5) Excision of Vulva
In the ICD-9-CM MS-DRGs Version 32, procedures involving excision
of the vulva are identified with procedure code 71.3 (Other local
excision or destruction of vulva and perineum) and are assigned to the
following MDCs and MS-DRGs:
MDC 9 (Diseases & Disorders of the Skin, Subcutaneous
Tissue and Breast): MS-DRGs 579 through 581 (Other Skin, Subcutaneous
Tissue and Breast Procedures with MCC, with CC, and without CC/MCC,
respectively); and
MDC 13 (Diseases & Disorders of the Female Reproductive
System): MS-DRG 746 (Vagina, cervix and vulva procedures with CC/MCC)
and MS-DRG 747 (Vagina, Cervix and Vulva procedures without CC/MCC).
A replication issue involving ICD-10-PCS procedure code 0UBMXZZ
(Excision of vulva, external approach) was identified after
implementation of the ICD-10 MS-DRGs Version 33. For example, when
cases with an ICD-10-CM principal diagnosis of code D07.1 (Carcinoma in
situ of vulva) are reported with ICD-10-PCS procedure code 0UBMXZZ
(Excision of vulva, external approach), they are resulting in
assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively).
To resolve this replication issue, we are proposing to add ICD-10-
PCS procedure code 0UBMXZZ to MDC 13 under MS-DRGs 746 and 747. Adding
procedure code 0UBMXZZ to MDC 13 in MS-DRGs 746 and 747 would result in
a more accurate replication of the comparable procedure under the ICD-
9-CM MS-DRGs Version 32. The proposed changes also would eliminate
erroneous assignment to MS-DRGs 981 through 983 for these procedures.
In addition, the proposed changes would be consistent with the
assignment of other clinically similar procedures, such as ICD-10-PCS
procedure code 0WBNXZZ (Excision of female perineum, external
approach). Finally, we note that there is no replication issue for MDC
9 regarding this procedure code.
We are inviting public comment on our proposal to add ICD-10-PCS
procedure code 0UBMXZZ to MDC 13 in MS-DRGs 746 and 747, effective
October 1, 2016, in the ICD-10 MS-DRGs Version 34.
(6) Lymph Node Biopsy
In the ICD-9-CM MS-DRGs Version 32, procedures involving a lymph
node biopsy are identified with procedure code 40.11 (Biopsy of
lymphatic structure), which may be assigned to several MDCs
representing various body systems. Under the ICD-10 MS-DRGs Version 33,
this procedure has 114 ICD-10-PCS procedure codes considered to be
comparable translations that describe diagnostic drainage or excision
of specified lymphatic structures and also warrant assignment to the
same MDCs across various body systems.
A replication issue for the lymph node biopsy procedure involving
MDC 4 (Diseases and Disorders of the Respiratory System) under the ICD-
10 MS-DRGs Version 33 was identified after implementation on October 1,
2015. For example, when a respiratory system diagnosis is reported with
the comparable ICD-10-PCS procedure code 07B74ZX (Excision of thorax
lymphatic, percutaneous endoscopic approach, diagnostic), the case is
assigned to MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively).
To resolve this replication issue, we are proposing to add ICD-10-
PCS procedure code 07B74ZX to MDC 4 under MS-DRGs 166 through 168
(Other Respiratory System O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively) to more accurately replicate assignment
of the comparable procedure code under the ICD-9-CM MS-DRGs Version 32.
While reviewing that specific example, we also identified two other
comparable ICD-10-PCS procedure code translations of ICD-9-CM procedure
code 40.11 (Biopsy of lymphatic structure) describing diagnostic
excision of thoracic lymphatic structures that were not replicated
consistent with the ICD-9-CM MS-DRGs Version 32. These are ICD-10-PCS
procedure codes 07B70ZX (Excision of thorax lymphatic, open approach,
diagnostic) and 07B73ZX (Excision of thorax lymphatic, percutaneous
approach, diagnostic). Therefore, we are proposing to add these two
ICD-10-PCS procedure codes to MDC 4 in MS-DRGs 166 through 168 as well.
Adding ICD-10-PCS procedure codes 07B74ZX, 07B70ZX, and 07B73ZX
that describe diagnostic excision of thoracic lymphatic structures to
MDC 4 under MS-DRGs 166 through 168 would result in a more accurate
replication of the comparable procedure under ICD-9-CM MS-DRGs Version
32. The proposed changes would eliminate erroneous assignment to MS-
DRGs 987 through 989 for these procedures.
[[Page 25016]]
We are inviting public comments on our proposal to add ICD-10-PCS
procedure codes 07B74ZX, 07B70ZX, and 07B73ZX to the ICD-10 MS-DRGs
Version 34 for MS-DRGs 166 through 168 in MDC 4, effective October 1,
2016.
(7) Obstetrical Laceration Repair
A replication issue for eight ICD-10-PCS procedure codes describing
procedures that may be performed for the repair of obstetrical
lacerations was identified after implementation of the ICD-10 MS-DRGs
Version 33. These codes are:
------------------------------------------------------------------------
ICD-10-PCS procedure
code Description
------------------------------------------------------------------------
0DQQ0ZZ.................. Repair anus, open approach.
0DQQ3ZZ.................. Repair anus, percutaneous approach.
0DQQ4ZZ.................. Repair anus, percutaneous endoscopic
approach.
0DQQ7ZZ.................. Repair anus, via natural or artificial
opening.
0DQQ8ZZ.................. Repair anus, via natural or artificial
opening endoscopic.
0DQR0ZZ.................. Repair anal sphincter, open approach.
0DQR3ZZ.................. Repair anal sphincter, percutaneous approach.
0DQR4ZZ.................. Repair anal sphincter, percutaneous
endoscopic approach.
------------------------------------------------------------------------
We discovered that the ICD-10 MDC and MS-DRG assignment are not
consistent with other ICD-10-PCS procedure codes that identify and
describe clinically similar procedures for the repair of obstetrical
lacerations which are coded and reported based on the extent of the
tear. For example, ICD-10-PCS procedure code 0DQP0ZZ (Repair rectum,
open approach) is appropriately assigned to MDC 14 (Pregnancy,
Childbirth and the Puerperium) under MS-DRG 774 (Vaginal Delivery with
Complicating Diagnoses). This procedure may be performed in the
treatment of a fourth-degree perineal laceration involving the rectal
mucosa. In contrast, ICD-10-PCS procedure code 0DQR0ZZ (Repair anal
sphincter, open approach), when reported for repair of a perineal
laceration, currently results in assignment to MS-DRGs 987 through 989
(Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis).
To resolve this replication issue, we are proposing to add these
eight ICD-10-PCS procedure codes to MDC 14 in MS-DRG 774. The proposed
changes would eliminate erroneous assignment to MS-DRGs 987 through 989
for these procedures.
We are inviting public comments on our proposal to add the eight
listed codes to MDC 14 under MS-DRG 774, effective October 1, 2016, in
the ICD-10 MS-DRGs Version 34.
17. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
a. ICD-10 Coordination and Maintenance Committee
In September 1985, the ICD-9-CM Coordination and Maintenance
Committee was formed. This is a Federal interdepartmental committee,
co-chaired by the National Center for Health Statistics (NCHS), the
Centers for Disease Control and Prevention, and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was to be made on October 1, 2013. Thereafter, the name of
the Committee was changed to the ICD-10 Coordination and Maintenance
Committee, effective with the March 19-20, 2014 meeting. The ICD-10
Coordination and Maintenance Committee addresses updates to the ICD-10-
CM and ICD-10-PCS coding systems. The Committee is jointly responsible
for approving coding changes, and developing errata, addenda, and other
modifications to the coding systems to reflect newly developed
procedures and technologies and newly identified diseases. The
Committee is also responsible for promoting the use of Federal and non-
Federal educational programs and other communication techniques with a
view toward standardizing coding applications and upgrading the quality
of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS Web site
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the previously mentioned
process by health-related organizations. In this regard, the Committee
holds public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2017 at a public meeting held on September 22-23,
2015, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 13, 2015.
The Committee held its 2016 meeting on March 9-10, 2016. It was
announced at this meeting that any new ICD-10-CM/PCS codes for which
there was consensus of public support and for which complete tabular
and indexing changes would be made by May 2016 would be included in the
October 1, 2016 update to ICD-10-CM/ICD-10-PCS. As discussed in earlier
sections of this preamble, there are new and deleted ICD-10-CM
diagnosis codes and ICD-10-PCS procedure codes that are captured in
Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, and
Table 6C.--Invalid Diagnosis Codes for the proposed rule, which are
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
Because of the length of these tables, they are not
[[Page 25017]]
published in the Addendum to this proposed rule. Rather, they are
available via the Internet as discussed in section VI. of the Addendum
to this proposed rule.
Live Webcast recordings of the discussions of procedure codes at
the Committee's September 22-23, 2015 meeting and March 9-10, 2016
meeting can be obtained from the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icD9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the
discussions of diagnosis codes at the September 23-24, 2015 meeting and
March 9-10, 2016 meeting are found at: http://www.cdc.gov/nchs/icd/icd9cm_maintenance.html. These Web sites also provide detailed
information about the Committee, including information on requesting a
new code, attending a Committee meeting, and timeline requirements and
meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by Email to:
[email protected].
Questions and comments concerning the procedure codes should be
addressed to: Patricia Brooks, Co-Chairperson, ICD-10 Coordination and
Maintenance Committee, CMS, Center for Medicare Management, Hospital
and Ambulatory Policy Group, Division of Acute Care, C4-08-06, 7500
Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent by
Email to: [email protected].
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October.
Section 503(a) of Public Law 108-173 included a requirement for
updating diagnosis and procedure codes twice a year instead of a single
update on October 1 of each year. This requirement was included as part
of the amendments to the Act relating to recognition of new technology
under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act
by adding a clause (vii) which states that the Secretary shall provide
for the addition of new diagnosis and procedure codes on April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) until the fiscal year that begins after such date. This
requirement improves the recognition of new technologies under the IPPS
system by providing information on these new technologies at an earlier
date. Data will be available 6 months earlier than would be possible
with updates occurring only once a year on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
in order to identify and report the new codes.
The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance
Committee holds its meetings in the spring and fall in order to update
the codes and the applicable payment and reporting systems by October 1
of each year. Items are placed on the agenda for the Committee meeting
if the request is received at least 2 months prior to the meeting. This
requirement allows time for staff to review and research the coding
issues and prepare material for discussion at the meeting. It also
allows time for the topic to be publicized in meeting announcements in
the Federal Register as well as on the CMS Web site. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all diagnosis and procedure coding changes, both
tabular and index, is published on the CMS and NCHS Web sites in May of
each year. Publishers of coding books and software use this information
to modify their products that are used by health care providers. This
5-month time period has proved to be necessary for hospitals and other
providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee Meeting minutes. The public agreed that there was a need to
hold the fall meetings earlier, in September or October, in order to
meet the new implementation dates. The public provided comment that
additional time would be needed to update hospital systems and obtain
new code books and coding software. There was considerable concern
expressed about the impact this new April update would have on
providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee meeting
are considered for an April 1 update if a strong and convincing case is
made by the requester at the Committee's public meeting. The request
must identify the reason why a new code is needed in April for purposes
of the new technology process. The participants at the meeting and
those reviewing the Committee meeting summary report are provided the
opportunity to comment on this expedited request. All other topics are
considered for the October 1 update. Participants at the Committee
meeting are encouraged to comment on all such requests. There were no
requests approved for an expedited April l, 2016 implementation of a
code at the September 22-23, 2015 Committee meeting. Therefore, there
were no new codes implemented on April 1, 2016.
ICD-9-CM addendum and code title information is published on the
CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/
icD9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and
ICD-10-PCS addendum and code title information is published on the CMS
Web site at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
Information on ICD-10-CM diagnosis codes, along with the Official ICD-
10-CM Coding Guidelines, can also be found on the CDC Web site at:
http://www.cdc.gov/nchs/icd/icd10.htm. Information on new, revised, and
deleted ICD-10-CM/ICD-10-PCS codes is also provided to the AHA for
publication in the Coding Clinic for ICD-10. AHA also distributes
information to publishers and software vendors.
CMS also sends copies of all ICD-10-CM and ICD-10-PCS coding
changes to its Medicare contractors for use in updating their systems
and providing education to providers.
[[Page 25018]]
The code titles are adopted as part of the ICD-10 (previously ICD-
9-CM) Coordination and Maintenance Committee process. Therefore,
although we publish the code titles in the IPPS proposed and final
rules, they are not subject to comment in the proposed or final rules.
b. Code Freeze
In the January 16, 2009 ICD-10-CM and ICD-10-PCS final rule (74 FR
3340), there was a discussion of the need for a partial or total freeze
in the annual updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS
codes. The public comment addressed in that final rule stated that the
annual code set updates should cease l year prior to the implementation
of ICD-10. The commenters stated that this freeze of code updates would
allow for instructional and/or coding software programs to be designed
and purchased early, without concern that an upgrade would take place
immediately before the compliance date, necessitating additional
updates and purchases.
HHS responded to comments in the ICD-10 final rule that the ICD-9-
CM Coordination and Maintenance Committee has jurisdiction over any
action impacting the ICD-9-CM and ICD-10 code sets. Therefore, HHS
indicated that the issue of consideration of a moratorium on updates to
the ICD-9-CM, ICD-10-CM, and ICD-10-PCS code sets in anticipation of
the adoption of ICD-10-CM and ICD-10-PCS would be addressed through the
Committee at a future public meeting.
The code freeze was discussed at multiple meetings of the ICD-9-CM
Coordination and Maintenance Committee and public comment was actively
solicited. The Committee evaluated all comments from participants
attending the Committee meetings as well as written comments that were
received. The Committee also considered the delay in implementation of
ICD-10 until October 1, 2014. There was an announcement at the
September 19, 2012 ICD-9-CM Coordination and Maintenance Committee
meeting that a partial freeze of both ICD-9-CM and ICD-10 codes will be
implemented as follows:
The last regular annual update to both ICD-9-CM and ICD-10
code sets was made on October 1, 2011.
On October 1, 2012 and October 1, 2013, there will be only
limited code updates to both ICD-9-CM and ICD-10 code sets to capture
new technology and new diseases.
On October 1, 2014, there were to be only limited code
updates to ICD-10 code sets to capture new technology and diagnoses as
required by section 503(a) of Public Law 108-173. There were to be no
updates to ICD-9-CM on October 1, 2014.
On October 1, 2015, one year after the originally
scheduled implementation of ICD-10, regular updates to ICD-10 were to
begin.
On May 15, 2014, CMS posted an updated Partial Code Freeze schedule
on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-9-CM-Coordination-and-Maintenance-Committee-Meetings.html. This updated
schedule provided information on the extension of the partial code
freeze until 1 year after the implementation of ICD-10. As stated
earlier, on April 1, 2014, the Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. 113-93) was enacted, which specified that the
Secretary may not adopt ICD-10 prior to October 1, 2015. On August 4,
2014, the Department published a final rule with a compliance date to
require the use of ICD-10 beginning October 1, 2015. The final rule
also required HIPAA-covered entities to continue to use ICD-9-CM
through September 30, 2015. Accordingly, the updated schedule for the
partial code freeze was as follows:
The last regular annual updates to both ICD-9-CM and ICD-
10 code sets were made on October 1, 2011.
On October 1, 2012, October 1, 2013, and October 1, 2014,
there will be only limited code updates to both the ICD-9-CM and ICD-10
code sets to capture new technologies and diseases as required by
section 1886(d)(5)(K) of the Act.
On October 1, 2015, there will be only limited code
updates to ICD-10 code sets to capture new technologies and diagnoses
as required by section 1886(d)(5)(K) of the Act. There will be no
updates to ICD-9-CM, as it will no longer be used for reporting.
On October 1, 2016 (1 year after implementation of ICD-
10), regular updates to ICD-10 will begin.
The ICD-10 (previously ICD-9-CM) Coordination and Maintenance
Committee announced that it would continue to meet twice a year during
the freeze. At these meetings, the public was encouraged to comment on
whether or not requests for new diagnosis and procedure codes should be
created based on the need to capture new technology and new diseases.
Any code requests that do not meet the criteria will be evaluated for
implementation within ICD-10 one year after the implementation of ICD-
10, once the partial freeze is ended.
Complete information on the partial code freeze and discussions of
the issues at the Committee meetings can be found on the ICD-10
Coordination and Maintenance Committee Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/meetings.html. A summary of the September 19, 2012 Committee meeting,
along with both written and audio transcripts of this meeting, is
posted on the Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2012-09-19-MeetingMaterials.html.
This partial code freeze dramatically decreased the number of codes
created each year as shown by the following information.
Total Number of Codes and Changes in Total Number of Codes per Fiscal Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
ICD-9-CM Codes ICD-10-CM and ICD-10-PCS Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Number Change Fiscal year Number Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2009 (October 1, 2008) FY 2009 .............. ..............
Diagnoses.................................. 14,025 348 ICD-10-CM.......................... 68,069 +5
Procedures................................. 3,824 56 ICD-10-PCS......................... 72,589 -14,327
FY 2010 (October 1, 2009) FY 2010 .............. ..............
Diagnoses.................................. 14,315 290 ICD-10-CM.......................... 69,099 +1,030
Procedures................................. 3,838 14 ICD-10-PCS......................... 71,957 -632
FY 2011 (October 1, 2010)
Diagnoses.................................. 14,432 117 ICD-10-CM.......................... 69,368 +269
Procedures................................. 3,859 21 ICD-10-PCS......................... 72,081 +124
FY 2012 (October 1, 2011) FY 2012 .............. ..............
Diagnoses.................................. 14,567 135 ICD-10-CM.......................... 69,833 +465
[[Page 25019]]
Procedures................................. 3,877 18 ICD-10-PCS......................... 71,918 -163
FY 2013 (October 1, 2012) FY 2013 .............. ..............
Diagnoses.................................. 14,567 0 ICD-10-CM.......................... 69,832 -1
Procedures................................. 3,878 1 ICD-10-PCS......................... 71,920 +2
FY 2014 (October 1, 2013) FY 2014 .............. ..............
Diagnoses.................................. 14,567 0 ICD-10-CM.......................... 69,823 -9
Procedures................................. 3,882 4 ICD-10-PCS......................... 71,924 +4
FY 2015 (October 1, 2014) FY 2015 .............. ..............
Diagnoses.................................. 14,567 0 ICD-10-CM.......................... 69,823 0
Procedures................................. 3,882 0 ICD-10-PCS......................... 71,924 0
FY 2016 (October 1, 2015) FY 2016 .............. ..............
Diagnoses.................................. 14,567 0 ICD-10-CM.......................... 69,823 0
Procedures................................. 3,882 0 ICD-10-PCS......................... 71,924 0
Proposed FY 2017 (October 1, 2016) Proposed FY 2017 .............. ..............
Diagnoses.................................. 14,567 0 ICD-10-CM.......................... 71,558 0
Procedures................................. 3,882 0 ICD-10-PCS......................... 75,625 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
As mentioned previously, the public is provided the opportunity to
comment on any requests for new diagnosis or procedure codes discussed
at the ICD-10 Coordination and Maintenance Committee meeting. The
public has supported only a limited number of new codes during the
partial code freeze, as can be seen by previously shown data. We have
gone from creating several hundred new codes each year to creating only
a limited number of new ICD-9-CM and ICD-10 codes.
At the September 22-23, 2015 and March 9-10, 2016 Committee
meetings, we discussed any requests we had received for new ICD-10-CM
diagnosis codes and ICD-10-PCS procedure codes that were to be
implemented on October 1, 2016. We did not discuss ICD-9-CM codes.
Because the partial code freeze will end on October 1, 2016, the public
no longer had to comment on whether or not new ICD-10-CM and ICD-10-PCS
codes should be created based on the partial code freeze criteria. We
invited public comments on any code requests discussed at the September
22-23, 2015 and March 9-10, 2016 Committee meetings for implementation
as part of the October 1, 2016 update. The deadline for commenting on
code proposals discussed at the September 22-23, 2015 Committee meeting
was November 13, 2015. The deadline for commenting on code proposals
discussed at the March 9-10, 2016 Committee meeting was April 8, 2016.
18. Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that has been recalled determined the base MS-DRG assignment. At
that time, we specified that we will reduce a hospital's IPPS payment
for those MS-DRGs where the hospital received a credit for a replaced
device equal to 50 percent or more of the cost of the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Proposed Changes for FY 2017
For FY 2017 we are proposing not to add any MS-DRGs to the policy
for replaced devices offered without cost or with a credit. We are
proposing to continue to include the existing MS-DRGs currently subject
to the policy as displayed in the table below.
------------------------------------------------------------------------
MDC MS-DRG MS-DRG Title
------------------------------------------------------------------------
Pre-MDC........ 001 Heart Transplant or Implant of Heart
Assist System with MCC.
Pre-MDC........ 002 Heart Transplant or Implant of Heart
Assist System without MCC.
1.............. 023 Craniotomy with Major Device Implant/Acute
Complex CNS Principal Diagnosis with MCC
or Chemo Implant.
1.............. 024 Craniotomy with Major Device Implant/Acute
Complex CNS Principal Diagnosis without
MCC.
1.............. 025 Craniotomy & Endovascular Intracranial
Procedures with MCC.
1.............. 026 Craniotomy & Endovascular Intracranial
Procedures with CC.
1.............. 027 Craniotomy & Endovascular Intracranial
Procedures without CC/MCC.
1.............. 040 Peripheral/Cranial Nerve & Other Nervous
System Procedure with MCC.
1.............. 041 Peripheral/Cranial Nerve & Other Nervous
System Procedure with CC or Peripheral
Neurostimulator.
1.............. 042 Peripheral/Cranial Nerve & Other Nervous
System Procedure without CC/MCC.
3.............. 129 Major Head & Neck Procedures with CC/MCC
or Major Device.
3.............. 130 Major Head & Neck Procedures without CC/
MCC.
5.............. 215 Other Heart Assist System Implant.
5.............. 216 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheter with MCC.
5.............. 217 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheter with CC.
5.............. 218 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheter without
CC/MCC.
5.............. 219 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheter with
MCC.
5.............. 220 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheter with
CC.
[[Page 25020]]
5.............. 221 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheter
without CC/MCC.
5.............. 222 Cardiac Defibrillator Implant with Cardiac
Catheter with AMI/Heart Failure/Shock
with MCC.
5.............. 223 Cardiac Defibrillator Implant with Cardiac
Catheter with AMI/Heart Failure/Shock
without MCC.
5.............. 224 Cardiac Defibrillator Implant with Cardiac
Catheter without AMI/Heart Failure/Shock
with MCC.
5.............. 225 Cardiac Defibrillator Implant with Cardiac
Catheter without AMI/Heart Failure/Shock
without MCC.
5.............. 226 Cardiac Defibrillator Implant without
Cardiac Catheter with MCC.
5.............. 227 Cardiac Defibrillator Implant without
Cardiac Catheter without MCC.
5.............. 242 Permanent Cardiac Pacemaker Implant with
MCC.
5.............. 243 Permanent Cardiac Pacemaker Implant with
CC.
5.............. 244 Permanent Cardiac Pacemaker Implant
without CC/MCC.
5.............. 245 AICD Generator Procedures.
5.............. 258 Cardiac Pacemaker Device Replacement with
MCC.
5.............. 259 Cardiac Pacemaker Device Replacement
without MCC.
5.............. 260 Cardiac Pacemaker Revision Except Device
Replacement with MCC.
5.............. 261 Cardiac Pacemaker Revision Except Device
Replacement with CC.
5.............. 262 Cardiac Pacemaker Revision Except Device
Replacement without CC/MCC.
5.............. 266 Endovascular Cardiac Valve Replacement
with MCC.
5.............. 267 Endovascular Cardiac Valve Replacement
without MCC.
5.............. 268 Aortic and Heart Assist Procedures Except
Pulsation Balloon with MCC.
5.............. 269 Aortic and Heart Assist Procedures Except
Pulsation Balloon without MCC.
5.............. 270 Other Major Cardiovascular Procedures with
MCC.
5.............. 271 Other Major Cardiovascular Procedures with
CC.
5.............. 272 Other Major Cardiovascular Procedures
without CC/MCC.
8.............. 461 Bilateral or Multiple Major Joint
Procedures Of Lower Extremity with MCC.
8.............. 462 Bilateral or Multiple Major Joint
Procedures of Lower Extremity without
MCC.
8.............. 466 Revision of Hip or Knee Replacement with
MCC.
8.............. 467 Revision of Hip or Knee Replacement with
CC.
8.............. 468 Revision of Hip or Knee Replacement
without CC/MCC.
8.............. 469 Major Joint Replacement or Reattachment of
Lower Extremity with MCC.
8.............. 470 Major Joint Replacement or Reattachment of
Lower Extremity without MCC.
------------------------------------------------------------------------
We are soliciting public comments on our proposal to continue to
include the existing MS-DRGs currently subject to the policy and to not
add any additional MS-DRGs to the policy. The final list of MS-DRGs
subject to the policy for FY 2017 will be listed in the FY 2017 IPPS/
LTCH PPS final rule, as well as issued to providers in the form of a
Change Request (CR).
19. Other Proposed Policy Changes
a. MS-DRG GROUPER Logic
(1) Operations on Products of Conception
In the ICD-9-CM MS-DRGs Version 32, intrauterine operations that
may be performed in an attempt to correct a fetal abnormality are
identified by ICD-9-CM procedure code 75.36 (Correction of fetal
defect). This procedure code is designated as an O.R. procedure and is
assigned to MDC 14 (Pregnancy, Childbirth and the Puerperium) in MS-DRG
768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or
Dilation and Curettage).
A replication issue for 208 ICD-10-PCS comparable code translations
that describe operations on the products of conception (fetus) to
correct fetal defects was identified during an internal review. These
208 procedure codes were inadvertently omitted from the MDC 14 GROUPER
logic for ICD-10 MS-DRG 768. To resolve this replication issue, we are
proposing to add the 208 ICD-10-PCS procedure codes shown in Table
6P.3a. associated with this proposed rule (which is available via the
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 14 in MS-DRG
768, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We are
inviting public comments on our proposal.
Separate from the replication issue described above, during our
internal review, we also concluded that the proposed MS-DRG logic for
these intrauterine procedures under ICD-10 may not accurately represent
a subset of the 208 ICD-10-PCS procedure codes (listed in Table
6P.3a.). For example, the GROUPER logic for MS-DRG 768 requires that a
vaginal delivery occur during the same episode of care in which an
intrauterine procedure is performed. However, this scenario may not be
clinically consistent with all pregnant patients who undergo fetal
surgery. For example, a pregnant patient whose fetus is diagnosed with
a congenital diaphragmatic hernia (CDH) may undergo a fetoscopic
endoluminal tracheal occlusion (FETO) procedure in which the pregnant
patient does not subsequently deliver during the same hospital stay.
The goal of this specific fetal surgery is to allow the fetus to remain
in utero until its lungs have developed to increase the chance of
survival. Therefore, this scenario of a patient who has fetal surgery
but does not have a delivery during the same hospital stay is not
appropriately captured in the GROUPER logic. We believe that further
analysis is warranted regarding a future proposal for a new MS-DRG to
better recognize this subset of patients.
In past rulemaking (72 FR 24700 and 24705), we have acknowledged
that CMS does not have the expertise or data to maintain the DRGs in
clinical areas that have very low volume in the Medicare population,
including for conditions associated with and/or occurring in the
maternal-fetal patient population. Additional information is needed to
fully and accurately evaluate all the possible fetal conditions that
may fall under similar scenarios to the one described above before
making a specific proposal. Therefore, we are soliciting public
comments on two clinical concepts for consideration for a possible
future proposal for the FY 2018 ICD-10 MS-DRGs Version 35: (1) The ICD-
10-CM diagnosis codes and ICD-10-PCS procedure codes that describe
fetal abnormalities for which fetal surgery may be performed in the
absence of a delivery during the same hospital stay; and (2) the ICD-
10-CM diagnosis codes and ICD-10-PCS procedure codes that describe
fetal abnormalities for which fetal surgery
[[Page 25021]]
may be performed with a subsequent delivery during the same hospital
stay. This second concept is the structure of current MS-DRG 768.
Commenters should submit their code recommendations for these concepts
to the following email address [email protected] by
December 7, 2016. We encourage public comments as we consider these
enhancements for the FY 2018 ICD-10 MS-DRGs Version 35.
(2) Other Heart Revascularization
In the ICD-9-CM MS-DRGs Version 32, revascularization procedures
that are performed to restore blood flow to the heart are identified
with procedure code 36.39 (Other heart revascularization). This
procedure code is designated as an O.R. procedure and is assigned to
MDC 5 (Diseases and Disorders of the Circulatory System) in MS-DRGs 228
through 230 (Other Cardiothoracic Procedures with MCC, with CC, and
without CC/MCC, respectively).
A replication issue for 16 ICD-10-PCS comparable code translations
that describe revascularization procedures was identified after
implementation of the ICD-10 MS-DRGs Version 33. These 16 procedure
codes were inadvertently omitted from the MDC 5 GROUPER logic for ICD-
10 MS-DRGs 228 through 230. We note that, as discussed in section
II.F.5.d. of the preamble of this proposed rule, we are proposing to
delete MS-DRG 230 and revise MS-DRG 229. Accordingly, to resolve this
replication issue, we are proposing to add the 16 ICD-10-PCS procedure
codes listed in the table below to MDC 5 in MS-DRG 228 and proposed
revised MS-DRG 229.
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0210344.................. Bypass coronary artery, one site from
coronary vein with drug-eluting intraluminal
device, percutaneous approach.
02103D4.................. Bypass coronary artery, one site from
coronary vein with intraluminal device,
percutaneous approach.
0210444.................. Bypass coronary artery, one site from
coronary vein with drug-eluting intraluminal
device, percutaneous endoscopic approach.
02104D4.................. Bypass coronary artery, one site from
coronary vein with intraluminal device,
percutaneous endoscopic approach.
0211344.................. Bypass coronary artery, two sites from
coronary vein with drug-eluting intraluminal
device, percutaneous approach.
02113D4.................. Bypass coronary artery, two sites from
coronary vein with intraluminal device,
percutaneous approach.
0211444.................. Bypass coronary artery, two sites from
coronary vein with drug-eluting intraluminal
device, percutaneous endoscopic approach.
02114D4.................. Bypass coronary artery, two sites from
coronary vein with intraluminal device,
percutaneous endoscopic approach.
0212344.................. Bypass coronary artery, three sites from
coronary vein with drug-eluting intraluminal
device, percutaneous approach.
02123D4.................. Bypass coronary artery, three sites from
coronary vein with intraluminal device,
percutaneous approach.
0212444.................. Bypass coronary artery, three sites from
coronary vein with drug-eluting intraluminal
device, percutaneous endoscopic approach.
02124D4.................. Bypass coronary artery, three sites from
coronary vein with intraluminal device,
percutaneous endoscopic approach.
0213344.................. Bypass coronary artery, four or more sites
from coronary vein with drug-eluting
intraluminal device, percutaneous approach.
02133D4.................. Bypass coronary artery, four or more sites
from coronary vein with intraluminal device,
percutaneous approach.
0213444.................. Bypass coronary artery, four or more sites
from coronary vein with drug-eluting
intraluminal device, percutaneous endoscopic
approach.
02134D4.................. Bypass coronary artery, four or more sites
from coronary vein with intraluminal device,
percutaneous endoscopic approach.
------------------------------------------------------------------------
We are inviting public comments on our proposal to add the above
listed ICD-10-PCS procedure codes to MDC 5 in MS-DRG 228 and proposed
revised MS-DRG 229 (Other Cardiothoracic Procedures with and without
MCC, respectively), effective October 1, 2016, in ICD-10 MS-DRGs
Version 34.
(3) Procedures on Vascular Bodies: Chemoreceptors
In the ICD-9-CM MS-DRGs Version 32, procedures performed on the
sensory receptors are identified with ICD-9-CM procedure code 39.89
(Other operations on carotid body, carotid sinus and other vascular
bodies). This procedure code is designated as an O.R. procedure and is
assigned to MDC 5 (Diseases and Disorders of the Circulatory System) in
MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC,
and without CC/MCC, respectively).
A replication issue for 234 ICD-10-PCS comparable code translations
that describe these procedures was identified after implementation of
the ICD-10 MS-DRGs Version 33. These 234 procedure codes were
inadvertently omitted from the MDC 5 GROUPER logic for ICD-10 MS-DRGs
252 through 254. To resolve this replication issue, we are proposing to
add the 234 ICD-10-PCS procedure codes listed in Table 6P.3b.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 5 in MS-DRG 252, 253,
and 254, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We
are inviting public comments on our proposal.
(4) Repair of the Intestine
In the ICD-9-CM MS-DRGs Version 32, the procedure for a repair to
the intestine may be identified with procedure code 46.79 (Other repair
of intestine). This procedure code is designated as an O.R. procedure
and is assigned to MDC 6 (Diseases and Disorders of the Digestive
System) in MS-DRGs 329, 330, and 331 (Major Small and Large Bowel
Procedures with MCC, with CC, and without CC/MCC, respectively).
A replication issue for four ICD-10-PCS comparable code
translations was identified after implementation of the ICD-10 MS-DRGs
Version 33. These four procedure codes are:
0DQF0ZZ (Repair right large intestine, open approach);
0DQG0ZZ (Repair left large intestine, open approach);
0DQL0ZZ (Repair transverse colon, open approach); and
0DQM0ZZ (Repair descending colon, open approach).
These four ICD-10-PCS codes were inadvertently omitted from the MDC
6 GROUPER logic for ICD-10 MS-DRGs 329 through 331. To resolve this
replication issue, we are proposing to add the four ICD-10-PCS
procedure codes to MDC 6 in MS-DRG 329, 230, and 331, effective October
1, 2016, in ICD-10 MS-DRGs Version 34. We are inviting public comments
on our proposal.
(5) Insertion of Infusion Pump
In the ICD-9-CM MS-DRGs Version 32, the procedure for insertion of
an infusion pump is identified with procedure code 86.06 (Insertion of
[[Page 25022]]
totally implantable infusion pump), which is designated as an O.R.
procedure and assigned to a number of MDCs and MS-DRGs across various
body systems. We refer readers to the ICD-9-CM MS-DRG Definitions
Manual Appendix E--Operating Room Procedures and Procedure Code/MS-DRG
Index, which is available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Rule-Data-Files.html, for
the complete list of MDCs and MS-DRGs to which procedure code 86.06 is
assigned
A replication issue for 16 ICD-10-PCS comparable code translations
was identified after implementation of the ICD-10 MS-DRGs Version 33.
These 16 procedure codes are listed in the table below:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
0JHD0VZ.................. Insertion of infusion pump into right upper
arm subcutaneous tissue and fascia, open
approach.
0JHD3VZ.................. Insertion of infusion pump into right upper
arm subcutaneous tissue and fascia,
percutaneous approach.
0JHF0VZ.................. Insertion of infusion pump into left upper
arm subcutaneous tissue and fascia, open
approach.
0JHF3VZ.................. Insertion of infusion pump into left upper
arm subcutaneous tissue and fascia,
percutaneous approach.
0JHG0VZ.................. Insertion of infusion pump into right lower
arm subcutaneous tissue and fascia, open
approach.
0JHG3VZ.................. Insertion of infusion pump into right lower
arm subcutaneous tissue and fascia,
percutaneous approach.
0JHH0VZ.................. Insertion of infusion pump into left lower
arm subcutaneous tissue and fascia, open
approach.
0JHH3VZ.................. Insertion of infusion pump into left lower
arm subcutaneous tissue and fascia,
percutaneous approach.
0JHL0VZ.................. Insertion of infusion pump into right upper
leg subcutaneous tissue and fascia, open
approach.
0JHL3VZ.................. Insertion of infusion pump into right upper
leg subcutaneous tissue and fascia,
percutaneous approach.
0JHM0VZ.................. Insertion of infusion pump into left upper
leg subcutaneous tissue and fascia, open
approach.
0JHM3VZ.................. Insertion of infusion pump into left upper
leg subcutaneous tissue and fascia,
percutaneous approach.
0JHN0VZ.................. Insertion of infusion pump into right lower
leg subcutaneous tissue and fascia, open
approach.
0JHN3VZ.................. Insertion of infusion pump into right lower
leg subcutaneous tissue and fascia,
percutaneous approach.
0JHP0VZ.................. Insertion of infusion pump into left lower
leg subcutaneous tissue and fascia, open
approach.
0JHP3VZ.................. Insertion of infusion pump into left lower
leg subcutaneous tissue and fascia,
percutaneous approach.
------------------------------------------------------------------------
These codes were inadvertently omitted from the MDCs and MS-DRGs to
which they should be assigned (consistent with the assignment of ICD-9-
CM procedure code 86.06) to accurately replicate the ICD-9-CM MS-DRG
logic. To resolve this replication issue, we are proposing to add the
16 ICD-10-PCS procedure codes listed above to the corresponding MDCs
and MS-DRGs, as set forth in the ICD-9-CM MS-DRG Definitions Manual--
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index
as described earlier, effective October 1, 2016, in ICD-10 MS-DRGs
Version 34. We are inviting public comments on our proposal.
(6) Procedures on the Bursa
In the ICD-9-CM MS-DRGs Version 32, procedures that involve cutting
into the bursa are identified with procedure code 83.03 (Bursotomy).
This procedure code is designated as an O.R. procedure and is assigned
to MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue) in MS-DRGs 500, 501, and 502 (Soft Tissue Procedures
with MCC, with CC, and without CC/MCC, respectively).
A replication issue for six ICD-10-PCS comparable code translations
was identified after implementation of the ICD-10 MS-DRGs Version 33.
These six procedure codes are:
0M850ZZ (Division of right wrist bursa and ligament, open
approach);
0M853ZZ (Division of right wrist bursa and ligament,
percutaneous approach);
0M854ZZ (Division of right wrist bursa and ligament,
percutaneous endoscopic approach);
0M860ZZ (Division of left wrist bursa and ligament, open
approach);
0M863ZZ (Division of left wrist bursa and ligament,
percutaneous approach); and
0M864ZZ (Division of left wrist bursa and ligament,
percutaneous endoscopic approach).
These codes were inadvertently omitted from the MDC 8 GROUPER logic
for ICD-10 MS-DRGs 500, 501, and 502. To resolve this replication
issue, we are proposing to add the six ICD-10-PCS procedure codes
listed above to MDC 8 in MS-DRGs 500, 501, and 502, effective October
1, 2016, in ICD-10 MS-DRGs Version 34. We are inviting public comments
on our proposal.
(7) Procedures on the Breast
In the ICD-9-CM MS-DRGs Version 32, procedures performed for a
simple repair to the skin of the breast may be identified with
procedure code 86.59 (Closure of skin and subcutaneous tissue of other
sites). This procedure code is designated as a non-O.R. procedure.
Therefore, this procedure code does not have an impact on MS-DRG
assignment.
A replication issue for two ICD-10-PCS comparable code translations
was identified after implementation of the ICD-10 MS-DRGs Version 33.
These two procedure codes are: 0HQVXZZ (Repair bilateral breast,
external approach) and 0HQYXZZ (Repair supernumerary breast, external
approach). These ICD-10-PCS procedures codes were inadvertently
assigned to ICD-10 MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC,
respectively) in the ICD-10 MS-DRG GROUPER logic. To resolve this
replication issue, we are proposing to remove these two ICD-10-PCS
procedure codes from MS-DRG 981, 982, and 983, to designate them as
non-O.R. procedures, effective October 1, 2016, in ICD-10 MS-DRGs
Version 34. We are inviting public comments on our proposal.
(8) Excision of Subcutaneous Tissue and Fascia
In the ICD-9-CM MS-DRGs Version 32, procedures involving excision
of the skin and subcutaneous tissue are identified with procedure code
86.3 (Other local excision of lesion or tissue of skin and subcutaneous
tissue). This procedure code is designated as a non-O.R. procedure that
affects MS-DRG assignment for MS-DRGs 579, 580, and 581 (Other Skin,
Subcutaneous Tissue and Breast Procedures with MCC, with CC and without
CC/MCC, respectively) in MDC 9 (Diseases and Disorders of the Skin,
Subcutaneous Tissue and Breast).
A replication issue for 19 ICD-10-PCS comparable code translations
was
[[Page 25023]]
identified after implementation of the ICD-10 MS-DRGs Version 33. These
19 procedure codes are listed in the table below:
------------------------------------------------------------------------
ICD-10-PCS code Description
------------------------------------------------------------------------
0JB03ZZ.................. Excision of scalp subcutaneous tissue and
fascia, percutaneous approach.
0JB43ZZ.................. Excision of anterior neck subcutaneous tissue
and fascia, percutaneous approach.
0JB53ZZ.................. Excision of posterior neck subcutaneous
tissue and fascia, percutaneous approach.
0JB63ZZ.................. Excision of chest subcutaneous tissue and
fascia, percutaneous approach.
0JB73ZZ.................. Excision of back subcutaneous tissue and
fascia, percutaneous approach.
0JB83ZZ.................. Excision of abdomen subcutaneous tissue and
fascia, percutaneous approach.
0JB93ZZ.................. Excision of buttock subcutaneous tissue and
fascia, percutaneous approach.
0JBB3ZZ.................. Excision of perineum subcutaneous tissue and
fascia, percutaneous approach.
0JBC3ZZ.................. Excision of pelvic region subcutaneous tissue
and fascia, percutaneous approach.
0JBD3ZZ.................. Excision of right upper arm subcutaneous
tissue and fascia, percutaneous approach.
0JBF3ZZ.................. Excision of left upper arm subcutaneous
tissue and fascia, percutaneous approach.
0JBG3ZZ.................. Excision of right lower arm subcutaneous
tissue and fascia, percutaneous approach.
0JBH3ZZ.................. Excision of left lower arm subcutaneous
tissue and fascia, percutaneous approach.
0JBL3ZZ.................. Excision of right upper leg subcutaneous
tissue and fascia, percutaneous approach.
0JBM3ZZ.................. Excision of left upper leg subcutaneous
tissue and fascia, percutaneous approach.
0JBN3ZZ.................. Excision of right lower leg subcutaneous
tissue and fascia, percutaneous approach.
0JBP3ZZ.................. Excision of left lower leg subcutaneous
tissue and fascia, percutaneous approach.
0JBQ3ZZ.................. Excision of right foot subcutaneous tissue
and fascia, percutaneous approach.
0JBR3ZZ.................. Excision of left foot subcutaneous tissue and
fascia, percutaneous approach.
------------------------------------------------------------------------
These codes were inadvertently omitted from the ICD-10 MS-DRG
GROUPER logic for MDC 9 in MS-DRGs 579, 580, and 581. To resolve this
replication issue, we are proposing to add the 19 ICD-10-PCS procedure
codes listed in the table above to MDC 9 in MS-DRGs 579, 580, and 581,
effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We are
inviting public comments on our proposal.
(9) Shoulder Replacement
In the ICD-9-CM MS-DRGs Version 32, procedures that involve
replacing a component of bone from the upper arm are identified with
procedure code 78.42 (Other repair or plastic operations on bone,
humerus). This procedure code is designated as an O.R. procedure and is
assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue) in MS-DRGs 492, 493, and 494 (Lower Extremity
and Humerus Procedures Except Hip, Foot and Femur with MCC, with CC,
and without CC/MCC, respectively).
A replication issue for two ICD-10-PCS comparable code translations
was identified after implementation of the ICD-10 MS-DRGs Version 33.
These two procedure codes are: 0PRC0JZ (Replacement of right humeral
head with synthetic substitute, open approach) and 0PRD0JZ (Replacement
of left humeral head with synthetic substitute, open approach). These
two codes were inadvertently omitted from the ICD-10 MS-DRG GROUPER
logic for MDC 8 in MS-DRGs 492, 493, and 494. To resolve this
replication issue, we are proposing to add these two ICD-10-PCS
procedure codes to MDC 8 in MS-DRGs 492, 493, and 494, effective
October 1, 2016, in ICD-10 MS-DRGs Version 34. We are inviting public
comments on our proposal.
(10) Reposition
In the ICD-9-CM MS-DRGs Version 32, procedures that involve the
percutaneous repositioning of an area in the vertebra are identified
with procedure code 81.66 (Percutaneous vertebral augmentation). This
procedure code is designated as an O.R. procedure and is assigned to
MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue) in MS-DRGs 515, 516, and 517 (Other Musculoskeletal
System and Connective Tissue Procedures with MCC, with CC, and without
CC/MCC, respectively).
A replication issue for four ICD-10-PCS comparable code
translations was identified after implementation of the ICD-10 MS-DRGs
Version 33. These four procedure codes are:
0PS33ZZ (Reposition cervical vertebra, percutaneous
approach);
0PS43ZZ (Reposition thoracic vertebra, percutaneous
approach);
0QS03ZZ (Reposition lumbar vertebra, percutaneous
approach); and
0QS13ZZ (Reposition sacrum, percutaneous approach).
These four ICD-10PCS procedure codes were inadvertently omitted
from the ICD-10 MS-DRG GROUPER logic for MDC 8 and MS-DRGs 515, 516,
and 517. To resolve this replication issue, we are proposing to add
these four ICD-10-PCS procedure codes to MDC 8 in MS-DRGs 515, 516, and
517, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We are
inviting public comments on our proposal.
(11) Insertion of Infusion Device
In the ICD-9-CM MS-DRGs Version 32, the procedure for insertion of
an infusion pump is identified with procedure code 86.06 (Insertion of
totally implantable infusion pump) which is designated as an O.R.
procedure and assigned to a number of MDCs and MS-DRGs, one of which is
MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue) in MS-DRGs 515, 516, and 517 (Other Musculoskeletal
System and Connective Tissue O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively).
A replication issue for 49 ICD-10-PCS comparable code translations
that describe insertion of an infusion device into a joint or disc was
identified after implementation of the ICD-10 MS-DRGs Version 33. These
49 procedure codes appear to describe procedures that utilize a
specific type of infusion device known as an infusion pump and were
inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 8.
To resolve this replication issue, we are proposing to add the 49 ICD-
10-PCS procedure codes shown in Table 6P.3c. (which is available via
the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 8 in
MS-DRGs 515, 516, and 517, effective October 1, 2016, in ICD-10 MS-DRGs
Version 34. We are inviting public comments on our proposal.
(12) Bladder Neck Repair
In the ICD-9-CM MS-DRGs Version 32, a procedure involving a bladder
[[Page 25024]]
repair is identified with procedure code 57.89 (Other repair of
bladder) which is designated as an O.R. procedure and assigned to MDC
11 (Diseases and Disorders of the Kidney and Urinary Tract) in MS-DRGs
653, 654, and 655 (Major Bladder Procedures with MCC, with CC, and
without CC/MCC, respectively) and MDC 13 (Diseases and Disorders of the
Female Reproductive System) in MS-DRGs 749 and 750 (Other Female
Reproductive System O.R. Procedures with CC/MCC and without CC/MCC,
respectively).
A replication issue for five ICD-10-PCS comparable code
translations that describe a bladder neck repair was identified after
implementation of the ICD-10 MS-DRGs Version 33. These five procedure
codes are:
0TQC0ZZ (Repair Bladder Neck, Open Approach);
0TQC3ZZ (Repair Bladder Neck, Percutaneous Approach);
0TQC4ZZ (Repair Bladder Neck, Percutaneous Endoscopic
Approach);
0TQC7ZZ (Repair Bladder Neck, Via Natural or Artificial
Opening); and
0TQC8ZZ (Repair Bladder Neck, Via Natural or Artificial
Opening Endoscopic).
These five ICD-10-PCS procedure codes were inadvertently omitted
from the ICD-10 MS-DRG GROUPER logic for MDC 11 in MS-DRGs 653, 654,
and 655 and MDC 13 in MS-DRGs 749 and 750. To resolve this replication
issue, we are proposing to add these five ICD-10-PCS procedure codes to
MDC 11 in MS-DRGs 653, 654, and 655 and MDC 13 in MS-DRGs 749 and 750,
effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We are
inviting public comments on our proposal.
(13) Future Consideration
We note that commenters have suggested that there are a number of
procedure codes that may not appear to be clinically feasible due to a
specific approach or device value in relation to a unique body part in
a given body system. These commenters have not identified a
comprehensive list of codes to be deleted. However, they have suggested
that CMS examine these codes further. Due to the multiaxial structure
of ICD-10-PCS, the current system allows for multiple possibilities for
a given procedure, some of which may not currently be used. As our
focus to refine the ICD-10 MS-DRGs continues, for FY 2018, we will
begin to conduct an analysis of where such ICD-10-PCS codes may exist.
We welcome suggestions from the public of code refinements that could
address the issue of current ICD-10-PCS codes that capture procedures
that would not reasonably be performed. Commenters should submit their
recommendations for these code refinements to the following email
address: [email protected] by December 7, 2016.
We also note that any suggestions that are received by December 7,
2016 to update ICD-10-PCS, including creating new codes or deleting
existing codes, will be addressed by the ICD-10 Coordination and
Maintenance Committee. Proposals to address the modification of any
ICD-10-PCS codes are discussed at the ICD-10 Coordination and
Maintenance Committee meetings held in March and September of each
year. We refer the reader to section II.F.17. of the preamble of this
proposed rule for information related to this process to request
updates to ICD-10-PCS.
b. Issues Relating to MS-DRG 999 (Ungroupable)
Under the ICD-9-CM MS-DRGs Version 32, a diagnosis of complications
of an obstetric surgical wound after delivery is identified with
diagnosis code 674.32 (Other complications of obstetrical surgical
wounds, delivered, with mention of postpartum complication) and is
assigned to MDC 14 (Pregnancy, Childbirth and the Puerperium) under MS-
DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure) or
MS-DRG 776 (Postpartum and Post Abortion Diagnoses without O.R.
Procedure). A replication issue under the ICD-10 MS-DRGs Version 33 for
this condition was identified after implementation on October 1, 2015.
Under ICD-10-CM, diagnosis code O90.2 (Hematoma of obstetric wound) is
the comparable translation for ICD-9-CM diagnosis code 674.32. We
discovered that cases where a patient has been readmitted to the
hospital after a delivery and ICD-10-CM diagnosis code O90.2 is
reported as the principal diagnosis are resulting in assignment to MS-
DRG 999 (Ungroupable).
In the ICD-9-CM diagnosis code description, the concept of
``delivery'' is included in the code title. This concept is not present
in the ICD-10-CM classification and has led to a replication issue for
patients who delivered during a previous stay and are subsequently
readmitted for the complication. To resolve this replication issue, we
are proposing to add ICD-10-CM diagnosis code O90.2 to MDC 14 under MS-
DRGs 769 and 776. This refinement would be consistent with the ICD-9-CM
diagnosis code assignment and result in a more accurate replication of
the ICD-9-CM MS-DRGs Version 32.
We are inviting public comments on our proposal to add ICD-10-CM
diagnosis code O90.2 to MS-DRG 769 and MS-DRG 776 in MDC 14, effective
October 1, 2016, in the ICD-10 MS-DRGs Version 34.
c. Other Operating Room (O.R.) and Non-O.R. Issues
(1) O.R. Procedures to Non-O.R. Procedures
For this FY 2017 IPPS/LTCH PPS proposed rule, we continued our
efforts to address the MS-DRG replication issues between ICD-9-CM logic
and ICD-10 that were brought to our attention. As a result of analyzing
those specific requests, we identified areas in the ICD-10-PCS
classification where additional refinements could further support our
replication efforts. We discuss these below.
We evaluated specific groups of ICD-10-PCS procedure codes with
respect to their current operating room (O.R.) designation that were
determined to be inconsistent with the ICD-9-CM procedure codes from
which the designation was initially derived. Our review demonstrated
that these ICD-10-PCS procedure codes should instead have the
attributes of a more logical ICD-9-CM procedure code translation for
MS-DRG replication purposes. As specified below, we are proposing to
change the status of ICD-10-PCS procedure codes from being designated
as O.R. to non-O.R. for the ICD-10 MS-DRGs Version 34. For each group
summarized below, the detailed code lists are shown in Tables 6P.4a.
through 6P.4k. (ICD-10-CM and ICD-10-PCS Codes for Proposed MCE and MS-
DRG Changes--FY 2017) associated with this proposed rule, which are
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
(a) Endoscopic/Transorifice Insertion
We found 72 ICD-10-PCS procedure codes describing an endoscopic/
transorifice (via natural or artificial opening) insertion of infusion
and monitoring devices into various tubular body parts that, when coded
under ICD-9-CM, would reasonably correlate to other noninvasive
catheterization and monitoring types of procedure codes versus an
``incision of [body part]'' or ``other operation on a [body part]''
procedure code. We are proposing that the 72 ICD-10-PCS procedure codes
in Table 6P.4a. associated with this proposed rule (which is available
via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/
[[Page 25025]]
Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be
assigned the attributes of the ICD-9-CM procedure code specified in
column C. The ICD-9-CM procedure codes and descriptions in column C
would replace the ICD-9-CM procedure codes and descriptions reflected
in column D, which are considered less accurate correlations. We are
inviting public comments on this proposal.
(b) Endoscopic/Transorifice Removal
We found 155 ICD-10-PCS procedure codes describing an endoscopic/
transorifice (via natural or artificial opening) removal of common
devices such as a drainage device, infusion device, intraluminal
device, or monitoring device from various tubular body parts that, when
coded under ICD-9-CM, would reasonably correlate to other nonoperative
removal of a wide range of devices/appliances procedure codes versus an
``incision of [body part]'' or ``other operation on a [body part]''
procedure code. We are proposing that the 155 ICD-10-PCS procedure
codes in Table 6P.4b. associated with this proposed rule (which is
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
be assigned the attributes of the ICD-9-CM procedure code specified in
column C. The ICD-9-CM procedure codes and descriptions in column C
would replace the ICD-9-CM procedure codes and descriptions reflected
in column D, which are considered less accurate correlations. We are
inviting public comments on this proposal.
(c) Tracheostomy Device Removal
We found five ICD-10-PCS procedure codes describing removal of a
tracheostomy device with various approaches such that, when coded under
ICD-9-CM, would reasonably correlate to the nonoperative removal of a
tracheostomy device procedure code versus an ``incision of [body
part]'' or ``other operation on a [body part]'' procedure code. We
acknowledge that, under ICD-10-PCS, an ``open'' approach is defined as
``cutting through.'' However, this procedure was designated as non-O.R.
under ICD-9-CM. For replication purposes, we are proposing that the
five ICD-10-PCS procedure codes in Table 6P.4c. associated with this
proposed rule (which is available via the Internet on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-
CM procedure code specified in column C. The ICD-9-CM procedure codes
and descriptions in column C would replace the ICD-9-CM procedure codes
and descriptions reflected in column D, which are considered less
accurate correlations. We are inviting public comments on this
proposal.
(d) Endoscopic/Percutaneous Insertion
We found 117 ICD-10-PCS procedure codes describing the endoscopic/
percutaneous insertion of infusion and monitoring devices into vascular
and musculoskeletal body parts that, when coded under ICD-9-CM, would
reasonably correlate to other noninvasive catheterization and
monitoring types of procedure codes versus an ``incision of [body
part]'' or ``other operation on a [body part]'' procedure code. We are
proposing that the 117 ICD-10-PCS procedure codes in Table 6P.4d.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html be assigned the attributes
of the ICD-9-CM procedure code specified in column C. The ICD-9-CM
procedure codes and descriptions in column C would replace the ICD-9-CM
procedure codes and descriptions reflected in column D, which are less
accurate correlations. We are inviting public comments on this
proposal.
(e) Percutaneous Removal
We found 124 ICD-10-PCS procedure codes describing the percutaneous
removal of drainage, infusion and monitoring devices from vascular and
musculoskeletal body parts that, when coded under ICD-9-CM, would
reasonably correlate to the nonoperative removal of a wide range of
devices/appliances procedure codes versus an ``incision of [body
part]'' or ``other operation on a [body part]'' procedure code. We are
proposing that the 124 ICD-10-PCS procedure codes in Table 6P.4e.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the
attributes of the ICD-9-CM procedure code specified in column C. The
ICD-9-CM procedure codes and descriptions in column C would replace the
ICD-9-CM procedure codes and descriptions reflected in column D, which
are considered less accurate correlations. We are inviting public
comments on this proposal.
(f) Percutaneous Drainage
We found 518 ICD-10-PCS procedure codes describing the percutaneous
therapeutic drainage of all body sites that do not have specific
percutaneous drainage codes. The list includes procedure codes for
drainage with or without placement of a drainage device. Exceptions to
this are cranial, intracranial and the eye where small incisions are
the norm and appropriately classified as O.R. These 518 ICD-10-PCS
procedures codes, when coded under ICD-9-CM, would reasonably correlate
to the nonoperative puncture or drainage of various body sites and
other miscellaneous procedures versus an ``incision of [body part]''
procedure code. We are proposing that the 518 ICD-10-PCS procedure
codes in Table 6P.4f. associated with this proposed rule (which is
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
be assigned the attributes of the ICD-9-CM procedure code specified in
column C. The ICD-9-CM procedure codes and descriptions in column C
would replace the ICD-9-CM procedure codes and descriptions reflected
in column D, which are considered less accurate correlations. We are
inviting public comments on this proposal.
(g) Percutaneous Inspection
We found 131 ICD-10-PCS procedure codes describing the percutaneous
inspection of body part sites, with the exception of the cranial cavity
and brain, whose designation is not consistent with other percutaneous
inspection codes. When coded under ICD-9-CM, these procedure codes
would reasonably correlate to the ``other nonoperative examinations''
and ``other diagnostic procedures on [body part]'' codes where the
approach is not specified and the codes are designated as non-O.R. We
are proposing that the 131 ICD-10-PCS procedure codes in Table 6P.4g.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the
attributes of the ICD-9-CM procedure code specified in column C. The
ICD-9-CM procedure codes and descriptions in column C would replace the
ICD-9-CM procedure codes and descriptions reflected in column D, which
are considered less accurate correlations. We are inviting public
comments on this proposal.
[[Page 25026]]
(h) Inspection Without Incision
We found 40 ICD-10-PCS procedure codes describing the inspection of
various body sites with endoscopic/transorifice and external
approaches. Under ICD-9-CM, these codes would reasonably correlate to
``other diagnostic procedures on [body part]'' codes where the approach
is not specified and the codes are designated as non-O.R. We are
proposing that the 40 ICD-10-PCS codes in Table 6P.4h. associated with
this proposed rule (which is available via the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-
CM code specified in column C. The ICD-9-CM codes and descriptions in
column C would replace the ICD-9-CM codes and descriptions reflected in
column D, which are considered less accurate correlations. We are
inviting public comments on this proposal.
(i) Dilation of Stomach
We found six ICD-10-PCS procedure codes describing the dilation of
stomach and pylorus body sites with various approaches whose
designation is not consistent with all other gastrointestinal body
parts dilation codes. Under ICD-9-CM, where a unique dilation code
exists, the approach is not specified and these codes are designated as
non-O.R. Therefore, we are proposing that the six ICD-10-PCS procedure
codes in Table 6P.4i. (which is available via the Internet on the CMS
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the
ICD-9-CM code specified in column C. The ICD-9-CM codes and
descriptions in column C would replace the ICD-9-CM codes and
descriptions reflected in column D, which are considered less accurate
correlations. We are inviting public comments on this proposal.
(j) Endoscopic/Percutaneous Occlusion
We found six ICD-10-PCS codes describing percutaneous occlusion of
esophageal vein with and without a device that, when coded under ICD-9-
CM would reasonably correlate to the endoscopic excision or destruction
of the vessel versus an open surgical procedure. We are proposing that
the six ICD-10-PCS procedure codes in Table 6P.4j. associated with this
proposed rule (which is available via the Internet on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-
CM code specified in column C. The ICD-9-CM codes and descriptions in
column C would replace the ICD-9-CM codes and descriptions reflected in
column D, which are considered less accurate correlations. We are
inviting public comments on this proposal.
(k) Infusion Device
We found 82 ICD-10-PCS codes describing the insertion of an
infusion device to various body parts that, when coded under ICD-9-CM,
would reasonably correlate to the insertion of a common infusion
catheter versus the insertion of a totally implantable infusion pump.
We are proposing that the 82 ICD-10-PCS procedure codes in Table 6P.4k.
associated with this proposed rule (which is available via the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) be assigned the attributes of
the ICD-9-CM code specified in column C. The ICD-9-CM codes and
descriptions in column C would replace the ICD-9-CM codes and
descriptions reflected in column D, which are considered less accurate
correlations. We are inviting public comments on this proposal.
(2) Non-O.R. Procedures to O.R. Procedures
(a) Drainage of Pleural Cavity
In the ICD-9-CM MS-DRGs Version 32 Definitions Manual under
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index,
procedure code 34.06 (Thoracoscopic drainage of pleural cavity) is
designated as an O.R. procedure code and is assigned to MS-DRGs 166
through 168 (Other Respiratory System O.R. Procedures with MCC, with
CC, and without CC/MCC, respectively) in MDC 4 (Diseases and Disorders
of the Respiratory System).
A replication issue regarding the procedure code designation and
MS-DRG assignment for the comparable code translations under the ICD-10
MS-DRGs Version 33 was brought to our attention after implementation on
October 1, 2015. The replication issue involves the following four ICD-
10-PCS procedure codes:
0W9940Z (Drainage of right pleural cavity with drainage
device, percutaneous endoscopic approach);
0W994ZZ (Drainage of right pleural cavity, percutaneous
endoscopic approach);
0W9B40Z (Drainage of left pleural cavity with drainage
device, percutaneous endoscopic approach); and
0W9B4ZZ (Drainage of left pleural cavity, percutaneous
endoscopic approach).
In the ICD-10 MS-DRGs Version 33, these four ICD-10-PCS procedure
codes are not recognized as O.R. procedures for purposes of MS-DRG
assignment. We agree that this was a replication error and the
designation and MS-DRG assignment should be consistent with the
designation and MS-DRG assignment of ICD-9-CM procedure code 34.06.
To resolve this replication issue, we are proposing to add ICD-10-
PCS procedure codes 0W9940Z, 0W994ZZ, 0W9B40Z, and 0W9B4ZZ to the FY
2017 ICD-10 MS-DRGs Version 34 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R.
procedures assigned to MS-DRGs 166 through 168 in MDC 4. We are
inviting public comments on our proposal.
(b) Drainage of Cerebral Ventricle
In the ICD-9-CM MS-DRGs Version 32 Definitions Manual under
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index,
procedure code 02.22 (Intracranial ventricular shunt or anastomosis) is
designated as an O.R. procedure code and is assigned to MS-DRGs 023
through 027, collectively referred to as the ``Craniotomy'' MS-DRGs, in
MDC 1 (Diseases and Disorders of the Nervous System).
A replication issue regarding the procedure code designation and
MS-DRG assignment for the comparable code translations under the ICD-10
MS-DRGs Version 33 was brought to our attention after implementation on
October 1, 2015. The replication issue involves the following ICD-10-
PCS procedure codes:
------------------------------------------------------------------------
ICD-10-PCS procedure code Description
------------------------------------------------------------------------
009130Z.................. Drainage of cerebral meninges with drainage
device, percutaneous approach.
00913ZZ.................. Drainage of cerebral meninges, percutaneous
approach.
009140Z.................. Drainage of cerebral meninges with drainage
device, percutaneous endoscopic approach.
[[Page 25027]]
00914ZZ.................. Drainage of cerebral meninges with drainage
device, percutaneous endoscopic approach.
009230Z.................. Drainage of dura mater with drainage device,
percutaneous approach.
00923ZZ.................. Drainage of dura mater, percutaneous
approach.
009240Z.................. Drainage of dura mater with drainage device,
percutaneous endoscopic approach.
00924ZZ.................. Drainage of dura mater, percutaneous
endoscopic approach.
009430Z.................. Drainage of subdural space with drainage
device, percutaneous approach.
00943ZZ.................. Drainage of subdural space, percutaneous
approach.
009440Z.................. Drainage of subdural space with drainage
device, percutaneous endoscopic approach.
00944ZZ.................. Drainage of subdural space, percutaneous
endoscopic approach.
009530Z.................. Drainage of subarachnoid space with drainage
device, percutaneous approach.
00953ZZ.................. Drainage of subarachnoid space, percutaneous
approach.
009540Z.................. Drainage of subarachnoid space with drainage
device, percutaneous endoscopic approach.
00954ZZ.................. Drainage of subarachnoid space, percutaneous
endoscopic approach.
00963ZZ.................. Drainage of cerebral ventricle, percutaneous
approach.
00964ZZ.................. Drainage of cerebral ventricle, percutaneous
endoscopic approach.
------------------------------------------------------------------------
In the ICD-10 MS-DRGs Version 33, these ICD-10-PCS procedure codes
are not recognized as O.R. procedures for purposes of MS-DRG
assignment. We agree that this was a replication error and their
translation should be consistent with the designation and MS-DRG
assignment of ICD-9-CM procedure 02.22.
To resolve this replication issue, we are proposing to add the ICD-
10-PCS procedure codes listed above to the FY 2017 ICD-10 MS-DRGs
Version 34 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs
023 through 027 in MDC 1. We are inviting public comments on our
proposal.
G. Recalibration of the Proposed FY 2017 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
In developing the proposed FY 2017 system of weights, we used two
data sources: Claims data and cost report data. As in previous years,
the claims data source is the MedPAR file. This file is based on fully
coded diagnostic and procedure data for all Medicare inpatient hospital
bills. The FY 2015 MedPAR data used in this proposed rule include
discharges occurring on October 1, 2014, through September 30, 2015,
based on bills received by CMS through December 31, 2015, from all
hospitals subject to the IPPS and short-term, acute care hospitals in
Maryland (which at that time were under a waiver from the IPPS). The FY
2015 MedPAR file used in calculating the proposed relative weights
includes data for approximately 9,706,869 Medicare discharges from IPPS
providers. Discharges for Medicare beneficiaries enrolled in a Medicare
Advantage managed care plan are excluded from this analysis. These
discharges are excluded when the MedPAR ``GHO Paid'' indicator field on
the claim record is equal to ``1'' or when the MedPAR DRG payment
field, which represents the total payment for the claim, is equal to
the MedPAR ``Indirect Medical Education (IME)'' payment field,
indicating that the claim was an ``IME only'' claim submitted by a
teaching hospital on behalf of a beneficiary enrolled in a Medicare
Advantage managed care plan. In addition, the December 31, 2015 update
of the FY 2015 MedPAR file complies with version 5010 of the X12 HIPAA
Transaction and Code Set Standards, and includes a variable called
``claim type.'' Claim type ``60'' indicates that the claim was an
inpatient claim paid as fee-for-service. Claim types ``61,'' ``62,''
``63,'' and ``64'' relate to encounter claims, Medicare Advantage IME
claims, and HMO no-pay claims. Therefore, the calculation of the
proposed relative weights for FY 2017 also excludes claims with claim
type values not equal to ``60.'' The data exclude CAHs, including
hospitals that subsequently became CAHs after the period from which the
data were taken. We note that the proposed FY 2017 relative weights are
based on the ICD-9-CM diagnoses and procedures codes from the FY 2015
MedPAR claims data, grouped through the ICD-9-CM version of the FY 2017
GROUPER (Version 34).
The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the HCRIS.
Normally, we use the HCRIS dataset that is 3 years prior to the IPPS
fiscal year. Specifically, we used cost report data from the December
31, 2015 update of the FY 2014 HCRIS for calculating the proposed FY
2017 cost-based relative weights.
2. Methodology for Calculation of the Proposed Relative Weights
As we explain in section II.E.2. of the preamble of this proposed
rule, we calculated the proposed FY 2017 relative weights based on 19
CCRs, as we did for FY 2016. The methodology we used to calculate the
proposed FY 2017 MS-DRG cost-based relative weights based on claims
data in the FY 2015 MedPAR file and data from the FY 2014 Medicare cost
reports is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2017 MS-DRG classifications discussed in sections
II.B. and II.F. of the preamble of this proposed rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2015 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is necessary to subtract the acquisition charges from
the total charges on each transplant bill that showed acquisition
charges before computing the average cost for each MS-DRG and before
eliminating statistical outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $10.00 from the sum of
the routine day charges,
[[Page 25028]]
intensive care charges, pharmacy charges, special equipment charges,
therapy services charges, operating room charges, cardiology charges,
laboratory charges, radiology charges, other service charges, labor and
delivery charges, inhalation therapy charges, emergency room charges,
blood charges, and anesthesia charges were also deleted.
At least 92.4 percent of the providers in the MedPAR file
had charges for 14 of the 19 cost centers. All claims of providers that
did not have charges greater than zero for at least 14 of the 19 cost
centers were deleted. In other words, a provider must have no more than
five blank cost centers. If a provider did not have charges greater
than zero in more than five cost centers, the claims for the provider
were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the geometric mean of the
log distribution of both the total charges per case and the total
charges per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), it is not a HAC, and the hospital is paid for the higher
severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HAC cases are likely to be higher as well.
Therefore, if the higher charges of these HAC claims are grouped into
lower severity MS-DRGs prior to the relative weight-setting process,
the relative weights of these particular MS-DRGs would become
artificially inflated, potentially skewing the relative weights. In
addition, we want to protect the integrity of the budget neutrality
process by ensuring that, in estimating payments, no increase to the
standardized amount occurs as a result of lower overall payments in a
previous year that stem from using weights and case-mix that are based
on lower severity MS-DRG assignments. If this would occur, the
anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have an ``N'' or a ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013
and subsequent fiscal years, we finalized a policy to treat hospitals
that participate in the Bundled Payments for Care Improvement (BPCI)
initiative the same as prior fiscal years for the IPPS payment modeling
and ratesetting process without regard to hospitals' participation
within these bundled payment models (that is, as if hospitals were not
participating in those models under the BPCI initiative). The BPCI
initiative, developed under the authority of section 3021 of the
Affordable Care Act (codified at section 1115A of the Act), is
comprised of four broadly defined models of care, which link payments
for multiple services beneficiaries receive during an episode of care.
Under the BPCI initiative, organizations enter into payment
arrangements that include financial and performance accountability for
episodes of care. For FY 2017, we are proposing to continue to include
all applicable data from subsection (d) hospitals participating in BPCI
Models 1, 2, and 4 in our IPPS payment modeling and ratesetting
calculations. We refer readers to the FY 2013 IPPS/LTCH PPS final rule
for a complete discussion on our final policy for the treatment of
hospitals participating in the BPCI initiative in our ratesetting
process. For additional information on the BPCI initiative, we refer
readers to the CMS' Center for Medicare and Medicaid Innovation's Web
site at: http://innovation.cms.gov/initiatives/Bundled-Payments/index.html and to section IV.H.4. of the preamble of the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53341 through 53343).
Once the MedPAR data were trimmed and the statistical outliers were
removed, the charges for each of the 19 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals located in Alaska and Hawaii,
the applicable cost-of-living adjustment. Because hospital charges
include charges for both operating and capital costs, we standardized
total charges to remove the effects of differences in geographic
adjustment factors, cost-of-living adjustments, and DSH payments under
the capital IPPS as well. Charges were then summed by MS-DRG for each
of the 19 cost groups so that each MS-DRG had 19 standardized charge
totals. These charges were then adjusted to cost by applying the
national average CCRs developed from the FY 2014 cost report data.
The 19 cost centers that we used in the proposed relative weight
calculation are shown in the following table. The table shows the lines
on the cost report and the corresponding revenue codes that we used to
create the proposed 19 national cost center CCRs. If stakeholders have
comments about the groupings in this table, we may consider those
comments as we finalize our policy.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicare charges
Revenue codes Cost from HCRIS Charges from HCRIS from HCRIS
Cost center group name (19 MedPAR charge contained in Cost report line (worksheet C, Part (worksheet C, Part (worksheet D-3,
total) field MedPAR charge description 1, column 5 and 1, column 6 & 7 column & line
field line number) form and line number) number) form CMS-
CMS-2552-10 form CMS-2552-10 2552-10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Routine Days.................... Private Room 011X and 014X..... Adults & C_1_C5_30......... C_1_C6_30......... D3_HOS_C2_30
Charges. Pediatrics
(General Routine
Care).
[[Page 25029]]
Semi[dash]Private 012X, 013X and
Room Charges. 016X-019X.
Ward Charges...... 015X..............
Intensive Days.................. Intensive Care 020X.............. Intensive Care C_1_C5_31......... C_1_C6_31......... D3_HOS_C2_31
Charges. Unit.
Coronary Care 021X.............. Coronary Care Unit C_1_C5_32......... C_1_C6_32......... D3_HOS_C2_32
Charges.
Burn Intensive C_1_C5_33......... C_1_C6_33......... D3_HOS_C2_33
Care Unit.
Surgical Intensive C_1_C5_34......... C_1_C6_34......... D3_HOS_C2_34
Care Unit.
Other Special Care C_1_C5_35......... C_1_C6_35......... D3_HOS_C2_35
Unit.
Drugs........................... Pharmacy Charges.. 025X, 026X and Intravenous C_1_C5_64......... C_1_C6_64......... D3_HOS_C2_64
063X. Therapy. C_1_C7_64.........
Drugs Charged To C_1_C5_73......... C_1_C6_73......... D3_HOS_C2_73
Patient. C_1_C7_73.........
Supplies and Equipment.......... Medical/Surgical 0270, 0271, 0272, Medical Supplies C_1_C5_71......... C_1_C6_71......... D3_HOS_C2_71
Supply Charges. 0273, 0274, 0277, Charged to C_1_C7_71.........
0279, and 0621, Patients.
0622, 0623.
Durable Medical 0290, 0291, 0292 DME[dash]Rented... C_1_C5_96......... C_1_C6_96......... D3_HOS_C2_96
Equipment Charges. and C_1_C7_96.........
0294[dash]0299.
Used Durable 0293.............. DME[dash]Sold..... C_1_C5_97......... C_1_C6_97......... D3_HOS_C2_97
Medical Charges. C_1_C7_97.........
Implantable Devices............. .................. 0275, 0276, 0278, Implantable C_1_C5_72......... C_1_C6_72......... D3_HOS_C2_72
0624. Devices Charged C_1_C7_72.........
to Patients.
Therapy Services................ Physical Therapy 042X.............. Physical Therapy.. C_1_C5_66......... C_1_C6_66......... D3_HOS_C2_66
Charges. C_1_C7_66.........
Occupational 043X.............. Occupational C_1_C5_67......... C_1_C6_67......... D3_HOS_C2_67
Therapy Charges. Therapy. C_1_C7_67.........
Speech Pathology 044X and 047X..... Speech Pathology.. C_1_C5_68......... C_1_C6_68......... D3_HOS_C2_68
Charges. C_1_C7_68.........
Inhalation Therapy.............. Inhalation Therapy 041X and 046X..... Respiratory C_1_C5_65......... C_1_C6_65......... D3_HOS_C2_65
Charges. Therapy. C_1_C7_65.........
Operating Room.................. Operating Room 036X.............. Operating Room.... C_1_C5_50......... C_1_C6_50......... D3_HOS_C2_50
Charges. C_1_C7_50.........
071X.............. Recovery Room..... C_1_C5_51......... C_1_C6_51......... D3_HOS_C2_51
C_1_C7_51.........
Labor & Delivery................ Operating Room 072X.............. Delivery Room and C_1_C5_52......... C_1_C6_52......... D3_HOS_C2_52
Charges. Labor Room. C_1_C7_52.........
Anesthesia...................... Anesthesia Charges 037X.............. Anesthesiology.... C_1_C5_53......... C_1_C6_53......... D3_HOS_C2_53
C_1_C7_53.........
Cardiology...................... Cardiology Charges 048X and 073X..... Electro-cardiology C_1_C5_69......... C_1_C6_69......... D3_HOS_C2_69
C_1_C7_69.........
Cardiac Catheterization......... .................. 0481.............. Cardiac C_1_C5_59......... C_1_C6_59......... D3_HOS_C2_59
Catheterization. C_1_C7_59.........
Laboratory...................... Laboratory Charges 030X, 031X, and Laboratory........ C_1_C5_60......... C_1_C6_60......... D3_HOS_C2_60
075X. C_1_C7_60.........
PBP Clinic C_1_C5_61......... C_1_C6_61......... D3_HOS_C2_61
Laboratory C_1_C7_61.........
Services.
074X, 086X........ Electro- C_1_C5_70......... C_1_C6_70......... D3_HOS_C2_70
Encephalography. C_1_C7_70.........
Radiology....................... Radiology Charges. 032X, 040X........ Radiology--Diagnos C_1_C5_54......... C_1_C6_54......... D3_HOS_C2_54
tic. C_1_C7_54.........
028x, 0331, 0332, Radiology--Therape C_1_C5_55......... C_1_C6_55......... D3_HOS_C2_55
0333, 0335, 0339, utic.
0342.
0343 and 344...... Radioisotope...... C_1_C5_56......... C_1_C6_56......... D3_HOS_C2_56
C_1_C7_56.........
Computed Tomography (CT) Scan... CT Scan Charges... 035X.............. Computed C_1_C5_57......... C_1_C6_57......... D3_HOS_C2_57
Tomography (CT) C_1_C7_57.........
Scan.
[[Page 25030]]
Magnetic Resonance Imaging (MRI) MRI Charges....... 061X.............. Magnetic Resonance C_1_C5_58......... C_1_C6_58......... D3_HOS_C2_58
Imaging (MRI). C_1_C7_58.........
Emergency Room.................. Emergency Room 045x.............. Emergency......... C_1_C5_91......... C_1_C6_91......... D3_HOS_C2_91
Charges. C_1_C7_91.........
Blood and Blood Products........ Blood Charges..... 038x.............. Whole Blood & C_1_C5_62......... C_1_C6_62......... D3_HOS_C2_62
Packed Red Blood C_1_C7_62.........
Cells.
Blood Storage/ 039x.............. Blood Storing, C_1_C5_63......... C_1_C6_63......... D3_HOS_C2_63
Processing. Processing, & C_1_C7_63.........
Transfusing.
Other Services.................. Other Service 0002-0099, 022X,
Charge. 023X, 024X, 052X,
053X.
055X-060X, 064X-
070X, 076X-078X,
090X-095X and
099X.
Renal Dialysis.... 0800X............. Renal Dialysis.... C_1_C5_74......... C_1_C6_74......... D3_HOS_C2_74
ESRD Revenue 080X and 082X-088X C_1_C7_74.........
Setting Charges.
Home Program C_1_C5_94......... C_1_C6_94......... D3_HOS_C2_94
Dialysis. C_1_C7_94.........
Outpatient Service 049X.............. ASC (Non Distinct C_1_C5_75......... C_1_C6_75......... D3_HOS_C2_75
Charges. Part). C_1_C7_75.........
Lithotripsy Charge 079X..............
Other Ancillary... C_1_C5_76......... C_1_C6_76......... D3_HOS_C2_76
C_1_C7_76.........
Clinic Visit 051X.............. Clinic............ C_1_C5_90......... C_1_C6_90......... D3_HOS_C2_90
Charges. C_1_C7_90.........
Observation beds.. C_1_C5_92.01...... C_1_C6_92.01...... D3_HOS_C2_92.01
C_1_C7_92.01......
Professional Fees 096X, 097X, and Other Outpatient C_1_C5_93......... C_1_C6_93......... D3_HOS_C2_93
Charges. 098X. Services. C_1_C7_93.........
Ambulance Charges. 054X.............. Ambulance......... C_1_C5_95......... C_1_C6_95......... D3_HOS_C2_95
C_1_C7_95.........
Rural Health C_1_C5_88......... C_1_C6_88......... D3_HOS_C2_88
Clinic. C_1_C7_88.........
FQHC.............. C_1_C5_89......... C_1_C6_89......... D3_HOS_C2_89
C_1_C7_89.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Development of National Average CCRs
We developed the national average CCRs as follows:
Using the FY 2014 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland because we include their charges in our
claims database. We then created CCRs for each provider for each cost
center (see prior table for line items used in the calculations) and
removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-3 and deriving the Medicare-specific
costs by applying the hospital-specific departmental CCRs to the
Medicare-specific charges for each line item from Worksheet D-3. Once
each hospital's Medicare-specific costs were established, we summed the
total Medicare-specific costs and divided by the sum of the total
Medicare-specific charges to produce national average, charge-weighted
CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 19 cost centers by the corresponding national average CCR, we
summed the 19 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the relative weight.
The proposed FY 2017 cost-based relative weights were then
normalized by an adjustment factor of 1.690233 so that the average case
weight after recalibration was equal to the average case weight before
recalibration. The normalization adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total
[[Page 25031]]
payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of
the Act.
The proposed 19 national average CCRs for FY 2017 are as follows:
------------------------------------------------------------------------
Group CCR
------------------------------------------------------------------------
Routine Days................................................. 0.459
Intensive Days............................................... 0.378
Drugs........................................................ 0.194
Supplies & Equipment......................................... 0.298
Implantable Devices.......................................... 0.336
Therapy Services............................................. 0.322
Laboratory................................................... 0.120
Operating Room............................................... 0.192
Cardiology................................................... 0.113
Cardiac Catheterization...................................... 0.119
Radiology.................................................... 0.154
MRIs......................................................... 0.079
CT Scans..................................................... 0.039
Emergency Room............................................... 0.172
Blood and Blood Products..................................... 0.325
Other Services............................................... 0.368
Labor & Delivery............................................. 0.411
Inhalation Therapy........................................... 0.170
Anesthesia................................................... 0.090
------------------------------------------------------------------------
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. For FY 2017, we are proposing to use that
same case threshold in recalibrating the MS-DRG relative weights for FY
2017. Using data from the FY 2015 MedPAR file, there were 8 MS-DRGs
that contain fewer than 10 cases. Under the MS-DRGs, we have fewer low-
volume DRGs than under the CMS DRGs because we no longer have separate
DRGs for patients aged 0 to 17 years. With the exception of newborns,
we previously separated some DRGs based on whether the patient was age
0 to 17 years or age 17 years and older. Other than the age split,
cases grouping to these DRGs are identical. The DRGs for patients aged
0 to 17 years generally have very low volumes because children are
typically ineligible for Medicare. In the past, we have found that the
low volume of cases for the pediatric DRGs could lead to significant
year-to-year instability in their relative weights. Although we have
always encouraged non-Medicare payers to develop weights applicable to
their own patient populations, we have received frequent complaints
from providers about the use of the Medicare relative weights in the
pediatric population. We believe that eliminating this age split in the
MS-DRGs will provide more stable payment for pediatric cases by
determining their payment using adult cases that are much higher in
total volume. Newborns are unique and require separate MS-DRGs that are
not mirrored in the adult population. Therefore, it remains necessary
to retain separate MS-DRGs for newborns. All of the low-volume MS-DRGs
listed are for newborns. For FY 2017, because we do not have sufficient
MedPAR data to set accurate and stable cost relative weights for these
low-volume MS-DRGs, we are proposing to compute relative weights for
the low-volume MS-DRGs by adjusting their final FY 2016 relative
weights by the percentage change in the average weight of the cases in
other MS-DRGs. The crosswalk table is shown:
------------------------------------------------------------------------
Low-volume MS-DRG MS-DRG title Crosswalk to MS-DRG
------------------------------------------------------------------------
768...................... Vaginal Delivery Final FY 2016 relative
with O.R. weight (adjusted by
Procedure Except percent change in
Sterilization and/ average weight of the
or D&C. cases in other MS-
DRGs).
789...................... Neonates, Died or Final FY 2016 relative
Transferred to weight (adjusted by
Another Acute Care percent change in
Facility. average weight of the
cases in other MS-
DRGs).
790...................... Extreme Immaturity Final FY 2016 relative
or Respiratory weight (adjusted by
Distress Syndrome, percent change in
Neonate. average weight of the
cases in other MS-
DRGs).
791...................... Prematurity with Final FY 2016 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
792...................... Prematurity without Final FY 2016 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
793...................... Full-Term Neonate Final FY 2016 relative
with Major weight (adjusted by
Problems. percent change in
average weight of the
cases in other MS-
DRGs).
794...................... Neonate with Other Final FY 2016 relative
Significant weight (adjusted by
Problems. percent change in
average weight of the
cases in other MS-
DRGs).
795...................... Normal Newborn..... Final FY 2016 relative
weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
------------------------------------------------------------------------
We are inviting public comments on this proposal.
H. Proposed Add-On Payments for New Services and Technologies for FY
2017
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate. We note that,
beginning with discharges occurring in FY 2008, CMS transitioned from
CMS-DRGs to MS-DRGs.
The regulations at 42 CFR 412.87 implement these provisions and
specify three criteria for a new medical service or technology to
receive the additional payment: (1) The medical service or technology
must be new; (2) the medical service or technology must be costly such
that the DRG rate otherwise applicable to discharges involving the
medical service or technology is determined to be inadequate; and (3)
the service or technology must demonstrate a substantial clinical
improvement over existing services or technologies. Below we highlight
some of the major statutory and regulatory provisions relevant to the
new technology add-on payment criteria, as well as other information.
For a complete discussion on the new technology add-on payment
criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51572 through 51574).
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments
[[Page 25032]]
until such time as Medicare data are available to fully reflect the
cost of the technology in the MS-DRG weights through recalibration. We
note that we do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar'' to a technology that was
approved by FDA and has been on the market for more than 2 to 3 years.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through
43814), we established criteria for evaluating whether a new technology
is substantially similar to an existing technology, specifically: (1)
Whether a product uses the same or a similar mechanism of action to
achieve a therapeutic outcome; (2) whether a product is assigned to the
same or a different MS-DRG; and (3) whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population. If a technology
meets all three of these criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments. For a detailed
discussion of the criteria for substantial similarity, we refer readers
to the FY 2006 IPPS final rule (70 FR 47351 through 47352), and the FY
2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to the discharge involving the new medical services or technologies
must be assessed for adequacy. Under the cost criterion, consistent
with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act,
to assess the adequacy of payment for a new technology paid under the
applicable MS-DRG prospective payment rate, we evaluate whether the
charges for cases involving the new technology exceed certain threshold
amounts. Table 10 that was released with the FY 2016 IPPS/LTCH PPS
final rule contains the final thresholds that we used to evaluate
applications for new medical service and new technology add-on payments
for FY 2017. We refer readers to the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Tables.html to download and view Table 10.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims
information that providers submit with applications for new medical
service and new technology add-on payments. We refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51573) for complete information on
this issue.
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations provides that a new technology is an appropriate candidate
for an additional payment when it represents an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries. For example, a
new technology represents a substantial clinical improvement when it
reduces mortality, decreases the number of hospitalizations or
physician visits, or reduces recovery time compared to the technologies
previously available. (We refer readers to the September 7, 2001 final
rule for a more detailed discussion of this criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full
DRG payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 50 percent of the estimated costs of the new technology or medical
service (if the estimated costs for the case including the new
technology or medical service exceed Medicare's payment); or (2) 50
percent of the difference between the full DRG payment and the
hospital's estimated cost for the case. Unless the discharge qualifies
for an outlier payment, the additional Medicare payment is limited to
the full MS-DRG payment plus 50 percent of the estimated costs of the
new technology or new medical service.
Section 503(d)(2) of Public Law 108-173 provides that there shall
be no reduction or adjustment in aggregate payments under the IPPS due
to add-on payments for new medical services and technologies.
Therefore, in accordance with section 503(d)(2) of Public Law 108-173,
add-on payments for new medical services or technologies for FY 2005
and later years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criterion, and only if so, do we then make a determination as to
whether the technology meets the cost threshold and represents a
substantial clinical improvement over existing medical services or
technologies. We amended Sec. 412.87(c) to specify that all applicants
for new technology add-on payments must have FDA approval or clearance
for their new medical service or technology by July 1 of each year
prior to the beginning of the fiscal year that the application is being
considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies and medical services
between CMS and other entities. The CTI, composed of senior CMS staff
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for
Clinical Standards and Quality (CCSQ) and the Director of the Center
for Medicare (CM), who is also designated as the CTI's Executive
Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CM, CCSQ, and the local claims-payment contractors (in
the case of local coverage and payment decisions). The CTI supplements,
rather than replaces, these processes by working to assure that all of
these activities reflect the agency-wide priority to promote high-
quality, innovative care. At the same time, the CTI also works to
streamline, accelerate, and improve coordination of these processes to
ensure that they remain up to date as new issues arise. To achieve its
goals, the CTI works to streamline and create a more transparent coding
and payment process, improve the quality of medical
[[Page 25033]]
decisions, and speed patient access to effective new treatments. It is
also dedicated to supporting better decisions by patients and doctors
in using Medicare-covered services through the promotion of better
evidence development, which is critical for improving the quality of
care for Medicare beneficiaries.
To improve the understanding of CMS' processes for coverage,
coding, and payment and how to access them, the CTI has developed an
``Innovator's Guide'' to these processes. The intent is to consolidate
this information, much of which is already available in a variety of
CMS documents and in various places on the CMS Web site, in a user-
friendly format. This guide was published in 2010 and is available on
the CMS Web site at: http://www.cms.gov/CouncilonTechInnov/Downloads/InnovatorsGuide5_10_10.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical services
or technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
[email protected].
We note that applicants for add-on payments for new medical
services or technologies for FY 2018 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical
services or technologies under review before the publication of the
proposed rule for FY 2018, the CMS Web site also will post the tracking
forms completed by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2017 prior
to publication of the FY 2017 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on November 30, 2015 (80 FR 74774),
and held a town hall meeting at the CMS Headquarters Office in
Baltimore, MD, on February 16, 2016. In the announcement notice for the
meeting, we stated that the opinions and presentations provided during
the meeting would assist us in our evaluations of applications by
allowing public discussion of the substantial clinical improvement
criterion for each of the FY 2017 new medical service and technology
add-on payment applications before the publication of the FY 2017 IPPS/
LTCH PPS proposed rule.
Approximately 76 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. We also live-streamed the town hall meeting and posted
the town hall on the CMS YouTube Web page at: https://www.youtube.com/watch?v=dn-R5KGQu-M. We considered each applicant's presentation made
at the town hall meeting, as well as written comments submitted on the
applications that were received by the due date of February 26, 2016,
in our evaluation of the new technology add-on payment applications for
FY 2017 in this proposed rule.
As indicated earlier in this section, CMS is required to provide,
before publication of a proposed rule, for a meeting at which
organizations representing hospitals, physicians, manufacturers, and
any other interested party may present comments, recommendations, and
data regarding whether a new medical service or technology represents a
substantial clinical improvement to the clinical staff of CMS. In
recent years, CMS has live-streamed the town hall meeting through the
CMS YouTube Web page and later posted the recorded version of the town
hall meeting, in addition to maintaining an open telephone line. We are
proposing to conduct future town hall meetings entirely via
teleconference and Webcast using the same technologies. Under this
proposal, we would continue to publish a notice informing the public of
the date of the meeting, as well as requirements for the submission of
presentations. We also would continue to maintain an open telephone
line, with an option for participation in the Webcast. The recording of
the town hall meeting would continue to be available on the CMS You
Tube Web page or other CMS Web site following the meeting. This
recording would include closed captioning of all presentations and
comments. In addition to submitting materials for discussion at the
town hall meeting, individuals would continue to be able to submit
other written comments after the town hall meeting on whether the
service or technology represents a substantial clinical improvement. We
are inviting public comments on this proposal.
In response to the published notice and the February 16, 2016 New
Technology Town Hall meeting, we received written comments regarding
the applications for FY 2017 new technology add-on payments. We
summarize below a general comment that does not relate to a specific
application for FY 2017 new technology
[[Page 25034]]
add-on payments. We also summarize comments regarding individual
applications, or, if applicable, indicate that there were no comments
received in section II.H.5. of the preamble of this proposed rule at
the end of each discussion of the individual applications.
Comment: One commenter recommended that CMS broaden the criteria
applied in making substantial clinical improvement determinations to
require, in addition to existing criteria, consideration of whether the
new technology or medical service meets one or more of the following
additional suggested criteria: (1) Results in a reduction of the length
of a hospital stay; (2) improves patient quality of life; (3) creates
long-term clinical efficiencies in treatment; (3) addresses patient-
centered objectives as defined by the Secretary; or (4) meets such
other criteria as the Secretary may specify. The commenter also
suggested that an entity that submits an application for new technology
add-on payments be entitled to administrative review of an adverse
determination made by the Secretary.
Response: We appreciate these recommendations and suggestions and
will consider them in future rulemaking.
We note that the commenter also provided comments that were
unrelated to the substantial clinical improvement criterion. As stated
earlier, the purpose of the new technology town hall meeting is
specifically to discuss the substantial clinical improvement criterion
in regard to pending new technology add-on payment applications for FY
2017. Therefore, we are not summarizing these additional comments in
this proposed rule. However, the commenter is welcome to resubmit its
comments in response to proposals presented in this proposed rule.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the
ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
Web site at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS ``X'' codes. We
encourage providers to view the material provided on ICD-10-PCS Section
``X'' codes.
4. Proposed FY 2017 Status of Technologies Approved for FY 2016 Add-On
Payments
a. KcentraTM
CSL Behring submitted an application for new technology add-on
payments for KcentraTM for FY 2014. KcentraTM is
a replacement therapy for fresh frozen plasma (FFP) for patients with
an acquired coagulation factor deficiency due to warfarin and who are
experiencing a severe bleed. KcentraTM contains the Vitamin
K dependent coagulation factors II, VII, IX and X, together known as
the prothrombin complex, and antithrombotic proteins C and S. Factor IX
is the lead factor for the potency of the preparation. The product is a
heat-treated, non-activated, virus filtered and lyophilized plasma
protein concentrate made from pooled human plasma. KcentraTM
is available as a lyophilized powder that needs to be reconstituted
with sterile water prior to administration via intravenous infusion.
The product is dosed based on Factor IX units. Concurrent Vitamin K
treatment is recommended to maintain blood clotting factor levels once
the effects of KcentraTM have diminished.
KcentraTM was approved by the FDA on April 29, 2013.
Under the ICD-10 coding system, KcentraTM is uniquely
identified by ICD-10-CM procedure code 30283B1 (Transfusion of
nonautologous 4-factor prothrombin complex concentrate into vein,
percutaneous approach).
After evaluation of the newness, cost, and substantial clinical
improvement criteria for new technology add-on payments for
KcentraTM and consideration of the public comments we
received in response to the FY 2014 IPPS/LTCH PPS proposed rule, we
approved KcentraTM for new technology add-on payments for FY
2014 (78 FR 50575 through 50580). In the application, the applicant
estimated that the average Medicare beneficiary would require an
average dosage of 2500 International Units (IU). Vials contain 500 IU
at a cost of $635 per vial. Therefore, cases of KcentraTM
would incur an average cost per case of $3,175 ($635 x 5). Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the technology or 50 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum add-on payment for a case of KcentraTM was $1,587.50
for FY 2014. We refer the reader to the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50579) for complete details on the new technology add-on
payments for KcentraTM.
As stated above, the new technology add-on payment regulations
provide that a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology (Sec. 412.87(b)(2)). Our practice has been to begin and end
new technology add-on payments on the basis of a fiscal year, and we
have generally followed a guideline that uses a 6-month window before
and after the start of the fiscal year to determine whether to extend
the new technology add-on payment for an additional fiscal year. In
general, we extend add-on payments for an additional year only if the
3-year anniversary date of the product's entry on the market occurs in
the latter half of the fiscal year (70 FR 47362).
With regard to the newness criterion for KcentraTM, we
considered the beginning of the newness period to commence when
KcentraTM was approved by the FDA on April 29, 2013. Because
the 3-year anniversary date for KcentraTM will occur in the
latter half of FY 2016 (April 29, 2016), in the FY 2016 IPPS/LTCH PPS
final rule, we continued new technology add-on payments for this
technology for FY 2016 (80 FR 49437). However, for FY 2017, the 3-year
anniversary date of the entry of KcentraTM on the U.S.
market (April 29, 2016) will occur prior to the beginning of FY 2017.
Therefore, we are proposing to discontinue new technology add-on
payments for this technology for FY 2017. We are inviting public
comments on this proposal.
b. Argus[supreg] II Retinal Prosthesis System
Second Sight Medical Products, Inc. submitted an application for
new technology add-on payments for the Argus[supreg] II Retinal
Prosthesis System (Argus[supreg] II System) for FY 2014. The
Argus[supreg] II System is an active implantable medical device that is
intended to provide electrical stimulation of the retina to induce
visual perception in patients who are profoundly blind due to retinitis
[[Page 25035]]
pigmentosa (RP). These patients have bare or no light perception in
both eyes. The system employs electrical signals to bypass dead photo-
receptor cells and stimulate the overlying neurons according to a real-
time video signal that is wirelessly transmitted from an externally
worn video camera. The Argus[supreg] II implant is intended to be
implanted in a single eye, typically the worse-seeing eye. Currently,
bilateral implants are not intended for this technology. According to
the applicant, the surgical implant procedure takes approximately 4
hours and is performed under general anesthesia.
With regard to the newness criterion, the applicant received a
Humanitarian Device Exemption (HDE) approval from the FDA on February
14, 2013. However, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49924
through 49925), we discussed comments we had received informing CMS
that the Argus[supreg] II System was not available on the U.S. market
until December 20, 2013. The applicant explained that, as part of the
lengthy approval process, it was required to submit a request to the
Federal Communications Commission (FCC) for a waiver of section
15.209(a) of the FCC rules that would allow the applicant to apply for
FCC authorization to utilize this specific RF band. The FCC approved
the applicant's waiver request on November 30, 2011. After receiving
the FCC waiver of the section 15.209(a) rules, the applicant requested
and obtained a required Grant of Equipment Authorization to utilize the
specific RF band, which the FCC issued on December 20, 2013. Therefore,
the applicant stated that the date the Argus[supreg] II System first
became available for commercial sale in the United States was December
20, 2013. We agreed with the applicant that, due to the delay, the date
of newness for the Argus[supreg] II System was December 20, 2013,
instead of February 14, 2013.
After evaluation of the new technology add-on payment application
and consideration of public comments received, we concluded that the
Argus[supreg] II System met all of the new technology add-on payment
policy criteria. Therefore, we approved the Argus[supreg] II System for
new technology add-on payments in FY 2014 (78 FR 50580 through 50583).
Cases involving the Argus[supreg] II System that are eligible for new
technology add-on payments currently are identified when one of the
following ICD-10-PCS procedure codes is reported: 08H005Z (Insertion of
epiretinal visual prosthesis into right eye, open approach); or 08H105Z
(Insertion of epiretinal visual prosthesis into left eye, open
approach). In the application, the applicant provided a breakdown of
the costs of the Argus[supreg] II System. The total operating cost of
the Argus[supreg] II System is $144,057.50. Under Sec. 412.88(a)(2),
we limit new technology add-on payments to the lesser of 50 percent of
the average cost of the device or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum add-on
payment for a case involving the Argus[supreg] II System for FY 2014
was $72,028.75.
With regard to the newness criterion for the Argus[supreg] II
System, we considered the beginning of the newness period to commence
when the Argus[supreg] II System became available on the U.S. market on
December 20, 2013. Because the 3-year anniversary date for the
Argus[supreg] II System will occur after FY 2016 (December 20, 2016),
in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology
add-on payments for this technology for FY 2016 (80 FR 49439). However,
for FY 2017, the 3-year anniversary date of the entry of the
Argus[supreg] II System on the U.S. market (December 20, 2016) will
occur in the first half of FY 2017. As discussed previously in this
section, in general, we extend new technology add-on payments for an
additional year only if the 3-year anniversary date of the product's
entry on to the U.S. market occurs in the latter half of the fiscal
year. Therefore, we are proposing to discontinue new technology add-on
payments for this technology for FY 2017. We are inviting public
comments on this proposal.
c. CardioMEMSTM HF (Heart Failure) Monitoring System
CardioMEMS, Inc. submitted an application for new technology add-on
payment for FY 2015 for the CardioMEMSTM HF (Heart Failure)
Monitoring System, which is an implantable hemodynamic monitoring
system comprised of an implantable sensor/monitor placed in the distal
pulmonary artery. Pulmonary artery hemodynamic monitoring is used in
the management of heart failure. The CardioMEMSTM HF
Monitoring System measures multiple pulmonary artery pressure
parameters for an ambulatory patient to measure and transmit data via a
wireless sensor to a secure Web site.
The CardioMEMSTM HF Monitoring System utilizes
radiofrequency (RF) energy to power the sensor and to measure pulmonary
artery (PA) pressure and consists of three components: An Implantable
Sensor with Delivery Catheter, an External Electronics Unit, and a
Pulmonary Artery Pressure Database. The system provides the physician
with the patient's PA pressure waveform (including systolic, diastolic,
and mean pressures) as well as heart rate. The sensor is permanently
implanted in the distal pulmonary artery using transcatheter techniques
in the catheterization laboratory where it is calibrated using a Swan-
Ganz catheter. PA pressures are transmitted by the patient at home in a
supine position on a padded antenna, pushing one button which records
an 18-second continuous waveform. The data also can be recorded from
the hospital, physician's office or clinic.
The hemodynamic data, including a detailed waveform, are
transmitted to a secure Web site that serves as the Pulmonary Artery
Pressure Database, so that information regarding PA pressure is
available to the physician or nurse at any time via the Internet.
Interpretation of trend data allows the clinician to make adjustments
to therapy and can be used along with heart failure signs and symptoms
to adjust medications.
The applicant received FDA approval on May 28, 2014.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the
CardioMEMSTM HF Monitoring System and consideration of the
public comments we received in response to the FY 2015 IPPS/LTCH PPS
proposed rule, we approved the CardioMEMSTM HF Monitoring
System for new technology add-on payments for FY 2015 (79 FR 49940).
Cases involving the CardioMEMSTM HF Monitoring System that
are eligible for new technology add-on payments are identified by
either ICD-10-PCS procedure code 02HQ30Z (Insertion of pressure sensor
monitoring device into right pulmonary artery, percutaneous approach)
or ICD-10-PCS procedure code 02HR30Z (Insertion of pressure sensor
monitoring device into left pulmonary artery, percutaneous approach).
With the new technology add-on payment application, the applicant
stated that the total operating cost of the CardioMEMSTM HF
Monitoring System is $17,750. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum new technology add-on
payment for a case involving the CardioMEMSTM HF Monitoring
System is $8,875.
With regard to the newness criterion for the
CardioMEMSTM HF Monitoring System, we considered the
beginning of the newness period to commence when the
CardioMEMSTM HF Monitoring System was approved by the FDA on
May 28, 2014. Because the 3-year
[[Page 25036]]
anniversary date of the entry of the CardioMEMSTM HF
Monitoring System on the U.S. market will occur in the latter half of
FY 2017 (May 28, 2017), we are proposing to continue new technology
add-on payments for this technology for FY 2017. The maximum payment
for a case involving the CardioMEMSTM HF Monitoring System
would remain at $8,875 for FY 2017. We are inviting public comments on
our proposal.
d. MitraClip[supreg] System
Abbott Vascular submitted an application for new technology add-on
payments for the MitraClip[supreg] System for FY 2015. The
MitraClip[supreg] System is a transcatheter mitral valve repair system
that includes a MitraClip[supreg] device implant, a Steerable Guide
Catheter, and a Clip Delivery System. It is designed to perform
reconstruction of the insufficient mitral valve for high-risk patients
who are not candidates for conventional open mitral valve repair
surgery.
With regard to the newness criterion, the MitraClip[supreg] System
received a premarket approval from the FDA on October 24, 2013. The
MitraClip[supreg] System is indicated ``for the percutaneous reduction
of significant symptomatic mitral regurgitation (MR >= 3+) due to
primary abnormality of the mitral apparatus (degenerative MR) in
patients who have been determined to be at prohibitive risk for mitral
valve surgery by a heart team, which includes a cardiac surgeon
experienced in mitral valve surgery and a cardiologist experienced in
mitral valve disease, and in whom existing comorbidities would not
preclude the expected benefit from reduction of the mitral
regurgitation.'' The MitraClip[supreg] System became immediately
available on the U.S. market following FDA approval. The
MitraClip[supreg] System is a Class III device, and has an
investigational device exemption (IDE) for the EVEREST study
(Endovascular Valve Edge-to-Edge Repair Study)--IDE G030061, and for
the COAPT study (Cardiovascular Outcomes Assessment of the MitraClip
Percutaneous Therapy for Health Failure Patients with Functional Mitral
Regurgitation)--IDE G120024. Cases involving the MitraClip[supreg]
System are identified using ICD-10-PCS procedure code 02UG3JZ
(Supplement mitral valve with synthetic substitute, percutaneous
approach).
On August 7, 2014, CMS issued a National Coverage Decision (NCD)
concerning Transcatheter Mitral Valve Repair procedures. We refer
readers to the CMS Web site at: http://www.cms.gov/medicare-coverage-database/details/nca-tracking-sheet.aspx?NCAId=273 for information
related to this NCD.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the
MitraClip[supreg] System and consideration of the public comments we
received in response to the FY 2015 IPPS/LTCH PPS proposed rule, we
approved the MitraClip[supreg] System for new technology add-on
payments for FY 2015 (79 FR 49946). As discussed in the FY 2015 IPPS/
LTCH PPS final rule, this approval is on the basis of using the
MitraClip[supreg] consistent with the NCD. The average cost of the
MitraClip[supreg] System is reported as $30,000. Under section
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the device or 50 percent of the costs
in excess of the MS-DRG payment for the case. As a result, the maximum
new technology add-on payment for a case involving the
MitraClip[supreg] System is $15,000 for FY 2015.
With regard to the newness criterion for the MitraClip[supreg]
System, we considered the beginning of the newness period to commence
when the MitraClip[supreg] System was approved by the FDA on October
24, 2013. Because the 3-year anniversary date of the entry of the
MitraClip[supreg] System on the U.S. market (October 24, 2016) will
occur after FY 2016, in the FY 2016 IPPS/LTCH PPS final rule, we
continued new technology add-on payments for this technology for FY
2016 (80 FR 49442). However, for FY 2017, the 3-year anniversary date
of the entry of MitraClip[supreg] System on the U.S. market (October
24, 2016) will occur in the first half of FY 2017. As discussed
previously in this section, in general, we extend new technology add-on
payments for an additional year only if the 3-year anniversary date of
the product's entry on to the U.S. market occurs in the latter half of
the fiscal year. Therefore, we are proposing to discontinue new
technology add-on payments for this technology for FY 2017. We are
inviting public comments on this proposal.
e. Responsive Neurostimulator (RNS[supreg]) System
NeuroPace, Inc. submitted an application for new technology add-on
payments for FY 2015 for the use of the RNS[supreg] System. (We note
that the applicant submitted an application for new technology add-on
payments for FY 2014, but failed to receive FDA approval prior to the
July 1 deadline.) Seizures occur when brain function is disrupted by
abnormal electrical activity. Epilepsy is a brain disorder
characterized by recurrent, unprovoked seizures. According to the
applicant, the RNS[supreg] System is the first implantable medical
device (developed by NeuroPace, Inc.) for treating persons diagnosed
with epilepsy whose partial onset seizures have not been adequately
controlled with antiepileptic medications. The applicant further stated
that, the RNS[supreg] System is the first closed-loop, responsive
system to treat partial onset seizures. Responsive electrical
stimulation is delivered directly to the seizure focus in the brain
when abnormal brain activity is detected. A cranially implanted
programmable neurostimulator senses and records brain activity through
one or two electrode-containing leads that are placed at the patient's
seizure focus/foci. The neurostimulator detects electrographic patterns
previously identified by the physician as abnormal, and then provides
brief pulses of electrical stimulation through the leads to interrupt
those patterns. Stimulation is delivered only when abnormal
electrocorticographic activity is detected. The typical patient is
treated with a total of 5 minutes of stimulation a day. The RNS[supreg]
System incorporates remote monitoring, which allows patients to share
information with their physicians remotely.
With regard to the newness criterion, the applicant stated that
some patients diagnosed with partial onset seizures that cannot be
controlled with antiepileptic medications may be candidates for the
vagus nerve stimulator (VNS) or for surgical removal of the seizure
focus. According to the applicant, these treatments are not appropriate
for, or helpful to, all patients. Therefore, the applicant believed
that there is an unmet clinical need for additional therapies for
partial onset seizures. The applicant further stated that the
RNS[supreg] System addresses this unmet clinical need by providing a
novel treatment option for treating persons diagnosed with medically
intractable partial onset seizures. The applicant received FDA
premarket approval on November 14, 2013.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the RNS[supreg]
System and consideration of the public comments we received in response
to the FY 2015 IPPS/LTCH PPS proposed rule, we approved the RNS[supreg]
System for new technology add-on payments for FY 2015 (79 FR 49950).
Cases involving the RNS[supreg] System that are eligible for new
technology add-on payments are identified using the following ICD-10-
PCS procedure code
[[Page 25037]]
combination: 0NH00NZ (Insertion of neurostimulator generator into
skull, open approach) in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach). According to the
applicant, cases using the RNS[supreg] System would incur an
anticipated cost per case of $36,950. Under Sec. 412.88(a)(2) of the
regulations, we limit new technology add-on payments to the lesser of
50 percent of the average costs of the device or 50 percent of the
costs in excess of the MS-DRG payment rate for the case. As a result,
the maximum new technology add-on payment for cases involving the
RNS[supreg] System is $18,475.
With regard to the newness criterion for the RNS[supreg] System, we
considered the beginning of the newness period to commence when the
RNS[supreg] System was approved by the FDA on November 14, 2013.
Because the 3-year anniversary date of the entry of the RNS[supreg]
System on the U.S. market (November 14, 2016) will occur after FY 2016,
in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology
add-on payments for this technology for FY 2016 (80 FR 49443). However,
for FY 2017, the 3-year anniversary date of the entry of RNS[supreg]
System on the U.S. market (November 14, 2016) will occur in the first
half of FY 2017. As discussed previously in this section, in general,
we extend new technology add-on payments for an additional year only if
the 3-year anniversary date of the product's entry on to the U.S.
market occurs in the latter half of the fiscal year. Therefore, we are
proposing to discontinue new technology add-on payments for this
technology for FY 2017. We are inviting public comments on this
proposal.
f. Blinatumomab (BLINCYTOTM Trade Brand)
Amgen, Inc. submitted an application for new technology add-on
payments for FY 2016 for Blinatumomab (BLINCYTOTM), a bi-
specific T-cell engager (BiTE) used for the treatment of Philadelphia
chromosome-negative (Ph-) relapsed or refractory (R/R) B-cell precursor
acute-lymphoblastic leukemia (ALL), which is a rare aggressive cancer
of the blood and bone marrow. Approximately 6,050 individuals are
diagnosed with Ph- R/R B-cell precursor ALL in the United States each
year, and approximately 2,400 individuals, representing 30 percent of
all new cases, are adults. Ph- R/R B-cell precursor ALL occurs when
there are malignant transformations of B-cell or T-cell progenitor
cells, causing an accumulation of lymphoblasts in the blood, bone
marrow, and occasionally throughout the body. As a bi-specific T-cell
engager, the BLINCYTOTM technology attaches to a molecule on
the surface of the tumorous cell, as well as to a molecule on the
surface of normal T-cells, bringing the two into closer proximity and
allowing the normal T-cell to destroy the tumorous cell. Specifically,
the BLINCYTOTM technology attaches to a cell identified as
CD19, which is present on all of the cells of the malignant
transformations that cause Ph- R/R B-cell precursor ALL and helps
attract the cell into close proximity of the T-cell CD3 with the intent
of getting close enough to allow the T-cell to inject toxins that
destroy the cancerous cell. According to the applicant, the
BLINCYTOTM technology is the first, and the only, bi-
specific CD19-directed CD3 T-cell engager single-agent immunotherapy
approved by the FDA.
BLINCYTOTM is administered as a continuous IV infusion
delivered at a constant flow rate using an infusion pump. A single
cycle of treatment consists of 28 days of continuous infusion, and each
treatment cycle followed by 2 weeks without treatment prior to
administering any further treatments. A course of treatment would
consist of two phases. Phase 1 consists of initial inductions or
treatments intended to achieve remission followed by additional
inductions and treatments to maintain consolidation; or treatments
given after remission has been achieved to prolong the duration. During
phase 1 of a single treatment course, up to two cycles of
BLINCYTOTM are administered, and up to three additional
cycles are administered during consolidation. The recommended dosage of
BLINCYTOTM administered during the first cycle of treatment
is 9 mcg per day for the first 7 days of treatment. The dosage is then
increased to 28 mcg per day for 3 weeks until completion. During phase
2 of the treatment course, all subsequent doses are administered as 28
mcg per day throughout the entire duration of the 28-day treatment
period.
With regard to the newness criterion, the BLINCYTOTM
technology received FDA approval on December 3, 2014, for the treatment
of patients diagnosed with Ph- R/R B-cell precursor ALL, and the
product gained entry onto the U.S. market on December 17, 2014.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for
BLINCYTOTM and consideration of the public comments we
received in response to the FY 2016 IPPS/LTCH PPS proposed rule, we
approved BLINCYTOTM for new technology add-on payments for
FY 2016 (80 FR 49449). Cases involving BLINCYTOTM that are
eligible for new technology add-on payments are identified using one of
the following ICD-10-PCS procedure codes: XW03351 (Introduction of
Blinatumomab antineoplastic immunotherapy into peripheral vein,
percutaneous approach, new technology group 1) or XW04351 (Introduction
of Blinatumomab antineoplastic immunotherapy into central vein,
percutaneous approach, new technology group1).
As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49449), the
applicant recommended that CMS consider and use the cost of the full
28-day inpatient treatment cycle as the expected length of treatment
when determining the maximum new technology add-on payment for cases
involving the BLINCYTOTM rather than the average cost of
lesser number of days used as other variables. For the reasons
discussed, we disagreed with the applicant and established the maximum
new technology add-on payment amount for a case involving the
BLINCYTOTM technology for FY 2016 using the weighted average
of the cycle 1 and cycle 2 observed treatment length. Specifically, in
the Phase II trial, the most recent data available, 92 patients
received cycle 1 for an average length of 21.2 days, and 52 patients
received cycle 2 for an average length of 10.2 days. The weighted
average of cycle 1 and 2 treatment length is 17 days. We noted that a
small number of patients also received 3 to 5 treatment cycles.
However, based on the data provided, these cases do not appear to be
typical at this point and we excluded them from this calculation. We
noted that, if we included all treatment cycles in this calculation,
the weighted average number of days of treatment is much lower, 10
days. Using the clinical data provided by the applicant, we stated that
we believe that setting the maximum new technology add-on payment
amount for a case involving the BLINCYTOTM technology for FY
2016 based on a 17-day length of treatment cycle is representative of
historical and current practice. We also stated that, for FY 2017, if
new data on length of treatment are available, we would consider any
such data in evaluating the maximum new technology add-on payment
amount. However, we did not receive any new data from the applicant to
evaluate for FY 2017.
In the application, the applicant estimated that the average
Medicare beneficiary would require a dosage of 9mcg/day for the first 7
days under the
[[Page 25038]]
first treatment cycle, followed by a dosage of 28mcg/day for the
duration of the treatment cycle, as well as all days included in
subsequent cycles. All vials contain 35mcg at a cost of $3,178.57 per
vial. The applicant noted that all vials are single-use. Therefore, we
determined that cases involving the use of the BLINCYTOTM
technology would incur an average cost per case of $54,035.69 (1 vial/
day x 17 days x $3,178.57/vial). Under 42 CFR 412.88(a)(2), we limit
new technology add-on payments to the lesser of 50 percent of the
average cost of the technology or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment amount for a case involving the use of the
BLINCYTOTM is $27,017.85 for FY 2016.
With regard to the newness criterion for BLINCYTOTM, we
considered the beginning of the newness period to commence when the
product gained entry onto the U.S. market on December 17, 2014. Because
the 3-year anniversary date of the entry of the BLINCYTOTM
on the U.S. market will occur after FY 2017 (December 17, 2017), we are
proposing to continue new technology add-on payments for this
technology for FY 2017. The maximum payment for a case involving
BLINCYTOTM would remain at $27,017.85 for FY 2017. We are
inviting public comments on this proposal.
g. Lutonix[supreg] Drug Coated Balloon PTA Catheter and
In.PACTTM AdmiralTM Paclitaxel Coated
Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter
Two manufacturers, CR Bard Inc. and Medtronic, submitted
applications for new technology add-on payments for FY 2016 for
LUTONIX[supreg] Drug-Coated Balloon (DCB) Percutaneous Transluminal
Angioplasty (PTA) Catheter (LUTONIX[supreg]) and IN.PACTTM
AdmiralTM Paclitaxel Coated Percutaneous Transluminal
Angioplasty (PTA) Balloon Catheter (IN.PACTTM
AdmiralTM), respectively. Both of these technologies are
drug-coated balloon angioplasty treatments for patients diagnosed with
peripheral artery disease (PAD). Typical treatments for patients with
PAD include angioplasty, stenting, atherectomy and vascular bypass
surgery. PAD most commonly occurs in the femoropopliteal segment of the
peripheral arteries, is associated with significant levels of morbidity
and impairment in quality of life, and requires treatment to reduce
symptoms and prevent or treat ischemic events.\2\ Treatment options for
symptomatic PAD include noninvasive treatment such as medication and
life-style modification (for example, exercise programs, diet, and
smoking cessation) and invasive options which include endovascular
treatment and surgical bypass. The 2013 American College of Cardiology
and American Heart Association (ACC/AHA) guidelines for the management
of PAD recommend endovascular therapy as the first-line treatment for
femoropopliteal artery lesions in patients suffering from claudication
(Class I, Level A recommendation).\3\
---------------------------------------------------------------------------
\2\ Tepe G, Zeller T, Albrecht T, Heller S, Schwarzwalder U,
Beregi JP, Claussen CD, Oldenburg A, Scheller B, Speck U.: Local
delivery of paclitaxel to inhibit restenosis during angioplasty of
the leg. N Engl J Med 2008; 358: 689-99.
\3\ Anderson JL, Halperin JL, Albert NM, Bozkurt B, Brindis RG,
Curtis LH, DeMets D, Guyton RA, Hochman JS, Kovacs RJ, Ohman EM,
Pressler SJ, Sellke FW, Shen WK.: Management of patients with
peripheral artery disease (compilation of 2005 and 2011 ACCF/AHA
guideline recommendations): a report of the American College of
Cardiology Foundation/American Heart Association Task Force on
Practice Guidelines. J Am Coll Cardiol 2013; 61:1555-70. Available
at: http://dx.doi.org/10.1016/j.jacc.2013.01.004.
---------------------------------------------------------------------------
According to both applicants, LUTONIX[supreg] and
IN.PACTTM AdmiralTM are the first drug coated
balloons that can be used for treatment of patients who are diagnosed
with PAD. In the FY 2016 IPPS/LTCH final rule, we stated that because
cases eligible for the two devices would group to the same MS-DRGs and
we believe that these devices are substantially similar to each other
(that is, they are intended to treat the same or similar disease in the
same or similar patient population and are purposed to achieve the same
therapeutic outcome using the same or similar mechanism of action), we
evaluated both technologies as one application for new technology add-
on payment under the IPPS. The applicants submitted separate cost and
clinical data, and we reviewed and discussed each set of data
separately. However, we made one determination regarding new technology
add-on payments that applied to both devices. We believe that this is
consistent with our policy statements in the past regarding substantial
similarity. Specifically, we have noted that approval of new technology
add-on payments would extend to all technologies that are substantially
similar (66 FR 46915), and that we believe that continuing our current
practice of extending a new technology add-on payment without a further
application from the manufacturer of the competing product or a
specific finding on cost and clinical improvement if we make a finding
of substantial similarity among two products is the better policy
because we avoid--
Creating manufacturer-specific codes for substantially
similar products;
Requiring different manufacturers of substantially similar
products from having to submit separate new technology applications;
Having to compare the merits of competing technologies on
the basis of substantial clinical improvement; and
Bestowing an advantage to the first applicant representing
a particular new technology to receive approval (70 FR 47351).
CR Bard, Inc. received FDA approval for LUTONIX[supreg] on October
9, 2014. Commercial sales in the U.S. market began on October 10, 2014.
Medtronic received FDA approval for IN.PACTTM
AdmiralTM on December 30, 2014. Commercial sales in the U.S.
market began on January 29, 2015.
In accordance with our policy, we stated in the FY 2016 IPPS\LTCH
final rule (80 FR 49463) that we believe it is appropriate to use the
earliest market availability date submitted as the beginning of the
newness period. Accordingly, for both devices, we stated that the
beginning of the newness period will be October 10, 2014.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the
LUTONIX[supreg] and IN.PACTTM AdmiralTM
technologies and consideration of the public comments we received in
response to the FY 2016 IPPS/LTCH PPS proposed rule, we approved the
LUTONIX[supreg] and IN.PACTTM AdmiralTM
technologies for new technology add-on payments for FY 2016 (80 FR
49469). Cases involving the LUTONIX[supreg] and IN.PACTTM
AdmiralTM technologies that are eligible for new technology
add-on payments are identified using one of the ICD-10-PCS procedure
codes in the following table:
------------------------------------------------------------------------
ICD-10-PCS Code Code description
------------------------------------------------------------------------
047K041.................. Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
[[Page 25039]]
047K0D1.................. Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047K0Z1.................. Dilation of right femoral artery using drug-
coated balloon, open approach.
047K341.................. Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047K3D1.................. Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047K3Z1.................. Dilation of right femoral artery using drug-
coated balloon, percutaneous approach.
047K441.................. Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047K4D1.................. Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047K4Z1.................. Dilation of right femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047L041.................. Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047L0D1.................. Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047L0Z1.................. Dilation of left femoral artery using drug-
coated balloon, open approach.
047L341.................. Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047L3D1.................. Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047L3Z1.................. Dilation of left femoral artery using drug-
coated balloon, percutaneous approach.
047L441.................. Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047L4D1.................. Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047L4Z1.................. Dilation of left femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047M041.................. Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047M0D1.................. Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047M0Z1.................. Dilation of right popliteal artery using drug-
coated balloon, open approach.
047M341.................. Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047M3D1.................. Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047M3Z1.................. Dilation of right popliteal artery using drug-
coated balloon, percutaneous approach.
047M441.................. Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047M4D1.................. Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047M4Z1.................. Dilation of right popliteal artery using drug-
coated balloon, percutaneous endoscopic
approach.
047N041.................. Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047N0D1.................. Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047N0Z1.................. Dilation of left popliteal artery using drug-
coated balloon, open approach.
047N341.................. Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047N3D1.................. Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047N3Z1.................. Dilation of left popliteal artery using drug-
coated balloon, percutaneous approach.
047N441.................. Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047N4D1.................. Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047N4Z1.................. Dilation of left popliteal artery using drug-
coated balloon, percutaneous endoscopic
approach.
------------------------------------------------------------------------
As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49469),
each of the applicants submitted operating costs for its DCB. The
manufacturer of the LUTONIX[supreg] stated that a mean of 1.37 drug-
coated balloons was used during the LEVANT 2 clinical trial. The
acquisition price for the hospital will be $1,900 per drug-coated
balloon, or $2,603 per case (1.37 x $1,900). The applicant projected
that approximately 8,875 cases will involve use of the LUTONIX[supreg]
for FY 2016. The manufacturer for the IN.PACTTM
AdmiralTM stated that a mean of 1.4 drug-coated balloons was
used during the IN.PACTTM AdmiralTM DCB arm. The
acquisition price for the hospital will be $1,350 per drug-coated
balloon, or $1,890 per case (1.4 x $1,350). The applicant projected
that approximately 26,000 cases will involve use of the
IN.PACTTM AdmiralTM for FY 2016.
For FY 2016, we based the new technology add-on payment for cases
involving these technologies on the weighted average cost of the two
DCBs described by the ICD-10-PCS procedure codes listed above (which
are not manufacturer specific). Because ICD-10 codes are not
manufacturer specific, we cannot set one new technology add-on payment
amount for IN.PACTTM AdmiralTM and a different
new technology add-on payment amount for LUTONIX[supreg]; both
technologies will be captured by using the same ICD-10-PCS procedure
code. As such, we stated that we believe that the use of a weighted
average of the cost of the standard DCBs based on the projected number
of cases involving each technology to determine the maximum new
technology add-on payment would be most appropriate. To compute the
weighted cost average, we summed the total number of projected cases
for each of the applicants, which equaled 34,875 cases (26,000 plus
8,875). We then divided the number of projected cases for each of the
applicants by the total number of cases, which resulted in the
following case-weighted percentages: 25 Percent for the LUTONIX[supreg]
and 75 percent for the IN.PACTTM AdmiralTM. We
then multiplied the cost per case for the manufacturer specific DCB by
the case-weighted percentage (0.25 * $2,603=$662.41 for LUTONIX[supreg]
and 0.75 * $1,890=$1,409.03 for the IN.PACTTM
AdmiralTM). This resulted in a case-weighted average cost of
$2,071.45 for DCBs. Under Sec. 412.88(a)(2), we limit new technology
add-on payments to the lesser of 50 percent of the average cost of the
device or 50 percent of the costs in excess of the MS-DRG payment for
the case. As a result, the maximum payment for a case involving the
LUTONIX[supreg] or IN.PACTTM AdmiralTM DCBs is
$1,035.72.
With regard to the newness criterion for LUTONIX[supreg] and
IN.PACTTM AdmiralTM technologies, we considered
the beginning of the newness period to commence when LUTONIX[supreg]
gained entry onto the U.S. market on October 10, 2014. Because the 3-
year anniversary date of the entry of LUTONIX[supreg] on the U.S.
market will occur after FY 2017 (October 10, 2017), we are proposing to
continue new technology add-on payments for both the LUTONIX[supreg]
and IN.PACTTM AdmiralTM technologies for
[[Page 25040]]
FY 2017. The maximum add-on payment for a case involving
LUTONIX[supreg] and IN.PACTTM AdmiralTM would
remain at $1,035.72 for FY 2017. We are inviting public comments on
this proposal.
5. Proposed FY 2017 Applications for New Technology Add-On Payments
We are reviewing nine applications for new technology add-on
payments for FY 2017. In accordance with the regulations under Sec.
412.87(c), applicants for new technology add-on payments must have FDA
approval by July 1 of each year prior to the beginning of the fiscal
year that the application is being considered. One applicant withdrew
its application prior to the issuance of this proposed rule.
a. MAGEC[supreg] Spinal Bracing and Distraction System (MAGEC[supreg]
Spine)
Ellipse Technologies, Inc. submitted an application for new
technology add-on payments for FY 2017 for the MAGEC[supreg] Spine.
According to the applicant, the MAGEC[supreg] Spine has been developed
for use in the treatment of children diagnosed with severe spinal
deformities, such as scoliosis. The system can be used in the treatment
of skeletally immature patients less than 10 years of age who have been
diagnosed with severe progressive spinal deformities associated with or
at risk of Thoracic Insufficiency Syndrome (TIS). The MAGEC[supreg]
Spine consists of a (spinal growth) rod that can be lengthened through
the use of magnets that are controlled by an external remote controller
(ERC). The rod(s) can be implanted into children as young as 2 years of
age. According to the applicant, use of the MAGEC[supreg] Spine has
proven to be successfully used in the treatment of patients diagnosed
with scoliosis who have not been responsive to other treatments.
The MAGEC[supreg] Spine initially received FDA approval for use of
the predicate device, which used a Harrington Rod on February 27, 2014.
Subsequent FDA approval was granted for use of the modified device,
which uses a shorter 70 mm on September 18, 2014. After minor
modification of the product, the MAGEC[supreg] Spine received its final
FDA approvals on March 24, 2015, and May 29, 2015, respectively.
Currently, there is no ICD-9-CM or ICD-10-PCS code to uniquely describe
procedures involving the MAGEC[supreg] Spine.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813
through 43814), we established criteria for evaluating whether a new
technology is substantially similar to an existing technology,
specifically: (1) Whether a product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) whether a
product is assigned to the same or a different MS-DRG; and (3) whether
the new use of the technology involves the treatment of the same or
similar type of disease and the same or similar patient population. If
a technology meets all three of these criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments. For
a detailed discussion of the criteria for substantial similarity, we
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through
43814).
With regard to the first criterion, the applicant stated that the
MAGEC[supreg] Spine's mechanism of action is dependent upon growing
rods used for the treatment of patients diagnosed with early onset
scoliosis (EOS), and is unique because the technique uses magnetic
distraction (lengthening), which does not require the patients to be
subjected to the potential and adverse effects of additional surgeries.
The applicant explained that treatment of patients diagnosed with
EOS involves the implantation of traditional growth rods (TGRs)
followed by surgery every 6 months to distract the rods to accommodate
the growing spine until the patient reaches a level of spinal maturity
when the spine can then be fused. The average number of distraction
surgeries per patient is 12 over the course of 6 years. Once spinal
alignment and maturity is reached, the TGRs are surgically and
permanently removed. The applicant stated that, while the most recent
modification to the MAGEC[supreg] Spine's rods accomplish the same goal
as the predicate device, Harrington rods, MAGEC[supreg] Spine rods
achieve the predetermined goal with minimally invasive techniques after
implantation, which prevents the patients from being subjected to the
potential and adverse effects of numerous lengthening surgeries. The
applicant further noted that after the MAGEC[supreg] Spine's rod has
been implanted, the ERC is placed externally over the patient's spine
at the location of the magnet in the MAGEC[supreg] Spine's rod.
Periodic, noninvasive distraction of the rod is performed to lengthen
the spine and to provide adequate bracing during growth. Routine X-ray
or ultrasound procedures are used to confirm the position and amount of
distraction. The frequency of distraction sessions is customized to the
needs of the individual patient by the treating surgeon.
With regard to the first criterion, we are concerned that the
MAGEC[supreg] Spine uses the same mechanism of action, spinal rod
distraction, to achieve the same therapeutic outcome of spinal
alignment as other currently available technologies and treatment
options for Medicare beneficiaries. Specifically, TGRs are implanted
and affixed to the immature spine in order to correct spinal
deformities. As a child grows, the TGRs must be distracted to
accommodate spinal growth. The common denominator between TGRs and the
MAGEC[supreg] Spine is that they both are devices (rods) that use the
same mechanism of action to perform and achieve spinal distraction, the
implantation of rods that are later lengthened. While we acknowledge
the applicant noted that the MAGEC[supreg] Spine does not require the
patient to endure the potential and adverse effects of additional
surgeries, this assertion seems to be a component of substantial
clinical improvement rather than a basis to distinguish the mechanism
of action.
In consideration of the applicant's statements that the mechanism
of action of the MAGEC[supreg] Spine, which uses growing rods in the
treatment of patients diagnosed with EOS, is unique because the
technique of using magnetic distraction (lengthening) does not require
patients to endure the potential and adverse effects of additional
surgeries, we note that there are other technologies and products
currently available that achieve spinal growth without the need to
subject patients to potential and adverse effects of additional
surgeries. For example, the Shilla growth guidance system, which
received FDA approval in 2014, uses a non-locking set screw at the
proximal and distal portions of the construct's rods. This specific
feature is designed to allow the rod to slide through the screw heads
as a child's spine grows, while still providing correction of the
spinal deformity. The Shilla technique also eliminates the need for
scheduled distraction surgeries, as the applicant pointed out are
needed with the use of TGRs. Therefore, we believe that the
MAGEC[supreg] Spine's mechanism of action may be similar to the
mechanism of action employed by the Shilla growth guidance system
because both technologies achieve the same therapeutic outcome and do
not require the patient to endure the potential and adverse effects of
additional surgeries.
With regard to the second criterion, cases that may be eligible for
treatment involving the MAGEC[supreg] Spine map to the following MS-
DRGs: 456 (Spinal
[[Page 25041]]
Fusion Except Cervical With Spinal Curvature or Malignancy or Infection
or Extensive Fusions with MCC); 457 (Spinal Fusion Except Cervical with
Spinal Curvature or Malignancy or Infection or Extensive Fusions with
CC); and 458 (Spinal Fusion Except Cervical with Spinal Curvature or
Malignancy or Infection or Extensive Fusions without CC/MCC). All cases
involving procedures describing spinal distraction devices, including
those that use TGRs and the Shilla growth guidance system, currently
map to the same MS-DRGs.
With regard to the third criterion, we believe that the
MAGEC[supreg] Spine technology involves the treatment of the same or
similar type of disease and the same or similar patient population.
Although the applicant stated that the MAGEC[supreg] Spine was
developed for the use in the treatment of children diagnosed with
severe spinal deformities, the MAGEC[supreg] Spine treats the same
patient population as other currently available spinal distraction
devices and technologies, including those that use TGRs and the Shilla
growth guidance system. Because it appears that the MAGEC[supreg] Spine
is substantially similar to these other currently available devices
used to treat the same or similar types of diseases and the same or
similar patient populations, we are concerned that the technology may
not be considered ``new'' for the purposes of new technology add-on
payments. We are inviting public comments on whether the MAGEC[supreg]
Spine meets the newness criterion.
With regard to the cost criterion, the applicant maintained that
there is an insufficient number of cases in the Medicare claims data to
evaluate because of the small number of potential cases and cases
reflecting patients who were actually diagnosed with or who experience
early onset scoliosis (EOS) requiring the implantation of growing rods.
Specifically, the majority of the Medicare population is 65 years of
age and older, while patients who may be eligible for the MAGEC[supreg]
Spine are typically less than 10 years of age. Therefore, the applicant
estimated the number of EOS cases using internal estimates for de novo
cases (<10 year of age), as well as cases that could potentially
convert to using the MAGEC[supreg] Spine without searching the MedPAR
data file or any other data source. The applicant estimated that a
total of 2,500 EOS cases may be eligible for treatment using the
MAGEC[supreg] Spine in FY 2016. According to the applicant, 580 cases
would map to MS-DRG 456, 870 cases would map to MS-DRG 457, and 1,050
cases would map to MS-DRG 458. The applicant based the distribution of
cases on data from its medical advisors, customers, and reimbursement
support team.
The applicant used Medicare and non-Medicare data for six providers
that used the MAGEC[supreg] Spine during CY 2016. This resulted in an
average unstandardized case-weighted charge per case of $243,999. The
applicant then removed charges related to the predicate technology.
Using the Impact File published with the FY 2016 IPPS/LTCH PPS final
rule, the applicant standardized the charges and applied an inflation
factor of 10 percent. The applicant computed an average CCR of the six
hospitals based on the overall hospitals CCRs in the FY 2016 IPPS/LTCH
final rule Impact File. The applicant then computed the charges for the
device by dividing the costs of the device by the average CCR and added
these charges to determine the inflated average standardized case-
weighted charge per case. The applicant noted that the cost of the
technology was proprietary information. Based on the FY 2016 IPPS/LTCH
PPS Table 10 thresholds, the average case-weighted threshold amount was
$105,909. The applicant computed an inflated average standardized case-
weighted charge per case of $248,037. Because the inflated average
standardized case-weighted charge per case exceeds the average case-
weighted threshold amount, the applicant maintained that the technology
meets the cost criterion.
We have the following concerns regarding the applicant's cost
analysis:
The applicant did not specify how many cases were the
basis for the average standardized case-weighted charges per case.
Therefore, we cannot determine if the charges per case represent a
statistical sample relative to the projected cases eligible for the
MAGEC[supreg] Spine for the upcoming fiscal year.
The applicant did not specify how many cases included in
the analysis were Medicare and non-Medicare cases. We typically rely on
Medicare data and understand the limitations of this patient population
in the Medicare data (as the applicant explained above). However, CMS
would still like the details regarding the numerical representation of
Medicare and non-Medicare cases the applicant used in its analysis.
The applicant did not explain the methodology it used to
remove the charges for the predicate technology, as well as the type of
technology that the charges replaced. Therefore, we are unable to
validate the accuracy of the applicant's methodology.
The applicant did not explain the basis of using a 10-
percent inflation factor. Specifically, the applicant used cases from
CY 2016 and inflated the costs to FY 2017 using a 10-percent inflation
factor. However, the 1-year inflation factor in the FY 2016 IPPS/LTCH
final rule (80 FR 49784) is 3.7 percent. Therefore, we do not believe
that a 10-percent inflation factor is appropriate.
The applicant used the average overall CCR of the six hospitals to
convert the costs of the MAGEC[supreg] Spine to charges. However,
rather than using an average CCR, to increase the precision of
determining the charges of the MAGEC[supreg] Spine, the applicant could
have instead used each hospital's individual CCR or the implantable
device CCR of 0.337 as reported in the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49429).
We are inviting public comments on whether the MAGEC[supreg] Spine
meets the cost criterion, particularly with regard to the concerns we
have raised.
With regard to substantial clinical improvement, the applicant
stated that use of the MAGEC[supreg] Spinal Bracing and Distraction
System significantly improves clinical outcomes for the pediatric
patient population with spinal deformities when compared to
technologies and treatment options that employ TGRs by decreasing the
number of subsequent surgeries and potential adverse effects following
implantation. The applicant provided results from a study \4\, which
demonstrated that patients receiving treatment using the magnetically
controlled growth rods (MCGR) system had 57 fewer surgeries as a whole
than those patients receiving treatment options using TGRs. According
to the applicant, the results further projected decreased rates of
infection and attendant costs because the need for additional
distraction (lengthening) surgeries is eliminated. In addition, the
applicant stated that 1,500 patients located around the world have been
successfully treated with the use of this technology. The applicant
indicated that the results from another study \5\ cited the following
qualitative outcomes: Minimal surgical scarring, decreased
psychological distress and improved quality of life, improved
[[Page 25042]]
pulmonary function tests (PFTs), and capabilities to continuously
monitor neurological behaviors because the patient is not exposed to
anesthesia during follow-up distractions.
---------------------------------------------------------------------------
\4\ Akbarnia BA, Cheung K, Noordeen H et al. Traditional rods
versus magnetically controlled growing rods in early onset
scoliosis: a case-matched two year study. 2013.
\5\ Cheng, KMC, Cheung JPY, Damartzis, D, Mak, KC, Wong, WYC,
Akbaria, BA, Luk KDK. Magnetically controlled growing rods for sever
spinal curvature in young children. A prospective study. Lancet 379
(830) 26 May-1 June 2012, pp. 1967-1974.
---------------------------------------------------------------------------
We are concerned that the applicant's assertions that the
MAGEC[supreg] Spine technology leads to significantly better clinical
outcomes; specifically, decreased rates of infection, when compared to
treatment options that use TGRs has not been shown by the results of
the studies provided. The results of the studies provided did not
compare rates of infection for patients receiving treatment using the
MAGEC[supreg] Spine versus patients receiving treatment using TGRs or
other spinal growth rods. Also, as previously mentioned, there are
other currently available technologies and devices such as the Shilla
growth guidance system that also achieve the same therapeutic outcome
and do not require the patient to be subjected to the potential and
adverse effects of additional surgery. Therefore, we are concerned that
the MAGEC[supreg] Spine may not represent a substantial clinical
improvement over existing technologies. We are inviting public comments
on whether the MAGEC[supreg] Spine meets the substantial clinical
improvement criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
b. MIRODERM Biologic Wound Matrix (MIRODERM)
Miromatrix Medical, Inc. submitted an application for new
technology add-on payments for FY 2017 for MIRODERM. MIRODERM is a non-
crosslinked acellular wound matrix that is derived from the porcine
liver and is processed and stored in a phosphate buffered aqueous
solution. MIRODERM is clinically indicated for the management of
wounds, including: Partial and full-thickness wounds, pressure ulcers,
venous ulcers, chronic vascular ulcers, diabetic ulcers, trauma wounds,
drainage wounds, and surgical wounds. Typical decellularization where
tissues are immersed in a decellularization solution is a diffusion-
based process, and thereby limits the ability to fully decellularize
thick, complex tissues such as the liver. MIRODERM uses a perfusion
decellularization process that rapidly removes cellular material while
maintaining the native architecture, vasculature and tissue structure.
Following decellularization, MIRODERM is isolated from partial
thickness liver sections following slight compression of the liver.
This allows for the retention of the native liver structure, including
the vasculature, within MIRODERM. The applicant noted that the MIRODERM
is the only acellular skin substitute product that is derived from the
liver.
According to the applicant, MIRODERM is positioned to completely
contact the entire surface of the wound bed and extend slightly beyond
all wound margins. As required, it is securely anchored to the wound
site with a physician's preferred fixation method. An appropriate,
primary non-adherent wound dressing is then applied over the MIRODERM
matrix. A secondary dressing (multi-layer compression bandage system),
total contact cast, or other appropriate dressing that will manage the
wound exudate should be applied in order to keep the MIRODERM matrix
moist and keep all layers securely in place. Additional applications of
MIRODERM are applied as needed until the wound closes.
MIRODERM received FDA approval for its use on January 27, 2015.
Currently, there are no ICD-10-PCS procedure codes to uniquely identify
the use of MIRODERM. The applicant submitted a request for a unique
ICD-10-PCS procedure code that was presented at the March 2016 ICD-10
Coordination and Maintenance Committee meeting. If approved, the
procedure codes would become effective on October 1, 2016 (FY 2017).
More information on this request can be found on the CMS Web site
located at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first substantial similarity criterion, whether
the product uses the same or a similar mechanism of action to achieve a
therapeutic outcome, the applicant stated that current wound healing
therapies are provided in several different modalities, which include
hyperbaric oxygen treatment, negative wound pressure therapy, and
treatment with other bioengineered skin substitute products. The
applicant noted that other products that have been commonly used for
similar procedures are Oasis Wound Matrix, Primatrix Dermal Repair, and
Theraskin. The applicant asserted that MIRODERM is different from these
other products because it is the only product sourced from porcine
liver and undergoes a unique, patented process of perfusion
decellularization that rapidly removes cellular material, while
maintaining the native architecture, vasculature and tissue structure.
The applicant explained that MIRODERM is isolated from partial
thickness liver sections following slight compression of the liver,
which allows for the retention of the native liver structure, including
the vasculature, within MIRODERM. The applicant stated that partial
thickness allows for one surface of MIRODERM to retain the native liver
capsule (an epithelial basement membrane) and the other opposite
surface to be comprised of open liver matrix. The applicant further
stated that case studies of the MIRODERM demonstrated accelerated
healing, which is likely the result of the unique perfusion
decellularization technology that retains a 3-dimensional extracellular
matrix that includes the vasculature.
With regard to the first criterion, similar to other current wound
matrix treatments, the MIRODERM uses a collagen matrix for tissue
repair and regeneration. Therefore, we are concerned that MIRODERM
employs the same mechanism of action as other wound matrix treatments.
Although the applicant has described how the MIRODERM differs from
other wound matrix treatments due to the perfusion decellularization
process, and is the first product that is derived from the porcine
liver, we believe that the mechanism of action of MIRODERM may be
substantially similar or the same as those employed by other wound
treatment matrixes. With regard to the second criterion, whether a
product is assigned to the same or a different MS-DRG, cases that may
be eligible for treatment using MIRODERM map to the same MS-DRGs as
other currently approved wound treatment matrixes. With regard to the
third criterion, whether the new use of the technology involves the
treatment of the same or similar type of disease and the same or
similar patient population, MIRODERM is used to treat the same patient
population as other currently approved wound treatment matrixes.
Because it appears that the MIRODERM may be substantially similar to
currently approved wound treatment matrixes, we are concerned that the
technology may not be considered ``new'' for the purposes of new
technology add-on payments. We are inviting public comments on whether
MIRODERM meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following
[[Page 25043]]
analysis. The applicant began by researching the 2014 Medicare
Inpatient Hospital Standard Analytical File (SAF) file for cases
primarily associated with dermal regenerative grafts that may be
eligible for treatment using MIRODERM. The applicant searched for
claims that reported ICD-9-CM procedure code 86.67 (Dermal regenerative
graft) that mapped to one of the following MS-DRGs: 463, 464, and 465
(Wound Debridement and Skin Graft Except Hand for Musculoskeletal
System and Connective Tissue Disorders with MCC, with CC, or without
CC/MCC, respectively); 573, 574, and 575 (Skin Graft for Skin Ulcer or
Cellulitis with MCC, with CC, or without CC/MCC, respectively); 576,
577, and 578 (Skin Graft Except for Skin Ulcer or Cellulitis with MCC,
with CC, or without CC/MCC, respectively); 622, 623, and 624 (Skin
Grafts and Wound Debridement for Endocrine, Nutritional and Metabolic
Diseases with MCC, with CC or without CC/MCC, respectively); and 904
and 905 (Skin Grafts for Injuries with CC/MCC or without CC/MCC,
respectively). As a result, the applicant identified 1,130 cases across
the MS-DRGs listed, which resulted in an average case-weighted charge
per case of $83,059.
Included in the average case-weighted charge per case were charges
for other previously used dermal regenerative grafts. According to the
applicant, the MIRODERM would replace the need for other dermal
regenerative grafts and, therefore, the applicant removed charges
related to the use of other currently used dermal regenerative grafts
from the average case-weighted charge per case. Specifically, using the
January 2016 CMS Part B Drug Pricing File, the applicant first computed
an average cost per square centimeter for currently used dermal
regenerative grafts (Apligraf $31.207/cm\2\, Oasis $10.676/cm\2\,
Integra DRT $21.585/cm\2\, Dermagraft $32.858/cm\2\, Integra skin
substitute $35.627/cm\2\, Primatrix $37.590/cm\2\, and Theraskin
$38.474/cm\2\), which equaled $29.72/cm\2\. To determine the average
amount of square centimeters of the other dermal regenerative grafts
used for each case within the MS-DRG, given the vast complexity and
variation in wounds, the applicant used clinical judgment based on
experience, observation and typical sizes and depths of wounds that
would present on different parts of the body. For an example, wounds on
the hand would typically be smaller than those located on the lower
extremities. The applicant also assumed that other dermal regenerative
grafts would require three applications to close a wound as opposed to
treatment using MIRODERM, which requires only two applications. Based
on this assumption, the applicant noted that it assumed that the first
application required 100 percent of the amount of skin substitute
required to treat the original wound area, the second application
required 70 percent, and the third application required 40 percent,
totaling 210 percent. To compute the total amount of square centimeters
used for each case within the MS-DRG, the applicant multiplied this
percentage (210 percent) by the amount of square centimeters used for
the first application for each case within the MS-DRG. The applicant
then multiplied the average cost of the other previously used dermal
regenerative grafts ($29.72/cm\2\) by the average amount of centimeters
used for each case within the MS-DRG to determine the average cost of
the other previously used dermal regenerative grafts for each case
within the MS-DRG. To convert the costs to charges, the applicant
computed an average CCR for each MS-DRG using CCRs from the FY 2014
Standardizing File of the hospitals indicated on each of the claims for
each case within the MS-DRG. The applicant then divided the average
cost of the other previously used dermal regenerative grafts for each
MS-DRG by the average CCR for each MS-DRG to determine the average
charges of the other previously used dermal regenerative grafts for
each MS-DRG. The applicant also reduced the charges for the number of
days of hospitalization by 30 percent because the applicant believed
that MIRODERM heals patients faster than the other currently used
dermal regenerative grafts, resulting in a reduction in the average
lengths of stay. The applicant then deducted the charges related to the
other previously used dermal regenerative grafts and the charges for
the reduction in the average lengths of stay from the average case-
weighted charge per case and then standardized the charges, which
resulted in an average standardized case-weighted charge per case of
$34,279. The applicant then inflated the average standardized case-
weighted charge per case by 7.7 percent, the same inflation factor used
by CMS to update the FY 2016 outlier threshold (80 FR 49784).
After inflating the charges it was necessary to add the associated
charges for the use of MIRODERM. The applicant conducted a similar
calculation to compute the charges for MIRODERM. Specifically, the
applicant used clinical judgment based on experience, observation, and
typical sizes and depths of wounds that would be present on different
parts of the body. The applicant stated that because MIRODERM has shown
greater efficacy in wound closure based on their case series, the
applicant modeled for only two applications with 50 percent closure of
the wound after the first application and full closure of the wound
after the second application. Based on this assumption, the applicant
noted that it assumed that the first application required 100 percent
of the amount of skin substitute required to treat the original wound
area and the second application required 50 percent, totaling 150
percent. To compute the total amount of square centimeters used for
each MS-DRG, the applicant multiplied this percentage (150 percent) by
the amount of square centimeters used for the first application for
each MS-DRG. The applicant then multiplied the cost per square
centimeter for MIRODERM by the average amount of centimeters used for
each case within the MS-DRG to determine the average cost of MIRODERM
grafts used for each MS-DRG. Similar to above, to convert the costs to
charges, the applicant used the same average CCRs for each MS-DRG and
divided the average cost of MIRODERM for each MS-DRG by the average CCR
for each MS-DRG to determine the average charges of MIRODERM for each
MS-DRG. The applicant then added charges related to the use of MIRODERM
to the inflated average standardized charges and determined a final
inflated average standardized case-weighted charge per case of $94,009.
Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted
threshold amount was $67,559 (all calculations above were performed
using unrounded numbers). Because the final inflated average
standardized case-weighted charge per case exceeds the average case-
weighted threshold amount, the applicant maintained that the technology
meets the cost criterion.
We are inviting public comments on whether the MIRODERM technology
meets the cost criterion.
With regard to substantial clinical improvement, the applicant
believed that the technology represents a substantial clinical
improvement over existing technologies because patients treated with
the MIRODERM for complicated wounds heal quicker and avoid additional
surgeries. To demonstrate that the technology meets the substantial
clinical improvement criterion, the applicant submitted the results of
two actual case studies of a complicated wound from necrotizing
fasciitis that was treated with the
[[Page 25044]]
MIRODERM. According to the applicant, one case study involved a
complicated wound that would typically be treated with a diverting
colostomy. The applicant noted that that the patient was discharged
with intact anoplasty and good sphincter control after 35 days and four
applications for MIRODERM. The applicant further stated that the use of
MIRODERM demonstrated rapid healing and likely avoided at least two
major debilitating surgeries, as well as the emotional and physical
impact of a colostomy for 3 to 6 months. In the second case study,
according to the applicant, the attending physician estimated the wound
would likely take greater than 90 days to close using traditional wound
care matrixes. The applicant stated that after 12 days and two
applications of MIRODERM the patient was discharged and after 21 days
the wound was sutured closed.
The applicant noted that additional patients have been treated with
MIRODERM. According to the applicant, given the recent product launch,
the case studies have not been completed, but similar results have been
communicated to the applicant.
We are concerned that the clinical data the applicant submitted is
from a very small sample with no comparisons to other currently
approved wound treatment matrixes. Specifically, the applicant
submitted data from only two case studies. Also, the applicant compared
the use of MIRODERM to the use of other treatments, such as diverting
colostomy. While MIRODERM may represent an improvement in treatment
options compared to the other treatment options such as diverting
colostomy, we are unable to determine if use of MIRODERM represents a
substantial clinical improvement when compared to other wound treatment
matrixes of other currently approved treatments. We are inviting public
comments on whether MIRODERM meets the substantial clinical improvement
criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
c. Idarucizumab
Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application
for new technology add-on payments for FY 2017 for Idarucizumab; a
product developed as an antidote to reverse the effects of
PRADAXA[supreg] (Dabigatran), which is also manufactured by Boehringer
Ingelheim Pharmaceuticals, Inc. (We note that the applicant submitted
an application for new technology add-on payments for FY 2016, but
failed to obtain FDA approval prior to the July 1 deadline.) Dabigatran
is an oral direct thrombin inhibitor currently indicated to: (1) Reduce
the risk of stroke and systemic embolism in patients who have been
diagnosed with nonvalvular atrial fibrillation (NVAF); (2) treat deep
venous thrombosis (DVT) and pulmonary embolism (PE) in patients who
have been administered a parenteral anticoagulant for 5 to 10 days; and
(3) reduce the risk of recurrence of DVT and PE in patients who have
been previously diagnosed with NVAF. Currently, unlike the
anticoagulant Warfarin, there is no specific way to reverse the
anticoagulant effect of Dabigatran in the event of a major bleeding
episode.
Idarucizumab is a humanized fragment antigen binding (Fab)
molecule, which specifically binds to Dabigatran to deactivate the
anticoagulant effect, thereby allowing thrombin to act in blood clot
formation. The applicant stated that Idarucizumab represents a new
pharmacologic approach to neutralizing the specific anticoagulant
effect of Dabigatran in emergency situations. Idarucizumab was approved
by the FDA on October 16, 2015. The applicant noted that Idarucizumab
is the only FDA-approved therapy available to neutralize the
anticoagulant effect of Dabigatran. Before the FDA approval of
Idarucizumab, the approach for the management of the anticoagulant
effect of Dabigatran prior to an invasive procedure was to withhold
administration of Dabigatran, when possible, for a certain duration of
time prior to the procedure to allow sufficient time for the patient's
kidneys to flush out the medication. The duration of time needed to
flush out the medication prior to the surgical procedure is based on
the patient's kidney function. According to the applicant, if surgery
cannot be delayed to allow the kidneys the necessary time to flush out
the traces of Dabigatran, there is an increased risk of bleeding.
Based on the FDA indication for Idarucizumab, the product can be
used in the treatment of patients who have been diagnosed with NVAF and
administered Dabigatran to reverse life-threatening bleeding events, or
who require emergency surgery or medical procedures and rapid reversal
of the anticoagulant effects of Dabigatran is necessary and desired.
The applicant received a unique ICD-10-PCS procedure code that became
effective October 1, 2015. The approved procedure code is XW03331
(Introduction of Idarucizumab, Dabigatran reversal agent into central
vein, percutaneous approach, New Technology Group 1). We are inviting
public comments on whether Idarucizumab meets the newness criterion.
With regard to the cost criterion, the applicant conducted two
analyses. The applicant began by researching claims data in the FY 2014
MedPAR file for cases that may be eligible for Idarucizumab using a
combination of ICD-9-CM diagnosis and procedure codes. Specifically,
the applicant searched the database for cases reporting anticoagulant
therapy diagnosis code E934.2 (Agents primarily affecting blood
constituents, anticoagulants) or V58.61 (Long-term (current) use of
anticoagulants) in combination with either current standard of care
procedure code 99.03 (Other transfusion of whole blood), 99.04
(Transfusion of packed cells), 99.05 (Transfusion of platelets), 99.06
(Transfusion of coagulation factors), 99.07 (Transfusion of other
serum), or 39.95 (Hemodialysis), and Dabigatran indication diagnosis
code 427.31 (Atrial fibrillation), 453.40 (Acute venous embolism and
thrombosis of unspecified deep vessels of lower extremity), 453.41
(Acute venous embolism and thrombosis of deep vessels of proximal lower
extremity), 453.42 (Acute venous embolism and thrombosis of deep
vessels of distal lower extremity), 453.50 (Chronic venous embolism and
thrombosis of unspecified deep vessels of lower extremity), 453.51
(Chronic venous embolism and thrombosis of deep vessels of proximal
lower extremity), 453.52 (Chronic venous embolism and thrombosis of
deep vessels of distal lower extremity), 415.11 (Iatrogenic pulmonary
embolism and infarction), 415.12 (Septic pulmonary embolism), 415.13
(Saddle embolus of pulmonary artery), 415.19 (Other pulmonary embolism
and infarction), 416.2 (Chronic pulmonary embolism), V12.51 (Personal
history of venous thrombosis and embolism), or V12.55 (Personal history
of pulmonary embolism).
To further target potential cases that may be eligible for
Idarucizumab, the applicant also excluded specific cases based on
Dabigatran contraindications, including all cases representing patients
who have been diagnosed with chronic kidney disease (CKD) stage V
(diagnosis code 585.5), end-stage renal disease (diagnosis code 585.6),
prosthetic heart valves (diagnosis code V43.3), and cases representing
patients who have been diagnosed with both CKD stage IV (diagnosis code
585.4) and either DVT or PE (using the same ICD-9-CM
[[Page 25045]]
diagnosis codes listed above). As a result, the applicant identified
84,224 cases that mapped to 684 MS-DRGs. The applicant standardized the
charges and computed an average case-weighted standardized charge per
case of $60,089.
The applicant then identified hospital charges potentially
associated with the current treatments to reverse anticoagulation,
specifically charges associated with pharmacy services, dialysis
services, and laboratory services for blood work. Due to limitations
associated with the claims data, the applicant was unable to determine
the specific drugs used to reverse anticoagulation and if these cases
represented patients who required laboratory services for blood work or
dialysis services unrelated to the reversal of anticoagulation.
Therefore, the applicant subtracted 40 percent of the charges related
to these three categories from the standardized charge per case, based
on the estimation that the full amount of charges associated with these
services would not be incurred by hospitals when Idarucizumab is
administered for use in the treatment of patients who have been
diagnosed with NVAF and Dabigatran is administered during treatment.
The applicant then inflated the standardized charge per case by 7.665
percent, the same inflation factor used by CMS to update the FY 2016
outlier threshold (80 FR 49784) and added charges for Idarucizumab.
This resulted in an inflated average case-weighted standardized charge
per case of $67,617. Using the FY 2016 IPPS Table 10 thresholds, the
average case-weighted threshold amount across all 684 MS-DRGs is
$55,586 (all calculations above were performed using unrounded
numbers). Because the inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion under
this analysis.
Further, the applicant conducted an additional analysis using the
same data from the FY 2014 MedPAR file and variables used in the
previous analysis. However, instead of using potentially eligible cases
that mapped to 100 percent of the 684 MS-DRGs identified, the applicant
used potentially eligible cases that mapped to the top 75 percent of
the 684 MS-DRGs identified. By applying this limitation, the applicant
identified 63,033 cases that mapped to 87 MS-DRGs. The applicant
computed an inflated average case-weighted standardized charge per case
of $55,872. Using the FY 2016 IPPS Table 10 thresholds, the average
case-weighted threshold amount across all 87 MS-DRGs is $63,323 (all
calculations above were performed using unrounded numbers). Because the
inflated average case-weighted standardized charge per case exceeds the
average case-weighted threshold amount, the applicant maintained that
the technology also meets the cost criterion under this analysis. We
are inviting public comments regarding the applicant's analyses with
regard to the cost criterion.
With regard to substantial clinical improvement, according to the
applicant, aside from Idarucizumab, there are no other FDA-approved
antidotes to reverse the anticoagulant effects of Dabigatran.
Management of the treatment of patients who have been diagnosed with
NVAF and administered Dabigatran and experience bleeding may often
include supportive care such as Hemodialysis and the use of fresh
frozen plasma, blood factor products such as prothrombin complex
concentrates (PCC), activated prothrombin complex concentrates, and
recombinant factor VIIa or delayed intervention. Protamine sulfate and
Vitamin K are typically used to reverse the effects of Heparin and
Warfarin, respectively. However, due to the mechanism of action in
Dabigatran, the applicant maintained that the use of protamine sulfate
and Vitamin K may not be effective to reverse the anticoagulant effect
of Dabigatran.
The applicant provided information regarding the management of
major bleeding events experienced by patients who were administered
Dabigatran and Warfarin during the RE-LY trial.\6\ During this study,
most major bleeding events were only managed by supportive care.
Patients who were administered 150 mg of Dabigatran were transfused
with pack red blood cells more often when compared to patients who were
administered Warfarin (61.4 percent versus 49.9 percent, respectively).
However, patients who were administered Warfarin were transfused with
plasma more often when compared to patients who were administered 150
mg of Dabigatran (30.2 percent versus 21.6 percent, respectively). In
addition, the use of Vitamin K in the treatment of patients who were
administered Warfarin was more frequent when compared to the frequency
of use in the treatment of patients who were administered 150 mg of
Dabigatran (27.3 percent versus 10.3 percent, respectively). The use of
PCCs, recombinant factor VIIa and other coagulation factor replacements
in the treatment of patients who were administered both Warfarin and
150 mg of Dabigatran was minimal, and did not significantly differ in
frequency when compared among patients assigned to either group.
Hemodialysis was used in a single case.
---------------------------------------------------------------------------
\6\ Healy, et al.: Periprocedural bleeding and thromboembolic
events with dabigatran compared with Warfarin: results from the
randomized evaluation of long-term anticoagulation therapy (RE-LY)
randomized trial, Circulation, 2012; 126:343-348.
---------------------------------------------------------------------------
The applicant reported that, currently, it is recommended that the
administration of Dabigatran be discontinued 1 to 2 days (CrCl >=50 ml/
min) or 3 to 5 days (CrCl <50 ml/min), if possible, before invasive or
surgical procedures because of the increased risk of bleeding.\7\ A
longer period of discontinuation time should be considered for patients
undergoing major surgery, spinal puncture, or placement of a spinal or
epidural catheter or port, if complete hemostasis is required. The
applicant stated that delaying emergency medical or surgical procedures
can cause urgent conditions to become more severe if intervention is
not initiated. The applicant further maintained that delaying emergency
medical or surgical procedures for an extended period of time can
ultimately lead to negative healthcare outcomes and increased
healthcare costs. The applicant asserted that rapidly reversing the
anticoagulant effect of Dabigatran administered to patients that
require an urgent medical procedure or surgery allows the medical
procedure or surgery to be performed in a timely manner, which in turn
may decrease complications and minimize the need for more costly
therapies.
---------------------------------------------------------------------------
\7\ Pradaxa[supreg] (Dabigatran Etexilate Mesylate) prescribing
information. Ridgefield, CT: Boehringer Ingelheim; 2014.
---------------------------------------------------------------------------
The applicant also provided interim data from an ongoing Phase III
trial 8 9 in patients who may have life-threatening
bleeding, or require emergency procedures. The applicant noted that
published results of the interim data based on 90 patients suggested
the following: Reversal of the Dabigatran anticoagulant effect, which
was evident immediately after administration; reversal was 100 percent
in the first 4 hours and greater than 89 percent of patients achieved
complete reversal; hemostasis in 35 patients in Group A was restored at
a median of 11.4 hours. Also, the 5 gram dose of Idarucizumab was
calculated to reverse the total body load of Dabigatran that was
associated
[[Page 25046]]
with the 99th percentile of the Dabigatran levels measured in the RE-LY
trial.
---------------------------------------------------------------------------
\8\ Pollack C, et al. Design and rationale for RE-VERSE AD: A
phase 3 study of idarucizumab, a specific reversal agent for
dabigatran. Thromb Haemost. 2015 Jul; 114(1):198-205.
\9\ Pollack C, et al. Idarucizumab for Dabigatran Reversal. N
Engl J Med. 2015 Aug 6; 373(6):511-20.
---------------------------------------------------------------------------
The applicant provided safety data from three Phase I studies and
interim data from the Phase III study. In the Phase I study, 110
healthy male patients enrolled in the study were administered dosages
of Idarucizumab that ranged from 20 mg to 8 grams. In this study, 135
patients received placebo. The applicant reported that adverse events
were generally mild in intensity and nonspecific. Healthy human
volunteers enrolled in the Phase I study were administered Idarucizumab
in dosages of 2 and 4 grams, which resulted in immediate and complete
reversal of the anticoagulant effect of Dabigatran that was sustained
for several hours. In the Phase III study, five thrombotic events
occurred. One occurred 2 days after treatment and the remainder
occurred 7, 9, 13, and 26 days after treatment. These patients were not
receiving antithrombotic therapy when the events occurred, and
complications or adverse effects can be attributed to patients'
underlying medical conditions. Twenty-one patients (13 in Group A and 8
in Group B) had a serious adverse event. The most frequently reported
adverse reactions in greater than or equal to 5 percent of the patients
treated with Idarucizumab were hypokalemia, delirium, constipation,
pyrexia, and pneumonia. The applicant concluded that the data from
these studies demonstrated that Idarucizumab effectively, safely, and
potently reverses the anticoagulant effect of Dabigatran. We are
inviting public comments on whether Idarucizumab meets the substantial
clinical improvement criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
d. Titan Spine (Titan Spine Endoskeleton[supreg] nanoLOCKTM
Interbody Device)
Titan Spine submitted an application for new technology add-on
payments for the Titan Spine Endoskeleton[supreg] nanoLOCKTM
Interbody Device (the Titan Spine nanoLOCKTM) for FY 2017.
The Titan Spine nanoLOCKTM is a nanotechnology-based
interbody medical device with a dual acid-etched titanium interbody
system used to treat patients diagnosed with degenerative disc disease
(DDD). One of the key distinguishing features of the device is the
surface manufacturing technique and materials, which produce macro,
micro, and nano surface textures. According to the applicant, the
combination of surface topographies enables initial implant fixation,
mimics an osteoclastic pit for bone growth, and produces the nano-scale
features that interface with the integrins on the outside of the
cellular membrane. Further, the applicant noted that these features
generate better osteogenic and angiogenic responses that enhance bone
growth, fusion, and stability. The applicant asserted that the Titan
Spine nanoLOCKTM's clinical features also reduce pain,
improve recovery time, and produces lower rates of device complications
such as debris and inflammation.
On October 27, 2014, the Titan Spine nanoLOCKTM received
FDA approval for the use of five lumbar interbody devices and one
cervical interbody device: The nanoLOCK\TM\ TA-Sterile Packaged Lumbar
ALIF Interbody Fusion Device with nanoLOCKTM surface,
available in multiple sizes to accommodate anatomy; the nanoLOCK\TM\
TAS-Sterile Packaged Lumbar ALIF Stand Alone Interbody Fusion Device
with nanoLOCKTM surface, available in multiple sizes to
accommodate anatomy; the nanoLOCK\TM\ TL-Sterile Packaged Lumbar
Lateral Approach Interbody Fusion Device with nanoLOCKTM
surface, available in multiple sizes to accommodate anatomy; the
nanoLOCK\TM\ TO-Sterile Packaged Lumbar Oblique/PLIF Approach Interbody
Fusion Device with nanoLOCKTM surface, available in multiple
sizes to accommodate anatomy; the nanoLOCK\TM\ TT-Sterile Packaged
Lumbar TLIF Interbody Fusion Device with nanoLOCKTM surface,
available in multiple sizes to accommodate anatomy and the nanoLOCK\TM\
TC-Sterile Packaged Cervical Interbody Fusion Device with
nanoLOCKTM surface, available in multiple sizes to
accommodate anatomy. The applicant received FDA approval on December
14, 2015, for the nanoLOCKTM TCS-Sterile Package Cervical
Stand Alone Interbody Fusion Device with nanoLOCKTM surface,
available in multiple sizes to accommodate anatomy. Currently, there
are no ICD-10-PCS procedure codes that uniquely describe procedures
involving use of the Titan Spine nanoLOCKTM surface
technology.
We note that cases reporting procedures involving lumbar and
cervical interbody devices map to different MS-DRGs. As discussed in
the Inpatient New Technology Add-On Payment Final Rule (66 FR 46915),
two separate reviews and evaluations of the technologies are necessary
in this instance because cases representing patients receiving
treatment for diagnoses associated with lumbar procedures that may be
eligible for use of the technology under the first indication are not
expected to be assigned to the same MS-DRGs as patients receiving
treatment for diagnoses associated with cervical procedures using the
technology under the second indication. Specifically, cases
representing patients who have been diagnosed with lumbar DDD and
received treatment that involved implanting a lumbar device map to MS-
DRGs 028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC
or Spinal Neurostimulators), 030 (Spinal Procedures without CC/MCC),
453 (Combined Anterior/Posterior Spinal Fusion with MCC), 454 (Combined
Anterior/Posterior Spinal Fusion with CC), 455 (Combined Anterior/
Posterior Spinal Fusion without CC/MCC), 456 (Spinal Fusion Except
Cervical with Spinal Curvature or Malignancy or Infection or Extensive
Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or Extensive Fusion without MCC),
458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy
or Infection or Extensive Fusions without CC/MCC), 459 (Spinal Fusion
Except Cervical with MCC), and 460 (Spinal Fusion Except Cervical
without MCC), while cases representing patients who have been diagnosed
with cervical DDD and received treatment that involved implanting a
cervical interbody device map to MS-DRGs 471 (Cervical Spinal Fusion
with MCC), 472 (Cervical Spinal Fusion with CC), and 473 (Cervical
Spinal Fusion without CC/MCC). Procedures involving the lumbar and
cervical interbody devices are assigned to separate MS-DRGs. Therefore,
the devices categorized as lumbar devices and the devices categorized
as cervical devices must distinctively (each category) meet the cost
criterion and the substantial clinical improvement criterion in order
to be eligible for new technology add-on payments beginning in FY 2017.
We discuss application of these criteria following discussion of the
newness criterion.
As discussed previously in this section, if a technology meets all
three of the substantial similarity criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for the purposes of new technology add-on payments.
We note that the substantial similarity discussion is applicable to
both the lumbar and the cervical devices
[[Page 25047]]
because all of the devices use the Titan Spine nanLOCKTM
technology.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant stated that, for both interbody devices (the lumbar and the
cervical interbody device), the Titan Spine nanoLOCKTM's
surface stimulates osteogenic cellular response to assist in bone
formation during fusion. During the manufacturing process, the surface
produces macro, micro, and nano-surface textures. The applicant
believed that this unique combination and use of these surface
topographies represents a new approach to stimulating osteogenic
cellular response. The applicant asserted that the macro-scale textured
features are important for initial implant fixation. The micro-scale
textured features mimic an osteoclastic pit for supporting bone growth.
The nano-scale textured features interface with the integrins on the
outside of the cellular membrane, which generates the osteogenic and
angiogenic (mRNA) responses necessary to promote healthy bone growth
and fusion. The applicant provided the results from in vitro studies,
using human mesenchymal cells (MSCs), which showed positive effects on
bone growth related to cellular signaling achieved by using the
device's surface, and osteoblasts exhibited a more differentiated
phenotype and increased bone morphogenetic protein (BMP) production
using titanium alloy substrates as opposed to poly-ether-ether-ketone
(PEEK) substrates. The applicant stated that Titan Spine's proprietary
and unique surface technology, the Titan Spine nanoLOCKTM
interbody devices, contain optimized nano-surface characteristics,
which generate the distinct cellular responses necessary for improved
bone growth, fusion, and stability. The applicant further stated that
the Titan Spine nanoLOCKTM's surface engages with the
strongest portion of the endplate, which enables better resistance to
subsidence because a unique dual acid-etched titanium surface promotes
earlier bone in-growth. The Titan Spine nanoLOCKTM's surface
is created by using a reductive process of the titanium itself. The
applicant asserted that use of the Titan Spine nanoLOCKTM
significantly reduces the potential for debris generated during
impaction when compared to treatments using PEEK-based implants coated
with titanium. According to the results of an in vitro study \10\
provided by the applicant, which compared angiogenic factor production
using PEEK-based versus titanium alloy surfaces, osteogenic production
levels were greater with the use of rough titanium alloy surfaces than
the levels produced using smooth titanium alloy surfaces. The results
of an additional study \11\ provided by the applicant examined whether
inflammatory microenvironment generated by cells as a result of use of
titanium aluminum-vanadium (Ti-alloy, TiAlV) surfaces is effected by
surface microtexture, and whether it differs from the effects generated
by PEEK-based substrates. The applicant noted that the use of
microtextured surfaces has demonstrated greater promotion of osteoblast
differentiation when compared to use of PEEK-based surfaces.
---------------------------------------------------------------------------
\10\ Olivares-Navarrete R, Hyzy S, Gittens R. Titanium Alloys
Regulate Osteoblast Production of Angiogenic Factors. The Spine
Journal, 2013, ep.13. 1563-1570.
\11\ Olivares-Navrrete R, Hyzy s, Slosar P, et al. Implant
Materials Generate Different Peri-implant Inflammatory Factors.
SPINE. 2015: 40:6:339-404.
---------------------------------------------------------------------------
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, cases that may be eligible for
treatment involving the Titan Spine nanoLOCKTM map to the
same MS-DRGs as other (lumbar and cervical) interbody devices currently
available to Medicare beneficiaries and also are used for the treatment
of patients who have been diagnosed with DDD (lumbar or cervical).
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
stated that the Titan Spine nanoLOCKTM can be used in the
treatment of patients diagnosed with similar types of diseases, such as
DDD, and for a similar patient population receiving treatment involving
both lumbar and cervical interbody devices.
In summary, the applicant maintained that the Titan Spine
nanoLOCKTM technology has a different mechanism of action
when compared to other spinal fusion devices. Therefore, the applicant
did not believe that the Titan Spine nanoLOCKTM technology
is substantially similar to existing technologies.
After reviewing the applicant's statements regarding nonsubstantial
similarity of its technology with other existing technologies, we are
still concerned that there are other titanium surfaced devices
currently available on the U.S. market. While these devices do not use
the Titan Spine nanoLOCKTM technology, their surfaces also
are made of titanium. Therefore, we believe that the Titan Spine
nanoLOCKTM interbody devices may be substantially similar to
currently available titanium interbody devices.
We are seeking public comments on whether the Titan Spine
Endoskeleton[supreg] nanoLOCKTM Interbody Devices are
substantially similar to existing technologies and whether these
devices meet the newness criterion.
(1) Titan Spine Endoskeleton[supreg] nanoLOCKTM Interbody
Device for Lumbar DDD
As previously mentioned, the Titan Spine nanoLOCKTM
received FDA approval for the use of five lumbar interbody devices on
October 27, 2014. To demonstrate that the Titan Spine
nanoLOCKTM for Lumbar DDD technology meets the cost
criterion, the applicant researched claims data in the FY 2014 MedPAR
file for cases assigned to MS-DRGs 028, 029, 030, 453, 454, and 455
reporting any of the ICD-9-CM procedure codes within the code series
81.xx (Repair and plastic operations on joint structures) or code
series 084.6x (Replacement of spinal disk), excluding cases reporting
the following ICD-9-CM procedure codes describing cervical fusion:
81.01 (Atlas-axis spinal fusion), 81.02 (Other cervical fusion,
anterior technique), 81.03 (Other cervical fusion, posterior
technique), 81.31 (Refusion of atlas-axis spine), 81.32 (Refusion of
other cervical spine, anterior technique), or 81.33 (Refusion of other
cervical spine, posterior technique). As a result, the applicant found
that all cases potentially eligible for treatment using the technology
mapped to MS-DRGs 456, 457, 458, 459, and 460. However, the applicant
focused its analyses on MS-DRGs 028 through 030, 453 through 455, and
456 through 460 because these are the MS-DRGs to which cases treated
with interbody fusion devices for degenerative disc disease would most
likely be assigned. The applicant applied CMS' relative weight
filtering process as described in the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49424) to ensure the correct claim types were used and the
charge details across the cost centers were appropriate.
According to the applicant, 78.03 percent of the 96,281 cases found
in the FY 2014 MedPAR file mapped to MS-DRG 460, while the remaining
21.97 percent of cases mapped to MS-DRGs 028 through 030, 453 through
455, and 456 through 459. This resulted in an average case-weighted
charge per case of $127,082. The applicant then removed $15,766 for
associated charges for other previously used spinal devices. The
[[Page 25048]]
applicant determined the associated charges to be removed for other
previously used devices based on current Titan Spine sales data for the
Titan Spine nanolockTM for Lumbar DDD various sizes. The
applicant computed the associated charges by multiplying the weighted
sales mix by the average sales price for each product in the Titan
Spine nanoLOCKTM for Lumbar DDD product line. After the
charges for other previously used technologies were removed, the
applicant standardized the charges for all cases using the FY 2014
standardizing file posted on the CMS Web site. The applicant excluded
all cases without standardized charges, resulting in a total of 96,281
cases. The applicant then inflated the average standardized case-
weighted charges from 2014 to 2016 by applying a 2-year rate of
inflation factor of 7.7 percent, which is the same inflation factor
used by CMS to update the FY 2016 outlier threshold (80 FR 49784).
To calculate the appropriate charges for the Titan Spine
nanoLOCKTM for Lumbar DDD, the applicant used a case-
weighted charge because the devices implanted are produced and made
available in different sizes. To calculate the case-weighted charge for
different lumbar device sizes, the applicant determined the average
cost to the hospital per device and divided that amount by the national
average CCR for implantable devices (0.337) published in the FY 2016
IPPS/LTCH PPS final rule (80 FR 49429). Based on sales data, the
applicant then applied a factor of 1.5 per patient to the case-weighted
charge by dividing the total number of products sold in the United
States by the total invoices generated; with one invoice being the
equivalent to one patient and a single surgery. The applicant then
added the device-related charges to the inflated average standardized
charge per case, which resulted in an inflated average standardized
case-weighted charge per case of $167,197. Using the FY 2016 IPPS Table
10 thresholds, the average case-weighted threshold amount was $112,825
(all calculations above were performed using unrounded numbers).
Because the final inflated average standardized case-weighted charge
per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion.
We are inviting public comments on whether the Titan Spine
nanoLOCKTM for Lumbar DDD meets the cost criterion,
particularly with regard to the assumptions and methodology used in the
applicant's analyses.
(2) Titan Spine Endoskeleton[supreg] nanoLOCKTM Interbody
Device for Cervical DDD
As previously mentioned, Titan Spine received FDA approval for the
use of the nanoLOCKTM TC-Sterile Packaged Cervical Interbody
Fusion Device with nanoLOCKTM surface on October 27, 2014,
and the nanoLOCKTM TCS-Sterile Package Cervical Interbody
Fusion Device with nanoLOCKTM surface on December 14, 2015.
To demonstrate that the Titan Spine nanoLOCKTM for Cervical
DDD meets the cost criterion, the applicant researched claims data in
the FY 2014 MedPAR file for cases assigned to MS-DRGs 028, 029, 030,
453, 454, and 455 reporting any of the following ICD-9-CM cervical
fusion procedure codes: 81.01, 81.02, 81.03, 81.32, 81.33. The
applicant found that all of the cases mapped to MS-DRGs 471, 472, and
473. However, the applicant focused its analysis on MS-DRGs 028 through
030, 453 through 455, and 471 through 473 because these are the MS-DRGs
to which cases treated with the implantation of cervical spinal devices
for degenerative disc disease would most likely be assigned. Similar to
the sensitivity analysis submitted for the Titan Spine
nanoLOCKTM for Lumbar DDD, the applicant applied CMS'
relative weight filtering process as described in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49424) to ensure the correct claim types were
used and the charge details across the cost centers were appropriate.
According to the applicant, 59.47 percent of the 48,187 cases
mapped to MS-DRG 473 and 25.65 percent of the cases mapped to MS-DRG
472, while the remaining 14.88 percent of the cases mapped to MS-DRGs
028 through 030, 453 through 455, and 471. This resulted in an average
case-weighted charge per case of $83,841. Using the same methodology
described above, the applicant removed $4,423 for associated charges
for other previously used technologies from the average case-weighted
charge per case using current Titan Spine sales data for cervical
device sizes and then standardized the charges. The applicant then
inflated the average standardized case-weighted charges from 2014 to
2016 by applying the same 2-year rate of inflation factor used above
(7.7 percent). Similar to the methodology described above, the
applicant calculated $36,023 for associated device related charges for
the Titan Spine nanoLOCKTM for Cervical DDD and added this
amount to the inflated average standardized case-weighted charge per
case, which resulted in a final inflated average standardized case-
weighted charge per case of $114,472. Using the FY 2016 IPPS Table 10
thresholds, the average case-weighted threshold amount was $79,827 (all
calculations above were performed using unrounded numbers). Because the
final inflated average standardized case-weighted charge per case
exceeds the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion.
We are inviting public comments on whether the Titan Spine
nanoLOCKTM for Cervical DDD meets the cost criterion.
With regard to the substantial clinical improvement criterion for
the Titan Spine Endoskeleton[supreg] nanoLOCKTM Interbody
Device for Lumbar and Cervical DDD, the applicant asserted that the
Titan Spine nanoLOCKTM substantially improves the treatment
of Medicare beneficiaries who have been diagnosed with and receive
treatment for serious spinal pathologies, such as DDD, compared to the
currently available technologies and treatment options, especially in
terms of improved fusion, decreased pain, greater stability, faster
recovery times, and lower rates of interbody device related
complications, such as debris and inflammation.
The applicant noted that the cellular process that occurs after
implantation of the Titan Spine nanoLOCKTM induces the body
to produce and regulate its own bone morphogenetic proteins (BMP),
which help stimulate bone growth naturally in the human body. According
to the applicant, this result supports new bone growth without
requiring use of exogenous BMP. The applicant explained that exogenous
rhBMPs trigger a significant cytokine related anti-inflammatory
reaction that has resulted in adverse side effects. The applicant
stated that the Titan Spine nanoLOCKTM's proprietary surface
and use promotes endogenous production of osteogenic growth factors,
such as BMP-2, BMP-4, BMP-7, and TGF-[beta]1.2, which produce only the
physiologic amounts necessary for bone production without the
concomitant cytokine related to anti-inflammatory reaction.
The applicant also stated that the unique surface of the TitanSpine
nanoLOCKTM differentiates the technology from existing
interbody devices, which use materials such as PEEK-based or ceramic
surfaces. The applicant explained that these materials cause stem cells
to flatten on the surface of the implant and primarily differentiate
into fibroblasts (fiber-producing cells). This result is avoided by
using the Titan Spine nanoLOCKTM because the nano-textured
surface
[[Page 25049]]
promotes differentiation of osteoblasts (bone-forming cells), which
increases bone production around the implant site and increases the
potential for a faster and more robust fusion. The applicant further
stated that use of titanium and titanium alloy surfaces with rough
microtopography demonstrate greater bone apposition, but use of
macrotextured titanium and titanium alloy surfaces, such as the Titan
Spine nanoLOCKTM, promotes osteoblast differentiation and
productions of factors that favor bone formation, whereas PEEK-based
surfaces do not.
As previously noted, the applicant provided results from in vitro
studies, using human MSCs, which showed positive effects on bone growth
related to cellular signaling achieved from use of the device's
surface, and osteoblasts exhibited a more differentiated phenotype and
increased bone morphogenetic protein BMP production using titanium
alloy substrates as opposed to PEEK-based substrates. The applicant
believed that the Titan Spine nanoLOCKTM substantially
improves the treatment of Medicare beneficiaries diagnosed with and
receiving treatment for serious spinal pathologies, such as DDD,
compared to currently available technologies and treatment options for
Medicare beneficiaries, especially in terms of improved fusion,
decreased pain, greater stability, faster recovery times, and lower
rates of interbody device related complications, such as debris and
inflammation.
We are concerned that the results of the in vitro studies may not
necessarily correlate with the clinical results specified by the
applicant. Specifically, because the applicant has only conducted in
vitro studies without obtaining any clinical data from live subjects
during a specific clinical trial, we are unable to substantiate the
clinical results that the applicant believed the technology achieved
from a clinical standpoint based on the results of the studies
provided. As a result, we are concerned that the results of the studies
provided by the applicant do not demonstrate that the Titan Spine
nanoLOCKTM technologies meet the substantial clinical
improvement criterion. We are inviting public comments on whether the
Titan Spine nanoLOCKTM technologies meet the substantial
clinical improvement criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
e. Andexanet Alfa
Portola Pharmaceuticals, Inc. (Portola) submitted an application
for new technology add-on payments for FY 2017 for use of Andexanet
Alfa, an antidote used to treat patients who are receiving treatment
with an oral Factor Xa inhibitor who suffer a major bleeding episode
and require urgent reversal of direct and indirect Factor Xa
anticoagulation. Patients at high risk for thrombosis, including those
who have been diagnosed with atrial fibrillation (AF) and venous
thrombosis (VTE), typically receive treatment using long-term oral
anticoagulation agents, such as Warfarin. Factor Xa inhibitors are
included in a new class of anticoagulants. Factor Xa inhibitors are
oral anticoagulants used to prevent stroke and systemic embolism in
patients who have been diagnosed with AF. These oral anticoagulants are
also used to treat patients diagnosed with deep-vein thrombosis (DVT)
and its complications, pulmonary embolism (PE), and patients who have
undergone knee, hip, or abdominal surgery. Rivarobaxan
(Xarelto[supreg]), apixaban (Eliqis[supreg]), and edoxaban
(Savaysa[supreg]) also are included in the new class of Factor Xa
inhibitors, and are often referred to as ``novel oral anticoagulants''
(NOACs) or ``non-vitamin K antagonist oral anticoagulants.'' Although
these anticoagulants have been commercially available since 2010, there
is no FDA-approved therapy used for the urgent reversal of any Factor
Xa inhibitor as a result of serious bleeding episodes.
Andexanet Alfa has not received FDA approval at the time of the
development of this proposed rule. The applicant anticipates receiving
FDA approval for use of the technology in approximately June of 2016.
Currently, there are no ICD-10-PCS procedure codes that uniquely
identify the use of and administration of Andexanet Alfa. We note that
the applicant submitted a request for unique ICD-10-PCS procedure codes
that was presented at the March 2016 ICD-10 Coordination and
Maintenance Committee meeting. If approved, the procedure codes would
become effective on October 1, 2016 (FY 2017). More information on this
request can be found on the CMS Web site located at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
The applicant believed that, if approved, Andexanet Alfa would be
the first and only antidote available used to treat patients receiving
treatment with an oral Factor Xa inhibitor who suffer a major bleeding
episode and require urgent reversal of direct and indirect Factor Xa
anticoagulation. Therefore, the applicant asserted that the technology
is not substantially similar to any other currently approved and
available treatment options for Medicare beneficiaries.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
Andexanet Alfa, if approved, would be the first reversal agent that
binds to direct Factor Xa inhibitors with high affinity, sequestering
the inhibitors, and consequently rapidly reducing free plasma
concentration of Factor Xa inhibitors and neutralizing the inhibitors'
anticoagulant effect, which allows for the restoration of normal
hemostasis. Andexanet Alfa also binds to and sequesters antithrombin
III molecules that are complexed with indirect inhibitor molecules,
disrupting the capacity of the antithrombin complex to bind to native
Factor Xa inhibitors. According to the applicant, Andexanet Alfa
represents a significant therapeutic advance by providing rapid
reversal of anticoagulation therapy in the event of a serious bleeding
episode. Other reversal agents, such as KcentraTM and
Idarucizumab, do not reverse the effects of Factor Xa inhibitors.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, Andexanet Alfa would be the first
FDA approved reversal agent for Factor Xa inhibitors. Therefore, the
MS-DRGs do not contain cases representing patients that have been
treated with any reversal agents for Factor Xa inhibitors.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, Andexanet Alfa, if
approved, would be the only reversal agent available for treating
patients receiving direct or indirect Factor Xa therapy who experience
serious, uncontrolled bleeding events or who require emergency surgery.
Therefore, Andexanet Alfa would be the first type of treatment option
available to this patient population, As a result, it appears that
Andexanet Alfa is not substantially similar to any existing
technologies. We are inviting public comments on whether Andexanet Alfa
[[Page 25050]]
meets the substantial similarity criteria and whether Andexanet Alfa
meets the newness criterion.
With regard to the cost criterion, the applicant researched the FY
2014 MedPAR claims data file for cases that may be eligible for
treatment using Andexanet Alfa. The applicant used three sets of ICD-9-
CM codes to identify these cases: (1) Codes identifying cases of
patients who were treated with an anticoagulant and, therefore, are at
risk of bleeding; (2) Codes identifying cases of patients with a
history of conditions that were treated with Factor Xa inhibitors; and
(3) codes identifying cases of patients who experienced bleeding
episodes as the reason for the current admission. The applicant
included with its application the following table displaying a complete
list of ICD-9-CM codes that met its selection criteria:
------------------------------------------------------------------------
ICD-9-CM codes applicable Applicable ICD-9-CM code description
------------------------------------------------------------------------
V12.50................... Personal history of unspecified circulatory
disease.
V12.51................... Personal history of venous thrombosis and
embolism.
V12.52................... Personal history of thrombophlebitis.
V12.54................... Personal history of transient ischemic attack
(TIA), and cerebral infarction without
residual deficits.
V12.55................... Personal history of pulmonary embolism.
V12.59................... Personal history of other diseases of
circulatory system.
V43.64................... Hip joint replacement.
V43.65................... Knee joint replacement.
V58.43................... Aftercare following surgery for injury and
trauma.
V58.49................... Other specified aftercare following surgery.
V58.73................... Aftercare following surgery of the
circulatory system, NEC.
V58.75................... Aftercare following surgery of the teeth,
oral cavity and digestive system, NEC.
V58.61................... Long-term (current) use of anticoagulants.
E934.2................... Anticoagulants causing adverse effects in
therapeutic use.
99.00.................... Perioperative autologous transfusion of whole
blood or blood components.
99.01.................... Exchange transfusion.
99.02.................... Transfusion of previously collected
autologous blood.
99.03.................... Other transfusion of whole blood.
99.04.................... Transfusion of packed cells.
99.05.................... Transfusion of platelets.
99.06.................... Transfusion of coagulation factors.
99.07.................... Transfusion of other serum.
------------------------------------------------------------------------
The applicant identified a total of 54,200 cases that mapped to 680
MS-DRGs, resulting in an average case-weighted charge per case of
$67,197. The applicant also provided an analysis limited to 80 percent
of all cases (47,273 cases), which mapped to the top 147 MS-DRGs. Under
this analysis, the average case-weighted charge per case was $64,095.
Under each of these two analyses, the applicant also provided
sensitivity analyses based on variables representing two areas of
uncertainty: (1) Whether to remove 40 percent or 60 percent of blood
and blood administration charges; and (2) whether to remove pharmacy
charges based on the ceiling price of factor eight inhibitor bypass
activity (FEIBA), a branded anti-inhibitor coagulant complex, or on the
pharmacy indicator 5 (PI5) in the MedPAR data file, which correlates to
cases utilizing generic coagulation factors. Overall, the applicant
conducted eight sensitivity analyses, and provided the following
rationales:
The applicant chose to remove 40 percent and 60 percent of
blood and blood administration charges because patients who require
Andexanet Alfa for Factor Xa reversal may still require blood and blood
products to treat other conditions. Therefore, it would be
inappropriate to remove all of the charges associated with blood and
blood administration because all of the charges cannot be attributed to
Factor Xa reversal. The applicant maintained that the amounts of blood
and blood products required for treatment vary according to the
severity of the bleeding. Therefore, the use of Andexanet Alfa may
replace 60 percent of blood and blood product administration charges
for cases with less severity of bleeding, but only 40 percent of
charges for cases with more severe bleeding.
The applicant maintained that FEIBA is the highest priced
clotting factor used for Factor Xa inhibitor reversal, and it is
unlikely that pharmacy charges for Factor Xa reversal would exceed the
FEIBA ceiling price of $10,570. Therefore, the applicant capped the
charges to be removed at $10,570, which in many cases removed 100
percent of the pharmacy charges. The applicant also considered an
alternative scenario in which charges associated with pharmacy
indicator 5 (PI5) were removed from the costs of cases that included
this indicator in the MedPAR data. On average, charges removed from the
costs of cases utilizing generic coagulation factors were much lower
than the total pharmacy charges.
The applicant noted that, in all eight scenarios, the average
standardized case-weighted charge per case for cases eligible for
treatment using Andexanet Alfa would exceed the average case-weighted
threshold amounts in Table 10 of the FY 2016 IPPS/LTCH PPS final rule
by approximately $3,247 to $7,844, depending on the results determined
by using the combination of variables of the two areas of uncertainty
and the number of MS-DRGs analyzed.
The applicant's order of operations used for each analysis follows:
(1) Removing 60 percent or 40 percent of blood and blood administration
charges and up to 100 percent of pharmacy charges for PI5 or FEIBA from
the average unstandardized case-weighted charge per case; (2)
standardizing the charges per cases using the Impact File published
with the FY 2014 IPPS/LTCH PPS final rule. After removing the charges
for the prior technology and standardizing charges, the applicant
applied an inflation factor of 1.076647, which is the 2-year inflation
factor in the FY 2016 IPPS/LTCH final rule (80 FR 49784) to update the
charges from FY 2014 to FY 2016. The applicant noted that it did not
add charges for Andexanet Alfa and related services. Under each
scenario, the applicant stated that the inflated average standardized
case-weighted charge per case exceeded the average case-weighted
threshold (based on the FY 2016 IPPS Table 10 thresholds). Below
[[Page 25051]]
we provide a table for all eight scenarios that the applicant indicated
demonstrate that the technology meets the cost criterion.
------------------------------------------------------------------------
Inflated
average
standardized Average
Scenario case-weighted case[dash]weighted
charge per threshold amount
case
------------------------------------------------------------------------
100 Percent of Cases, FEIBA, 60 $60,231 $55,799
Percent Removal of Blood and Blood
Administration Costs...............
100 Percent of Cases, PI5, 60 63,643 55,799
Percent Removal of Blood and Blood
Administration Costs...............
100 Percent of Cases, FEIBA, 40 61,651 55,799
Percent Removal of Blood and Blood
Administration Costs...............
100 Percent of Cases, PI5, 40 64,203 55,799
Percent Removal of Blood and Blood
Administration Costs...............
80 Percent of Cases, FEIBA, 60 57,686 54,413
Percent Removal of Blood and Blood
Administration Costs...............
80 Percent of Cases, PI5, 60 Percent 60,994 54,413
Removal of Blood and Blood
Administration Costs...............
80 Percent of Cases, FEIBA, 40 59,096 54,413
Percent Removal of Blood and Blood
Administration Costs...............
80 Percent of Cases, PI5, 40 Percent 61,558 54,413
Removal of Blood and Blood
Administration Costs...............
------------------------------------------------------------------------
The applicant noted that 25 percent of the total volume of cases
map to the following 10 MS-DRGs: MS-DRG 378 (Gastrointestinal
Hemorrhage with CC), 7.56 percent of all cases; MS-DRG 812 (Red Blood
Cell Disorders without MCC), 3.13 percent of all cases; MS-DRG 377
(Gastrointestinal Hemorrhage with MCC), 2.68 percent of all cases; MS-
DRG 470 (Major Joint Replacement or Reattachment of Lower Extremity
without MCC), 2.32 percent of all cases); MS-DRG 871 (Septicemia or
Severe Sepsis without Mechanical Ventilation >96 hours with MCC), 2.26
percent of all cases; MS-DRG 481 (Hip & Femur Procedures, Except Major
Joint with CC), 2.08 percent of all cases; MS-DRG 811 (Red Blood Cell
Disorders with MCC), 1.70 percent of all cases; MS-DRG 291 (Heart
Failure and Shock with MCC), 1.22 percent of all cases; MS-DRG 379
(Gastro intestinal Hemorrhage without CC/MCC), 1.12 percent of all
cases; and MS-DRG 683 (Renal Failure with CC), 1.06 percent of all
cases. We are concerned that the applicant did not include sensitivity
analyses for this subset of cases.
We are inviting public comments on whether Andexanet Alfa meets the
cost criterion, including with regard to the concern we have raised.
With regard to the substantial clinical improvement criterion, the
applicant asserted that Andexanet Alfa represents a substantial
clinical improvement for the treatment of patients receiving direct or
indirect Factor Xa therapy who experience serious, uncontrolled
bleeding events or who require emergency surgery because it addresses
an unmet medical need for a universal antidote to direct and indirect
Factor Xa inhibitors; if approved, would be the only agent shown in
prospective clinical trials to rapidly (within 2-5 minutes) and
sustainably reverse the anticoagulation activity of Factor Xa
inhibitors; is potentially non-thrombogenic, as no serious adverse
effects of thrombosis were observed in clinical trials; and could
supplant current treatments for bleeding from anti-Factor Xa treatment,
which have not been shown to be effective in the treatment of all
patients.
With regard to addressing an unmet need for a universal antidote to
direct and indirect Factor Xa inhibitors, the applicant asserted that
the use of any anticoagulant is associated with an increased risk of
bleeding, and bleeding complications can be life-threatening. Bleeding
is especially concerning in patients treated with Factor Xa inhibitors
because there are currently no antidotes to Factor Xa inhibitors
available. The applicant stated that Andexanet Alfa has a unique
mechanism of action and represents a new biological approach to the
treatment of patients who have been diagnosed with acute severe
bleeding who require immediate reversal of the Factor Xa inhibitor
therapy. The applicant explained that although Andexanet Alfa is
structurally very similar to native Factor Xa inhibitors, it has
undergone several modifications that restrict its biological activity
to reversing the effects of Factor Xa inhibitors by binding with and
sequestering direct or indirect Factor Xa inhibitors, which allows
native Factor Xa inhibitors to dictate the normal coagulation and
hemostasis process. As a result, the applicant maintained that
Andexanet Alfa represents a safe and effective therapy for the
management of bleeding in a fragile patient population and a
substantial clinical improvement over existing technologies and
reversal strategies.
The applicant noted the following: On average, patients with a
bleeding complication were hospitalized for 6.3 to 7.4 days; the most
common therapies currently used to manage bleeding events in patients
undergoing anticoagulant treatment are blood transfusions, most
frequently with packed red blood cells or fresh frozen plasma; and
Vitamin K therapy was used only in 1 percent of Medicare beneficiaries
who were receiving treatment with the indirect Factor Xa inhibitor
enoxaparin.
The applicant asserted that laboratory studies have failed to
provide consistent evidence of ``reversal'' of the anticoagulant effect
of Factor Xa inhibitors across a range of different PCC products and
concentrations. Results of thrombin generation assays have varied
depending on the format of the assay. Despite years of experience with
low molecular weight heparins and pentasaccharide anticoagulants,
neither PCCs nor factor eight inhibitor bypassing activity are
recognized as safe and effective reversal agents for these Factor Xa
inhibitors. Unlike patients taking Vitamin K antagonists, patients
receiving treatment with oral Factor Xa inhibitor drugs have normal
levels of clotting factors. Therefore, a strategy based on
``repleting'' factor levels is of uncertain foundation and could result
in supra-normal levels of coagulation factors after rapid metabolism
and clearance of the oral anticoagulant.
The applicant provided results from two Phase III studies
12 13 in which older healthy volunteers pretreated with
direct or indirect Factor Xa inhibitors (apixaban, edoxaban,
rivaroxaban, and enoxaparin) demonstrated the following: Rapid and
sustainable reversal of anticoagulation; reduced Factor Xa inhibitor
free plasma levels by at least 80 percent below a calculated no-effect
level; and reduced anti-Factor Xa activity to the lowest level of
detection within 2 to 5 minutes of
[[Page 25052]]
infusion. The applicant noted that decreased Factor Xa inhibitor levels
have been shown to correspond to decreased bleeding complications,
reconstitution of activity of coagulation factors, and correction of
coagulation.
---------------------------------------------------------------------------
\12\ Conners, J.M. Antidote for Factor Xa Anticoagulants. N Engl
J Med. 2015 Nov 13.
\13\ Siegal DM, Curnutte JT, Connolly SJ, et al. Andexanet Alfa
for the Reversal of Factor Xa Inhibitor Activity. N Engl J Med. 2015
Nov 11.
---------------------------------------------------------------------------
The applicant stated that the results from the two Phase III
studies and previous proof-of-concept Phase II dose-finding studies \2\
showed that use of Andexanet Alfa can rapidly reverse anticoagulation
activity of Factor Xa inhibitors and sustain that reversal. Therefore,
the applicant asserted that Andexanet Alfa has the potential to
successfully treat patients who only need short-duration reversal of
the Factor Xa inhibitor anticoagulant, as well as patients who require
longer-duration reversal, such as patients experiencing a severe
intracranial hemorrhage or requiring emergency surgery. Furthermore,
the applicant noted that its technology's duration of action allows for
a gradual return of Factor Xa inhibitor concentrations to placebo
control levels within 2 hours following the end of infusion.
With regard to Andexanet Alfa's non-thrombogenic nature, as no
serious adverse effects of thrombosis were observed in clinical trials,
the applicant provided clinical trial data which revealed participants
in Phase II and Phase III trials had no thrombotic events and there
were no serious or severe adverse events reported. Results also showed
that use of Andexanet Alfa has a much lower risk of thrombosis than
typical procoagulants because it lacks the region responsible for
inducing coagulation. Furthermore, the applicant asserted that
Andexanet Alfa is not associated with the known complications seen with
red blood cell transfusions.
The applicant asserted that, while the Phase II and Phase III
trials and studies measured physiological hallmarks of reversal of
NOACs, it is expected that the availability of a safe and reliable
Factor Xa reversal will result in an overall better prognosis for
patients--potentially leading to a reduction in length of hospital
stay, fewer complications, and decreased mortality associated with
unexpected bleeding episodes.
The applicant also stated that use of Andexanet Alfa can supplant
currently available treatments used for reversing bleeding from anti-
Factor Xa treatments, which have not been shown to be effective in the
treatment of all patients. With regard to PCCs, NOACs, and FFP, the
applicant stated that there is a lack of clinical evidence available
for patients taking Factor Xa inhibitors that experience bleeding
events. The applicant noted that the case reports provide a snapshot of
emergent treatment of these often medically complex anti-Factor Xa-
treated patients with major bleeds. However, the applicant stated that
these analyses reveal the inconsistent approach in assessing the degree
of anticoagulation in the patient and the variability in treatment
strategy. The applicant explained that little or no assessment of
efficacy in restoring coagulation in the patients was performed, and
the major outcomes measures were bleeding cessation or mortality. The
applicant concluded that overall, there is very little evidence for the
efficacy suggested in some guidelines, and the evidence is insufficient
to draw any conclusions.
We are inviting public comments on whether Andexanet Alfa meets the
substantial clinical improvement criterion.
Below is a summary of the written comments we received on the
Andexanet Alfa application in response to the February 2016 New
Technology Town Hall meeting and our response:
Comment: Two commenters supported the approval of new technology
add-on payments for Andexanet Alfa. According to the commenters,
Andexanet Alfa is a significant clinical improvement over existing
therapies used to reverse major bleeding in patients receiving
treatment using Factor Xa inhibitors. One commenter stated that
Andexanet Alfa would be the first and only antidote to treat patients
receiving an oral Factor Xa inhibitor who have suffered a major
bleeding episode and require urgent reversal of Factor Xa
anticoagulation. Based on professional experience as a first line
clinician charged with stabilizing and treating patients with bleeding
events or trauma such as assaults and motor vehicle accidents, the
commenter stated that patients on anticoagulation therapy present a
difficult scenario and they often have comorbidities, which complicate
the effectiveness of medical care and put them at risk for
complications. The commenter stated that major bleeding is observed in
approximately five percent of patients receiving treatment using Factor
Xa inhibitors, but only a small subset of those patients require urgent
reversal of anti-Factor Xa activity. The commenter believed that, in
spite of oral Factor Xa inhibitor's short half-life (7 to 9 hours) and
similar or even lower bleeding rates than with warfarin or low
molecular weight heparin, the lack of a targeted antidote that is safe
for Factor Xa inhibitors is believed to limit these anticoagulants,
which do not have a monitoring requirement, nor any dietary
restrictions. The commenter believed that a significant disadvantage of
Factor Xa inhibitors is the lack of an effective strategy to rapidly
reverse the anticoagulant effects in patients requiring emergency
surgery or presenting with an emergent bleed. There is currently no
agent indicated or proven to be effective for the treatment of patients
with Factor Xa inhibitor related bleeding. The commenter believed that
Andexanet Alfa would provide clinicians and their patients the ability
to restore homeostasis in critical emergency settings for the broad
range of bleeds experienced by patients receiving treatment using
Factor Xa inhibitors. The commenter compared Andexanet Alfa to
KcentraTM and FEIBA, and noted that both work upstream in
the coagulation cascade and thus cannot overcome the effects of the
Factor Xa inhibitors. The commenter further stated that human plasma-
derived clotting factors were not designed to reverse Factor Xa
inhibitors. The commenter also believed that it is well recognized
among clinicians that there is a critical need for a reversal agent for
the new oral anticoagulants (NOAC) that will rapidly restore normal
coagulation, and stated that Andexanet Alfa represents a significant
clinical improvement over existing therapies that should be approved
for the new technology add-on payments.
Another commenter also believed that Andexanet Alfa represents a
significant clinical improvement over existing therapies. The commenter
stated that, in the dire moment that a patient presents a critical care
team with a life-threatening bleed, reversing coagulation immediately
provides the foundation for stabilizing the patient, which is needed to
prevent further morbidity and mortality. The commenter also noted
KcentraTM's and FEIBA's inability to affect Factor Xa
inhibitors because they act on upstream coagulation cascade factors.
The commenter further believed that Andexanet Alfa's mechanism of
action is different from the mechanism of action of existing
treatments.
Response: We appreciate the commenters' input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for Andexanet Alfa for FY 2017.
f. Defitelio[supreg] (Defibrotide)
Jazz Pharmaceuticals submitted an application for new technology
add-on payments for FY 2017 for Defibrotide (Defitelio[supreg]), a
treatment for patients diagnosed with hepatic veno-occlusive disease
(VOD) with evidence of multi-organ dysfunction. VOD is a potentially
[[Page 25053]]
life-threatening complication resulting from hematopoietic stem cell
transplantation (HSCT), with an incidence rate of 8 percent to 15
percent of patients experiencing its effects after HSCT. Diagnoses of
VOD range in severity from what has been classically defined as a
disease limited to the liver (mild) and reversible, to a severe
syndrome associated with multi-organ dysfunction or failure and death.
Patients treated with HSCT who develop VOD with evidence of multi-organ
dysfunction face an immediate risk of death, with a mortality rate of
more than 80 percent when only supportive care is used.
VOD is believed to be the result of endothelial cell damage and
hepatocellular injury from high-dose conditioning regimens administered
prior to receiving treatment with HSCT. Preclinical data suggest that
Defitelio[supreg] stabilizes endothelial cells by reducing endothelial
cell activation and by protecting endothelial cells from further
damage. Defitelio[supreg] is administered as a 2-hour intravenous
infusion every 6 hours. The recommended dosage is 6.25 mg/kg body
weight (25mg/kg/day). Defitelio[supreg] should be administered for a
minimum of 21 days. If after 21 days the signs and symptoms associated
with hepatic VOD are not resolved, the administration of
Defitelio[supreg] should be continued until clinical resolution.
With regard to the newness criterion, according to the
manufacturer, Defitelio[supreg] received FDA approval in March 30, 2016
and is expected to be commercially available on the U.S. market on
April 6, 2016. At this time, the applicant has not submitted any
specific information to establish that the technology was not available
on the U.S. market as of the FDA approval date or to describe the
reasons for a delay of availability until the first week of April 2016.
Therefore, we believe the newness period for Defitelio[supreg] would
begin on March 30, 2016, the date of FDA approval.
There are currently no ICD-10-PCS codes to uniquely identify the
intravenous administration of Defitelio[supreg]. The applicant
submitted an application for the March 9-10, 2016 meeting of the ICD-10
Coordination and Maintenance Committee for a unique ICD-10-PCS
procedure code to identify the use of Defitelio. If approved, the
procedure code would become effective on October 1, 2016 (FY 2017).
More information on this request can be found on the CMS Web site
located at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
criteria for substantial similarity, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments.
With regard to the first criterion, whether the product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant maintained that Defitelio[supreg] has a unique mechanism
of action that is not shared by any other drug on the market used to
treat patients diagnosed with VOD with evidence of multi-organ failure.
According to the applicant, there are no FDA-approved treatments for
VOD other than supportive care. Anticoagulants such as heparin,
antithrombin, and tissue plasminogen factor have been used to treat
patients diagnosed with VOD, but there is a lack of conclusive evidence
that these treatments are effective and they also present a high risk
of bleeding. The applicant maintained that Defitelio[supreg] addresses
the underlying pathology of VOD with evidence of multi-organ failure
and its use is effective as a treatment for this form of the disease.
According to the applicant, it is speculated that the mechanism of
action of the Defitelio[supreg] revolves around the stabilization of
endothelial cells because endothelial cell damage is believed to be a
major contributing factor to the development of VOD. However, we are
concerned that this mechanism of action is not well understood by the
manufacturer and we are unable to determine whether Defitelio[supreg]
is substantially similar to the other drugs on the market without full
understanding of its distinct mechanism of action.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant maintained that cases
potentially eligible for treatment using Defitelio[supreg] and
representing the target patient population mainly group to two MS-DRGs:
MS-DRG 014 (Allogeneic Bone Marrow Transplant) and MS-DRG 016
(Autologous Bone Marrow Transplant with CC/MCC). We believe that these
are the same MS-DRGs that identify cases of patients treated with
supportive care for VOD with multi-organ failure.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
asserted that there are no FDA-approved treatments for VOD other than
supportive care, such as dialysis or ventilation. In addition, the
applicant stated that poor outcomes have been reported for patients
treated with nonapproved pharmacological treatments for VOD. These
treatments have largely been discontinued because of the high incidence
of hemorrhagic complications, particularly among patients diagnosed
with multi-organ failure. According to the applicant, Defitelio[supreg]
would be the first and only FDA-approved treatment for VOD with
evidence of multi-organ failure. However, we are concerned that the
applicant did not include in its application data comparing the
outcomes of patients treated with Defitelio[supreg] to outcomes of
patients treated only for supportive care. We are concerned that
Defitelio[supreg] may not produce outcomes that are significantly
different than the outcomes of patients treated with supportive care.
We are inviting public comments on whether Defitelio[supreg] is
substantially similar to existing technologies and whether it meets the
newness criterion.
With regard to the cost criterion, the applicant conducted
sensitivity analyses using claims data from 2012 through 2014 and
determined the results in aggregate and by year. The applicant
researched 100 percent of the 2012 through 2014 Inpatient Standard
Analytic Files (SAFs) for cases eligible for Defitelio[supreg]. Because
an ICD-9-CM code specific to treatment for VOD does not exist, the
applicant used an algorithm to identify cases to use in its sensitivity
analyses. The most appropriate ICD-9-CM diagnosis codes were identified
based on clinical criteria used to diagnose VOD and were used to
identify cohorts of patients diagnosed with VOD and VOD with multi-
organ dysfunction. The applicant first identified claims with an ICD-9-
CM procedure code indicating an HSCT (Group A) within a 30-day window;
VOD most commonly occurs after receipt of HSCT. The applicant then
looked for cases with ICD-9-CM diagnosis codes related to liver injury
(Group B) or clinical evidence of suspected VOD symptoms based on at
least two relevant ICD-9 diagnosis codes (Group C). Lastly, the
applicant filtered out cases that did not show clinical evidence of
multi-organ dysfunction based on at least one relevant ICD-9-CM code
(Group D).
The applicant submitted the following table indicating the ICD-9-CM
codes used for each category of the algorithm.
[[Page 25054]]
Table 12--ICD-9 Codes Used for the Premier VOD Algorithm
----------------------------------------------------------------------------------------------------------------
Group Title ICD-9-CM Code Description
----------------------------------------------------------------------------------------------------------------
A...................... Hematopoietic Stem Cell 41.00 Bone marrow transplant, not otherwise
Transplant (HSCT) (at 41.01 specified.
least one code). 41.02 Autologous bone marrow transplant without
purging.
Allogeneic bone marrow transplant with
purging.
41.03 Allogeneic bone marrow transplant without
purging.
41.04 Autologous hematopoietic stem cell
transplant without purging.
41.05 Allogeneic hematopoietic stem cell
transplant without purging.
41.06 Cord blood stem cell transplant.
41.07 Autologous hematopoietic stem cell
transplant with purging.
41.08 Allogeneic hematopoietic stem cell
transplant.
41.09 Autologous bone marrow transplant with
purging.
B...................... Liver Injury (at least one 453.xx Other venous embolism and thrombosis.
code). 570.xx Acute and subacute necrosis of liver.
573.8 Other specified disorders of liver.
573.9 Unspecified disorder of liver.
459.89 Other specified disorders of the
circulatory system.
277.4 Disorders of bilirubin excretion.
C...................... VOD Symptoms (at least two 782.4 Hyperbilirubinemia.
codes). 789.1 Hepatomegaly.
783.1 Abnormal weight gain.
789.5 Ascites.
D...................... Multi-Organ Dysfunction (at 518.8x Acute/Chronic Respiratory Failure.
least one code). 786.09 Other respiratory abnormalities
(respiratory distress, except that
associated with trauma/surgery in adults,
or with RDS in newborns).
799.02 Hypoxemia.
518.81 Acute respiratory failure.
V46.2 Other dependence on machines, supplemental
oxygen.
96.7x Other continuous invasive mechanical
ventilation.
93.90, 93.91, Non-invasive mechanical ventilation.
93.93, 93.99
584.X Acute renal failure.
586.X Renal failure unspecified.
593.9 Renal Failure.
39.27, 39.42, Dialysis, including hemodialysis,
39.95, 54.98 peritoneal dialysis, hemofiltration.
----------------------------------------------------------------------------------------------------------------
Using the above algorithm, the applicant identified a total of 267
patient cases of VOD with multi-organ dysfunction in the 2012-2014
Inpatient SAFs, with 78 patient cases in 2012, 102 patient cases in
2013, and 87 patient cases in 2014, or an average annual patient case
volume of 89. The applicant determined that these cases grouped mainly
into two MS-DRGs: 014 and 016. The applicant noted that there were no
cases in the data from MS-DRG 017 (Autologous Bone Marrow Transplant
without CC/MCC). The applicant further noted that there were no cases
from MS-DRG 017 because the ICD-9-CM codes identifying VOD with multi-
organ dysfunction include serious medical conditions that are listed on
the MCC and CC lists. In total, 38 MS-DRGs were represented in the
patient cohort, with 27 percent of cases mapping to MS-DRG 014 and 42
percent of cases mapping to MS-DRG 016. The remaining cases mapped to 1
of the 36 remaining MS-DRGs with fewer than 11 cases.
For results in the aggregate, the applicant calculated an average
case-weighted charge per case of $427,440 across 267 cases representing
diagnoses of VOD with multi-organ dysfunction from 2012 through 2014.
The applicant assumed there would be a reduction in the use of selected
drugs as a result of using Defitelio[supreg] and removed 50 percent of
the estimated charges for heparin, furosemide, and spironolactone. The
charges for these drugs were estimated based on pricing taken from the
Medispan PriceRx database, whose costs were marked up according to the
inverse of CCRs from cost center 073 (Drugs Charged to Patients)
obtained from providers' 2012, 2013, and 2014 cost reports. The
applicant matched these CCRs with the provider numbers on each claim.
The applicant removed an average of $2,631 in charges for these drugs
from the overall unstandardized charges for Defitelio[supreg].
The applicant then standardized the charges and calculated an
average standardized case-weighted charge per case of $310,651. To
update the charge data to the current fiscal year, the applicant
inflated the charges based on the charge inflation factor of 1.048116
in the FY 2016 IPPS/LTCH final rule (80 FR 49779). The 1-year inflation
factor was applied four times to FY 2012 claims, three times to FY 2013
claims, and twice to FY 2014 claims to inflate all charges to 2016. The
applicant computed an inflated average standardized case-weighted
charge per case of $356,015. Using the FY 2016 IPPS Table 10
thresholds, the average case-weighted threshold amount was $157,951
(all calculations above were performed using unrounded numbers).
Because the inflated average standardized case-weighted charge per case
exceeds the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion. The applicant
noted that it did not include charges for Defitelio[supreg] in the
inflated average standardized case-weighted charge per case because the
inflated average standardized case-weighted charge per case exceeded
the average case-weighted threshold amount without charges for
Defitelio[supreg].
The applicant provided a similar analysis for each individual year
of the SAF data rather than combining all the data from all 3 years
into one analysis. Under the other three analyses, the applicant noted
that the average standardized case-weighted charge per case exceeded
the average case-
[[Page 25055]]
weighted threshold amount (as shown in the table below) without
inflating the charges and without adding any charges for
Defitelio[supreg]. We are inviting public comments on whether
Defitelio[supreg] meets the cost criterion.
------------------------------------------------------------------------
Average
Average standardized
SAF year case[dash]weighted case-weighted
threshold amount charge per
case
------------------------------------------------------------------------
2012................................ $161,469 $347,910
2013................................ 150,585 326,445
2014................................ 163,434 404,883
------------------------------------------------------------------------
With regard to the substantial clinical improvement criterion, the
applicant maintained that Defitelio[supreg] is an effective treatment
for VOD as an early onset cause of mortality following HSCT. According
to the applicant, patients treated with Defitelio[supreg] have improved
survival and efficacy rates compared to patients who were not treated
with Defitelio[supreg]. In increasing the chances of post-HSCT
survival, Defitelio[supreg] affords the transplant patient the
opportunity for engraftment, which could be a potential cure for the
underlying disease that required HSCT.
The applicant supported these assertions with clinical evidence
from pivotal trial 2005-01, a Phase III historical control study in
which patients with VOD with multi-organ failure were given
Defitelio[supreg] in doses of 25/mg/kg/day for the recommended minimum
treatment duration of 21 days. Patients in the historical control group
were selected by an independent medical review committee (MRC) from a
pool of 6,867 medical charts of patients receiving HSCT that were
hospitalized from January 1995 through November 2007. The trial
consisted of 102 patients in the Defitelio[supreg] treated group and 32
patients in the historical control group. The trial used the survival
rate and rate of Complete Response (CR) at Day+100 as clinical
endpoints. The observed survival rate at Day+100 in the
Defitelio[supreg] treated group was 38.2 percent compared to 25 percent
in the historical control group. Moreover, the rate of CR by Day+100
post-HSCT for the Defitelio[supreg] treated group was 25.5 percent
compared to 12.5 percent in the historical control group. The applicant
conducted additional analyses that showed improvements in survival
outcomes among subgroups of patients with baseline prognostic factors
related to worse outcomes.
According to the applicant, running a controlled, blinded, and
randomized trial in a patient population with high mortality rates
would be unethical. We are concerned that there are limitations to the
historical control group used in pivotal trial 2005-01. We believe that
the discrepancy between the size of the treatment group (N=102) and the
historical control group (N=32) may skew the trial results in favor of
the treatment group. We also are uncertain, given the small sample size
and historical data used, whether the historical control group is
representative of patients with VOD with multi-organ failure. According
to the applicant, patients in the historical control group were
hospitalized between January 1995 and November 2007. Because of
advancements in medicine within this timeframe, we are concerned that
the patients in the historical control group cannot be appropriately
compared to patients in the treatment group. Moreover, we believe that
it is difficult to attribute improved survival and CR rates only to
Defitelio[supreg] treatment.
We are inviting public comments on whether Defitelio[supreg] meets
the substantial clinical improvement criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
g. EDWARDS INTUITY EliteTM Valve System
Edwards Lifesciences submitted an application for new technology
add-on payments for the EDWARDS INTUITY EliteTM Valve System
(INTUITY) for FY 2017. The device uses a rapid deployment valve system
and serves as a prosthetic aortic valve, which is inserted using
surgical aortic valve replacement (AVR). The device replaces the
diseased native valve in patients with aortic valve disease, including
aortic stenosis. The components of the device are: (1) A bovine
pericardial aortic bioprosthetic valve; (2) a balloon expandable
stainless steel frame; and (3) a textured sealing cloth. The INTUITY
valve shares many basic features with other tissue, bioprosthetic
valves. The leaflets are made of bovine pericardium, rather than
porcine valve tissue, or purely mechanical elements.
With regard to the newness criterion, the applicant submitted an
application to the FDA for pre-market approval of the INTUITY valve and
anticipates FDA approval prior to July 1, 2016. The applicant indicated
that the device would be available on the market shortly after
approval. The applicant submitted a request for a unique ICD-10-PCS
code for consideration at the March 2016 ICD-10 Coordination and
Maintenance Committee meeting. If approved, the codes will be effective
on October 1, 2016 (FY 2017). More information on this request can be
found on the CMS Web site located at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant described three aspects of the valve system that are unique
relative to existing devices. First, the valve system has a deployment
mechanism that allows for rapid deployment and only requires 3 sutures,
as opposed to 12 to 18 sutures used in standard valve replacement
procedures. Second, the flexible deployment arm allows improved
surgical access and visualization, making the surgery less challenging
for the surgeon, which improves the likelihood that the surgeon can use
a minimally invasive approach. Third, the assembly of the device only
allows the correct valve size to be fitted, which ensures that the
valve does not slip or migrate, which prevents paravalvular leaks and
patient prosthetic mismatch. The applicant maintained that the INTUITY
has a different mechanism of action than other prosthetic aortic valves
and, therefore, is not substantially similar to those used in standard
aortic valve replacement procedures.
With regard to the second and third criteria, the device is used in
the same
[[Page 25056]]
patient population and would be assigned to the same MS-DRGs as cases
involving other prosthetic aortic valves. We also received information
about the Perceval aortic valve (LivaNova), which received FDA approval
in January 2016 and which appears to be a substantially similar aortic
valve. If the INTUITY valve were to receive approval for new technology
add-on payments, we would consider whether the INTUITY valve is
substantially similar to the device that has already received FDA
approval. If we determine that it is substantially similar, we note
that the start date for determining the duration of new technology add-
on payments would be the date of FDA approval for the Perceval aortic
valve.
After reviewing the information provided by the applicant with
regard to the substantial similarity criteria discussed above, we have
the following concerns. First, it appears that this device uses a
similar mechanism of action as standard aortic valves; the differences
described in the application, with respect to how the valve is placed
and secured, and the number of sutures required, do not readily
distinguish the mechanism of action from other aortic valves. Second,
the MS-DRGs to which cases using the INTUITY would be assigned, as
indicated in the application, are the same MS-DRGs to which cases
involving standard aortic valves would be assigned. Third, the device
is used to treat the same disease and patient population as standard
aortic valves. In light of these concerns, we believe that this device
appears to be substantially similar to other valves used in aortic
valve replacement. We are inviting public comments on whether the
INTUITY meets the newness criterion.
With regard to the cost criterion, the applicant researched the FY
2014 MedPAR claims data file to identify cases of patients who
represent potential recipients of treatment using the INTUITY. The
applicant identified claims that had an ICD-9-CM diagnosis code of
424.1 (Aortic valve disorder) in combination with an ICD-9-CM procedure
code of 35.21 (Replacement of aortic valve with tissue) or 35.22 (Open
and other replacement of aortic valve). The applicant also identified
cases with or without a coronary artery bypass graft (CABG) using the
ICD-9-CM procedure codes in the table below.
------------------------------------------------------------------------
ICD-9-CM code Code description
------------------------------------------------------------------------
36.10............................. Aortocoronary bypass for heart
revascularization, not otherwise
specified.
36.11............................. (Aorto)coronary bypass of one
coronary artery.
36.12............................. (Aorto)coronary bypass of two
coronary arteries.
36.13............................. (Aorto)coronary bypass of three
coronary arteries.
36.14............................. (Aorto)coronary bypass of four or
more coronary arteries.
36.15............................. Single internal mammary-coronary
artery bypass.
36.16............................. Double internal mammary-coronary
artery bypass.
36.17............................. Abdominal-coronary artery bypass.
------------------------------------------------------------------------
The applicant identified a total of 15,291 cases that mapped to MS-
DRGs 216 (Cardiac Valve & Other Major Cardiothoracic Procedures with
Cardiac Catheterization with MCC), 217 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization with CC), 218
(Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization without CC/MCC), 219 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC),
220 (Cardiac Valve & Other Major Cardiothoracic Procedures without
Cardiac Catheterization with CC), and 221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization without CC/
MCC). The applicant calculated an average unstandardized charge per
case of $178,608 for all cases. The applicant then removed 100 percent
of the charges for pacemakers, investigational devices, and other
implants that would not be required for patients receiving treatment
using the INTUITY.
The applicant standardized the charges and then applied an
inflation factor of 1.076647, which is the 2-year inflation factor in
the FY 2016 IPPS/LTCH final rule (80 FR 49784), to update the charges
from FY 2014 to FY 2016. Because the price of the INTUITY has yet to be
determined, the applicant calculated the average expected charge using
the same price as charged in the recent IDE trial. Although the
applicant submitted data that related to the estimated clinical trial
cost of the INTUITY, the applicant noted that the cost of the
technology was proprietary information. To add charges for the new
technology, the applicant assumed a hospital mark-up of approximately
3.0 percent, based on the current average CCR for implantable devices
(0.337) as reported in the FY 2016 IPPS/LTCH PPS final rule (80 FR
49429). Based on the FY 2016 IPPS/LTCH PPS Table 10 thresholds, the
average case-weighted threshold amount was $163,173. The applicant
computed an inflated average standardized case-weighted charge per case
of $185,982, which is $22,809 above the average case-weighted threshold
amount. Because the inflated average standardized case-weighted charge
per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion.
We are concerned that the number of individual cases that were
identified and provided by the applicant indicated a total of 26,520
cases that would be eligible for treatment using the INTUITY, but the
applicant only included 15,291 cases in the final sensitivity analysis.
We would like more information from the applicant regarding how it
decided upon which cases to include in the sensitivity analysis, as
well as further details about how and on what basis the applicant
weighted CABG and non-CABG cases. We are inviting public comments on
whether the INTUITY meets the cost criterion, including with regard to
the concerns we have raised.
With regard to the substantial clinical improvement criterion, the
applicant stated that the device improves clinical outcomes for
patients undergoing minimally invasive AVR and full-sternotomy AVR. The
applicant also stated that the rapid deployment technology enables
reduced operative time, specifically cross-clamp time, thereby reducing
the period of myocardial ischemia. The applicant also indicated that
the flexible deployment arm increases the likelihood that a minimally
invasive approach can be used. In addition, the applicant suggested
that the device offers a reduction in operative time for full-
sternotomy AVR. The applicant noted that clinical results demonstrated
significant patient outcome and utilization improvements, including
improved patient satisfaction, faster return to normal activity,
decreased post-operative pain, reduced mortality and decreased
complications, including
[[Page 25057]]
need for reoperation due to bleeding, reduced recovery time, and
reduced length of stay.
According to the applicant, the valve has been tested clinically in
several programs. In the TRITON trial (Kocher et al., 2013 \14\), 287
patients with aortic stenosis underwent surgery in 1 of 6 European
centers. The first 149 patients received the first generation Model
8300A valve, and the next 138 patients received the second generation
Model 8300AB. The average age of the patients was 75.7 years. Early,
30-day mortality was 1.7 percent (5/287), the post-operative valve
gradient was low, and 75 percent of the patients improved functionally.
A total of four valves were explanted in the final 30 days due to
bleeding, and three were explanted later for paravalvular leak,
endocarditis, and aortic root aneurysms. Follow-up extended to 3 years
(mean 1.8 years).
---------------------------------------------------------------------------
\14\ Kocher AA, Laufer G, Haverich A, et al. One-year outcomes
of the surgical treatment of aortic stenosis with a next generation
surgical aortic valve (TRITON) trial: A prospective multicenter
study of rapid-deployment aortic valve replacement with the EDWARDS
INTUITY valve system. J Thorac Cardiovasc Surg. 2013; 145:110-116.
---------------------------------------------------------------------------
Implantation of the INTUITY using minimally invasive surgery was
compared with conventional aortic valve replacement in the CADENCE-MIS
randomized trial (Borger et al., 2015 \15\) of 100 patients treated in
1 of 5 centers in Germany (3). Aortic cross-clamp time was reduced from
54.0 to 41.3 minutes (p<0.0001), and cardiopulmonary bypass time was
reduced from 74.4 to 68.8 minutes (p=0.21). Early clinical outcomes
were similar: Two deaths in the MIS group versus one death in the
conventional surgery group (p = 0.53), reoperation in one patient in
each group, and no differences in other clinical outcomes. The aortic
valve gradient was significantly lower in the MIS group: 8.5 vs. 10.3
mmHg.
---------------------------------------------------------------------------
\15\ Borger MA, Moustafine V, Conradi L, et al. A randomized
multicenter trial of minimally invasive rapid deployment versus
conventional full sternotomy aortic valve replacement. Ann Thorac
Surg 2015; 99:17-25.
---------------------------------------------------------------------------
The applicant also provided information referring to unpublished
data about the preliminary outcomes of the Transform trial; this trial
included a study arm that compared MIS surgery with the INTUITY valve
to historical comparators that involved MIS surgery with another valve.
The applicant indicated that key findings of this trial included
reduced procedure times and cross-clamp times, reduced reoperations and
30-day mortality, and reduced length of stay for the INTUITY valve
relative to historical comparators that involved another valve. The
applicant did not provide any details about these outcomes, stating
that the data would be submitted for publication after FDA review.
After reviewing the information provided by the applicant, we have
the following concerns. We are concerned that the INTUITY does not have
sufficient advantages over other alternative surgically implanted valve
systems to constitute a substantial clinical improvement. While the
studies included with the application demonstrate reduced aortic cross-
clamp time, conventional aortic valve replacement was used in the
comparison group; therefore, it is unclear whether the reduced aortic
cross-clamp time is associated with the INTUITY valve or with MIS
surgery in general. We understand that this issue is currently being
studied in the Transform trial, which is in progress. We also note
that, there have been no conducted trials of the INTUITY valve,
implanted using minimally invasive surgery, versus traditional
transcatheter aortic valve replacement (TAVR) procedures, which we
believe would be the most relevant comparison. We also do not believe
that the applicant provided evidence to support its assertion that the
use of the INTUITY valve increase the likelihood of MIS surgery being
performed. We are inviting public comments on whether the INTUITY valve
meets the substantial clinical improvement criterion.
Below is a summary of the written comments we received on the
INTUITY valve in response to the February 2016 New Technology Town Hall
meeting and our response.
Comment: One commenter stated that the Perceval bioprothesis is
substantially similar to the INTUITY valve, in that they both map to
the same MS-DRGs 219, 220, and 221; they utilize the same ICD-10 code
02RF8Z (Replacement of aortic valve with zooplastic tissue, open
approach); they are intended to treat the same or similar disease and
patient population; they are intended to achieve the same therapeutic
outcome; and they are both considered to be sutureless/rapid deployment
aortic heart valves used for the replacement of diseased, damaged, or
malfunctioning native or prosthetic aortic valves. The commenter cited
several meta-analyses that include both the Perceval and INTUITY valves
and consider them clinically equivalent technologies. The commenter
also cited excerpts from articles as well as a description of the
ongoing Perceval IDE study to provide support for the substantial
clinical improvement of sutureless/rapid deployment heart valves. The
applicant requested that Perceval and INTUITY valves be considered in
the same category for the new technology add-on payment.
Response: We appreciate the commenter's input. We welcome
additional input from the public and will take these comments into
consideration when deciding whether to approve new technology add-on
payments for the INTUITY valve for FY 2017.
h. GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis (IBE)
W.L. Gore and Associates, Inc. submitted an application for new
technology add-on payments for the GORE[supreg] EXCLUDER[supreg] Iliac
Branch Endoprosthesis (GORE IBE device) for FY 2017. The device
consists of two components: The Iliac Branch Component (IBC) and the
Internal Iliac Component (IIC). The applicant indicated that each
endoprosthesis is pre-mounted on a customized delivery and deployment
system allowing for controlled endovascular delivery via bilateral
femoral access. According to the applicant, the device is designed to
be used in conjunction with the GORE[supreg] EXCLUDER[supreg] AAA
Endoprosthesis for the treatment of patients requiring repair of common
iliac or aortoiliac aneurysms. When deployed, the GORE IBE device
excludes the common iliac aneurysm from systemic blood flow, while
preserving blood flow in the external and internal iliac arteries.
With regard to the newness criterion, the applicant submitted an
application to the FDA for pre-market approval of the GORE IBE device,
but has not yet received FDA approval. The applicant submitted a
request for a unique ICD-10-PCS code that was presented at the March
2016 ICD-10 Coordination and Maintenance Committee meeting. If
approved, the code will be effective on October 1, 2016 (FY 2017). More
information on this request can be found on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant indicated that the GORE IBE device is based on the same
design principles as other endovascular repair devices, and
[[Page 25058]]
its use differs because of the specific target site for implantation.
Consequently, it has a different shape and method of delivery from
other endovascular devices. The GORE IBE device is similar to the
GORE[supreg] EXCLUDER[supreg] AAA Endoprosthesis, primarily differing
in device dimensions to fit within the iliac artery anatomy. With
regard to the first criterion, we are concerned that the GORE IBE
device has a similar mechanism of action to other stenting grafts used
to treat patients with abdominal aortic aneurysms (AAAs) because it
repairs the abdominal aortoiliac aneurysm from the inside and is
inserted in a similar manner to other abdominal aortoiliac endovascular
aneurysm repair devices.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant indicated that cases
using the GORE IBE device would map to the same MS-DRGs as cases
involving other stent-grafts used to treat patients with AAAs.
Specifically, similar to cases involving other stent-grafts used to
treat AAAs, cases involving the GORE IBE device would be assigned to
MS-DRG 268 (Aortic and Heart Assist Procedures except Pulsation Balloon
with MCC) and MS-DRG 269 (Aortic and Heart Assist Procedures except
Pulsation Balloon without MCC).
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
indicated that the GORE IBE device is intended to be used in the
treatment of patients requiring repair of common iliac or aortoiliac
aneurysms. The applicant stated that this device, if approved, would be
the first purpose-built endovascular device for patients whose
conditions (common iliac or aortoiliac aneurysm) put them at risk for
negative clinical outcomes due to limitations of current treatment
methods, which may not preserve internal iliac artery perfusion. The
applicant described current repair options for these patients as: (a)
Intentional occlusion and coverage of the internal iliac artery; (b)
undergoing a more extensive surgical operation to place a bypass graft;
or (c) use of combinations of devices in a nonindicated, variable, and
inconsistent manner. With regard to the third criterion, we are
concerned that this device appears to treat a similar type of disease
to existing stent grafts.
Based on the statements above, the applicant maintained that the
GORE IBE device is not substantially similar to other stent-grafts used
to treat patients with AAAs. We are inviting public comments on whether
Gore IBE device is substantially similar to existing technologies and
whether the technology meets the newness criterion.
With regard to the cost criterion, the applicant researched the FY
2014 MedPAR claims data to identify patients who may be eligible for
treatment using the GORE IBE device. The applicant noted that cases
eligible for the GORE IBE device would map to MS-DRGs 268 (Aortic and
Heart Assist Procedures Except Pulsation Balloon with MCC) and 269
(Aortic and Heart Assist Procedures Except Pulsation Balloon without
MCC). The applicant provided two analyses. The first analysis searched
for cases that may be potentially eligible for the GORE IBE device by
identifying cases with endovascular aneurysm repair (EVAR) with iliac
diagnoses. To identify these cases, the applicant searched for cases
that had an ICD-9-CM primary procedure code of 39.71 (Endovascular
implantation of other graft in abdominal aorta) in combination with a
primary diagnosis code of 441.4 (Abdominal aneurysm without mention of
rupture) or 441.02 (Dissection of aorta, abdominal). The applicant
excluded cases with a diagnosis code of 441.3 (Abdominal aneurysm,
ruptured), and cases with atherosclerosis of the lower extremities
(ICD-9-CM diagnosis code 440.20 through 440.28). The applicant then
identified a subset of cases (1,615 cases) with significant iliac
involvement (which indicated use of the prior technology as well as
disease extent where the new technology could be used) by searching for
cases with a secondary ICD-9-CM diagnosis code of 442.2 (Aneurysm of
iliac artery) or 443.22 (Dissection of iliac artery). This subset of
cases was used in the analysis with 205 cases that mapped to MS-DRG 268
and 1,410 cases that mapped to MS-DRG 269. As discussed below, the
remaining cases (11,926 cases) were used to help evaluate and compare
subsequent offset charge calculations (base EVAR cases).
Using the 1,615 cases, the applicant calculated an average
unstandardized case-weighted charge per case of $121,527. Charges for
the prior technology (implants), which would be offset by the new
technology were established by subtracting the average implant charge
in the 1,615 cases from the average implant charge in the base EVAR
sample. The excess implant charge represents current implant charges
being used in EVAR cases with iliac involvement, and was subtracted
from the average unstandardized case-weighted charge per case.
The applicant compared the average unstandardized O.R. and
radiology charges associated with the new technology from the clinical
trial data with the unstandardized O.R. and radiology charges
associated with the prior technology from the MedPAR data and noted
that O.R. and radiology charges for resources related to the new
technology and the prior technology were similar. However, with regard
to charges in the intensive care unit (ICU), there was a reduction of
56 percent in ICU associated charges for the new technology. Therefore,
the applicant offset the ICU associated charge by 56 percent and
deducted this amount from the average unstandardized case-weighted
charge per case. The applicant then standardized the charges, but noted
that it did not inflate the charges. The applicant added charges for
the GORE IBE device by converting the costs of the device to charges
using the average CCR for implantable devices (0.337) as reported in
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49429). The applicant noted
that the cost of the technology was proprietary information. Based on
the FY 2016 IPPS/LTCH PPS Table 10 thresholds, the average case-
weighted threshold amount was $109,241. The applicant computed an
average standardized case-weighted charge per case of $124,129. Because
the average standardized case-weighted charge per case exceeds the
average case-weighted threshold amount, the applicant maintained that
the technology meets the cost criterion.
The second analysis was similar to the first analysis, but searched
the MedPAR claims data file for cases with an EVAR with an iliac
diagnosis and procedure instead of cases with EVAR and only an iliac
diagnosis. The applicant used the same ICD-9-CM procedure and diagnoses
codes as used in the first analysis, but used the following ICD-9-CM
procedure codes to identify cases that had an iliac procedure: 39.79
(Other endovascular procedures on other vessels) in combination with
39.29 (Other (peripheral) vascular shunt or bypass), 39.79 in
combination with 39.90 (Insertion of non-drug-eluting peripheral (non-
coronary) vessel stent(s)) without 39.29, 39.90 in combination with
00.41 (Procedure on two vessels), 00.46 (Insertion of two vascular
stents), and 00.47 (Insertion of three vascular stents) without 39.79
and 39.29. The applicant noted that the expected distribution of cases
for the GORE IBE device is that 20 percent of the cases would map to
MS-DRG 268 and 80 percent of the cases would map
[[Page 25059]]
to MS-DRG 269. Because this analysis represents cases that had an
actual iliac procedure, the applicant applied this distribution to the
cases. The applicant then followed the same methodology above and
removed charges for the prior technology and resources related to the
prior technology, standardized the charges, and then added charges
related to the GORE IBE device. Based on the FY 2016 IPPS/LTCH PPS
Table 10 thresholds, the average case-weighted threshold amount was
$113,015. The applicant computed an inflated average standardized case-
weighted charge per case of $138,179. Because the inflated average
standardized case-weighted charge per case exceeds the average case-
weighted threshold amount, the applicant maintained that the technology
meets the cost criterion.
With regard to the second analysis, the applicant imputed the
distribution of cases. We are not sure how the applicant determined
which cases would map to MS-DRG 268 or MS-DRG 269, if the distribution
was imputed. Also, the applicant did not disclose how many cases were
found in the claims data after filtering the case volume using ICD-9-CM
procedure codes identifying cases that had an iliac procedure. We are
inviting public comments on whether the GORE IBE device meets the cost
criterion, including with regard to the concerns we have raised.
With regard to the substantial clinical improvement criterion, the
applicant indicated that current treatment approaches have substantial
risks of complications that can negatively impact quality of life.
Available treatment methods that do not preserve internal iliac artery
perfusion increase risks for negative clinical outcomes; compared to
methods that preserve the internal iliac artery, those that use
contralateral hypogastric embolization result in a higher incidence of
buttock claudication (15-55 percent), sexual dysfunction (5-45
percent), ischemia of the colon (2.6 percent), and rarely, ischemia of
the spine. The applicant cited the ``12-04'' study,\16\ which the
applicant suggested showed the GORE IBE device to have 0 percent rates
of buttock claudication, new onset erectile dysfunction, colonic
ischemia, and spinal cord ischemia. The applicant also suggested that
the 12-04 study showed the GORE IBE device to have reduced procedure
time, reduced fluoroscopy time, reduced reintervention rates, and
increased patency rates. The applicant asserted that because the GORE
IBE device preserves flow to the internal iliac artery, the risk of
complications is reduced, which represents a substantial clinical
improvement relative to current treatment approaches. The applicant
also stated that, compared with historical data for procedures done
using contralateral hypogastric embolization, the GORE IBE device is
associated with reduced procedure time, reduced fluoroscopy time,
reduced reintervention rates, reduced incidence of aneurysm
enlargement, and improved patency rates.
---------------------------------------------------------------------------
\16\ DeRubertis BG, Quinones-Baldrich WJ, Greenberg JI, Jimenez
JC, Lee JT. Results of a double-barrel technique with commercially
available devices for hypogastric preservation during aortoilac
endovascular abdominal aortic aneurysm repair. J Vasc Surg
2012;56:1252-1259.
---------------------------------------------------------------------------
The applicant submitted several research articles with its
application, which consisted of a few very small case series of 23
total patients published,17 18 19 as well as some abstracts
of other case series. These publications describe the procedural
results of using the device, with angiographic endpoints, and
demonstrate the feasibility of insertion. The applicant also indicated
that other treatment approaches, including open surgery, are done
infrequently, while other approaches are not approved for this purpose.
Therefore, the applicant indicated that it would be impractical to
conduct comparative studies.
---------------------------------------------------------------------------
\17\ DeRubertis BG, Quinones-Baldrich WJ, Greenberg JI, Jimenez
JC, Lee JT. Results of a double-barrel technique with commercially
available devices for hypogastric preservation during aortoilac
endovascular abdominal aortic aneurysm repair. J Vasc Surg
2012;56:1252-1259.
\18\ Ferrer C, De Crescenzo F, Coscarella C, Cao P. Early
experience with the Excluder(R) iliac branch endoprosthesis. J
Cardiovasc Surg 2014;55:679-683.
\19\ Sch[ouml]nhofer S, Mansour R, Ghotbi R. Initial results of
the management of aortoiliac aneurysms with GORE(R) Excluder(R)
iliac branched endoprosthesis. J Cardiovasc Surg 2015;56:883-888.
---------------------------------------------------------------------------
After reviewing the information provided by the applicant, we have
the following concerns: We are concerned about the lack of clinical
studies comparing the GORE IBE device with alternative methods of
treatment, and note that the application did not provide data that
supported its assertions that the GORE IBE device is associated with
reduced procedure time, reduced fluoroscopy time, reduced
reintervention rates, reduced incidence of aneurysm enlargement, and
improved patency rates. We also note that the applicant's assertions
about decreased rates of complications appear to compare a small number
of published cases of the use of the GORE IBE device with complication
rates cited in the literature, which does not indicate whether there is
a valid basis for comparison. We are inviting public comments on
whether the GORE IBE device meets the substantial clinical improvement
criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
i. VistogardTM (Uridine Triacetate)
BTG International Inc., submitted an application for new technology
add-on payments for the VistogardTM for FY 2017.
VistogardTM (Uridine Triacetate) was developed as an
antidote to Fluorouracil toxicity. Chemotherapeutic agent 5-
fluorouracil (5-FU) is used to treat specific solid tumors. It acts
upon deoxyribonucleic acid (DNA) and ribonucleic acid (RNA) in the
body, as uracil is a naturally occurring building block for genetic
material. Fluorouracil is a fluorinated pyrimidine. As a chemotherapy
agent, Fluorouracil is absorbed up by cells and causes the cell to
metabolize into byproducts that are toxic and used to destroy cancerous
cells. The byproducts fluorodoxyuridine monophosphate (F-dUMP) and
floxuridine triphosphate (FUTP) are believed to do the following:
Reduce DNA synthesis, lead to DNA fragmentation, and disrupt RNA
synthesis. Fluorouracil is used to treat a variety of solid tumors such
as colorectal, head and neck, breast, and ovarian cancer. With
different tumor treatments, different dosages, and different dosing
schedules, there is a risk for toxicity in these patients.
Patients may suffer from fluorouracil toxicity/death if 5-FU is
delivered in slight excess or at faster infusion rates than prescribed.
The cause of overdose can happen for a variety of reasons including:
Pump malfunction, incorrect pump programming or miscalculated doses,
and accidental or intentional ingestion.
According to the applicant, current treatment for fluorouracil
toxicity is supportive care, including discontinuation of the drug,
hydration, filgrastim for neutropenia, as well as antibiotics,
antiemetics, and treatments that are required for potential
gastrointestinal and cardiovascular compromise. VistogardTM
is an antidote to Fluorouracil toxicity and is a pro-drug of uridine.
Once the drug is metabolized into uridine, it competes with the toxic
byproduct FUTP in binding to RNA, thus reducing the impact FUTP has on
cell death.
With regard to the newness criterion, VistogardTM
received FDA approval on December 11, 2015. The applicant noted that
VistogardTM is the first FDA approved antidote used to
reverse fluorouracil toxicity. Currently, there
[[Page 25060]]
are no ICD-10-CM procedure codes that uniquely identify the use of
VistogardTM. The applicant presented an application at the
March 9-10, 2016 meeting of the ICD-10 Coordination and Maintenance
Committee for a unique ICD-10-PCS procedure code to identify the use of
VistogardTM. If approved, the code will be effective on
October 1, 2016 (FY 2017). More information on this request can be
found on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10ProviderDiagnosticCodes/ICD-10-CM-C-and-M-Meeting-Materials.html.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether the product uses the
same or a similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that VistogardTM is the first FDA-
approved antidote used to reverse fluorouracil toxicity. The applicant
maintained that VistogardTM has a unique mechanism of action
that is not comparable to any other drug's mechanism of action that is
currently available on the U.S. market. The applicant described in
technical detail how the novel and unique mechanism of action provides
bioavailable uridine, a direct biochemical antagonist of 5-FU toxicity;
quickly absorbs into the gastrointestinal tract due to its lipophilic
nature; in normal cells, stops the process of cell damage and cell
destruction caused by 5-FU and counteracts the effects of 5-FU
toxicity; protects normal cells and allows recovery from damage caused
by 5-FU, without interfering with the primary antitumor mechanism of 5-
FU; and uses uridine derived from VistogardTM to convert it
into uridine triphosphate (UTP), which competes with FUTP for
incorporation into RNA, preventing further cell destruction and dose-
limiting toxicities.
With regard to the second criterion, whether the product is
assigned to the same or a different MS-DRG, the applicant noted that
Xuriden (uridine triacetate) was also approved by the FDA on September
8, 2015, as a pyrimidine analog for uridine replacement indicated for
the treatment of hereditary orotic aciduria (HOA). According to the
applicant, HOA is a rare, potentially life-threatening, genetic
disorder in which patients (primarily pediatric patients) lack the
ability to synthesize adequate amounts of uridine and consequently can
suffer from hematologic abnormalities, failure to thrive, a range of
developmental delays, and episodes of crystalluria leading to
obstructive uropathy. The applicant stated that, although Xuriden is
approved as a chronic, once daily medication (not to exceed 8 grams)
that is administered orally in the patient's home and also used to
replace uridine, Xuriden is not administered in a hospital setting and
cases involving the use of Xuriden would not be assigned to the same
MS-DRGs associated with the use of VistogardTM in the
treatment of patients experiencing 5-FU overdose or severe toxicity.
Therefore, the applicant maintained that no other technology similar to
VistogardTM would map to the same MS-DRGs as cases involving
the use of VistogardTM.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, similar to above,
the applicant maintained that VistogardTM is the first FDA
approved antidote to reverse fluorouracil toxicity and, therefore, no
other technology treats this disease or patient population to reverse
fluorouracil toxicity. Therefore, the applicant believed that
VistogardTM is not substantially similar to any other
currently approved technology. We are inviting public comments on
whether VistogardTM is substantially similar to existing
technologies and whether it meets the newness criterion.
With regard to the cost criterion, the applicant searched the
claims data from the 2013 and 2014 Inpatient SAFs for cases that may be
eligible for treatment involving VistogardTM. Specifically,
the applicant searched for cases reporting a primary ICD-9-CM diagnosis
code for colorectal cancer, head and neck cancer, gastric cancers and
pancreatic cancer. The applicant further narrowed the potential target
patient population by identifying cases reporting toxicity due to an
antineoplastic. In order to include only patients diagnosed with severe
toxicity that would be eligible for treatment using
VistogardTM, using revenue center codes and ICD-9-CM V
codes, the applicant included an additional cohort of cases
representing patients admitted from the emergency department, an
observation unit, another short-term, acute care hospital, or who have
received chemotherapy treatment during the inpatient stay included on
the claim. Because 5-FU toxicity is associated with a high mortality
rate, the applicant identified a subgroup of patients diagnosed with
chemotherapy toxicity who expired during their inpatient visit or
within 7 days of discharge. The applicant provided two analyses to
determine that the technology meets the cost criterion: One analysis of
patients that experienced toxicity with mortality and a second analysis
using the broader chemotherapy toxicity cohort, which includes patients
who did not expire. The table below provides the diagnosis codes and
information the applicant used to identify cases for both of these
analyses.
------------------------------------------------------------------------
Criterion ICD-9 code Description
------------------------------------------------------------------------
Colorectal, head and neck, 153.x............... Malignant neoplasm
gastric, or pancreatic 154.x............... of colon.
cancer (at least one code). Malignant neoplasm
of rectum,
rectosigmoid
junction, and anus.
171.0............... Malignant neoplasm
of head, face, and
neck.
151.x............... Malignant neoplasm
of stomach.
157.x............... Malignant neoplasm
of pancreas.
Toxicity due to an 963.1............... Poisoning by
antineoplastic (at least antineoplastic and
one code). immunosuppressive
drugs.
E933.1.............. Antineoplastic and
immunosuppressive
drugs causing
adverse effects in
therapeutic use.
Admission to Inpatient Revenue Center...... Revenue Center Codes
Setting Admitted from ED. 450, 451, 452, 456,
459.
or observation unit..... Revenue Center...... Revenue Center Codes
760, 761, 762, 769.
or short-term, acute N/A................. Source of admission
care hospital. code = ``4''
``Transfer from
hospital (Different
facility)''.
or received chemotherapy V58.0............... Encounter or
during inpatient stay. admission for
radiation.
V58.11.............. Encounter for
antineoplastic
chemotherapy.
V58.12.............. Encounter for
antineoplastic
immunotherapy (Must
be primary
diagnosis on the
claim).
[[Page 25061]]
Expired during inpatient N/A................. Determined by
stay or within seven days N/A................. patient discharge
of discharge (at least one status code.
code) \a\. If date of death in
100 percent
Denominator File
pertaining to the
year of the claim
was within 7 days
of claim discharge
date.
------------------------------------------------------------------------
\a\ Required only for toxicity with mortality cohort.
Source: KNG Health analysis of 2013-2014 100% Inpatient Standard
Analytic Files and 2013-2014 100% Denominator Files.
Under the first analysis, the applicant found 76 cases with 18.42
percent of those cases mapping to MS-DRG 871 (Septicemia or Severe
Sepsis without Mechanical Ventilation > 96 hours with MCC), and the
remaining number of cases mapping to MS-DRGs with less than 11 cases.
According to the applicant, the results of the analysis of the MS-DRGs
with less than 11 cases could not be discussed separately because of
the small sample sizes. The applicant believed that it was unnecessary
to remove any charges for other previously used technologies because
although VistogardTM is singular in its ability to treat 5-
FU toxicity, the associated charges for palliative care would continue
to be necessary to treat the symptoms of the toxicity, even though it
is possible that the use of VistogardTM may reduce a
patient's hospital length of stay. To update the charge data to the
current fiscal year, the applicant inflated the charges based on the
charge inflation factor of 1.048116 in the FY 2016 IPPS/LTCH proposed
rule (80 FR 24632). A 1-year inflation factor was applied three times
for FY 2013 claims and two times for FY 2014 claims, inflating all
claims to FY 2016. This resulted in an inflated average standardized
case-weighted charge per case of $51,451. Using the FY 2016 IPPS Table
10 thresholds, the average case-weighted threshold amount was $46,233
(all calculations above were performed using unrounded numbers). The
applicant noted that the inflated average standardized case-weighted
charge per case exceeded the average case-weighted threshold amount
without including charges for VistogardTM. Therefore,
because the inflated average standardized case-weighted charge per case
exceeds the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion.
Under the second analysis, the applicant used the same methodology
it used in its first analysis, except that the analysis included cases
representing patients who did not expire. The applicant found 879 cases
with 8.53 percent of those cases mapping to MS-DRG 392 (Esophagitis,
Gastroenteritis and Miscellaneous Digestive System Disorders without
MCC), and the remaining number of cases spread across several MS-DRGs.
The inflated average standardized case-weighted charge per case was
$42,708. Using the FY 2016 IPPS Table 10 thresholds, the average case-
weighted threshold amount was $42,377 (all calculations above were
performed using unrounded numbers). Similar to the results of the first
analysis, the applicant noted that the inflated average standardized
case-weighted charge per case exceeded the average case-weighted
threshold amount without including charges for VistogardTM.
Therefore, because the inflated average standardized case-weighted
charge per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology also meets the cost criterion
under the second analysis.
We note that the applicant used the inflation factor of 1.048116
from the FY 2016 IPPS/LTCH proposed rule instead of the inflation
factor of 1.037616 from the FY 2016 IPPS/LTCH final rule (80 FR 49784).
We believe that the applicant should use the most recent data
available, which is the inflation factor from the final rule. The
inflation factor from the FY 2016 IPPS/LTCH final rule is lower than
the inflation factor from the proposed rule. However, the difference
between these two factors is marginal. Also, as the applicant noted, it
did not include charges for VistogardTM in its analysis.
Therefore, we believe that it is likely that the applicant would still
meet the cost criterion under both analyses even if it used the lower
inflation factor from the FY 2016 final rule. We are inviting public
comments on whether VistogardTM meets the cost criterion
under both analyses.
With regard to substantial clinical improvement, the applicant
maintained that VistogardTM represents a substantial
clinical improvement. The applicant noted that VistogardTM
is the first and only antidote indicated to treat adult and pediatric
patients following a fluorouracil overdose, regardless of the presence
of symptoms or whether a patient exhibits early-onset, severe or life-
threatening toxicity within 96 hours following the conclusion of
fluorouracil or capecitabine administration. The applicant provided
data from two studies (Study 1, an open-label, single arm, multi-center
expanded access study and Study 2, an open-label, single arm, multi-
center emergency use study), which combined enrolled 135 patients. The
applicant noted that 130 patients treated with VistogardTM
survived through the 30-day treatment and observation period (95
percent Confidence Interval: 0.92, 0.99). Of the 135 patients, 30
percent were 65 years old and older, including 11 percent of patients
who were 75 years old and older.
According to the applicant, the studies' results demonstrate that
VistogardTM reduced the incidence, severity and virulence of
toxicities associated with 5-FU toxicity due to overdose or rapid
onset. Specifically, the applicant noted the following results:
VistogardTM ameliorated the progression of
mucositis, leukopenia and thrombocytopenia; leukopenia and
thrombocytopenia were resolved in almost all patients by the 4th week,
indicating recovery of the hematopoietic system; mucositis also was
resolved in almost all patients within the 30-day observation period
with the incidence of serious (Grade 3 or 4) mucositis being very low;
and no grade 4 mucositis was observed in any patients who received
treatment using VistogardTM within 96 hours after 5-FU.
Thirty-eight percent of patients who experienced 5-FU
overdose were able to resume chemotherapy treatment in less than 30
days after 5-FU toxicity, with the majority of these patients resuming
treatment within 21 days. According to the applicant, 21 percent of the
patients who presented with rapid onset of serious toxicities resumed
chemotherapy treatment (typically with a different agent than 5-FU) in
less than 30 days, with an overall median time to resumption of
chemotherapy of 19 days.
The safety and tolerability profile of
VistogardTM is consistent with what would be expected for
patients diagnosed with cancer following 5-FU chemotherapy treatment,
but is generally less in severity and incidence when compared to what
would be expected with patients who experience a 5-FU overdose.
Specifically, during Study 1, there were no patients that
[[Page 25062]]
discontinued uridine triacetate treatment as a result of adverse
events, and during Study 2, three patients discontinued uridine
triacetate treatment as a result of adverse events, one of which was
considered possibly related to uridine triacetate (nausea and
vomiting).
We are inviting public comments on whether VistogardTM
meets the substantial clinical improvement criterion.
We did not receive any written public comments in response to the
February 2016 New Technology Town Hall meeting regarding this
application for new technology add-on payments.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2017 hospital wage index based
on the statistical areas appears under sections III.A.2. and G. of the
preamble of this proposed rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short-term, acute care hospitals. (CMS collects
these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-
3, Parts II, III, and IV. The OMB control number for approved
collection of this information is 0938-0050.) This provision also
requires that any updates or adjustments to the wage index be made in a
manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The proposed adjustment for
FY 2017 is discussed in section II.B. of the Addendum to this proposed
rule.
As discussed in section III.J. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2017 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are proposing to
apply to the FY 2017 wage index, appears under sections III.E.3. and F.
of the preamble of this proposed rule.
2. Core-Based Statistical Areas (CBSAs) Revisions for the Proposed FY
2017 Hospital Wage Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate
hospital labor market areas based on OMB-established Core-Based
Statistical Areas (CBSAs). The current statistical areas (which were
implemented beginning with FY 2015) are based on revised OMB
delineations issued on February 28, 2013, in OMB Bulletin No. 13-01.
OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census, and provided guidance on the use of the
delineations of these statistical areas using standards published on
June 28, 2010 in the Federal Register (75 FR 37246 through 37252). We
refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951
through 49963) for a full discussion of our implementation of the new
OMB labor market area delineations beginning with the FY 2015 wage
index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses. On July 15, 2015, OMB issued
OMB Bulletin No. 15-01, which provides updates to and supersedes OMB
Bulletin No. 13-01 that was issued on February 28, 2013. The attachment
to OMB Bulletin No. 15-01 provides detailed information on the update
to statistical areas since February 28, 2013. The updates provided in
OMB Bulletin No. 15-01 are based on the application of the 2010
Standards for Delineating Metropolitan and Micropolitan Statistical
Areas to Census Bureau population estimates for July 1, 2012 and July
1, 2013. The complete list of statistical areas incorporating these
changes is provided in the attachment to OMB Bulletin No. 15-01.
According to OMB, ``[t]his bulletin establishes revised delineations
for the Nation's Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas. The bulletin also
provides delineations of Metropolitan Divisions as well as delineations
of New England City and Town Areas.'' A copy of this bulletin may be
obtained on the Web site at: https://www.whitehouse.gov/omb/bulletins_default.
OMB Bulletin No. 15-01 made the following changes that are relevant
to the IPPS wage index:
Garfield County, OK, with principal city Enid, OK, which
was a Micropolitan (geographically rural) area, now qualifies as an
urban new CBSA 21420 called Enid, OK.
The county of Bedford City, VA, a component of the
Lynchburg, VA CBSA 31340, changed to town status and is added to
Bedford County. Therefore, the county of Bedford City (SSA State county
code 49088, FIPS State County Code 51515) is now part of the county of
Bedford, VA (SSA State county code 49090, FIPS State County Code
51019). However, the CBSA remains Lynchburg, VA, 31340.
The name of Macon, GA, CBSA 31420, as well as a principal
city of the Macon-Warner Robins, GA combined statistical area, is now
Macon-Bibb County, GA. The CBSA code remains as 31420.
We believe that it is important for the IPPS to use the latest
labor market area delineations available as soon as is reasonably
possible in order to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions (79 FR 28055). Therefore, we are proposing to implement
these revisions, effective October 1, 2016, beginning with the FY 2017
wage indexes. We are proposing to use these new definitions to
calculate area wage indexes in a manner that is generally consistent
with the CBSA-based methodologies finalized in the FY 2005 and the FY
2015 IPPS final rules. For FY
[[Page 25063]]
2017, Tables 2 and 3 for this proposed rule and the County to CBSA
Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care
Hospitals File posted on the CMS Web site reflect these CBSA changes.
We are inviting public comments on these proposals.
B. Worksheet S-3 Wage Data for the Proposed FY 2017 Wage Index
The proposed FY 2017 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2013 (the FY 2016 wage indexes
were based on data from cost reporting periods beginning during FY
2012).
1. Included Categories of Costs
The proposed FY 2017 wage index includes all of the following
categories of data associated with costs paid under the IPPS (as well
as outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty);
Home office costs and hours;
Certain contract labor costs and hours, which include
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315 through 47317)); and
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586
through 51590)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2016, the
proposed wage index for FY 2017 also excludes the direct and overhead
salaries and hours for services not subject to IPPS payment, such as
skilled nursing facility (SNF) services, home health services, costs
related to GME (teaching physicians and residents) and certified
registered nurse anesthetists (CRNAs), and other subprovider components
that are not paid under the IPPS. The proposed FY 2017 wage index also
excludes the salaries, hours, and wage-related costs of hospital-based
rural health clinics (RHCs), and Federally qualified health centers
(FQHCs) because Medicare pays for these costs outside of the IPPS (68
FR 45395). In addition, salaries, hours, and wage-related costs of CAHs
are excluded from the wage index for the reasons explained in the FY
2004 IPPS final rule (68 FR 45397 through 45398).
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute
Care Hospitals Under the IPPS
Data collected for the IPPS wage index also are currently used to
calculate wage indexes applicable to suppliers and other providers,
such as SNFs, home health agencies (HHAs), ambulatory surgical centers
(ASCs), and hospices. In addition, they are used for prospective
payments to IRFs, IPFs, and LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules, we do not address comments
pertaining to the wage indexes of any supplier or provider except IPPS
providers and LTCHs. Such comments should be made in response to
separate proposed rules for those suppliers and providers.
C. Verification of Worksheet S-3 Wage Data
The wage data for the proposed FY 2017 wage index were obtained
from Worksheet S-3, Parts II and III of the Medicare cost report (Form
CMS-2552-10, OMB control number 0938-0050) for cost reporting periods
beginning on or after October 1, 2012, and before October 1, 2013. For
wage index purposes, we refer to cost reports during this period as the
``FY 2013 cost report,'' the ``FY 2013 wage data,'' or the ``FY 2013
data.'' Instructions for completing the wage index sections of
Worksheet S-3 are included in the Provider Reimbursement Manual (PRM),
Part 2 (Pub. No. 15-2), Chapter 40, Sections 4005.2 through 4005.4. The
data file used to construct the proposed FY 2017 wage index includes FY
2013 data submitted to us as of February 29, 2016. As in past years, we
performed an extensive review of the wage data, mostly through the use
of edits for reasonableness designed to identify aberrant data.
We asked our MACs to revise or verify data elements that result in
specific edit failures. For the proposed FY 2017 wage index, we
identified and excluded 62 providers with aberrant data that should not
be included in the proposed wage index. Of these 62 providers that we
excluded from the proposed wage index, 47 have data that we do not
expect to change such that the data would be included in the final wage
index (for example, among the reasons these providers were excluded is
they are low Medicare utilization providers, they closed and failed
edits for reasonableness, or they have extremely high or low average
hourly wages that are atypical for their CBSAs). If data elements for
some of these providers are corrected, we intend to include those
providers in the calculation of the final FY 2017 wage index. We also
adjusted certain aberrant data and included these data in the proposed
wage index. For example, in situations where a hospital did not have
documentable salaries, wages, and hours for housekeeping and dietary
services, we imputed estimates, in accordance with policies established
in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967).
In constructing the proposed FY 2017 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2013, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believed that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398). For the this
proposed rule, we removed 3 hospitals that converted to CAH status on
or after February 5, 2015, the cut-off date for CAH exclusion from the
FY 2016 wage index, and through and including January 22, 2016, the
cut-off date for CAH exclusion from the FY 2017 wage index. After
removing hospitals that converted to CAH status, we calculated the
proposed FY 2017 wage index based on 3,345 hospitals.
For the proposed FY 2017 wage index, we allotted the wages and
hours data for a multicampus hospital among the different labor market
areas where its campuses are located in the same manner that we
allotted such hospitals' data in the FY 2016 wage index (80 FR 49489
through 49491). Table 2, which contains the proposed FY 2017 wage index
associated with proposed rule (available via the Internet on the CMS
Web site), includes separate wage data for the campuses of 9
multicampus hospitals.
D. Method for Computing the Proposed FY 2017 Unadjusted Wage Index
The method used to compute the proposed FY 2017 wage index without
an occupational mix adjustment follows the same methodology that we
used to compute the FY 2012, FY 2013, FY 2014, FY 2015, and FY 2016
final wage indexes without an occupational mix adjustment (76 FR 51591
through 51593, 77 FR 53366 through 53367, 78 FR 50587 through 50588, 79
FR 49967 and
[[Page 25064]]
80 FR 49491 through 49492, respectively).
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in ``Step
5,'' for each hospital, we adjust the total salaries plus wage-related
costs to a common period to determine total adjusted salaries plus
wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2012, through April 15,
2014, for private industry hospital workers from the BLS' Compensation
and Working Conditions. We have consistently used the ECI as the data
source for our wages and salaries and other price proxies in the IPPS
market basket, and we are not proposing any changes to the usage for FY
2017. The factors used to adjust the hospital's data were based on the
midpoint of the cost reporting period, as indicated in the following
table.
Midpoint of Cost Reporting Period
------------------------------------------------------------------------
After Before Adjustment factor
------------------------------------------------------------------------
10/14/2012...................... 11/15/2012........ 1.02321
11/14/2012...................... 12/15/2012........ 1.02183
12/14/2012...................... 01/15/2013........ 1.02040
01/14/2013...................... 02/15/2013........ 1.01894
02/14/2013...................... 03/15/2013........ 1.01743
03/14/2013...................... 04/15/2013........ 1.01592
04/14/2013...................... 05/15/2013........ 1.01443
05/14/2013...................... 06/15/2013........ 1.01297
06/14/2013...................... 07/15/2013........ 1.01152
07/14/2013...................... 08/15/2013........ 1.01006
08/14/2013...................... 09/15/2013........ 1.00859
09/14/2013...................... 10/15/2013........ 1.00711
10/14/2013...................... 11/15/2013........ 1.00561
11/14/2013...................... 12/15/2013........ 1.00408
12/14/2013...................... 01/15/2014........ 1.00260
01/14/2014...................... 02/15/2014........ 1.00124
02/14/2014...................... 03/15/2014........ 1.00000
03/14/2014...................... 04/15/2014........ 0.99878
------------------------------------------------------------------------
For example, the midpoint of a cost reporting period beginning
January 1, 2013, and ending December 31, 2013, is June 30, 2013. An
adjustment factor of 1.01152 would be applied to the wages of a
hospital with such a cost reporting period.
Using the data as previously described, the proposed FY 2017
national average hourly wage (unadjusted for occupational mix) is
$41.1026.
Previously, we would also provide a Puerto Rico overall average
hourly wage. As discussed in section IV.A. of the preamble of this
proposed rule, prior to January 1, 2016, Puerto Rico hospitals were
paid based on 75 percent of the national standardized amount and 25
percent of the Puerto Rico-specific standardized amount. As a result,
we calculated a Puerto Rico-specific wage index that was applied to the
labor share of the Puerto Rico-specific standardized amount. Section
601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113),
enacted on December 18, 2015, amended section 1886(d)(9)(E) of the Act
to specify that the payment calculation with respect to operating costs
of inpatient hospital services of a subsection (d) Puerto Rico hospital
for inpatient hospital discharges on or after January 1, 2016, shall
use 100 percent of the national standardized amount. Because Puerto
Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount as of January 1, 2016, under section 1886(d)(9)(E)
of the Act, as amended by section 601 of the Consolidated
Appropriations Act, 2016, there is no longer a need to calculate a
Puerto Rico-specific average hourly wage and wage index. Hospitals in
Puerto Rico are now paid 100 percent of the national standardized
amount and, therefore, are subject to the national average hourly wage
(unadjusted for occupational mix) (which would be $41.1026 for this FY
2017 proposed rule) and the national wage index, which is applied to
the national labor share of the national standardized amount.
Accordingly, for FY 2017, we are not proposing a Puerto Rico-specific
overall average hourly wage or wage index.
E. Proposed Occupational Mix Adjustment to the FY 2017 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of 2013 Occupational Mix Survey for the FY 2017 Proposed Wage
Index
Section 304(c) of Public Law 106-554 amended section 1886(d)(3)(E)
of the Act to require CMS to collect data every 3 years on the
occupational mix of employees for each short-term, acute care hospital
participating in the Medicare program. We collected data in 2013 to
compute the occupational mix adjustment for the FY 2016, FY 2017, and
FY 2018 wage indexes. A new measurement of occupational mix is required
for FY 2019.
The 2013 survey included the same data elements and definitions as
the previous 2010 survey and provided for the collection of hospital-
specific wages and hours data for nursing employees for calendar year
2013 (that is, payroll periods ending between January 1, 2013 and
December 31, 2013). We published the 2013 survey in the Federal
Register on February 28, 2013 (78 FR 13679 through 13680). This survey
was approved by OMB on May 14, 2013, and is available on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/Medicare-Wage-Index-Occupational-Mix-Survey2013.html. The 2013 Occupational Mix Survey
Hospital Reporting Form CMS-10079 for the Wage Index Beginning FY 2016
(in Excel format) is available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/Medicare-Wage-Index-Occupational-Mix-Survey2013.html. Hospitals were required to submit
their completed 2013 surveys to their MACs by July 1, 2014. The
preliminary, unaudited 2013 survey data were posted on the CMS Web site
on July 11, 2014. As with the Worksheet S-3, Parts II and III cost
report wage data, we asked our MACs to revise or verify data elements
in hospitals' occupational mix surveys that result in certain edit
failures.
2. Development of the 2016 Medicare Wage Index Occupational Mix Survey
for the FY 2019 Wage Index
As stated earlier, section 304(c) of Public Law 106-554 amended
section 1886(d)(3)(E) of the Act to require CMS to collect data every 3
years on the occupational mix of employees for each short-term, acute
care hospital participating in the Medicare program. We collected data
in 2013 to compute the occupational mix adjustment for the FY 2016, FY
2017, and FY 2018 wage indexes. A new measurement of occupational mix
is required for FY 2019. The FY 2019 occupational mix adjustment will
be based on a new calendar year (CY) 2016 survey. The CY 2016 survey
(CMS Form CMS-10079) is currently awaiting approval by OMB,
[[Page 25065]]
and can be accessed at http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201512-0938-011.
3. Calculation of the Proposed Occupational Mix Adjustment for FY 2017
For FY 2017, we are proposing to calculate the occupational mix
adjustment factor using the same methodology that we used for the FY
2012, FY 2013, FY 2014, FY 2015, and FY 2016 wage indexes (76 FR 51582
through 51586, 77 FR 53367 through 53368, 78 FR 50588 through 50589, 79
FR 49968, and 80 FR 49492 through 49493, respectively) and to apply the
occupational mix adjustment to 100 percent of the FY 2017 wage index.
Because the statute requires that the Secretary measure the earnings
and paid hours of employment by occupational category not less than
once every 3 years, all hospitals that are subject to payments under
the IPPS, or any hospital that would be subject to the IPPS if not
granted a waiver, must complete the occupational mix survey, unless the
hospital has no associated cost report wage data that are included in
the FY 2017 wage index. For the FY 2017 wage index, we are using the
Worksheet S-3, Parts II and III wage data of 3,345 hospitals, and we
are using the occupational mix surveys of 3,143 hospitals for which we
also have Worksheet S-3 wage data, which represents a ``response'' rate
of 94 percent (3,143/3,345). For the proposed FY 2017 wage index in
this proposed rule, we applied proxy data for noncompliant hospitals,
new hospitals, or hospitals that submitted erroneous or aberrant data
in the same manner that we applied proxy data for such hospitals in the
FY 2012 wage index occupational mix adjustment (76 FR 51586).
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2017 Occupational Mix Adjusted Wage
Index
1. Analysis of the Occupational Mix Adjustment and the Occupational Mix
Adjusted Wage Index
As discussed in section III.E. of the preamble of this proposed
rule, for FY 2017, we are proposing to apply the occupational mix
adjustment to 100 percent of the FY 2017 wage index. We calculated the
proposed occupational mix adjustment using data from the 2013
occupational mix survey data, using the methodology described in the FY
2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586).
Using the occupational mix survey data and applying the
occupational mix adjustment to 100 percent of the FY 2017 wage index
results in a proposed national average hourly wage of $41.0651.
Previously, we would also provide a Puerto Rico overall average hourly
wage. As discussed in section IV.A. of the preamble of this proposed
rule, prior to January 1, 2016, Puerto Rico hospitals were paid based
on 75 percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we calculated a
Puerto Rico-specific wage index that was applied to the labor-related
share of the Puerto Rico-specific standardized amount. Section 601 of
the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on
December 18, 2015, amended section 1886(d)(9)(E) of the Act to specify
that the payment calculation with respect to operating costs of
inpatient hospital services of a subsection (d) Puerto Rico hospital
for inpatient hospital discharges on or after January 1, 2016, shall
use 100 percent of the national standardized amount. Because Puerto
Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount as of January 1, 2016 under section 1886(d)(9)(E)
of the Act, as amended by section 601 of the Consolidated
Appropriations Act, 2016, there is no longer a need to calculate a
Puerto Rico-specific average hourly wage and wage index. Hospitals in
Puerto Rico are now paid 100 percent of the national standardized
amount and, therefore, are subject to the national average hourly wage
(adjusted for occupational mix) (which would be $41.0651 for this FY
2017 IPPS proposed rule) and the national wage index, which is applied
to the national labor share of the national standardized amount.
Accordingly, for FY 2017, we are not proposing a Puerto Rico-specific
overall average hourly wage or wage index.
The proposed FY 2017 national average hourly wages for each
occupational mix nursing subcategory as calculated in Step 2 of the
occupational mix calculation are as follows:
------------------------------------------------------------------------
Average hourly
Occupational mix nursing subcategory wage
------------------------------------------------------------------------
National RN........................................... $38.814164598
National LPN and Surgical Technician.................. 22.733613839
National Nurse Aide, Orderly, and Attendant........... 15.94875556
National Medical Assistant............................ 18.058859076
National Nurse Category............................... 32.844074591
------------------------------------------------------------------------
The proposed national average hourly wage for the entire nurse
category as computed in Step 5 of the occupational mix calculation is
$32.844074591. Hospitals with a nurse category average hourly wage (as
calculated in Step 4) of greater than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of less than 1.0. Hospitals with a nurse category
average hourly wage (as calculated in Step 4) of less than the national
nurse category average hourly wage receive an occupational mix
adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2013 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) that the national
percentage of hospital employees in the nurse category is 42.6 percent,
and the national percentage of hospital employees in the all other
occupations category is 57.4 percent. At the CBSA level, the percentage
of hospital employees in the nurse category ranged from a low of 25.6
percent in one CBSA to a high of 80.5 percent in another CBSA.
We compared the proposed FY 2017 occupational mix adjusted wage
indexes for each CBSA to the proposed unadjusted wage indexes for each
CBSA. As a result of applying the occupational mix adjustment to the
wage data, the proposed wage index values for 221 (54.2 percent) urban
areas and 24 (51.1 percent) rural areas would increase. One hundred and
three (25.2 percent) urban areas would increase by greater than or
equal to 1 percent but less than 5 percent, and 6 (1.5 percent) urban
areas would increase by 5 percent or more. Nine (19.1 percent) rural
areas would increase by greater than or equal to 1 percent but less
than 5 percent, and no rural areas would increase by 5 percent or more.
However, the proposed
[[Page 25066]]
wage index values for 185 (45.3 percent) urban areas and 23 (48.9
percent) rural areas would decrease. Eighty-nine (21.8 percent) urban
areas would decrease by greater than or equal to 1 percent but less
than 5 percent, and no urban area would decrease by 5 percent or more.
Seven (14.9 percent) rural areas would decrease by greater than or
equal to 1 percent and less than 5 percent, and no rural areas would
decrease by 5 percent or more. The largest positive impacts would be
17.4 percent for an urban area and 2.9 percent for a rural area. The
largest negative impacts would be 4.9 percent for an urban area and 2.1
percent for a rural area. Two urban areas' wage indexes, but no rural
area wage indexes, would remain unchanged by application of the
proposed occupational mix adjustment. These results indicate that a
larger percentage of urban areas (54.2 percent) would benefit from the
proposed occupational mix adjustment than would rural areas (51.1
percent).
G. Transitional Wage Indexes
1. Background
In the FY 2015 IPPS/LTCH PPS proposed rule and final rule (79 FR
28060 and 49957, respectively), we stated that, overall, we believed
implementing the new OMB labor market area delineations would result in
wage index values being more representative of the actual costs of
labor in a given area. However, we recognized that some hospitals would
experience decreases in wage index values as a result of the
implementation of these new OMB labor market area delineations. We also
realized that some hospitals would have higher wage index values due to
the implementation of the new OMB labor market area delineations.
The FY 2015 IPPS/LTCH PPS final rule (79 FR 49957) explained the
methodology utilized in implementing prior transition periods when
adopting changes that have significant payment implications,
particularly large negative impacts. Specifically, for FY 2005, in the
FY 2005 IPPS final rule (69 FR 49032 through 49034), we provided
transitional wage indexes when the OMB definitions were implemented
after the 2000 Census. The FY 2015 IPPS/LTCH PPS final rule (79 FR
49957 through 49962) established similar transition methodologies to
mitigate any negative payment impacts experienced by hospitals due to
our adoption of the new OMB labor market area delineations for FY 2015.
As finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49957
through 49960) and as discussed below, for FY 2017, we will be in the
third and final year of two 3-year transition periods for wage index
(1) for hospitals that, for FY 2014, were located in an urban county
that became rural under the new OMB delineations, and had no form of
wage index reclassification or redesignation in place for FY 2015 (that
is, MGCRB reclassifications under section 1886(d)(10) of the Act,
redesignations under section 1886(d)(8)(B) of the Act, or rural
reclassifications under section 1886(d)(8)(E) of the Act); and (2) for
hospitals deemed urban under section 1886(d)(8)(B) of the Act where the
urban area became rural under the new OMB delineations.
2. Transition for Hospitals in Urban Areas That Became Rural
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49957 through
49959), for hospitals that, for FY 2014, were located in an urban
county that became rural under the new OMB delineations, and had no
form of wage index reclassification or redesignation in place for FY
2015 (that is, MGCRB reclassifications under section 1886(d)(10) of the
Act, redesignations under section 1886(d)(8)(B) of the Act, or rural
reclassifications under section 1886(d)(8)(E) of the Act), we adopted a
policy to assign 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
(with the rural and imputed floors applied and with the rural floor
budget neutrality adjustment applied to the area wage index). FY 2017
will be the third year of this transition policy, and we are not
proposing any changes to this policy in this proposed rule. In the FY
2015 IPPS/LTCH PPS final rule (79 FR 49957) and the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49495), we stated our belief that it is
appropriate to apply a 3-year transition period for hospitals located
in urban counties that would become rural under the new OMB
delineations, given the potentially significant payment impacts for
these hospitals. We continue to believe that assigning the wage index
of the hospitals' FY 2014 area for a 3-year transition is the simplest
and most effective method for mitigating negative payment impacts due
to the adoption of the new OMB delineations.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49959), we noted
that there were situations where a hospital could not be assigned the
wage index value of the CBSA in which it geographically was located in
FY 2014 because that CBSA split and no longer exists and some or all of
the constituent counties were added to another urban labor market area
under the new OMB delineations. If the hospital could not be assigned
the wage index value of the CBSA in which it was geographically located
in FY 2014 because that CBSA split apart and no longer exists, and some
or all of its constituent counties were added to another urban labor
market area under the new OMB delineations, we established that
hospitals located in such counties that became rural under the new OMB
delineations were assigned the wage index of the urban labor market
area that contained the urban county in their FY 2014 CBSA to which
they were closest (with the rural and imputed floors applied and with
the rural floor budget neutrality adjustment applied). Any such
assignment made in FY 2015 and continued in FY 2016 will continue for
FY 2017, except as discussed later in this section. We continue to
believe this approach minimizes the negative effects of the change in
the OMB delineations.
Under the policy adopted in the FY 2015 IPPS/LTCH PPS final rule,
if a hospital for FY 2014 was located in an urban county that became
rural for FY 2015 under the new OMB delineations and such hospital
sought and was granted reclassification or redesignation for FY 2015 or
FY 2016, or such hospital seeks and is granted any reclassification or
redesignation for FY 2017, the hospital will permanently lose its 3-
year transitional assigned wage index status, and will not be eligible
to reinstate it. We established the transition policy to assist
hospitals if they experience a negative payment impact specifically due
to the adoption of the new OMB delineations in FY 2015. If a hospital
chooses to forego this transition adjustment by obtaining some form of
reclassification or redesignation, we do not believe reinstatement of
this transition adjustment would be appropriate. The purpose of the
transition adjustment policy is to assist hospitals that may be
negatively impacted by the new OMB delineations in transitioning to a
wage index based on these delineations. By obtaining a reclassification
or redesignation, we believe that the hospital has made the
determination that the transition adjustment is not necessary because
it has other viable options for mitigating the impact of the transition
to the new OMB delineations.
As we did for FY 2015 (79 FR 49959) and FY 2016 (80 FR 49495), with
respect to the wage index computation for FY 2017, we will follow our
existing policy regarding the inclusion of a hospital's wage index data
in the CBSA in which it is geographically located (we
[[Page 25067]]
refer readers to Step 6 of the method for computing the unadjusted wage
index in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592)).
Accordingly, for FY 2017, the wage data of all hospitals receiving this
type of 3-year transition adjustment will be included in the statewide
rural area in which they are geographically located under the new OMB
labor market area delineations. After the 3-year transition period,
beginning in FY 2018, these formerly urban hospitals will receive their
statewide rural wage index, absent any reclassification or
redesignation.
In addition, we established in the FY 2015 IPPS/LTCH PPS final rule
(79 FR 49959) that the hospitals receiving this 3-year transition
because they are in counties that were urban under the FY 2014 CBSA
definitions, but are rural under the new OMB delineations, will not be
considered urban hospitals. Rather, they will maintain their status as
rural hospitals for other payment considerations. This is because our
application of a 3-year transitional wage index for these newly rural
hospitals only applies for the purpose of calculating the wage index
under our adoption of the new OMB delineations.
3. Transition for Hospitals Deemed Urban Under Section 1886(d)(8)(B) of
the Act Where the Urban Area Became Rural Under the New OMB
Delineations
As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49959
through 49960) and FY 2016 IPPS/LTCH PPS final rule (80 FR 49495
through 49496), there were some hospitals that, for FY 2014, were
geographically located in rural areas but were deemed to be urban under
section 1886(d)(8)(B) of the Act. For FY 2015, some of these hospitals
redesignated under section 1886(d)(8)(B) of the Act were no longer
eligible for deemed urban status under the new OMB delineations, as
discussed in detail in section III.H.3. of the preamble of the FY 2015
IPPS/LTCH PPS final rule. Similar to the policy implemented in the FY
2005 IPPS final rule (69 FR 49059), and consistent with the FY 2015
policy we established for other hospitals in counties that were urban
and became rural under the new OMB delineations, we finalized a policy
to apply a 3-year transition to these hospitals redesignated to urban
areas under section 1886(d)(8)(B) of the Act for FY 2014 that are no
longer deemed urban under the new OMB delineations and revert to being
rural.
For FY 2017, we are not proposing any changes to this policy and
will continue the third and final year of the implementation of our
policy to provide a 3-year transition adjustment to hospitals that are
deemed urban under section 1886(d)(8)(B) of the Act under the FY 2014
labor market area delineations, but are considered rural under the new
OMB delineations, assuming no other form of wage index reclassification
or redesignation is granted. We assign these hospitals the area wage
index value of hospitals reclassified to the urban CBSA (that is, the
attaching wage index) to which they were redesignated in FY 2014 (with
the rural and imputed floors applied and with the rural floor budget
neutrality adjustment applied). If the hospital cannot be assigned the
reclassified wage index value of the CBSA to which it was redesignated
in FY 2014 because that CBSA was split apart and no longer exists, and
some or all of its constituent counties were added to another urban
labor market area under the new OMB delineations, such hospitals are
assigned the wage index of the hospitals reclassified to the urban
labor market area that contained the urban county in their FY 2014
redesignated CBSA to which they were closest. We assign these hospitals
the area wage index of hospitals reclassified to a CBSA because
hospitals deemed urban under section 1886(d)(8)(B) of the Act are
treated as reclassified under current policy, under which such
hospitals receive an area wage index that includes wage data of all
hospitals reclassified to the area. This wage index assignment will be
forfeited if the hospital obtains any form of wage index
reclassification or redesignation.
4. Budget Neutrality
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50372 through
50373), for FY 2015, and in the FY 2016 IPPS/LTCH PPS final rule (80 FR
49496), for FY 2016, we applied the 3-year transition wage index
adjustments in a budget neutral manner. For FY 2017, we are proposing
to apply the 3-year transition adjustments in a budget neutral manner.
We are proposing to make an adjustment to the standardized amount to
ensure that the total payments, including the effect of the transition
provisions, would equal what payments would have been if we would not
be providing for any transitional wage indexes under the new OMB
delineations. For a complete discussion on the proposed budget
neutrality adjustment for FY 2017, we refer readers to section
II.A.4.b. of the Addendum to this proposed rule.
H. Proposed Application of the Proposed Rural, Imputed, and Frontier
Floors
1. Proposed Rural Floor
Section 4410(a) of Public Law 105-33 provides that, for discharges
on or after October 1, 1997, the area wage index applicable to any
hospital that is located in an urban area of a State may not be less
than the area wage index applicable to hospitals located in rural areas
in that State. This provision is referred to as the ``rural floor.''
Section 3141 of Public Law 111-148 also requires that a national budget
neutrality adjustment be applied in implementing the rural floor. Based
on the proposed FY 2017 wage index associated with this proposed rule
(which is available via the Internet on the CMS Web site), we estimated
that 371 hospitals would receive an increase in their FY 2017 proposed
wage index due to the application of the rural floor.
2. Proposed Imputed Floor for FY 2017
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the ``imputed floor'' policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all-urban States that
have argued that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. Since its initial
implementation, we have extended the imputed floor policy six times,
the last of which was adopted in the FY 2016 IPPS/LTCH PPS final rule
and is set to expire on September 30, 2016. (We refer readers to
further discussions of the imputed floor in the FY 2014, FY 2015, and
FY 2016 IPPS/LTCH PPS final rules (78 FR 50589 through 50590, 79 FR
49969 through 49970, and 80 FR 49497 through 49498, respectively) and
to the regulations at 42 CFR 412.64(h)(4).) Currently, there are three
all-urban States--Delaware, New Jersey, and Rhode Island--with a range
of wage indexes assigned to hospitals in these States, including
through reclassification or redesignation. (We refer readers to
discussions of geographic reclassifications and redesignations in
section III.J. of the preamble of this proposed rule.)
In computing the imputed floor for an all-urban State under the
original methodology, which was established beginning in FY 2005, we
calculated the ratio of the lowest-to-highest CBSA wage index for each
all-urban State as well as the average of the ratios of lowest-to-
highest CBSA wage indexes of those all-urban States. We then compared
the State's own ratio to the average ratio for all-urban States and
whichever is higher is multiplied by the
[[Page 25068]]
highest CBSA wage index value in the State--the product of which
established the imputed floor for the State. As of FY 2012, there were
only two all-urban States--New Jersey and Rhode Island--and only New
Jersey benefitted under this methodology. Under the previous OMB labor
market area delineations, Rhode Island had only one CBSA (Providence-
New Bedford-Fall River, RI-MA) and New Jersey had 10 CBSAs. Therefore,
under the original methodology, Rhode Island's own ratio equaled 1.0,
and its imputed floor was equal to its original CBSA wage index value.
However, because the average ratio of New Jersey and Rhode Island was
higher than New Jersey's own ratio, this methodology provided a benefit
for New Jersey, but not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through
53369), we retained the imputed floor calculated under the original
methodology as discussed above, and established an alternative
methodology for computing the imputed floor wage index to address the
concern that the original imputed floor methodology guaranteed a
benefit for one all-urban State with multiple wage indexes (New Jersey)
but could not benefit the other all-urban State (Rhode Island). The
alternative methodology for calculating the imputed floor was
established using data from the application of the rural floor policy
for FY 2013. Under the alternative methodology, we first determined the
average percentage difference between the post-reclassified, pre-floor
area wage index and the post-reclassified, rural floor wage index
(without rural floor budget neutrality applied) for all CBSAs receiving
the rural floor. (Table 4D associated with the FY 2013 IPPS/LTCH PPS
final rule (which is available via the Internet on the CMS Web site)
included the CBSAs receiving a State's rural floor wage index.) The
lowest post-reclassified wage index assigned to a hospital in an all-
urban State having a range of such values then is increased by this
factor, the result of which establishes the State's alternative imputed
floor. We amended Sec. 412.64(h)(4) of the regulations to add new
paragraphs to incorporate the finalized alternative methodology, and to
make reference and date changes. In summary, for the FY 2013 wage
index, we did not make any changes to the original imputed floor
methodology at Sec. 412.64(h)(4) and, therefore, made no changes to
the New Jersey imputed floor computation for FY 2013. Instead, for FY
2013, we adopted a second, alternative methodology for use in cases
where an all-urban State has a range of wage indexes assigned to its
hospitals, but the State cannot benefit under the original methodology.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through
50590), we extended the imputed floor policy (both the original
methodology and the alternative methodology) for 1 additional year,
through September 30, 2014, while we continued to explore potential
wage index reforms.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49969 through
49970), for FY 2015, we adopted a policy to extend the imputed floor
policy (both the original methodology and alternative methodology) for
another year, through September 30, 2015, as we continued to explore
potential wage index reforms. In that final rule, we revised the
regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect the 1-year
extension of the imputed floor.
As discussed in section III.B. of the preamble of that FY 2015
final rule, we adopted the new OMB labor market area delineations
beginning in FY 2015. Under the new OMB delineations, Delaware became
an all-urban State, along with New Jersey and Rhode Island. Under the
new OMB delineations, Delaware has three CBSAs, New Jersey has seven
CBSAs, and Rhode Island continues to have only one CBSA (Providence-
Warwick, RI-MA). We refer readers to a detailed discussion of our
adoption of the new OMB labor market area delineations in section
III.B. of the preamble of the FY 2015 IPPS/LTCH PPS final rule.
Therefore, under the adopted new OMB delineations discussed in section
III.B. of the preamble of the FY 2015 IPPS/LTCH PPS final rule,
Delaware became an all-urban State and was subject to an imputed floor
as well for FY 2015.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49497 through
49498), for FY 2016, we extended the imputed floor policy (under both
the original methodology and the alternative methodology) for 1
additional year, through September 30, 2016. In that final rule, we
revised the regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect
this additional 1-year extension.
For FY 2017, we are proposing to extend the imputed floor policy
(under both the original methodology and the alternative methodology)
for 1 additional year, through September 30, 2017, while we continue to
explore potential wage index reforms. We are proposing to revise the
regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect this
proposed additional 1-year extension. We are inviting public comments
on the proposed additional 1-year extension of the imputed floor
through September 30, 2017. The wage index and impact tables associated
with this FY 2017 IPPS/LTCH PPS proposed rule (which are available on
the Internet via the CMS Web site) reflect the proposed continued
application of the imputed floor policy at Sec. 412.64(h)(4) and a
proposed national budget neutrality adjustment for the imputed floor
for FY 2017. There are 20 providers in New Jersey that would receive an
increase in their proposed FY 2017 wage index due to the proposed
continued application of the imputed floor policy under the original
methodology, and 10 hospitals in Rhode Island that would benefit under
the alternative methodology. No providers in Delaware would benefit
under the original methodology or the alternative methodology.
3. Proposed State Frontier Floor for FY 2017
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000 (we
refer readers to regulations at 42 CFR 412.64(m) and to a discussion of
the implementation of this provision in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50160 through 50161)). Fifty hospitals would receive the
frontier floor value of 1.0000 for their FY 2017 wage index in this
proposed rule. These hospitals are located in Montana, Nevada, North
Dakota, South Dakota, and Wyoming.
We are not proposing any changes to the frontier floor policy for
FY 2017.
The areas affected by the proposed rural, imputed, and frontier
floor policies for the proposed FY 2017 wage index are identified in
Table 2 associated with this proposed rule, which is available via the
Internet on the CMS Web site.
I. Proposed FY 2017 Wage Index Tables
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807
through 49808), we finalized a proposal to streamline and consolidate
the wage index tables associated with the IPPS proposed and final rules
for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage
index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C,
4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the Internet
on the CMS Web site. Effective beginning FY 2016, with the exception of
Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). We
refer readers to section VI. of the Addendum to this proposed rule for
a discussion of
[[Page 25069]]
the proposed wage index tables for FY 2017.
J. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for purposes of the proximity requirements.) The general policies for
reclassifications and redesignations that we are proposing for FY 2017,
and the policies for the effects of hospitals' reclassifications and
redesignations on the wage index, are the same as those discussed in
the FY 2012 IPPS/LTCH PPS final rule for the FY 2012 final wage index
(76 FR 51595 and 51596). In addition, in the FY 2012 IPPS/LTCH PPS
final rule, we discussed the effects on the wage index of urban
hospitals reclassifying to rural areas under 42 CFR 412.103. Hospitals
that are geographically located in States without any rural areas are
ineligible to apply for rural reclassification in accordance with the
provisions of 42 CFR 412.103.
2. MGCRB Reclassification and Redesignation Issues for FY 2017
a. FY 2017 Reclassification Requirements and Approvals
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. The specific procedures and rules that apply
to the geographic reclassification process are outlined in regulations
under 42 CFR 412.230 through 412.280.
At the time this proposed rule was constructed, the MGCRB had
completed its review of FY 2017 reclassification requests. Based on
such reviews, there are 299 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2017. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2017,
hospitals reclassified beginning in FY 2015 or FY 2016 are eligible to
continue to be reclassified to a particular labor market area based on
such prior reclassifications for the remainder of their 3-year period.
There were 302 hospitals approved for wage index reclassifications in
FY 2015 that will continue for FY 2017, and 266 hospitals approved for
wage index reclassifications in FY 2016 that will continue for FY 2017.
Of all the hospitals approved for reclassification for FY 2015, FY
2016, and FY 2017, based upon the review at the time of this proposed
rule, 867 hospitals are in a reclassification status for FY 2017.
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
within 45 days of the publication of a proposed rule. For information
about withdrawing, terminating, or canceling a previous withdrawal or
termination of a 3-year reclassification for wage index purposes, we
refer readers to 42 CFR 412.273, as well as the FY 2002 IPPS final rule
(66 FR 39887 through 39888) and the FY 2003 IPPS final rule (67 FR
50065 through 50066). Additional discussion on withdrawals and
terminations, and clarifications regarding reinstating
reclassifications and ``fallback'' reclassifications, were included in
the FY 2008 IPPS final rule (72 FR 47333).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2017 will be incorporated
into the wage index values published in the FY 2017 IPPS/LTCH PPS final
rule. These changes affect not only the wage index value for specific
geographic areas, but also the wage index value that redesignated/
reclassified hospitals receive; that is, whether they receive the wage
index that includes the data for both the hospitals already in the area
and the redesignated/reclassified hospitals. Further, the wage index
value for the area from which the hospitals are redesignated/
reclassified may be affected.
b. Requirements for FY 2018 Applications and Proposed Revisions
Regarding Paper Application Requirements
Applications for FY 2018 reclassifications are due to the MGCRB by
September 1, 2016 (the first working day of September 2016). We note
that this is also the deadline for canceling a previous wage index
reclassification withdrawal or termination under 42 CFR 412.273(d).
Applications and other information about MGCRB reclassifications may be
obtained, beginning in mid-July 2016, via the Internet on the CMS Web
site at https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/index.html, or by calling the MGCRB at (410) 786-1174. The
mailing address of the MGCRB is: 2520 Lord Baltimore Drive, Suite L,
Baltimore, MD 21244-2670.
Under existing regulations at 42 CFR 412.256(a)(1), applications
for reclassification must be mailed or delivered to the MGCRB, with a
copy to CMS, and may not be submitted through the facsimile (FAX)
process or by other electronic means. While existing regulations
exclusively require paper applications, we believe this policy to be
outdated and overly restrictive. Therefore, to promote ease of
application for FY 2018 and subsequent years, we are proposing to
revise this policy to require applications and supporting documentation
to be submitted via the method prescribed in instructions by the MGCRB,
with an electronic copy to CMS. Therefore, we are proposing to revise
Sec. 412.256(a)(1) to specify that an application must be submitted to
the MGCRB according to the method prescribed by the MGCRB, with an
electronic copy of the application sent to CMS. We are specifying that
CMS copies should be sent via email to [email protected]. We are
inviting public comments on this proposal.
c. Other Policy Regarding Reclassifications for Terminated Hospitals
Under longstanding CMS policy, if a hospital that has an approved
reclassification by the MGCRB terminates its CMS certification number
(CCN), we terminate the reclassification status for that hospital when
calculating the wage index, because the CCN is no longer active, and
because the MGCRB makes its reclassification decisions based on CCNs.
We believe this policy results in more accurate reclassifications when
compiling CBSA labor market wage data, as it is often the case that
[[Page 25070]]
hospitals that have terminated their CCNs have also terminated
operations, and can no longer make timely and informed decisions
regarding reclassification statuses, which could have ramifications for
various wage index floors and labor market values.
However, as discussed in response to a comment in the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49499 through 49500), in the case of a
merger or acquisition where the acquiring hospital accepted the
Medicare provider agreement of the acquired hospital located in a
different market area that has an existing MGCRB reclassification, we
do believe that the acquiring hospital should be able to make
determinations regarding the reclassification status of the subordinate
campus. While the original CCN for the acquired hospital would be
considered terminated or ``tied out'' by CMS, in the specific
situations where a hospital merges with or acquires another hospital
located in a different labor market area to create a ``multicampus''
hospital and accepts the Medicare provider agreement of the acquired
hospital, the reclassification status of the subordinate campus remains
in effect. The acquired campus (that is, the hospital whose CCN is no
longer active) may continue to receive its previously approved
reclassification status, and the acquiring hospital is authorized to
make timely requests to terminate, withdraw, or reinstate any
reclassification for the subordinate campus for any remaining years of
the reclassification. We believe this policy is consistent with
existing regulations regarding reclassification status of
``multicampus'' hospitals at Sec. 412.230(d)(2)(v). Hospitals should
take care to review their status on Table 2 associated with this
proposed rule (which is available via the Internet on the CMS Web site)
and notify CMS if they believe a reclassification for a hospital was
mistakenly terminated by CMS.
3. Redesignation of Hospitals Under Section 1886(d)(8)(B) of the Act
Section 1886(d)(8)(B)(i) of the Act requires the Secretary to treat
a hospital located in a rural county adjacent to one or more urban
areas as being located in the urban MSA to which the greatest number of
workers in the county commute if certain adjacency and commuting
criteria are met. The criteria utilize standards for designating MSAs
published in the Federal Register by the Director of the Office of
Management and Budget (OMB) based on the most recently available
decennial population data. Effective beginning FY 2015, we use the OMB
delineations based on the 2010 Decennial Census data to identify
counties in which hospitals qualify under section 1886(d)(8)(B) of the
Act to receive the wage index of the urban area. Hospitals located in
these counties are referred to as ``Lugar'' hospitals and the counties
themselves are often referred to as ``Lugar'' counties. The chart for
this FY 2017 proposed rule with the listing of the rural counties
containing the hospitals designated as urban under section
1886(d)(8)(B) of the Act is available via the Internet on the CMS Web
site.
In an interim final rule with comment period (IFC) (CMS-1664-IFC)
that appeared elsewhere in this issue of the Federal Register, CMS made
regulatory changes in order to implement the decisions in Geisinger
Community Medical Center v. Secretary, United States Department of
Health and Human Services, 794 F.3d 383 (3d Cir. 2015) and Lawrence +
Memorial Hospital v. Burwell, No. 15-164, 2016 WL 423702 (2d Cir. Feb.
4, 2015) in a nationally consistent manner. Specifically, the IFC
revises the regulations at Sec. 412.230(a)(5)(ii) and removes the
regulatory provision at Sec. 412.230(a)(5)(iii) to allow hospitals
nationwide to reclassify based on their acquired rural status,
effective with reclassifications beginning with FY 2018. The IFC also
gives hospitals with an existing MGCRB reclassification the opportunity
to seek rural reclassification for IPPS payment and other purposes
under Sec. 412.103 and keep their existing MGCRB reclassification.
As a consequence of the regulatory changes in the IFC that allow a
hospital to have more than one reclassification simultaneously, we are
clarifying in this proposed rule that a hospital with Lugar status may
simultaneously receive an urban to rural reclassification under Sec.
412.103. The IFC provides that when there is both a Sec. 412.103
reclassification and an MGCRB reclassification, the MGCRB
reclassification controls for wage index calculation and payment
purposes (the IFC can be downloaded from the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices.html). Similarly, in
this proposed rule, we are clarifying that we are treating the wage
data of hospitals with simultaneous Lugar status and Sec. 412.103
reclassification as Lugar for wage index calculation and wage index
payment purposes. We believe it is appropriate to apply a similar
policy for simultaneous MGCRB reclassification and Sec. 412.103
reclassifications, and simultaneous Lugar and Sec. 412.103
reclassifications, because CMS treats Lugar status as a
reclassification for purposes of calculating the wage index in
accordance with section 1886(d)(8)(C)(iii) of the Act. (Section
1886(d)(8)(C)(iii) of the Act states that the application of section
1886(d)(8)(B) of the Act or a decision of the MGCRB or the Secretary
under section 1886(d)(10) of the Act may not result in the reduction of
any county's wage index to a level below the wage index for rural areas
in the State in which the county is located.) The wage index associated
with the Lugar status, and not the wage index associated with the Sec.
412.103 reclassification, is reflected accordingly in Table 2
associated with this proposed rule (which is available via the Internet
on the CMS Web site). We note that, for payment purposes other than the
wage index, a hospital with simultaneous Sec. 412.103 status and Lugar
reclassification receives payment as a rural hospital.
4. Waiving Lugar Redesignation for the Out-Migration Adjustment
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS, including being
considered rural for the DSH payment adjustment, effective for the
fiscal year in which the hospital receives the out-migration
adjustment. (We refer readers to a discussion of DSH payment adjustment
under section IV.F. of the preamble of this proposed rule.)
In addition, we adopted a minor procedural change in that rule that
allows a Lugar hospital that qualifies for and accepts the out-
migration adjustment (through written notification to CMS within 45
days from the publication of the proposed rule) to waive its urban
status for the full 3-year period for which its out-migration
adjustment is effective. By doing so, such a Lugar hospital would no
longer be required during the second and third years of eligibility for
the out-migration adjustment to advise us annually that it prefers to
continue being treated as rural and receive the out-migration
adjustment. Therefore, under the procedural change, a Lugar hospital
that requests to waive its urban status in order to receive the rural
wage index in addition to the out-migration adjustment would be deemed
to have accepted the out-migration adjustment and agrees to be treated
as rural for the duration of its 3-year eligibility period, unless,
prior to its second or third year
[[Page 25071]]
of eligibility, the hospital explicitly notifies CMS in writing, within
the required period (generally 45 days from the publication of the
proposed rule), that it instead elects to return to its deemed urban
status and no longer wishes to accept the out-migration adjustment. If
the hospital does notify CMS that it is electing to return to its
deemed urban status, it would again be treated as urban for all IPPS
payment purposes.
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51599 through 51600) for a detailed discussion of the policy and
process for waiving Lugar status for the out-migration adjustment.
K. Proposed Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees for FY 2017
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the ``out-
migration'' adjustment). The process, outlined in the FY 2005 IPPS
final rule (69 FR 49061), provides for an increase in the wage index
for hospitals located in certain counties that have a relatively high
percentage of hospital employees who reside in the county but work in a
different county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use
data the Secretary determines to be appropriate to establish the
qualifying counties. When the provision of section 1886(d)(13) of the
Act was implemented for the FY 2005 wage index, we analyzed commuting
data compiled by the U.S. Census Bureau that were derived from a
special tabulation of the 2000 Census journey-to-work data for all
industries (CMS extracted data applicable to hospitals). These data
were compiled from responses to the ``long-form'' survey, which the
Census Bureau used at the time and which contained questions on where
residents in each county worked (69 FR 49062). However, the 2010 Census
was ``short form'' only; information on where residents in each county
worked was not collected as part of the 2010 Census. The Census Bureau
worked with CMS to provide an alternative dataset based on the latest
available data on where residents in each county worked in 2010, for
use in developing a new out-migration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-Year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49501), the same policies, procedures, and
computation that were used for the FY 2012 out-migration adjustment
were applicable for FY 2016, and we are proposing to use them again for
FY 2017. We have applied the same policies, procedures, and
computations since FY 2012, and we believe they continue to be
appropriate for FY 2017. We refer readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49500 through 49502) for a full explanation of the
revised data source.
For FY 2017, until such time that CMS finalizes out-migration
adjustments based on the next Census, the out-migration adjustment
continues to be based on the data derived from the custom tabulation of
the ACS utilizing 2008 through 2012 (5-Year) Microdata. For FY 2017, we
are not proposing any changes to the methodology or data source that we
used for FY 2016. (We refer readers to a full discussion of the out-
migration adjustment, including rules on deeming hospitals reclassified
under section 1886(d)(8) or section 1886(d)(10) of the Act to have
waived the out-migration adjustment, in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51601 through 51602).) Table 2 associated with this
proposed rule (which is available via the Internet on the CMS Web site)
includes the proposed out-migration adjustments for the FY 2017 wage
index.
L. Notification Regarding Proposed CMS ``Lock-In'' Date for Urban to
Rural Reclassifications Under Sec. 412.103
Under section 1886(d)(8)(E) of the Act, a qualifying prospective
payment hospital located in an urban area may apply for rural status
for payment purposes separate from reclassification through the MGCRB.
Specifically, section 1886(d)(8)(E) of the Act provides that, not later
than 60 days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital that
satisfies certain criteria, the Secretary shall treat the hospital as
being located in the rural area (as defined in paragraph (2)(D)) of the
State in which the hospital is located. We refer readers to the
regulations at 42 CFR 412.103 for the general criteria and application
requirements for a subsection (d) hospital to reclassify from urban to
rural status in accordance with section 1886(d)(8)(E) of the Act. The
FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes
our policies regarding the effect of wage data from reclassified or
redesignated hospitals.
Hospitals must meet the criteria to be reclassified from urban to
rural status under Sec. 412.103, as well as fulfill the requirements
for the application process. However, under existing Sec. 412.103(b),
there is no timeframe requirement as to when hospitals must apply for
the urban to rural reclassification. Therefore, a hospital can apply
for the urban to rural reclassification at any time, and under Sec.
412.103(d), the effective date of the hospital's rural status, once
approved, is the filing date of the application.
There may be one or more reasons that a hospital applies for the
urban to rural reclassification, and the timeframe that a hospital
submits an application is often dependent on those reason(s). Because
there are no timeframes for when a hospital must submit its application
under Sec. 412.103, it is the hospital's prerogative as to when it
files the application with the CMS Regional Office. Because the wage
index is part of the methodology for determining the prospective
payments to hospitals for each fiscal year, we believe there should be
a definitive timeframe within which a hospital should apply for rural
status in order for the reclassification to be reflected in the next
Federal fiscal year's wage data used for setting payment rates. As
hospitals are aware, the IPPS ratesetting process that CMS undergoes
each proposed and final rulemaking is complex and labor-intensive, and
subject to a compressed timeframe in order to issue the final rule each
year within the timeframes for publication. Accordingly, CMS must
ensure that it receives, in a timely fashion, the necessary data,
including, but not limited to, the list of hospitals that are
reclassified from urban to rural status under Sec. 412.103, in order
to calculate the wage indexes and other IPPS rates.
Therefore, in this proposed rule, we are proposing a date by when
we would ``lock in'' the list of hospitals that are reclassified from
urban to rural status under Sec. 412.103 in order to include them in
the upcoming Federal fiscal year's wage index calculation provided for
at Sec. 412.64(h) and budget neutrality calculations provided for at
[[Page 25072]]
Sec. Sec. 412.64(e)(1)(ii), (e)(2), and (e)(4) that are part of the
ratesetting process). The ratesetting process is described in the
Addendum of the annual proposed and final rules and includes the budget
neutrality adjustments in accordance with the regulations at Sec. Sec.
412.64(e)(1)(ii), (e)(2), and (e)(4), as well as adjustments for
differences in area wage levels provided for at Sec. 412.64(h). We
believe that this proposal would introduce additional transparency and
predictability regarding the timing of accounting for urban or rural
status in the IPPS ratesetting each Federal fiscal year. We are
proposing that this date for ``locking in'' the list of hospitals with
rural status achieved under Sec. 412.103 would be the second Monday in
June of each year. Therefore, if a hospital is applying for an urban to
rural reclassification under Sec. 412.103 for the purpose and
expectation that its rural status be reflected in the wage index and
budget neutrality calculations for setting payment rates for the next
Federal fiscal year, the hospital would need to file its application
with the CMS Regional Office not later than 70 days prior to the second
Monday in June. Because, under 412.103(c), the CMS Regional Office must
notify the hospital of its approval or disapproval of the application
within 60 days of the hospital's filing date (the date it is received
by the CMS Regional Office, in accordance with Sec. 412.103(b)(5)), we
would expect that the extra 10 days would provide the CMS Regional
Office with sufficient processing and administrative time to notify the
CMS Central Office of the reclassification status of the applications
by the second Monday in June of each year. This is the latest date that
CMS would need the information in order to ensure that reclassified
hospitals would be included as such in the wage index and budget
neutrality calculations for setting payment rates for the next Federal
fiscal year. This does not preclude a hospital from applying for
reclassification under Sec. 412.103 earlier or later than the proposed
deadline. Nor does the proposed deadline change the fact that the rural
reclassification is effective as of its filing date, in accordance with
Sec. 412.103(d). However, in order to ensure that a reclassification
is reflected in the wage index and budget neutrality calculations for
setting payment rates for the next Federal fiscal year, applications
must be received by the CMS Regional Office (the filing date) by no
later than 70 days prior to the second Monday in June of each year. If
the CMS Central Office is informed of a reclassification status after
the second Monday in June, for wage index and budget neutrality
purposes, the reclassification would not be reflected in the payment
rates until the following Federal fiscal year; that is, the Federal
fiscal year following the next Federal fiscal year. We are proposing to
revise Sec. 412.103(b) by adding a new paragraph (6) to incorporate
this proposed policy. Proposed Sec. 412.103(b)(6) would specify that
in order for a hospital to be treated as rural in the wage index and
budget neutrality calculations under Sec. Sec. 412.64(e)(1)(ii),
(e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal
year, the hospital's filing date must be no later than 70 days prior to
the second Monday in June of the current Federal fiscal year and the
application must be approved by the CMS Regional Office in accordance
with the requirements of Sec. 412.103.
M. Process for Requests for Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files for the
proposed FY 2017 wage index were made available on May 15, 2015, and
the preliminary CY 2013 occupational mix data files on May 15, 2015,
through the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home-Page.html.
On January 29, 2016, we posted a public use file (PUF) at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home-Page.html containing FY 2017 wage index data available as of January
28, 2016. This PUF contains a tab with the Worksheet S-3 wage data
(which includes Worksheet S-3, Parts II and III wage data from cost
reporting periods beginning on or after October l, 2012 through
September 30, 2013; that is, FY 2013 wage data), a tab with the
occupational mix data (which includes data from the CY 2013
occupational mix survey, Form CMS-10079), and new for FY 2017, a tab
containing the Worksheet S-3 wage data of hospitals deleted from the
January 29, 2016 wage data PUF and a tab containing the CY 2013
occupational mix data (if any) of the hospitals deleted from the
January 29, 2016 wage data PUF. In a memorandum dated January 21, 2016,
we instructed all MACs to inform the IPPS hospitals that they service
of the availability of the January 29, 2016 wage index data PUFs, and
the process and timeframe for requesting revisions in accordance with
the FY 2017 Wage Index Timetable.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional PUF on our
Web site that reflects the actual data that are used in computing the
proposed wage index. The release of this file does not alter the
current wage index process or schedule. We notify the hospital
community of the availability of these data as we do with the current
public use wage data files through our Hospital Open Door Forum. We
encourage hospitals to sign up for automatic notifications of
information about hospital issues and about the dates of the Hospital
Open Door Forums at the CMS Web site at: http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/index.html.
In a memorandum dated April 30, 2015, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
wage index data files and the process and timeframe for requesting
revisions (including the specific deadlines listed later in this
section). We also instructed the MACs to advise hospitals that these
data were also made available directly through their representative
hospital organizations.
If a hospital wished to request a change to its data as shown in
May 15, 2015 wage data files and May 15, 2015 occupational mix data
files, the hospital was to submit corrections along with complete,
detailed supporting documentation to its MAC by September 2, 2015.
Hospitals were notified of this deadline and of all other deadlines and
requirements, including the requirement to review and verify their data
as posted in the preliminary wage index data files on the Internet,
through the letters sent to them by their MACs.
November 4, 2015 was the date by when MACs notified State hospital
associations regarding hospitals that failed to respond to issues
raised during the desk reviews. The MACs notified the hospitals by mid-
January 2016 of any changes to the wage index data as a result of the
desk reviews and the resolution of the hospitals' revision requests.
The MACs also submitted the revised data to CMS by January 22, 2016.
CMS published the proposed wage index PUFs that included hospitals'
revised wage index data on January 29, 2016. Hospitals had until
February 16, 2016, to submit requests to the MACs for reconsideration
of adjustments made by the MACs as a result of the desk review, and to
correct errors due to CMS' or the MAC's mishandling of the wage index
data. Hospitals also were required to submit
[[Page 25073]]
sufficient documentation to support their requests.
After reviewing requested changes submitted by hospitals, MACs were
required to transmit to CMS any additional revisions resulting from the
hospitals' reconsideration requests by March 24, 2016. The deadline for
a hospital to request CMS intervention in cases where a hospital
disagreed with a MAC's policy interpretation was April 5, 2016. We note
that, as we did for the FY 2016 wage index, for the FY 2017 wage index,
in accordance with the FY 2017 wage index timeline posted on the CMS
Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home-Page.html, the April appeals have to be sent via mail and email.
We refer readers to the wage index timeline for complete details.
Hospitals are given the opportunity to examine Table 2, which is
listed in section VI. of the Addendum to this proposed rule and
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home-Page.html. Table 2 contains each
hospital's proposed adjusted average hourly wage used to construct the
wage index values for the past 3 years, including the FY 2013 data used
to construct the proposed FY 2017 wage index. We note that the proposed
hospital average hourly wages shown in Table 2 only reflect changes
made to a hospital's data that were transmitted to CMS by late February
2016.
We plan to post the final wage index data PUFs in late April 2016
on the Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home-Page.html. The April 2016 PUFs are made available solely for
the limited purpose of identifying any potential errors made by CMS or
the MAC in the entry of the final wage index data that resulted from
the correction process previously described (revisions submitted to CMS
by the MACs by March 24, 2016).
After the release of the April 2016 wage index data PUFs, changes
to the wage and occupational mix data can only be made in those very
limited situations involving an error by the MAC or CMS that the
hospital could not have known about before its review of the final wage
index data files. Specifically, neither the MAC nor CMS will approve
the following types of requests:
Requests for wage index data corrections that were
submitted too late to be included in the data transmitted to CMS by the
MACs on or before March 24, 2016.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 29,
2016 wage index PUFs.
Requests to revisit factual determinations or policy
interpretations made by the MAC or CMS during the wage index data
correction process.
If, after reviewing the April 2016 final wage index data PUFs, a
hospital believes that its wage or occupational mix data were incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital is given the opportunity to notify both its MAC and CMS
regarding why the hospital believes an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital is required to send its
request to CMS and to the MAC no later than May 23, 2016. Similar to
the April appeals, beginning with the FY 2015 wage index, in accordance
with the FY 2017 wage index timeline posted on the CMS Web site at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2017-Wage-Index-Home.html,
the May appeals must be sent via mail and email to CMS and the MACs. We
refer readers to the wage index timeline for complete details.
Verified corrections to the wage index data received timely by CMS
and the MACs (that is, by May 23, 2016) will be incorporated into the
final FY 2017 wage index, which will be effective October 1, 2016.
We created the processes previously described to resolve all
substantive wage index data correction disputes before we finalize the
wage and occupational mix data for the FY 2017 payment rates.
Accordingly, hospitals that do not meet the procedural deadlines set
forth above will not be afforded a later opportunity to submit wage
index data corrections or to dispute the MAC's decision with respect to
requested changes. Specifically, our policy is that hospitals that do
not meet the procedural deadlines set forth above will not be permitted
to challenge later, before the PRRB, the failure of CMS to make a
requested data revision. We refer readers also to the FY 2000 IPPS
final rule (64 FR 41513) for a discussion of the parameters for appeals
to the PRRB for wage index data corrections.
Again, we believe the wage index data correction process described
earlier provides hospitals with sufficient opportunity to bring errors
in their wage and occupational mix data to the MAC's attention.
Moreover, because hospitals have access to the final wage index data
PUFs by late April 2016, they have the opportunity to detect any data
entry or tabulation errors made by the MAC or CMS before the
development and publication of the final FY 2017 wage index by August
2016, and the implementation of the FY 2017 wage index on October 1,
2016. Given these processes, the wage index implemented on October 1
should be accurate. Nevertheless, in the event that errors are
identified by hospitals and brought to our attention after May 23,
2016, we retain the right to make midyear changes to the wage index
under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our
regulations, we make midyear corrections to the wage index for an area
only if a hospital can show that: (1) The MAC or CMS made an error in
tabulating its data; and (2) the requesting hospital could not have
known about the error or did not have an opportunity to correct the
error, before the beginning of the fiscal year. For purposes of this
provision, ``before the beginning of the fiscal year'' means by the May
deadline for making corrections to the wage data for the following
fiscal year's wage index (for example, May 23, 2016 for the FY 2017
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
Web site prior to publishing both the proposed and final IPPS rules,
and the MACs notify hospitals directly of any wage index data changes
after completing their desk reviews, we do not expect that midyear
corrections will be necessary. However, under our current policy, if
the correction of a data error changes the wage index value for an
area, the revised wage index value will be effective prospectively from
the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on
October 1, 2005, that is, beginning with the FY 2006 wage index, a
change to the wage index can be made retroactive to the beginning of
the Federal fiscal year only when CMS determines all of the following:
(1) The MAC or CMS made an error in tabulating data used for the wage
index calculation; (2) the hospital knew about
[[Page 25074]]
the error and requested that the MAC and CMS correct the error using
the established process and within the established schedule for
requesting corrections to the wage index data, before the beginning of
the fiscal year for the applicable IPPS update (that is, by the May 23,
2016 deadline for the FY 2017 wage index); and (3) CMS agreed before
October 1 that the MAC or CMS made an error in tabulating the
hospital's wage index data and the wage index should be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculated the final wage index (that
is, by the May 23, 2016 deadline for the FY 2017 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS' or the MAC's mishandling of the data, we believe that
the hospital should not be penalized by our delay in publishing or
implementing the correction. As with our current policy, we indicated
that the provision is not available to a hospital seeking to revise
another hospital's data. In addition, the provision cannot be used to
correct prior years' wage index data; and it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear corrections other than those specified in 42 CFR
412.64(k)(2)(ii), we continue to believe that it is appropriate to make
prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a final judicial decision reverses a CMS denial
of a hospital's wage index data revision request.
N. Proposed Labor Market Share for the Proposed FY 2017 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related and to adjust the
proportion (as estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and wage-related costs
of the DRG prospective payment rates. We refer to the portion of
hospital costs attributable to wages and wage-related costs as the
labor-related share. The labor-related share of the prospective payment
rate is adjusted by an index of relative labor costs, which is referred
to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this would result in lower payments to a
hospital than would otherwise be made. However, this provision of
Public Law 108-173 did not change the legal requirement that the
Secretary estimate from time to time the proportion of hospitals' costs
that are attributable to wages and wage-related costs. Thus, hospitals
receive payment based on either a 62-percent labor-related share, or
the labor-related share estimated from time to time by the Secretary,
depending on which labor-related share resulted in a higher payment.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50596 through
50607), we rebased and revised the hospital market basket. We
established a FY 2010-based IPPS hospital market basket to replace the
FY 2006-based IPPS hospital market basket, effective October 1, 2013.
In that final rule, we presented our analysis and conclusions regarding
the frequency and methodology for updating the labor-related share for
FY 2014. Using the FY 2010-based IPPS market basket, we finalized a
labor-related share for FY 2014, FY 2015, and FY 2016 of 69.6 percent.
In addition, in FY 2014, we implemented this revised and rebased labor-
related share in a budget neutral manner (78 FR 51016). However,
consistent with section 1886(d)(3)(E) of the Act, we did not take into
account the additional payments that would be made as a result of
hospitals with a wage index less than or equal to 1.0000 being paid
using a labor-related share lower than the labor-related share of
hospitals with a wage index greater than 1.0000.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. In this proposed rule, for FY 2017, we are not proposing to
make any further changes to the national average proportion of
operating costs that are attributable to wages and salaries, employee
benefits, contract labor, the labor-related portion of professional
fees, administrative and facilities support services, and all other
labor-related services. Therefore, for FY 2017, we are proposing to
continue to use a labor-related share of 69.6 percent for discharges
occurring on or after October 1, 2016.
As discussed in section IV.A of the preamble of this proposed rule,
prior to January 1, 2016, Puerto Rico hospitals were paid based on 75
percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2017, we are
not proposing a Puerto Rico-specific labor-related share percentage or
a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2017 IPPS/LTCH PPS proposed rule and available via
the Internet on the CMS Web site, reflect the proposed national labor-
related share, which is also applicable to Puerto Rico hospitals. For
FY 2017, for all IPPS hospitals (including Puerto Rico hospitals) whose
wage indexes are less than or equal to 1.0000, we are proposing to
apply the wage index to a labor-related share of 62 percent of the
national standardized amount. For all IPPS hospitals (including Puerto
Rico hospitals) whose wage indexes are greater than 1.000, for FY 2017,
we are proposing to apply the wage index to a proposed labor-related
share of 69.6 percent of the national standardized amount.
[[Page 25075]]
O. Solicitation of Comments on Treatment of Overhead and Home Office
Costs in the Wage Index Calculation
Section III.D. of the preamble of this proposed rule states that
the method used to compute the proposed FY 2017 wage index without an
occupational mix adjustment follows the same methodology that we used
to compute the FY 2012, FY 2013, FY 2014, FY 2015, and FY 2016 final
wage indexes without an occupational mix adjustment (76 FR 51591
through 51593, 77 FR 53366 through 53367, 78 FR 50587 through 50588, 79
FR 49967, and 80 FR 49491 through 49492, respectively).
As discussed in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592),
in ``Step 4'' of the calculation of the unadjusted wage index, for each
hospital reporting both total overhead salaries and total overhead
hours greater than zero, we allocate overhead costs to areas of the
hospital excluded from the wage index calculation. We also compute the
amounts of overhead wage-related costs to be allocated to excluded
areas. Finally, we subtract the computed overhead salaries, overhead
wage-related costs, and hours associated with excluded areas from the
total salaries (plus allowable wage-related costs) and hours derived in
``Steps 2 and 3'' of the calculation of the unadjusted wage index. (We
refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592) for
a description of the calculation of the unadjusted wage index.) We
first began to remove from the wage index the overhead salaries and
hours allocated to excluded areas beginning with the FY 1999 wage index
calculation (63 FR 40971 and 40972). Beginning with the FY 2002 wage
index calculation, we estimated and removed overhead wage-related costs
allocated to excluded areas in addition to removing overhead salaries
and hours allocated to excluded areas (66 FR 39863 and 39864). We began
to estimate and remove overhead wage-related costs associated with
excluded areas because we realized that without doing so, the formula
resulted in large and inappropriate increases in the average hourly
wages of some hospitals, particularly hospitals with large overhead and
excluded area costs. These findings led us to believe that not all
hospitals were fully or consistently allocating their overhead salaries
among the lines on Worksheet S-3, Part II, of the hospital cost report
for allowable wage-related costs (Worksheet S-3, Part II, lines 13 and
14 on CMS Form 2552-96, and lines 17 and 18 on CMS Form 2552-10), and
nonallowable wage-related costs associated with excluded areas
(Worksheet S-3, Part II, line 15 on CMS Form 2552-96 and line 19 on CMS
Form 2552-10). Therefore, we determined that it was necessary to
estimate and remove overhead wage-related costs allocated to excluded
areas, and we have been doing so in ``Step 4'' of the unadjusted wage
index calculation since FY 2002.
With the implementation of CMS Form 2552-10, Worksheet S-3, Part IV
was added to the cost report on which hospitals are required to itemize
their wage-related costs (formerly reported on Exhibit 6 of CMS Form-
339). The total amount of wage-related costs reported on Worksheet S-3,
Part II, lines 17 through 25 (CMS Form 2552-10) must correspond to the
total core wage-related costs on Worksheet S-3, Part IV, line 24. (We
refer readers to the instructions for line 17 of Worksheet S-3, Part
II, which state: ``Enter the core wage-related costs from Worksheet S-
3, Part IV, line 24.'') Hospitals report wage-related costs associated
with excluded areas of the hospital on Worksheet S-3, Part II, line 19.
We understand that hospitals use an allocation methodology to allocate
total wage-related costs to each of lines Worksheet S-3, Part II, lines
17 through 25 respectively, typically based on the ratio of individual
line costs to total wage-related costs on lines 17 through 25.
Alternatively, we understand that hospitals use the ratio of full-time
equivalent (FTE) hours of an individual line to total FTE hours for
those lines 17 through 25. Because the wage-related costs of employees
who work in overhead areas of the hospital are included in the wage-
related costs of the hospital reported on Worksheet S-3, Part IV, and
in turn, on Worksheet S-3, Part II, it is possible to conclude that
hospitals' own allocation methodologies are properly allocating an
accurate amount of wage-related costs for both direct cost centers and
overhead areas to line 19 for the excluded areas. Accordingly, the
question has been raised whether it continues to be necessary for CMS
to estimate and remove the overhead wage-related costs associated with
excluded areas from the unadjusted wage index calculation.
We have tested the effect on the average hourly wages of hospitals
if we would not estimate and remove the overhead wage-related costs
associated with excluded areas from the unadjusted wage index
calculation. The results show that the problem manifested in the
formula prior to FY 2002 continues to be a concern; that is, while the
average hourly wages of all hospitals with excluded areas are impacted,
hospitals that have particularly large excluded areas experience large
and inappropriate increases to their average hourly wages. For example,
one hospital with an excluded area percentage of 95 percent that has an
average hourly wage of approximately $32 under our current methodology
would have an average hourly wage of $128 under the formula in effect
prior to FY 2002 (that is, without removal of overhead wage-related
costs). Accordingly, we believe that, at this point, there is a need
for CMS to continue to estimate and remove the overhead wage-related
costs associated with excluded areas from the unadjusted wage index
calculation. However, in an effort to improve consistency in hospital
cost reporting practices and to improve the accuracy of the wage index,
we are considering the possibility of future rulemaking or cost
reporting changes, or a combination of both, where hospitals would
apply a single allocation methodology between Worksheet S-3, Part IV
and Worksheet S-3, Part II, lines 17 through 25. For example, one
possibility is the modification and expansion of Worksheet S-3, Part IV
to add columns that would correspond to each line 17 through 25 of
Worksheet S-3, Part II. In addition, Worksheet S-3, Part IV could
employ one or two standard statistical allocation methods, facilitating
a direct flow of the allocated amounts to each line 17 through 25 of
Worksheet S-3, Part II. We are soliciting comments from stakeholders to
gain a better understanding of the nature of hospitals' reporting of
wage-related costs on Worksheet S-3, Part IV, statistical allocation
methods that hospitals typically use to allocate their wage-related
costs, the treatment of direct versus overhead employee wage-related
costs, and suggestions for possible modifications to Worksheet S-3,
Parts II and IV respectively, which would preempt the need for CMS to
estimate and remove overhead wage-related costs associated with
excluded areas from the unadjusted wage index.
Another issue about which we are concerned and would like to
solicit public comments relates to inconsistent reporting of home
office salaries and wage-related costs. Worksheet S-2, Part I, line
140, requires hospitals to complete Worksheet A-8-1 if they have any
related organization or home office costs claimed as defined in the
Provider Reimbursement Manual, CMS Pub. 15-1, Chapter 10, Section 1002,
and 42 CFR 413.17. Then, line 14 of Worksheet S-3, Part II instructs
hospitals to enter the salaries and wage-related costs paid to
[[Page 25076]]
personnel who are affiliated with a home office and/or related
organization, who provide services to the hospital, and whose salaries
are not included on Worksheet A, Column 1. Because home office salaries
and wage-related costs are not included on Worksheet A, Column 1, we
are concerned that hospitals are not including home office costs on
Worksheet A, Column 2 or Column 6 in the appropriate cost centers on
lines 4 through 17, adjusted from Worksheet A-8 or Worksheet A-8-1.\20\
Another concern is a hospital's inadvertent inclusion on line 14 of the
home office salaries or wage-related costs associated with excluded
areas on Worksheet S-3, Part II, lines 9 or 10. In addition, we are
concerned about the amalgam of personnel costs that hospitals report on
line 14, particularly when another more precise line exists for those
personnel costs to be reported. For example, if cafeteria services are
provided through the home office, those wages and hours should not be
reported on line 14, but instead should be reported on the more
specific cost center for Cafeteria, Worksheet S-3, Part II, line 36
(corresponding to Cafeteria on Worksheet A, line 11 \21\). We note
that, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through
49967), we reiterated our requirement that all hospitals must document
salaries, wages, and hours for the purpose of reporting this
information on Worksheet S-3, Part II, lines 32, 33, 34, and/or 35 (for
either directly employed housekeeping and dietary employees on lines 32
and 34, and contract labor on lines 33 and 35). We have learned of
instances where housekeeping or dietary services are provided through
the home office, and the hospital reported those wages and hours on
line 14. This is inconsistent with other hospitals' reporting of
housekeeping and dietary services on lines 32 through 35. As stated in
the FY 2015 IPPS/LTCH PPS final rule, we have instructed the MACs to
impute housekeeping or dietary wages and hours when hospitals have not
properly completed those lines 32 through 35. Hospitals whose
housekeeping or dietary services (either direct or under contract) are
provided through their home office are not exempt from this requirement
to report wages and hours on the specific cost centers for housekeeping
and dietary. Hospitals should also take care to report housekeeping and
dietary services in the appropriate cost centers on Worksheet A, lines
9 and 10 respectively. Because the nature of services provided by home
office personnel are for general management or administrative services
related to the provision of patient care (CMS Pub. 15-1, Chapter 21,
Section 2150), and may be provided to multiple areas of the hospital,
we are considering ending reporting of home office costs on line 14 of
Worksheet S-3, Part II, and instead we may require reporting of home
office costs as part of the overhead lines, possibly by adding lines or
columns, or subscripting existing line 27 (Administrative & General),
and line 28 (Administrative & General for contract labor). We are
soliciting public comments to gain a better understanding of hospitals'
reporting of home office salaries and wage-related costs for possible
future revisions to the cost report instructions and lines.
---------------------------------------------------------------------------
\20\ CMS Pub. 15-2, Chapter 40, Section 4013, Worksheet A
instructions for column 6: ``Enter on the appropriate lines in
column 6 the amounts of any adjustments to expenses indicated on
Worksheet A-8, column 2,'' and the note for line 12 of Worksheet A-
8, section 4016: ``Worksheet A-8-1 represents the detail of the
various cost centers on Worksheet A which must be adjusted.''
\21\ CMS Pub. 15-2, Chapter 40, Section 4013, Worksheet A
instructions under Line Descriptions: ``The trial balance of
expenses is broken down into general service, inpatient routine
service, ancillary service, outpatient service, other reimbursable,
special purpose, and nonreimbursable cost center categories to
facilitate the transfer of costs to the various worksheets. The line
numbers on Worksheet A are used on subsequent worksheets. * * *''
(emphasis added).
---------------------------------------------------------------------------
IV. Other Decisions and Changes to the IPPS for Operating Costs and
Direct Graduate Medical Education (GME) and Indirect Medical Education
(IME) Costs
A. Changes to Operating Payments for Subsection (d) Puerto Rico
Hospitals as a Result of Section 601 of Public Law 114-113
Prior to January 1, 2016, Puerto Rico hospitals were paid with
respect to operating costs of inpatient hospital services for inpatient
hospital discharges based on 75 percent of the national standardized
amount and 25 percent of the Puerto Rico-specific standardized amount.
Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-
113) amended section 1886(d)(9)(E) of the Act to specify that the
payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. As a result of the
amendment made by section 601 of Public Law 114-113, on February 4,
2016, we issued Change Request 9523 which updated the payment rates for
subsection (d) Puerto Rico hospitals for discharges occurring on or
after January 1, 2016. Change Request 9523 can be downloaded from the
CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2016-Transmittals-Items/R3449CP.html.
For operating costs for inpatient hospital discharges occurring in
FY 2017 and subsequent fiscal years, consistent with the provisions of
section 1886(d)(9)(E) of the Act as amended by section 601 of Public
Law 114-113, subsection (d) Puerto Rico hospitals will continue to be
paid based on 100 percent of the national standardized amount.
In this proposed rule, we are proposing to make conforming changes
to the regulations at 42 CFR 412.204 to reflect the current law that is
effective for discharges occurring on or after January 1, 2016.
Specifically, we are proposing to add a new paragraph (e) to Sec.
412.204 to reflect that, beginning January 1, 2016, subsection (d)
Puerto Rico hospitals are paid based on 100 percent of the national
standardized amount. We also are proposing to revise paragraph (d) of
Sec. 412.204 to specify that subsection (d) Puerto Rico hospitals were
paid based on 75 percent of the national standardized amount and 25
percent of the Puerto Rico-specific standardized amount for discharges
occurring through December 31, 2015.
B. Proposed Changes in the Inpatient Hospital Update for FY 2017 (Sec.
412.64(d))
1. Proposed FY 2017 Inpatient Hospital Update
In accordance with section 1886(b)(3)(B)(i) of the Act, each year
we update the national standardized amount for inpatient hospital
operating costs by a factor called the ``applicable percentage
increase.'' For FY 2017, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2016. Specifically, consistent with section
1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a)
of the Affordable Care Act, we are setting the applicable percentage
increase by applying the following adjustments in the following
sequence. The applicable percentage increase under the IPPS is equal to
the rate-of-increase in the hospital market basket for IPPS hospitals
in all areas, subject to--
(a) A reduction of one-quarter of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals that fail to submit quality information
under
[[Page 25077]]
rules established by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act;
(b) A reduction of three-quarters of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals not considered to be meaningful EHR users
in accordance with section 1886(b)(3)(B)(ix) of the Act;
(c) An adjustment based on changes in economy-wide productivity
(the multifactor productivity (MFP) adjustment); and
(d) An additional reduction of 0.75 percentage point as required by
section 1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added
by section 3401(a) of the Affordable Care Act, state that application
of the MFP adjustment and the additional FY 2017 adjustment of 0.75
percentage point may result in the applicable percentage increase being
less than zero.
We note that, in compliance with section 404 of the MMA, in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50596 through 50607), we replaced
the FY 2006-based IPPS operating and capital market baskets with the
revised and rebased FY 2010-based IPPS operating and capital market
baskets for FY 2014. In the FY 2015 IPPS/LTCH PPS final rule (79 FR
49993 through 49996) and the FY 2016 IPPS/LTCH PPS final rule (80 FR
49508 through 49511), we continued to use the FY 2010-based IPPS
operating and capital market baskets for FY 2015 and FY 2016 and the
labor-related share of 69.6 percent, which was based on the FY 2010-
based IPPS market basket. For FY 2017, we are proposing to continue
using the FY 2010-based IPPS operating and capital market baskets and
the proposed labor-related share of 69.6 percent, which is based on the
FY 2010-based IPPS market basket.
Based on the most recent data available for this FY 2017 proposed
rule, in accordance with section 1886(b)(3)(B) of the Act, we are
proposing to base the proposed FY 2017 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Insight, Inc.'s (IGI's) first quarter 2016 forecast of the FY 2010-
based IPPS market basket rate-of-increase with historical data through
fourth quarter 2015, which is estimated to be 2.8 percent. We are
proposing that if more recent data subsequently become available (for
example, a more recent estimate of the market basket and the MFP
adjustment), we would use such data, if appropriate, to determine the
FY 2017 market basket update and the MFP adjustment in the final rule.
For FY 2017, depending on whether a hospital submits quality data
under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital
that submits quality data) and is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that
is a meaningful EHR user), there are four possible applicable
percentage increases that can be applied to the standardized amount as
specified in the table that appears later in this section.
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. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, calendar year, cost
reporting period, or other annual period). The Bureau of Labor
Statistics (BLS) publishes the official measure of private nonfarm
business MFP. We refer readers to the BLS Web site at http://www.bls.gov/mfp for the BLS historical published MFP data.
MFP is derived by subtracting the contribution of labor and capital
input growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking
cycle, the MFP adjustment is calculated using the revised series
developed by IGI to proxy the aggregate capital inputs. Specifically,
in order to generate a forecast of MFP, IGI forecasts BLS aggregate
capital inputs using a regression model. A complete description of the
MFP projection methodology is available on the CMS Web site at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. As
discussed in the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes
to the MFP methodology, we will announce them on our Web site rather
than in the annual rulemaking.
For FY 2017, we are proposing an MFP adjustment of 0.5 percentage
point. Similar to the market basket update, for the proposed rule, we
used the most recent data available to compute the MFP adjustment. As
noted previously, we are proposing that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2017 market basket update and MFP adjustment for
the final rule.
Based on the most recent data available for this proposed rule, as
described previously, we have determined four proposed applicable
percentage increases to the standardized amount for FY 2017, as
specified in the following table:
Proposed FY 2017 Applicable Percentage Increases for the IPPS
----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted NOT submit NOT submit
quality data quality data quality data quality data
FY 2017 and is a and is NOT a and is a and is NOT a
meaningful EHR meaningful EHR meaningful EHR meaningful EHR
user user user user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket 2.8 2.8 2.8 2.8
Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit 0.0 0.0 -0.7 -0.7
Quality Data under Section 1886(b)(3)(B)(viii)
of the Act.....................................
Proposed Adjustment for Failure to be a 0.0 -2.1 0.0 -2.1
Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section -0.5 -0.5 -0.5 -0.5
1886(b)(3)(B)(xi) of the Act...................
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..................
[[Page 25078]]
Proposed Applicable Percentage Increase Applied 1.55 -0.55 0.85 -1.25
to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------
We are proposing to revise the existing regulations at 42 CFR
412.64(d) to reflect the current law for the FY 2017 update.
Specifically, in accordance with section 1886(b)(3)(B) of the Act, we
are proposing to add a new paragraph (vii) to Sec. 412.64(d)(1) to
reflect the applicable percentage increase to the FY 2017 operating
standardized amount as the percentage increase in the market basket
index, subject to the reductions specified under Sec. 412.64(d)(2) for
a hospital that does not submit quality data and Sec. 412.64(d)(3) for
a hospital that is not a meaningful EHR user, less an MFP adjustment
and less an additional reduction of 0.75 percentage point.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable
percentage increase to the hospital-specific rates for SCHs and MDHs
equals the applicable percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all
other hospitals subject to the IPPS). Therefore, the update to the
hospital-specific rates for SCHs and MDHs also is subject to section
1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act. We note that section 205 of the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L.
114-10, enacted on April 16, 2015) extended the MDH program (which,
under previous law, was to be in effect for discharges on or before
March 31, 2015 only) for discharges occurring on or after April 1,
2015, through FY 2017 (that is, for discharges occurring on or before
September 30, 2017).
For FY 2017, we are proposing the following updates to the
hospital-specific rates applicable to SCHs and MDHs: A proposed update
of 1.55 percent for a hospital that submits quality data and is a
meaningful EHR user; a proposed update of 0.85 percent for a hospital
that fails to submit quality data and is a meaningful EHR user; a
proposed update of -0.55 percent for a hospital that submits quality
data and is not a meaningful EHR user; and a proposed update of -1.25
percent for a hospital that fails to submit quality data and is not a
meaningful EHR user. As mentioned previously, for this FY 2017 proposed
rule, we are using IGI's first quarter 2016 forecast of the FY 2010-
based IPPS market basket update with historical data through fourth
quarter 2015. Similarly, we are using IGI's first quarter 2016 forecast
of the MFP adjustment. We are proposing that if more recent data
subsequently become available (for example, a more recent estimate of
the market basket increase and the MFP adjustment), we would use such
data, if appropriate, to determine the update for SCHs and MDHs in the
final rule.
2. Proposed FY 2017 Puerto Rico Hospital Update
As discussed in section IV.A. of the preamble of this proposed
rule, prior to January 1, 2016, Puerto Rico hospitals were paid based
on 75 percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. Section 601 of Public Law
114-113 amended section 1886(d)(9)(E) of the Act to specify that the
payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount under the amendments to section 1886(d)(9)(E) of the Act, there
is no longer a need for us to propose an update to the Puerto Rico
standardized amount. Hospitals in Puerto Rico are now paid 100 percent
of the national standardized amount and, therefore, are subject to the
same update to the national standardized amount discussed under section
IV.B.1. of the preamble of this proposed rule. Accordingly, for FY
2017, we are proposing an applicable percentage increase of 1.55
percent to the standardized amount for hospitals located in Puerto
Rico.
We note that section 1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under the
rules established by the Secretary, is not applicable to hospitals
located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section
1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016, and also to apply the
adjustments to the applicable percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable
to hospitals located in Puerto Rico until FY 2022, the adjustments
under this provision are not applicable for FY 2017.
C. Rural Referral Centers (RRCs): Proposed Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a rural referral center
(RRC). RRCs receive some special treatment under both the DSH payment
adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment
for RRCs such that they are not subject to the 12-percent cap on DSH
payments that is applicable to other rural hospitals. RRCs also are not
subject to the proximity criteria when applying for geographic
reclassification. In addition, they do not have to meet the requirement
that a hospital's average hourly wage must exceed, by a certain
percentage, the average hourly wage of the labor market area in which
the hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, that any
hospital classified as an RRC by the Secretary for FY 1991 shall be
classified as such an RRC for FY 1998 and each subsequent fiscal year.
In the August 29, 1997 IPPS final rule with comment period (62 FR
45999), we reinstated RRC status for all hospitals that lost that
status due to triennial review or MGCRB
[[Page 25079]]
reclassification. However, we did not reinstate the status of hospitals
that lost RRC status because they were now urban for all purposes
because of the OMB designation of their geographic area as urban.
Subsequently, in the August 1, 2000 IPPS final rule (65 FR 47089), we
indicated that we were revisiting that decision. Specifically, we
stated that we would permit hospitals that previously qualified as an
RRC and lost their status due to OMB redesignation of the county in
which they are located from rural to urban, to be reinstated as an RRC.
Otherwise, a hospital seeking RRC status must satisfy all of the other
applicable criteria. We use the definitions of ``urban'' and ``rural''
specified in Subpart D of 42 CFR part 412. One of the criteria under
which a hospital may qualify as an RRC is to have 275 or more beds
available for use (Sec. 412.96(b)(1)(ii)). A rural hospital that does
not meet the bed size requirement can qualify as an RRC if the hospital
meets two mandatory prerequisites (a minimum case-mix index (CMI) and a
minimum number of discharges), and at least one of three optional
criteria (relating to specialty composition of medical staff, source of
inpatients, or referral volume). (We refer readers to Sec.
412.96(c)(1) through (c)(5) and the September 30, 1988 Federal Register
(53 FR 38513) for additional discussion.) With respect to the two
mandatory prerequisites, a hospital may be classified as an RRC if--
The hospital's CMI is at least equal to the lower of the
median CMI for urban hospitals in its census region, excluding
hospitals with approved teaching programs, or the median CMI for all
urban hospitals nationally; and
The hospital's number of discharges is at least 5,000 per
year, or, if fewer, the median number of discharges for urban hospitals
in the census region in which the hospital is located. The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year, as specified in section 1886(d)(5)(C)(i) of the
Act.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2017 is based on the CMI values of all urban
hospitals nationwide, and the proposed regional median CMI values for
FY 2017 are based on the CMI values of all urban hospitals within each
census region, excluding those hospitals with approved teaching
programs (that is, those hospitals that train residents in an approved
GME program as provided in Sec. 413.75). These proposed values are
based on discharges occurring during FY 2015 (October 1, 2014 through
September 30, 2015), and include bills posted to CMS' records through
December 2015.
We are proposing that, in addition to meeting other criteria, if
rural hospitals with fewer than 275 beds are to qualify for initial RRC
status for cost reporting periods beginning on or after October 1,
2016, they must have a CMI value for FY 2015 that is at least--
1.6125 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed CMI values by region are set forth in the following
table.
------------------------------------------------------------------------
Case-mix
Region index value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................. 1.3637
2. Middle Atlantic (PA, NJ, NY).......................... 1.4441
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)... 1.51235
4. East North Central (IL, IN, MI, OH, WI)............... 1.5324
5. East South Central (AL, KY, MS, TN)................... 1.45055
6. West North Central (IA, KS, MN, MO, NE, ND, SD)....... 1.59535
7. West South Central (AR, LA, OK, TX)................... 1.643
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............. 1.6966
9. Pacific (AK, CA, HI, OR, WA).......................... 1.616
------------------------------------------------------------------------
We intend to update the preceding CMI values in the FY 2017 final
rule to reflect the updated FY 2015 MedPAR file, which would contain
data from additional bills received through March 2016.
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its MAC. Data are
available on the Provider Statistical and Reimbursement (PS&R) System.
In keeping with our policy on discharges, the CMI values are computed
based on all Medicare patient discharges subject to the IPPS MS-DRG-
based payment.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. For FY 2017, we are
proposing to update the regional standards based on discharges for
urban hospitals' cost reporting periods that began during FY 2014 (that
is, October 1, 2013 through September 30, 2014), which are the latest
cost report data available at the time this proposed rule was
developed.
We are proposing that, in addition to meeting other criteria, a
hospital, if it is to qualify for initial RRC status for cost reporting
periods beginning on or after October 1, 2016, must have, as the number
of discharges for its cost reporting period that began during FY 2014,
at least--
5,000 (3,000 for an osteopathic hospital); or
The median number of discharges for urban hospitals in the
census region in which the hospital is located as indicated in the
following table.
------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 8,090
2. Middle Atlantic (PA, NJ, NY)......................... 10,745
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 10,309
4. East North Central (IL, IN, MI, OH, WI).............. 8,090
5. East South Central (AL, KY, MS, TN).................. 7,457
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 7,718
7. West South Central (AR, LA, OK, TX).................. 5,027
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 8,621
9. Pacific (AK, CA, HI, OR, WA)......................... 8,509
------------------------------------------------------------------------
We intend to update these numbers in the FY 2017 final rule based
on the latest available cost report data.
We note that the median number of discharges for hospitals in each
census region is greater than the national standard of 5,000
discharges. Therefore, under this proposed rule, 5,000 discharges is
the minimum criterion for all hospitals, except for osteopathic
hospitals for which the minimum criterion is 3,000 discharges.
[[Page 25080]]
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Background
Section 1886(d)(12) of the Act provides for an additional payment
to each qualifying low-volume hospital that is paid under IPPS
beginning in FY 2005, and the low-volume hospital payment policy is set
forth in the regulations at 42 CFR 412.101. Sections 3125 and 10314 of
the Affordable Care Act provided for a temporary change in the low-
volume hospital payment policy for FYs 2011 and 2012. Specifically, the
provisions of the Affordable Care Act amended the qualifying criteria
for low-volume hospitals to specify, for FYs 2011 and 2012, that a
hospital qualifies as a low-volume hospital if it is more than 15 road
miles from another subsection (d) hospital and has less than 1,600
discharges of individuals entitled to, or enrolled for, benefits under
Medicare Part A during the fiscal year. In addition, the statute as
amended by the Affordable Care Act, provides that the low-volume
hospital payment adjustment (that is, the percentage increase) is
determined using a continuous linear sliding scale ranging from 25
percent for low-volume hospitals with 200 or fewer discharges of
individuals entitled to, or enrolled for, benefits under Medicare Part
A in the fiscal year to 0 percent for low-volume hospitals with greater
than 1,600 discharges of such individuals in the fiscal year. We
revised the regulations governing the low-volume hospital payment
adjustment policy at Sec. 412.101 to reflect the changes to the
qualifying criteria and the calculation of the payment adjustment for
low-volume hospitals according to the provisions of the Affordable Care
Act in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414).
The temporary changes to the low-volume hospital qualifying
criteria and the payment adjustment originally provided for by the
Affordable Care Act have been extended by subsequent legislation as
follows: Through FY 2013, by the American Taxpayer Relief Act of 2012
(ATRA), Public Law 112-240; through March 31, 2014, by the Pathway for
SGR Reform Act of 2013, Public Law 113- 167; through March 31, 2015, by
the Protecting Access to Medicare Act of 2014 (PAMA), Public Law 113-
93; and most recently through FY 2017, by the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA), Public Law 114-10. For additional
details on the implementation of the previous extensions of the
temporary changes to the low-volume hospital qualifying criteria and
payment adjustment originally provided for by the Affordable Care Act,
we refer readers to the following Federal Register documents: The FY
2013 IPPS notice (78 FR 14689 through 14691); the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50611 through 50612); the FY 2014 IPPS interim final
rule with comment period (79 FR 15022 through 15025); the FY 2014 IPPS
notice (79 FR 34444 through 34446); the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49998 through 50001); and the FY 2016 IPPS interim final
rule with comment period (80 FR 49594 through 49595).
2. Proposed Low-Volume Hospital Definition and Payment Adjustment for
FY 2017
Under section 1886(d)(12) of the Act, as amended by section 204 of
the MACRA, the temporary changes in the low-volume hospital payment
policy originally provided by the Affordable Care Act and extended
through subsequent legislation, are effective through FY 2017. In this
proposed rule, consistent with our historical approach, we are
proposing to update the discharge data source used to identify
qualifying low-volume hospitals and calculate the payment adjustment
(percentage increase) for FY 2017. Under Sec. 412.101(b)(2)(ii), for
the applicable fiscal years, a hospital's Medicare discharges from the
most recently available MedPAR data, as determined by CMS, are used to
determine if the hospital meets the discharge criteria to receive the
low-volume payment adjustment in the current year and to determine the
applicable low-volume percentage increase for qualifying hospitals. The
applicable low-volume percentage increase for FY 2017 is determined
using a continuous linear sliding scale equation that results in a low-
volume hospital payment adjustment ranging from an additional 25
percent for hospitals with 200 or fewer Medicare discharges to a zero
percent additional payment adjustment for hospitals with 1,600 or more
Medicare discharges. For FY 2017, consistent with our historical
policy, we are proposing that qualifying low-volume hospitals and their
payment adjustment would be determined using the most recently
available Medicare discharge data from the December 2015 update of the
FY 2015 MedPAR file, as these data are the most recent data available.
Table 14 listed in the Addendum of this proposed rule (which is
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
lists the ``subsection (d)'' hospitals with fewer than 1,600 Medicare
discharges based on the claims data from the December 2015 update of
the FY 2015 MedPAR file and their potential proposed low-volume payment
adjustment for FY 2017. Consistent with past practice, we note that
this list of hospitals with fewer than 1,600 Medicare discharges in
Table 14 does not reflect whether or not the hospital meets the mileage
criterion. Eligibility for the low-volume hospital payment adjustment
for FY 2017 also is dependent upon meeting the mileage criterion
specified at Sec. 412.101(b)(2)(ii); that is, the hospital must be
located more than 15 road miles from any other IPPS hospital. In other
words, eligibility for the low-volume hospital payment adjustment for
FY 2017 also is dependent upon meeting (in the case of a hospital that
did not qualify for the low-volume hospital payment adjustment in FY
2016) or continuing to meet (in the case of a hospital that did qualify
for the low-volume hospital payment adjustment in FY 2016) the mileage
criterion specified at Sec. 412.101(b)(2)(ii). Consistent with
historical practice, we are proposing that if more recent Medicare
discharge data become available, we would use that updated data to
determine qualifying low-volume hospitals and their payment adjustment
in the final rule, and update Table 14 to reflect that updated data.
In order to receive a low-volume hospital payment adjustment under
Sec. 412.101 for FY 2017, consistent with our previously established
procedure, we are proposing that a hospital must notify and provide
documentation to its MAC that it meets the discharge and mileage
criteria under Sec. 412.101(b)(2)(ii). Specifically, for FY 2017, we
are proposing that a hospital must make a written request for low-
volume hospital status that is received by its MAC no later than
September 1, 2016, in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its FY 2017 discharges
occurring on or after October 1, 2016. Under this procedure, a hospital
that qualified for the low-volume hospital payment adjustment in FY
2016 may continue to receive a low-volume hospital payment adjustment
for FY 2017 without reapplying if it continues to meet the Medicare
discharge criterion established for FY 2017 and the mileage criterion.
However, the hospital must send written verification that is received
by its MAC no later than September 1, 2016, stating that it continues
to be located more than 15 miles from any
[[Page 25081]]
other subsection (d) hospital. This written verification could be a
brief letter to the MAC stating that the hospital continues to meet the
low-volume hospital mileage criterion as documented in a prior low-
volume hospital status request. We also are proposing that if a
hospital's written request for low-volume hospital status for FY 2017
is received after September 1, 2016, and if the MAC determines that the
hospital meets the criteria to qualify as a low-volume hospital, the
MAC would apply the applicable low-volume hospital payment adjustment
to determine the payment for the hospital's FY 2017 discharges
effective prospectively within 30 days of the date of its low-volume
hospital status determination, consistent with past practice. (For
additional details on our established process for the low-volume
hospital payment adjustment, we refer readers to the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53408) and the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50000 through 50001).)
We note that, in the FY 2016 IPPS interim final rule with comment
period (80 FR 49595), we revised the regulations at Sec. 412.101 to
conform the text to the provisions of section 204 of the MACRA, which
extended the changes to the qualifying criteria and the payment
adjustment methodology for low-volume hospitals through FY 2017 (that
is, through September 30, 2017). We intend to finalize the low-volume
hospital provisions (as well as the Medicare-dependent small rural
hospital (MDH) provisions at Sec. 412.108) included in that FY 2016
interim final rule with comment period in the FY 2017 IPPS/LTCH PPS
final rule.
E. Indirect Medical Education (IME) Payment Adjustment Factor for FY
2017 (Sec. 412.105)
1. IME Adjustment for FY 2017
Under the IPPS, an additional payment amount is made to hospitals
with residents in an approved graduate medical education (GME) program
in order to reflect the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The payment amount is
determined by use of a statutorily specified adjustment factor. The
regulations regarding the calculation of this additional payment, known
as the IME adjustment, are located at Sec. 412.105. We refer readers
to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full
discussion of the IME adjustment and IME adjustment factor. Section
1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges
occurring during FY 2008 and fiscal years thereafter, the IME formula
multiplier is 1.35. Accordingly, for discharges occurring during FY
2017, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2017 IME adjustment will result in
an increase in IPPS payment of 5.5 percent for every approximately 10
percent increase in the hospital's resident to bed ratio.
2. Other Proposed Policies Related to IME
We refer readers to section IV.I. of the preamble of this proposed
rule for a discussion of the proposed policy changes relating to
medical residency training programs (or rural tracks) at urban
hospitals that also affect payments for IME.
F. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2017 and Subsequent Years (Sec. 412.106)
1. General Discussion
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals that serve a significantly
disproportionate number of low-income patients. The Act specifies two
methods by which a hospital may qualify for the Medicare
disproportionate share hospital (DSH) adjustment. Under the first
method, hospitals that are located in an urban area and have 100 or
more beds may receive a Medicare DSH payment adjustment if the hospital
can demonstrate that, during its cost reporting period, more than 30
percent of its net inpatient care revenues are derived from State and
local government payments for care furnished to needy patients with low
incomes. This method is commonly referred to as the ``Pickle method.''
The second method for qualifying for the DSH payment adjustment, which
is the most common, is based on a complex statutory formula under which
the DSH payment adjustment is based on the hospital's geographic
designation, the number of beds in the hospital, and the level of the
hospital's disproportionate patient percentage (DPP). A hospital's DPP
is the sum of two fractions: the ``Medicare fraction'' and the
``Medicaid fraction.'' The Medicare fraction (also known as the ``SSI
fraction'' or ``SSI ratio'') is computed by dividing the number of the
hospital's inpatient days that are furnished to patients who were
entitled to both Medicare Part A and Supplemental Security Income (SSI)
benefits by the hospital's total number of patient days furnished to
patients entitled to benefits under Medicare Part A. The Medicaid
fraction is computed by dividing the hospital's number of inpatient
days furnished to patients who, for such days, were eligible for
Medicaid, but were not entitled to benefits under Medicare Part A, by
the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the DSH
statutory references (under section 1886(d)(5)(F) of the Act) to
``days'' apply only to hospital acute care inpatient days. Regulations
located at Sec. 412.106 govern the Medicare DSH payment adjustment and
specify how the DPP is calculated as well as how beds and patient days
are counted in determining the Medicare DSH payment adjustment. Under
Sec. 412.106(a)(1)(i), the number of beds for the Medicare DSH payment
adjustment is determined in accordance with bed counting rules for the
IME adjustment under Sec. 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act, as
amended by section 10316 of the same Act and section 1104 of the Health
Care and Education Reconciliation Act (Pub. L. 111-152), added a new
section 1886(r) to the Act that modifies the methodology for computing
the Medicare DSH payment adjustment. (For purposes of this proposed
rule, we refer to these provisions collectively as section 3133 of the
Affordable Care Act.) Beginning with discharges in FY 2014, hospitals
that qualify for Medicare DSH payments under section 1886(d)(5)(F) of
the Act receive 25 percent of the amount they previously would have
received under the statutory formula for Medicare DSH payments. This
provision applies equally to hospitals that qualify for DSH payments
under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that
qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of
the Act.
The remaining amount, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, reduced to
reflect changes in the percentage of individuals under age 65 who are
uninsured, is available to make additional payments to each hospital
that qualifies for Medicare DSH payments and that has uncompensated
care. The payments to each hospital for a fiscal year are based on the
hospital's amount of uncompensated care for a given time period
relative to the total amount of uncompensated care for that same time
period reported by all hospitals that receive Medicare DSH payments for
that fiscal year.
As provided by section 3133 of the Affordable Care Act, section
1886(r) of the Act requires that, for FY 2014 and
[[Page 25082]]
each subsequent fiscal year, a subsection (d) hospital that would
otherwise receive DSH payments made under section 1886(d)(5)(F) of the
Act receives two separately calculated payments. Specifically, section
1886(r)(1) of the Act provides that the Secretary shall pay to such a
subsection (d) hospital (including a Pickle hospital) 25 percent of the
amount the hospital would have received under section 1886(d)(5)(F) of
the Act for DSH payments, which represents the empirically justified
amount for such payment, as determined by the MedPAC in its March 2007
Report to the Congress. We refer to this payment as the ``empirically
justified Medicare DSH payment.''
In addition to this empirically justified Medicare DSH payment,
section 1886(r)(2) of the Act provides that, for FY 2014 and each
subsequent fiscal year, the Secretary shall pay to such subsection (d)
hospital an additional amount equal to the product of three factors.
The first factor is the difference between the aggregate amount of
payments that would be made to subsection (d) hospitals under section
1886(d)(5)(F) of the Act if subsection (r) did not apply and the
aggregate amount of payments that are made to subsection (d) hospitals
under section 1886(r)(1) of the Act for each fiscal year. Therefore,
this factor amounts to 75 percent of the payments that would otherwise
be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FYs 2014 through 2017, 1 minus the
percent change in the percent of individuals under the age of 65 who
are uninsured, determined by comparing the percent of such individuals
who were uninsured in 2013, the last year before coverage expansion
under the Affordable Care Act (as calculated by the Secretary based on
the most recent estimates available from the Director of the
Congressional Budget Office before a vote in either House on the Health
Care and Education Reconciliation Act of 2010 that, if determined in
the affirmative, would clear such Act for enrollment), and the percent
of individuals who were uninsured in the most recent period for which
data are available (as so calculated) minus 0.1 percentage point for FY
2014, and minus 0.2 percentage point for FYs 2015 through 2017. For FYs
2014 through 2017, the baseline for the estimate of the change in
uninsurance is fixed by the most recent estimate of the Congressional
Budget Office before the final vote on the Health Care and Education
Reconciliation Act of 2010, which is contained in a March 20, 2010
letter from the Director of the Congressional Budget Office to the
Speaker of the House. (The March 20, 2010 letter is available for
viewing on the following Web site: http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/amendreconprop.pdf.)
For FY 2018 and subsequent fiscal years, the second factor is 1
minus the percent change in the percent of individuals who are
uninsured, as determined by comparing the percent of individuals who
were uninsured in 2013 (as estimated by the Secretary, based on data
from the Census Bureau or other sources the Secretary determines
appropriate, and certified by the Chief Actuary of CMS), and the
percent of individuals who were uninsured in the most recent period for
which data are available (as so estimated and certified), minus 0.2
percentage point for FYs 2018 and 2019. Therefore, for FY 2018 and
subsequent fiscal years, the statute provides some greater flexibility
in the choice of the data sources to be used for the estimate of the
change in the percent of uninsured individuals.
The third factor is a percent that, for each subsection (d)
hospital, represents the quotient of the amount of uncompensated care
for such hospital for a period selected by the Secretary (as estimated
by the Secretary, based on appropriate data), including the use of
alternative data where the Secretary determines that alternative data
are available which are a better proxy for the costs of subsection (d)
hospitals for treating the uninsured, and the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act. Therefore, this third factor
represents a hospital's uncompensated care amount for a given time
period relative to the uncompensated care amount for that same time
period for all hospitals that receive Medicare DSH payments in the
applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents
its additional payment for uncompensated care for the applicable fiscal
year. We refer to the additional payment determined by these factors as
the ``uncompensated care payment.''
Section 1886(r) of the Act applies to FY 2014 and each subsequent
fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620
through 50647) and the FY 2014 IPPS interim final rule with comment
period (78 FR 61191 through 61197), we set forth our policies for
implementing the required changes to the Medicare DSH payment
methodology made by section 3133 of the Affordable Care Act for FY
2014. In those rules, we noted that, because section 1886(r) of the Act
modifies the payment required under section 1886(d)(5)(F) of the Act,
it affects only the DSH payment under the operating IPPS. It does not
revise or replace the capital IPPS DSH payment provided under the
regulations at 42 CFR part 412, subpart M, which were established
through the exercise of the Secretary's discretion in implementing the
capital IPPS under section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be
no administrative or judicial review under section 1869, section 1878,
or otherwise of any estimate of the Secretary for purposes of
determining the factors described in section 1886(r)(2) of the Act or
of any period selected by the Secretary for the purpose of determining
those factors. Therefore, there is no administrative or judicial review
of the estimates developed for purposes of applying the three factors
used to determine uncompensated care payments, or the periods selected
in order to develop such estimates.
2. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As indicated earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a DSH payment made under section 1886(d)(5)(F)
of the Act. Therefore, hospitals must receive empirically justified
Medicare DSH payments in a fiscal year in order to receive an
additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that, in addition to
the payment made to a subsection (d) hospital under section 1886(r)(1)
of the Act, the Secretary shall pay to such subsection (d) hospitals an
additional amount. Because section 1886(r)(1) of the Act refers to
empirically justified Medicare DSH payments, the additional payment
under section 1886(r)(2) of the Act is limited to hospitals that
receive empirically justified Medicare DSH payments in accordance with
section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 IPPS interim final rule with comment period (78 FR 61193), we
provided that hospitals that are not eligible to receive empirically
justified Medicare DSH payments in a fiscal year will not receive
uncompensated care payments
[[Page 25083]]
for that year. We also specified that we would make a determination
concerning eligibility for interim uncompensated care payments based on
each hospital's estimated DSH status for the applicable fiscal year
(using the most recent data that are available). We indicated that our
final determination on the hospital's eligibility for uncompensated
care payments would be based on the hospital's actual DSH status at
cost report settlement for that payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2015 IPPS/LTCH PPS final rule (79 FR 50006), we specified our policies
for several specific classes of hospitals within the scope of section
1886(r) of the Act. We refer readers to those two final rules for a
detailed discussion of our policies. In summary, we specified the
following:
Subsection (d) Puerto Rico hospitals that are eligible for
DSH payments also are eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under the new
payment methodology (78 FR 50623 and 79 FR 50006).
Maryland hospitals are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
the payment methodology of section 1886(r) of the Act because they are
not paid under the IPPS. As discussed in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50007), effective January 1, 2014, the State of
Maryland elected to no longer have Medicare pay Maryland hospitals in
accordance with section 1814(b)(3) of the Act and entered into an
agreement with CMS that Maryland hospitals will be paid under the
Maryland All-Payer Model. However, under the Maryland All-Payer Model,
Maryland hospitals still are not paid under the IPPS. Therefore, they
remain ineligible to receive empirically justified Medicare DSH
payments or uncompensated care payments under section 1886(r) of the
Act.
SCHs that are paid under their hospital-specific rate are
not eligible for Medicare DSH payments. SCHs that are paid under the
IPPS Federal rate receive interim payments based on what we estimate
and project their DSH status to be prior to the beginning of the
Federal fiscal year (based on the best available data at that time)
subject to settlement through the cost report, and if they receive
interim empirically justified Medicare DSH payments in a fiscal year,
they also will receive interim uncompensated care payments for that
fiscal year on a per discharge basis, subject as well to settlement
through the cost report. Final eligibility determinations will be made
at the end of the cost reporting period at settlement, and both interim
empirically justified Medicare DSH payments and uncompensated care
payments will be adjusted accordingly (78 FR 50624 and 79 FR 50007).
MDHs are paid based on the IPPS Federal rate or, if
higher, the IPPS Federal rate plus 75 percent of the amount by which
the Federal rate is exceeded by the updated hospital-specific rate from
certain specified base years (76 FR 51684). The IPPS Federal rate used
in the MDH payment methodology is the same IPPS Federal rate that is
used in the SCH payment methodology. Section 205 of the Medicare Access
and CHIP Reauthorization Act of 2015 (MACRA), Public Law 114-10,
enacted April 16, 2015, extended the MDH program for discharges on or
after April 1, 2015, through September 30, 2017. Because MDHs are paid
based on the IPPS Federal rate, for FY 2017, MDHs will continue to be
eligible to receive empirically justified Medicare DSH payments and
uncompensated care payments if their DPP is at least 15 percent. We
will apply the same process to determine MDHs' eligibility for
empirically justified Medicare DSH and uncompensated care payments, as
we do for all other IPPS hospitals, through September 30, 2017.
Moreover, we will continue to make a determination concerning
eligibility for interim uncompensated care payments based on each
hospital's estimated DSH status for the applicable fiscal year (using
the most recent data that are available). Our final determination on
the hospital's eligibility for uncompensated care payments will be
based on the hospital's actual DSH status at cost report settlement for
that payment year. In addition, as we do for all IPPS hospitals, we
calculate a numerator for Factor 3 for all MDHs, regardless of whether
they are projected to be eligible for Medicare DSH payments during the
fiscal year, but the denominator for Factor 3 will be based on the
uncompensated care data from the hospitals that we have projected to be
eligible for Medicare DSH payments during the fiscal year.
IPPS hospitals that have elected to participate in the
Bundled Payments for Care Improvement initiative continue to be paid
under the IPPS (77 FR 53342) and, therefore, are eligible to receive
empirically justified Medicare DSH payments and uncompensated care
payments (78 FR 50625 and 79 FR 50008).
Hospitals participating in the Rural Community Hospital
Demonstration Program under section 410A of the Medicare Modernization
Act do not receive DSH payments and, therefore, are excluded from
receiving empirically justified Medicare DSH payments and uncompensated
care payments under the new DSH payment methodology (78 FR 50625 and 79
FR 50008). There are 14 hospitals currently participating in the
program; 10 will continue to participate through the end of FY 2016,
and 4 will continue to participate through the scheduled end of the
program on December 31, 2016. Once a hospital's participation in the
demonstration program ends, the hospital will be treated like a
subsection (d) hospital and subject to the IPPS. Therefore, once their
participation ends, these hospitals could be eligible to receive
empirically justified Medicare DSH payments and uncompensated care
payments and, if so, will be treated accordingly for interim and final
payments. We will apply the same process to determining their
eligibility as we do for all other IPPS hospitals, and will make
interim and final DSH and uncompensated care payments accordingly.
3. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the Medicare
DSH payment that would otherwise be made under section 1886(d)(5)(F) of
the Act to a subsection (d) hospital. Because section 1886(r)(1) of the
Act merely requires the program to pay a designated percentage of these
payments, without revising the criteria governing eligibility for DSH
payments or the underlying payment methodology, we stated in the FY
2014 IPPS/LTCH PPS final rule that we did not believe that it was
necessary to develop any new operational mechanisms for making such
payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50626), we implemented this provision by advising MACs to simply adjust
the interim claim payments to the requisite 25 percent of what would
have otherwise been paid. We also made corresponding changes to the
hospital cost report so that these empirically justified Medicare DSH
payments can be settled at the appropriate level at the time of cost
report settlement. We provided more detailed operational instructions
and cost report instructions following issuance of the FY 2014 IPPS/
LTCH PPS final rule that are available on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
[[Page 25084]]
4. Uncompensated Care Payments
As we have discussed earlier, section 1886(r)(2) of the Act
provides that, for each eligible hospital in FY 2014 and subsequent
years, the uncompensated care payment is the product of three factors.
These three factors represent our estimate of 75 percent of the amount
of Medicare DSH payments that would otherwise have been paid, an
adjustment to this amount for the percent change in the national rate
of uninsurance compared to the rate of uninsurance in 2013, and each
eligible hospital's estimated uncompensated care amount relative to the
estimated uncompensated care amount for all eligible hospitals. Below
we discuss the data sources and methodologies for computing each of
these factors, our final policies for FYs 2014 through 2016, and our
proposed policies for FY 2017.
a. Calculation of Proposed Factor 1 for FY 2017
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the
calculation of the uncompensated care payment. Section 1886(r)(2)(A) of
the Act states that this factor is equal to the difference between (1)
the aggregate amount of payments that would be made to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year (as estimated by the
Secretary); and (2) the aggregate amount of payments that are made to
subsection (d) hospitals under section 1886(r)(1) of the Act for such
fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of
the Act represents the estimated Medicare DSH payments that would have
been made under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year. Under a prospective payment
system, we would not know the precise aggregate Medicare DSH payment
amount that would be paid for a Federal fiscal year until cost report
settlement for all IPPS hospitals is completed, which occurs several
years after the end of the Federal fiscal year. Therefore, section
1886(r)(2)(A)(i) of the Act provides authority to estimate this amount,
by specifying that, for each fiscal year to which the provision
applies, such amount is to be estimated by the Secretary. Similarly,
section 1886(r)(2)(A)(ii) of the Act represents the estimated
empirically justified Medicare DSH payments to be made in a fiscal
year, as prescribed under section 1886(r)(1) of the Act. Again, section
1886(r)(2)(A)(ii) of the Act provides authority to estimate this
amount.
Therefore, Factor 1 is the difference between our estimates of: (1)
The amount that would have been paid in Medicare DSH payments for the
fiscal year, in the absence of the new payment provision; and (2) the
amount of empirically justified Medicare DSH payments that are made for
the fiscal year, which takes into account the requirement to pay 25
percent of what would have otherwise been paid under section
1886(d)(5)(F) of the Act. In other words, this factor represents our
estimate of 75 percent (100 percent minus 25 percent) of our estimate
of Medicare DSH payments that would otherwise be made, in the absence
of section 1886(r) of the Act, for the fiscal year.
As we did for FY 2016, in order to determine Factor 1 in the
uncompensated care payment formula for FY 2017, we are proposing to
continue the policy established in the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50628 through 50630) and in the FY 2014 IPPS interim final rule
with comment period (78 FR 61194) of determining Factor 1 by developing
estimates of both the aggregate amount of Medicare DSH payments that
would be made in the absence of section 1886(r)(1) of the Act and the
aggregate amount of empirically justified Medicare DSH payments to
hospitals under 1886(r)(1) of the Act. These estimates will not be
revised or updated after we know the final Medicare DSH payments for FY
2017.
Therefore, in order to determine the two elements of Factor 1 for
FY 2017 (Medicare DSH payments prior to the application of section
1886(r)(1) of the Act, and empirically justified Medicare DSH payments
after application of section 1886(r)(1) of the Act), we used the most
recently available projections of Medicare DSH payments for the fiscal
year, as calculated by CMS' Office of the Actuary using the most
recently filed Medicare hospital cost report with Medicare DSH payment
information and the most recent Medicare DSH patient percentages and
Medicare DSH payment adjustments provided in the IPPS Impact File.
For purposes of calculating Factor 1 and modeling the impact of
this FY 2017 IPPS/LTCH PPS proposed rule, we used the Office of the
Actuary's March 2016 Medicare DSH estimates, which are based on data
from the December 2015 update of the Medicare Hospital Cost Report
Information System (HCRIS) and the FY 2016 IPPS/LTCH PPS final rule
IPPS Impact file, published in conjunction with the publication of the
FY 2016 IPPS/LTCH PPS final rule. Because SCHs that are projected to be
paid under their hospital-specific rate are excluded from the
application of section 1886(r) of the Act, these hospitals also were
excluded from the March 2016 Medicare DSH estimates. Furthermore,
because section 1886(r) of the Act specifies that the uncompensated
care payment is in addition to the empirically justified Medicare DSH
payment (25 percent of DSH payments that would be made without regard
to section 1886(r) of the Act), Maryland hospitals participating in the
Maryland All-Payer Model that do not receive DSH payments are also
excluded from the Office of the Actuary's Medicare DSH estimates.
Because the Rural Community Hospital Demonstration program is scheduled
to end on December 31, 2016, hospitals that are participating in the
program are included in this estimate for FY 2017. However, we have
excluded 25 percent of our estimate of DSH payments that would
otherwise be made to the 4 hospitals whose participation in the program
will continue through December 31, 2016, as these hospitals will be
excluded from receiving DSH payments until that time. The estimate
includes the total DSH payments that would be made to the 10 hospitals
whose participation in the Rural Community Hospital Demonstration
program will continue only through September 30, 2016.
Using the data sources discussed above, the Office of the Actuary
uses the most recently submitted Medicare cost report data to identify
Medicare DSH payments and the most recent Medicare DSH payment
adjustments provided in the IPPS Impact File, and applies inflation
updates and assumptions for future changes in utilization and case-mix
to estimate Medicare DSH payments for the upcoming fiscal year. The
March 2016 Office of the Actuary estimate for Medicare DSH payments for
FY 2017, without regard to the application of section 1886(r)(1) of the
Act, is approximately $14.227 billion. This estimate excludes Maryland
hospitals participating in the Maryland All-Payer Model, SCHs paid
under their hospital-specific payment rate, and 25 percent of payments
to the 4 hospitals whose participation in the Rural Community Hospital
Demonstration program will continue through December 31, 2016.
Therefore, based on the March 2016 estimate, the estimate for
empirically justified Medicare DSH payments for FY 2017, with the
application of section 1886(r)(1) of the Act, is approximately $3.556
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for
[[Page 25085]]
FY 2017). Under Sec. 412.l06(g)(1)(i) of the regulations, Factor 1 is
the difference between these two estimates of the Office of the
Actuary. Therefore, in this proposed rule, we are proposing that Factor
1 for FY 2017 is $10,670,529,595.84, which is equal to 75 percent of
the total amount of estimated Medicare DSH payments for FY 2017
($14,227,372,794.46 minus $3,556,843,198.62).
The Office of the Actuary's estimates for FY 2017 begin with a
baseline of $12.154 billion in Medicare DSH expenditures for FY 2013.
The following table shows the factors applied to update this baseline
through the current estimate for FY 2017:
Factors Applied for FY 2014 Through FY 2017 To Estimate Medicare DSH Expenditures Using 2013 Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated DSH
FY Update Discharge Case-mix Other Total payment (in
billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014.................................................... 1.009 0.9553 1.015 1.04795 1.025268 $12.461
2015.................................................... 1.014 0.9894 1.005 1.0702 1.079048 13.446
2016.................................................... 1.009 1.0078 1.005 0.9993 1.021239 13.732
2017.................................................... 1.0005 1.0168 1.005 1.0134 1.036095 14.227
--------------------------------------------------------------------------------------------------------------------------------------------------------
In this table, the discharge column shows the increase in the
number of Medicare FFS inpatient hospital discharges. The figures for
FYs 2014 and 2015 are based on Medicare claims data that have been
adjusted by a completion factor. The discharge figure for FY 2016 is
based on preliminary data for 2016. The discharge figure for FY 2017 is
an assumption based on recent trends recovering back to the long-term
trend and assumptions related to how many beneficiaries will be
enrolled in Medicare Advantage (MA) plans. The case-mix column shows
the increase in case-mix for IPPS hospitals. The case-mix figures for
FYs 2014 and 2015 are based on actual data adjusted by a completion
factor. The FY 2016 and FY 2017 increases are based on the
recommendation of the 2010-2011 Medicare Technical Review Panel. The
``other'' column shows the increase in other factors that contribute to
the Medicare DSH estimates. These factors include the difference
between the total inpatient hospital discharges and the IPPS
discharges, various adjustments to the payment rates that have been
included over the years but are not reflected in the other columns
(such as the change in rates for the 2-midnight stay policy). In
addition, the ``other'' column includes a factor for the Medicaid
expansion due to the Affordable Care Act.
The table below shows the factors that are included in the
``Update'' column of the above table:
----------------------------------------------------------------------------------------------------------------
Affordable
Market basket Care Act Multifactor Documentation Total update
FY percentage payment productivity and coding percentage
reductions adjustment
----------------------------------------------------------------------------------------------------------------
2014............................ 2.5 -0.3 -0.5 -0.8 0.9
2015............................ 2.9 -0.2 -0.5 -0.8 1.4
2016............................ 2.4 -0.2 -0.5 -0.8 0.9
2017............................ 2.8 -0.75 -0.5 -1.5 0.05
----------------------------------------------------------------------------------------------------------------
Note: All numbers are based on the FY 2017 President's Budget projections.
b. Calculation of Proposed Factor 2 for FY 2017
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the
calculation of the uncompensated care payment. Specifically, section
1886(r)(2)(B)(i) of the Act provides that, for each of FYs 2014, 2015,
2016, and 2017, a factor equal to 1 minus the percent change in the
percent of individuals under the age of 65 who are uninsured, as
determined by comparing the percent of such individuals (1) who were
uninsured in 2013, the last year before coverage expansion under the
Affordable Care Act (as calculated by the Secretary based on the most
recent estimates available from the Director of the Congressional
Budget Office before a vote in either House on the Health Care and
Education Reconciliation Act of 2010 that, if determined in the
affirmative, would clear such Act for enrollment); and (2) who are
uninsured in the most recent period for which data are available (as so
calculated), minus 0.1 percentage point for FY 2014 and minus 0.2
percentage point for each of FYs 2015, 2016, and 2017.
Section 1886(r)(2)(B)(i)(I) of the Act further indicates that the
percent of individuals under 65 without insurance in 2013 must be the
percent of such individuals who were uninsured in 2013, the last year
before coverage expansion under the Affordable Care Act (as calculated
by the Secretary based on the most recent estimates available from the
Director of the Congressional Budget Office before a vote in either
House on the Health Care and Education Reconciliation Act of 2010 that,
if determined in the affirmative, would clear such Act for enrollment).
The Health Care and Education Reconciliation Act (Pub. L. 111-152) was
enacted on March 30, 2010. It was passed in the House of
Representatives on March 21, 2010, and by the Senate on March 25, 2010.
Because the House of Representatives was the first House to vote on the
Health Care and Education Reconciliation Act of 2010 on March 21, 2010,
we have determined that the most recent estimate available from the
Director of the Congressional Budget Office ``before a vote in either
House on the Health Care and Education Reconciliation Act of 2010 . .
.'' (emphasis added) appeared in a March 20, 2010 letter from the
director of the CBO to the Speaker of the House. Therefore, we believe
that only the estimates in this March 20, 2010 letter meet the
statutory requirement under section 1886(r)(2)(B)(i)(I) of the Act. (To
view the March 20, 2010 letter, we refer readers to the Web site at:
http://
[[Page 25086]]
www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/
amendreconprop.pdf.)
In its March 20, 2010 letter to the Speaker of the House of
Representatives, the CBO provided two estimates of the ``post-policy
uninsured population.'' The first estimate is of the ``Insured Share of
the Nonelderly Population Including All Residents'' (82 percent) and
the second estimate is of the ``Insured Share of the Nonelderly
Population Excluding Unauthorized Immigrants'' (83 percent). In the FY
2014 IPPS/LTCH PPS final rule (78 FR 50631), we used the first estimate
that includes all residents, including unauthorized immigrants. We
stated that we believe this estimate is most consistent with the
statute, which requires us to measure ``the percent of individuals
under the age of 65 who are uninsured'' and provides no exclusions
except for individuals over the age of 65. In addition, we stated that
we believe that this estimate more fully reflects the levels of
uninsurance in the United States that influence uncompensated care for
hospitals than the estimate that reflects only legal residents. The
March 20, 2010 CBO letter reports these figures as the estimated
percentage of individuals with insurance. However, because section
1886(r)(2)(B)(i) of the Act requires that we compare the percent of
individuals who are uninsured in the most recent period for which data
are available with the percent of individuals who were uninsured in
2013, in the FY 2014 IPPS/LTCH PPS final rule, we used the CBO
insurance rate figure and subtracted that amount from 100 percent (that
is the total population without regard to insurance status) to estimate
the 2013 baseline percent of individuals without insurance. Therefore,
for FYs 2014 through 2017, our estimate of the uninsurance percentage
for 2013 is 18 percent.
Section 1886(r)(2)(B)(i) of the Act requires that we compare the
baseline uninsurance rate to the percent of such individuals who are
uninsured in the most recent period for which data are available (as so
calculated). In the FY 2014, FY 2015, and FY 2016 IPPS/LTCH PPS final
rules (78 FR 50634, 79 FR 50014, and 80 FR 49522, respectively), we
used the same data source, CBO estimates, to calculate this percent of
individuals without insurance. In response to public comments, we also
agreed that we should normalize the CBO estimates, which are based on
the calendar year, for the Federal fiscal years for which each
calculation of Factor 2 is made (78 FR 50633). Therefore, for this FY
2017 IPPS/LTCH PPS proposed rule, we used the most recently available
estimate of the uninsurance rate, which is based on the CBO's March
2015 estimates of the effects of the Affordable Care Act on health
insurance coverage (which are available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2014-04-ACAtables2.pdf). The
CBO's March 2015 estimate of individuals under the age of 65 with
insurance in CY 2016 is 89 percent. Therefore, the CBO's most recent
estimate of the rate of uninsurance in CY 2016 is 11 percent (that is,
100 percent minus 89 percent). Similarly, the CBO's March 2015 estimate
of individuals under the age of 65 with insurance in CY 2017 is 90
percent. Therefore, the CBO's most recent estimate of the rate of
uninsurance in CY 2017 available for this proposed rule is 10 percent
(that is, 100 percent minus 90 percent).
The calculation of the proposed Factor 2 for FY 2017, employing a
weighted average of the CBO projections for CY 2016 and CY 2017, is as
follows:
CY 2016 rate of insurance coverage (March 2015 CBO
estimate): 89 percent.
CY 2017 rate of insurance coverage (March 2015 CBO
estimate): 90 percent.
FY 2016 rate of insurance coverage: (89 percent * .25) +
(90 percent * .75) = 89.75 percent.
Percent of individuals without insurance for 2013 (March
2010 CBO estimate): 18 percent.
Percent of individuals without insurance for FY 2017
(weighted average): 10.25 percent.
1-[verbar]((0.1025-0.18)/0.18)[verbar] = 1 - 0.4306 = 0.5694 (56.94
percent)
0.5694 (56.94 percent) - .002 (0.2 percentage points for FY 2017 under
section 1886(r)(2)(B)(i) of the Act) = 0.5674 or 56.74 percent
0.5674 = Factor 2
Therefore, the proposed Factor 2 for FY 2017 is 56.74 percent.
The FY 2017 Proposed Uncompensated Care Amount is:
$10,670,529,595.84 x 0.5674 = $6,054,458,492.68.
------------------------------------------------------------------------
------------------------------------------------------------------------
FY 2017 Proposed Uncompensated Care Total $6,054,458,492.68
Available.....................................
------------------------------------------------------------------------
c. Calculation of Proposed Factor 3 for FY 2017
Section 1886(r)(2)(C) of the Act defines Factor 3 in the
calculation of the uncompensated care payment. As we have discussed
earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal
to the percent, for each subsection (d) hospital, that represents the
quotient of (1) the amount of uncompensated care for such hospital for
a period selected by the Secretary (as estimated by the Secretary,
based on appropriate data (including, in the case where the Secretary
determines alternative data are available that are a better proxy for
the costs of subsection (d) hospitals for treating the uninsured, the
use of such alternative data)); and (2) the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act for such period (as so
estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the
proportion of the estimated uncompensated care amount for each
subsection (d) hospital and each subsection (d) Puerto Rico hospital
with the potential to receive Medicare DSH payments relative to the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the fiscal year for which the
uncompensated care payment is to be made. Factor 3 is applied to the
product of Factor 1 and Factor 2 to determine the amount of the
uncompensated care payment that each eligible hospital will receive for
FY 2014 and subsequent fiscal years. In order to implement the
statutory requirements for this factor of the uncompensated care
payment formula, it was necessary to determine: (1) The definition of
uncompensated care or, in other words, the specific items that are to
be included in the numerator (that is, the estimated uncompensated care
amount for an individual hospital) and the denominator (that is, the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the applicable fiscal year); (2) the
data source(s) for the estimated uncompensated care amount; and (3) the
timing and manner of computing the quotient for each hospital estimated
to receive Medicare DSH payments. The statute instructs the Secretary
to estimate the amounts of uncompensated care for a period based on
appropriate data. In addition, we note that the statute permits the
[[Page 25087]]
Secretary to use alternative data in the case where the Secretary
determines that such alternative data are available that are a better
proxy for the costs of subsection (d) hospitals for treating
individuals who are uninsured.
In the course of considering how to determine Factor 3 during the
rulemaking process for FY 2014, we considered defining the amount of
uncompensated care for a hospital as the uncompensated care costs of
each hospital and determined that Worksheet S-10 of the Medicare cost
report potentially provides the most complete data regarding
uncompensated care costs for Medicare hospitals. However, because of
concerns regarding variations in the data reported on the Worksheet S-
10 and the completeness of these data, we did not propose to use data
from the Worksheet S-10 to determine the amount of uncompensated care
for FY 2014, the first year this provision was in effect, or for FY
2015 and FY 2016. We instead employed the utilization of insured low
income patients, defined as inpatient days of Medicaid patients plus
inpatient days of Medicare SSI patients as defined in Sec.
412.106(b)(4) and Sec. 412.106(b)(2)(i) of the regulations,
respectively, to determine Factor 3. We believed that these alternative
data, which are currently reported on the Medicare cost report, would
be a better proxy for the amount of uncompensated care provided by
hospitals. We also indicated that we were expecting reporting on the
Worksheet S-10 to improve over time and remained convinced that the
Worksheet S-10 could ultimately serve as an appropriate source of more
direct data regarding uncompensated care costs for purposes of
determining Factor 3. As discussed in section IV.F.3.d. of the preamble
of this proposed rule, since the introduction of the uncompensated care
payment in FY 2014, we believe that hospitals have been submitting more
accurate and consistent data through Worksheet S-10 and that it is
appropriate to begin incorporating Worksheet S-10 data for purposes of
calculating Factor 3 starting in FY 2018. As discussed in greater
detail in section IV.F.3.d. of the preamble of this proposed rule, we
are proposing a methodology and timeline for incorporating Worksheet S-
10 data and invite public comments on such a proposal.
For FY 2017, we believe it remains premature to propose the use of
Worksheet S-10 data for purposes of determining Factor 3 because
hospitals were not on notice that Worksheet S-10 would be used for
purposes of computing uncompensated care payments prior to FY 2014,
which could affect the accuracy and completeness of the information
reported on Worksheet S-10. As described more fully below regarding the
time period of the data used to calculate Factor 3, for FY 2017, we are
using data from hospital cost reports that precede FY 2014 to determine
Factor 3 of the uncompensated care payments methodology. Therefore, for
FY 2017, we remain concerned about the accuracy and consistency of the
data reported on Worksheet S-10 and are proposing to continue to employ
the utilization of insured low-income patients (defined as inpatient
days of Medicaid patients plus inpatient days of Medicare SSI patients
as defined in Sec. 412.106(b)(4) and Sec. 412.106(b)(2)(i),
respectively) to determine Factor 3. We also are proposing to continue
the policies that were finalized in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50020) to address several specific issues concerning the
process and data to be employed in determining Factor 3 in the case of
hospital mergers for FY 2017 and subsequent fiscal years.
We also are proposing to make a change to the data that will be
used to calculate Factor 3 for Puerto Rico hospitals. We received a
comment in response to the FY 2016 IPPS/LTCH PPS proposed rule that
requested CMS to create a proxy for the SSI days used in the Factor 3
calculation for Puerto Rico hospitals (80 FR 49526). Specifically,
commenters were concerned that residents of Puerto Rico are not
eligible for SSI benefits. Although we did not have logical outgrowth
to adopt any change for FY 2016, we indicated that we planned to
address this issue in the FY 2017 IPPS/LTCH PPS proposed rule if we
also proposed to continue using inpatient days of Medicare SSI patients
as a proxy for uncompensated care in FY 2017. Because we are proposing
to continue using insured low-income patient days as a proxy for
uncompensated care in FY 2017, we believe it is important to consider
the commenter's request regarding the data used to calculate Factor 3
for Puerto Rico hospitals. Accordingly, we are proposing to create a
proxy for SSI days for Puerto Rico hospitals for use in the Factor 3
calculation. The commenter specifically mentioned the use of inpatient
days for Medicare beneficiaries receiving Medicaid as this proxy. We
have examined this concept and have been unable to identify a
systematic source for these data for Puerto Rico hospitals.
Specifically, we note that inpatient utilization for Medicare
beneficiaries entitled to Medicaid is not reported by hospitals on the
Medicare cost report. Therefore, we sought an alternative method using
publicly available Medicare data for determining a proxy to account for
the fact that residents of Puerto Rico are not eligible for SSI, and
therefore Puerto Rico hospitals have a relatively low number of
Medicare SSI days in the Factor 3 computation. We believe it is
appropriate to use data from the Medicare cost report to develop a
Puerto Rico Medicare SSI days proxy because they are publicly
available, used for payment purposes, and subject to audit. However, we
acknowledge that there are other data sources that could be included to
develop such a proxy, in particular the SSI ratios posted on the
Medicare DSH Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html, and therefore are
soliciting public comment on their use.
To develop a Puerto Rico Medicare SSI days proxy using data from
the Medicare cost report, our Office of the Actuary examined data from
2013 cost reports and analyzed the relationship between Medicare SSI
days (estimated using SSI ratios on the cost report and Medicare days
from the same cost report) and Medicaid days (reported by the hospitals
in accordance with Sec. 412.106(b)(4)). Nationally, excluding Puerto
Rico, the Office of the Actuary found that, on average and across
States, for every 100 Medicaid inpatient days, hospitals had 14
Medicare SSI days. In other words, the relationship between Medicare
SSI days and Medicaid days reported by hospitals in States, excluding
Puerto Rico, was approximately 14 percent. We believe it would be
appropriate to extrapolate this relationship to Puerto Rico hospitals
to approximate how many patient days for these hospitals would be
Medicare SSI days if Puerto Rico residents were eligible to receive
SSI. Therefore, to calculate Factor 3 for FY 2017, we are proposing to
use a proxy for Medicare SSI days for each Puerto Rico hospital equal
to 14 percent (or 0.14) of its Medicaid days. In other words, for each
Puerto Rico hospital, we would compute a value that is equal to 14
percent of its Medicaid days, where Medicaid days are determined in
accordance with Sec. 412.106(b)(4). Because this is a proposed proxy
for the Puerto Rico hospital's Medicare SSI days, this value would
replace whatever value would otherwise be computed for the hospital
under Sec. 412.106(b)(2)(i). Specifically, we would first remove any
Medicare SSI days that a Puerto Rico hospital has from our calculation
for
[[Page 25088]]
purposes of determining the numerator of Factor 3 for the hospital and,
if the hospital is projected to be eligible for DSH payments in FY
2017, the denominator of Factor 3. Second, we would add the proxy to
the hospital's Medicaid days for purposes of determining the numerator
of Factor 3 for the hospital and, if the hospital is projected to be
eligible for DSH payments in FY 2017, the denominator of Factor 3. We
note that we continue to encourage Puerto Rico hospitals to report
uncompensated care costs on Worksheet S-10 of the Medicare cost report
completely and accurately in light of our proposal to begin
incorporating data from Worksheet S-10 in the computation of hospitals'
uncompensated care payments starting in FY 2018, as described in more
detail in section IV.F.3.d. of the preamble of this proposed rule.
In summary, we are inviting public comments on these proposals to
continue to use insured low-income days (that is, to use data for
Medicaid and Medicare SSI patient days determined in accordance with
Sec. 412.106(b)(2)(i) and (b)(4) as a proxy for uncompensated care, as
permitted by statute, including a proxy for Medicare SSI days for
Puerto Rico hospitals), to determine Factor 3 for FY 2017. These
proposals would be codified in our regulations at Sec.
412.106(g)(1)(iii)(C). We also are inviting public comments on our
proposal to continue the policies concerning the process and data to be
employed in determining Factor 3 in the case of hospital mergers.
As we have done for every proposed rule beginning in FY 2014, for
this FY 2017 IPPS/LTCH PPS proposed rule, we are publishing on the CMS
Web site a table listing Factor 3 for all hospitals that we estimate
would receive empirically justified Medicare DSH payments in FY 2017
(that is, hospitals that we project would receive interim uncompensated
care payments during the fiscal year), and for the remaining subsection
(d) hospitals and subsection (d) Puerto Rico hospitals that have the
potential of receiving a Medicare DSH payment in the event that they
receive an empirically justified Medicare DSH payment for the fiscal
year as determined at cost report settlement. This table also contains
a list of the mergers that we are aware of and the computed
uncompensated care payment for each merged hospital. Hospitals have 60
days from the date of public display of this FY 2017 IPPS/LTCH PPS
proposed rule to review this table and notify CMS in writing of any
inaccuracies. Comments can be submitted to the CMS inbox at
[email protected]. After the publication of the FY 2017 IPPS/
LTCH final rule, hospitals will have until August 31, 2016, to review
and submit comments on the accuracy of the table published in
conjunction with the final rule. Comments can be submitted to the CMS
inbox at [email protected] through August 31, 2016, and any
changes to Factor 3 will be posted on the CMS Web site prior to October
1, 2016.
The statute also allows the Secretary the discretion to determine
the time periods from which we will derive the data to estimate the
numerator and the denominator of the Factor 3 quotient. Specifically,
section 1886(r)(2)(C)(i) of the Act defines the numerator of the
quotient as the amount of uncompensated care for such hospital for a
period selected by the Secretary. Section 1886(r)(2)(C)(ii) of the Act
defines the denominator as the aggregate amount of uncompensated care
for all subsection (d) hospitals that receive a payment under section
1886(r) of the Act for such period. In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50638), we adopted a process of making interim payments
with final cost report settlement for both the empirically justified
Medicare DSH payments and the uncompensated care payments required by
section 3133 of the Affordable Care Act. Consistent with that process,
we also determined the time period from which to calculate the
numerator and denominator of the Factor 3 quotient in a way that would
be consistent with making interim and final payments. Specifically, we
must have Factor 3 values available for hospitals that we estimate will
qualify for Medicare DSH payments and for those hospitals that we do
not estimate will qualify for Medicare DSH payments but that may
ultimately qualify for Medicare DSH payments at the time of cost report
settlement.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638) and the FY
2015 IPPS/LTCH PPS final rule (79 FR 50018), we finalized a policy of
using the most recent available full year of Medicare cost report data
for determining Medicaid days and the most recently available SSI
ratios to calculate Factor 3. In the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49528), we held constant the cost reporting years used to
determine Medicaid days in the calculation of Factor 3. That is,
instead of calculating the numerator and the denominator of Factor 3
for hospitals based on the most recently available full year of
Medicare cost report data with respect to a Federal fiscal year, we
used data from the more recent of the cost report years (2012/2011)
used to determine Medicaid days in FY 2015. We made this change in
order to refine the balance between the recency and accuracy of the
data used in the Factor 3 calculation. Because we make prospective
determinations of the uncompensated care payment without
reconciliation, we believed this change would increase the accuracy of
the data used to determine Factor 3, and accordingly each eligible
hospital's allocation of the overall uncompensated care amount by
providing hospitals with more time to submit these data before they are
used in the computation of Factor 3. As in prior years, if the more
recent of the two cost reporting periods did not reflect data for a 12-
month period, we used data from the earlier of the two periods so long
as that earlier period reflected data for a period of 12 months. If
neither of the two periods reflected 12 months, we used the period that
reflected a longer amount of time. We also finalized a proposal to
continue to extract Medicaid days from the most recent HCRIS database
update and to use Medicare SSI days from the most recent SSI ratios
available to us during the time of rulemaking to calculate Factor 3. We
stated that, for subsequent fiscal years, if we propose and finalize a
policy of using insured low-income days in computing Factor 3, we would
continue to use the most recent HCRIS database extract at the time of
the annual rulemaking cycle, and to use the subsequent year of cost
reports (that is, to advance the 12-month cost reports by 1 year). In
addition, for any subsequent fiscal years in which we finalize a policy
to use insured low-income days to compute Factor 3, our intention would
be to continue to use the most recently available SSI ratio data at the
time of annual rulemaking to calculate Factor 3. We believed that it
was appropriate to state our intentions regarding the specific data we
would use in the event Factor 3 was determined on the basis of low-
income insured days for subsequent years to provide hospitals with as
much guidance as possible so they may best consider how and when to
submit cost report information in the future. We noted that we would
make proposals with regard to our methodology for calculating Factor 3
for subsequent fiscal years through notice-and-comment rulemaking.
Since the publication of the FY 2016 IPPS/LTCH PPS final rule, we
have learned that some members of the hospital community have been
disadvantaged by our policy of using only one cost reporting period to
[[Page 25089]]
determine their share of uncompensated care. Specifically, many
hospitals have reported unpredictable swings and anomalies in their
low-income insured days between cost reporting periods. These hospitals
expressed concern that the use of only one cost reporting period is a
poor predictor of their future uncompensated care burden and results in
inadequate payments. Because the data used to make uncompensated care
payment determinations are not subject to reconciliation after the end
of the fiscal year, we believe that it would be appropriate to expand
the time period for the data used to calculate Factor 3 from one cost
reporting period to three cost reporting periods. Using data from more
than one cost reporting period would mitigate undue fluctuations in the
amount of uncompensated care payments to hospitals from year to year
and smooth over anomalies between cost reporting periods. Moreover,
this policy would have the benefit of supplementing the data of
hospitals that filed cost reports that are less than 12 months, such
that the basis of their uncompensated care payments and those of
hospitals that filed full-year 12-month cost reports would be more
equitable. We believe that computing Factor 3 using data from three
cost reporting periods would best stabilize hospitals' uncompensated
care payments while maintaining the recency of the data used in the
Factor 3 calculation. We believe that using data from two cost
reporting periods would not be as stable while using data from more
than three cost reporting periods could result in using overly dated
information.
Therefore, for FY 2017, we are proposing to use an average of data
derived from three cost reporting periods instead of one cost reporting
period to compute Factor 3. That is, we would calculate a Factor 3 for
each cost reporting period and calculate the average. We would
calculate their average by adding these amounts together, and dividing
the sum by three, in order to calculate Factor 3 for FY 2017.
Consistent with the policy adopted in the FY 2016 IPPS/LTCH PPS final
rule, we would advance the most recent cost report years used to obtain
Medicaid days and Medicare SSI days in FY 2017 by one year and continue
to extract Medicaid days data from the most recent update of HCRIS,
which for FY 2017 would be the March 2015 update of HCRIS. If the
hospital does not have data for one or more of the three cost reporting
periods, we compute Factor 3 for the periods available and average
those. In other words, we would divide the sum of the individual Factor
3s by the number of cost reporting periods for which there are data. If
a hospital has merged, we would combine data from both hospitals for
the cost reporting periods in which the merger is not reflected in the
surviving hospital's cost report data to compute Factor 3 for the
surviving hospital. Moreover, to further reduce undue fluctuations in a
hospital's uncompensated care payments, if a hospital filed multiple
cost reports beginning in the same fiscal year, we are proposing to
combine data from the multiple cost reports so that a hospital may have
a Factor 3 calculated using more than one cost report within a cost
reporting period. We are proposing to codify these changes for FY 2017
by amending the regulations at Sec. 412.106(g)(1)(iii)(C). We are
inviting public comments on this proposal, which we describe more fully
below.
For the FY 2016 IPPS/LTCH PPS final rule, we used the most recent
of hospitals' 12-month 2012 or 2011 cost reports and 2012 cost report
data submitted to CMS by IHS hospitals to obtain the Medicaid days to
calculate Factor 3. In addition, we used Medicare SSI days from the FY
2013 SSI ratios published on the following CMS Web site to calculate
Factor 3: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html.
Under our proposal to calculate Factor 3 for FY 2017 using data
from three cost reporting periods, we would use data from hospitals' FY
2011, FY 2012, and FY 2013 cost reporting periods extracted from the
most recent update of the hospital cost report data in the HCRIS
database and the FY 2011 and FY 2012 cost report data submitted to CMS
by IHS hospitals to obtain the Medicaid days to calculate Factor 3. (We
note that, starting with the FY 2013 cost reports, data for IHS
hospitals will be included in the HCRIS database and will no longer be
submitted separately.) In addition, to calculate Factor 3 for FY 2017,
we anticipate that, under our proposal discussed earlier to use the
most recent available 3 years of data on Medicare SSI utilization, we
would obtain Medicare SSI days from the FY 2012, FY 2013, and FY 2014
SSI ratios (or, for Puerto Rico hospitals, substitute Medicare SSI days
with a proxy as described earlier). We expect the FY 2014 SSI ratios to
be published on the CMS Web site when available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html.
Under this proposal, we would calculate Factor 3 as follows:
Step 1: Calculate Factor 3 for FY 2011 by summing a hospital's
FY 2011 Medicaid days and FY 2012 SSI days and dividing by all DSH
eligible hospitals' FY 2011 Medicaid days and FY 2012 SSI days.
Step 2: Calculate Factor 3 for FY 2012 by summing a hospital's
FY 2012 Medicaid days and FY 2013 SSI days and dividing by all DSH
eligible hospitals' FY 2012 Medicaid days and FY 2013 SSI days.
Step 3: Calculate Factor 3 for FY 2013 by summing a hospital's
FY 2013 Medicaid days and FY 2014 SSI days and dividing by all DSH
eligible hospitals' FY 2013 Medicaid days and FY 2014 SSI days.
Step 4: Sum the Factor 3 calculated for FY 2011, FY 2012, and FY
2013 and divide by the number of cost reporting periods with data to
compute an average Factor 3.
For illustration purposes, in Table 18 associated with the FY 2017
proposed rule (which is available via the Internet on the CMS Web
site), we compute Factor 3 using hospitals' FY 2011, FY 2012, and FY
2013 cost reports from the December 2015 update of HCRIS to obtain
Medicaid days and the FY 2012 and FY 2013 SSI ratios published on the
following CMS Web site to determine Medicare SSI days: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html. Because the FY 2014 SSI ratios are not yet
available, for purposes of this proposed rule, we computed Factor 3 for
FY 2013 using FY 2013 Medicaid days and FY 2013 SSI days. However, we
expect that the FY 2014 SSI ratios will be available to calculate
Factor 3 for the FY 2017 IPPS/LTCH PPS final rule.
For subsequent years, we are proposing to continue to use the most
recent HCRIS database extract at the time of the annual rulemaking
cycle and to advance the three cost reporting periods used to determine
Factor 3 by 1 year as appropriate. For instance, if we were to finalize
a proposal to continue using the proxy in FY 2018, we would use FY
2012, FY 2013, and FY 2014 cost reports from the most recent available
extract of HCRIS for Medicaid days and FY 2013, FY 2014, and FY 2015
SSI ratios to obtain the Medicare SSI days and follow the same
methodology outlined earlier to determine Factor 3. However, as
discussed earlier, we believe that it is possible to begin
incorporating data from Worksheet S-10 into the computation of Factor 3
starting in FY 2018 and outline a proposal for doing so using data from
three cost reporting periods in the following section.
d. Proposed Calculation of Factor 3 for FY 2018 and Subsequent Years
(1) Background
In response to commenters' requests for a timeline and transition
for
[[Page 25090]]
introducing Worksheet S-10 data into the calculation of Factor 3, in
this section, we discuss our proposed plans on how to begin
incorporating hospitals' Worksheet S-10 data into the calculation of
Factor 3, in order to allocate payments based on a hospital's share of
overall uncompensated care costs reported on Worksheet S-10. When we
first discussed using Worksheet S-10 to allocate hospitals' shares of
uncompensated care costs in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50638), we explained why we believed that it was premature to use
uncompensated care costs reported on Worksheet S-10 for FY 2014.
Specifically, at that time, the most recent available cost reports
would have been from FYs 2010 and 2011, which were submitted on or
after May 1, 2010, when the new Worksheet S-10 went into effect. We
believed that ``[c]oncerns about the standardization and completeness
of the Worksheet S-10 data could be more acute for data collected in
the first year of the Worksheet's use'' (78 FR 50635). In addition, we
believed that it would be most appropriate to use data elements that
have been historically publicly available, subject to audit, and used
for payment purposes (or that the public understands will be used for
payment purposes) to determine the amount of uncompensated care for
purposes of Factor 3 (78 FR 50635). At the time we issued the FY 2014
IPPS/LTCH PPS final rule, we did not believe that the available data
regarding uncompensated care from Worksheet S-10 met these criteria
and, therefore, we believed they were not reliable enough to use for
determining FY 2014 uncompensated care payments. Accordingly, for FY
2014, we concluded that utilization of insured low-income patients
would be a better proxy for the costs of hospitals in treating the
uninsured. For FYs 2015, 2016, and 2017, the cost reports used for
calculating uncompensated care payments (that is, FYs 2011, 2012, and
2013) were also submitted prior to the time that hospitals were on
notice that Worksheet S-10 could be the data source for calculating
uncompensated care payments. Therefore, we believe it is also
appropriate to use proxy data to calculate Factor 3 for these years.
We believe that, for FY 2018, many of these concerns would no
longer be relevant. That is, as described more fully below regarding
the use of Worksheet S-10 from FY 2014, hospitals were on notice as of
FY 2014 that Worksheet S-10 could eventually become the data source for
CMS to calculate uncompensated care payments. Hospitals' cost reports
from FY 2014 have been publically available for some time now.
Furthermore, MedPAC has provided analyses that found that current
Worksheet S-10 data are a better proxy for predicting audited
uncompensated care costs than Medicaid/Medicare SSI days. Specifically,
MedPAC submitted a public comment discussed in the FY 2016 IPPS/LTCH
PPS final rule that cited its 2007 analysis of data from the Government
Accountability Office (GAO) and data from the American Hospital
Association (AHA), which suggests that Medicaid days and low-income
Medicare days are not a good proxy for uncompensated care costs (80 FR
49525). Analysis performed by MedPAC showed that the correlation
between audited uncompensated care data from 2009 and the data from FY
2011 Worksheet S-10 was over 0.80, as compared to a correlation of
approximately 0.50 for 2011 Medicare SSI and Medicaid days. MedPAC
concluded that use of Worksheet S-10 data was already better than using
Medicare SSI and Medicaid days as a proxy for uncompensated care costs,
and that the data on Worksheet S-10 would improve over time as the data
are actually used to make payments.
We also have undertaken an extensive analysis of the Worksheet S-10
data, benchmarking it against the data on uncompensated care costs
reported to the Internal Revenue Service (IRS) on Form 990 by not-for-
profit hospitals. The purpose of this analysis, performed by Dobson
DaVanzo & Associates, LLC, under contract to CMS, was to determine if
Worksheet S-10 uncompensated care data are becoming more stable over
time. (This analysis, included in a report entitled ``Improvements to
Medicare Disproportionate Share Hospital (DSH) Payments Report:
Benchmarking S-10 Data Using IRS Form 990 Data and Worksheet S-10 Trend
Analyses,'' is available on the CMS Web site at: https://www.cms/gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html
under the Downloads section.) Although we acknowledge that the analysis
was limited to not-for-profit hospitals, we believe it is relevant to
our assessment of the overall quality of the data reported on Worksheet
S-10. Because many not-for-profit hospitals are eligible for
empirically justified Medicare DSH payments and, therefore,
uncompensated care payments, they represent a suitable standard of
comparison. We conducted an analysis of 2010, 2011, and 2012 Worksheet
S-10 data and IRS Form 990 data from the same years. Using IRS Form 990
data for tax years 2010, 2011, and 2012 (the latest available years) as
a benchmark, we compared key variables derived from Worksheet S-10 and
IRS Form 990 data, such as charity care and bad debt. The analysis was
completed using data from hospitals that had completed both Worksheet
S-10 and IRS Form 990 across all study years, yielding a sample of 788
not-for-profit hospitals (representing 668 unique Taxpayer
Identification Numbers). Because Factor 3 is used to determine the
Medicare uncompensated care payment amount for each hospital, we
calculated the amounts for Factor 3 for the matched hospitals using
charity care and bad debt, and compared the Factor 3 distributions
calculated using data from IRS Form 990 and Worksheet S-10. Key
findings indicate that the amounts for Factor 3 derived using the IRS
Form 990 and Worksheet S-10 data are highly correlated. In addition,
the correlation coefficient between the amounts for Factor 3 calculated
from the IRS Form 990 and Worksheet S-10 has increased over time, from
0.71 in 2010 to 0.80 in 2012, suggesting some convergence in the data
sources over time. This strong correlation indicates that Worksheet S-
10 data would be a statistically valid source to use as part of the
calculation of the uncompensated care payments in FY 2018.
Accordingly, because hospitals have been on notice since the FY
2014 rulemaking that CMS intended eventually to use Worksheet S-10 as
the data source for calculating uncompensated care payments, and in
light of growing evidence that Worksheet S-10 data are improving over
time, we believe it would be appropriate to use Worksheet S-10 as a
data source for determining Factor 3 starting in FY 2018. We discuss
our proposed methodology below for how we would begin to incorporate
Worksheet S-10 data into the calculation of Factor 3 of the
uncompensated care payment methodology.
(2) Proposed Data Source and Time Period for FY 2018 and Subsequent
Years, Including Methodology for Incorporating Worksheet S-10 Data
For the reasons explained earlier, we believe that, starting with
Worksheet S-10 data reported for FY 2014, it is appropriate to begin to
incorporate Worksheet S-10 data into the computation of Factor 3 and
the allocation of uncompensated care payments. Specifically, we are
proposing to continue to use low-income insured patient days as a proxy
[[Page 25091]]
for uncompensated care for cost reporting periods before FY 2014 and to
use Worksheet S-10 data for FY 2014 and subsequent fiscal years to
calculate uncompensated care payments for FY 2018 and subsequent fiscal
years, which, when combined with our proposal to use data from three
cost reporting periods to calculate Factor 3, would have the effect of
transitioning toward exclusive use of Worksheet S-10 data. Under this
proposed approach, we would use only Worksheet S-10 data to calculate
Factor 3 for FY 2020 and subsequent fiscal years.
As discussed previously, for FY 2017, we are proposing to calculate
a hospital's share of uncompensated care based on the proxy of its
share of low-income insured days using a time period that includes
three cost reports (that is, FY 2011, FY 2012, and FY 2013 cost
reports). For the reasons we described earlier, we believe it would not
be appropriate to use Worksheet S-10 data for periods prior to FY 2014.
For cost reporting periods prior to FY 2014, we believe it would be
appropriate to continue to use low-income insured days for the reasons
we have previously described. Accordingly, with a time period that
includes three cost reporting periods consisting of FY 2014 and two
preceding periods, we are proposing to use Worksheet S-10 data for the
FY 2014 cost reporting period and the low-income insured day proxy data
for the two earlier cost reporting periods, drawing three sets of data
from the most recently available HCRIS extract. That is, for FY 2018,
to compute Factor 3, we are proposing to continue to advance the 3-year
time period we are using by 1 year and therefore to use FY 2012, FY
2013, and FY 2014 cost report data from the most recent update of
HCRIS. In addition, for FY 2018, we are proposing to use Medicaid days
from FY 2012 and FY 2013 cost reports and FY 2014 and FY 2015 SSI
ratios. We believe this approach would have a transitioning effect of
incorporating data from Worksheet S-10 into the calculation of Factor 3
starting in FY 2018.
Consistent with our proposal to determine Factor 3 using data over
a period of 3 cost reporting periods, we are proposing to calculate a
Factor 3 for each of the three cost reporting periods. Specifically, we
are proposing to calculate Factor 3 for FY 2018 based on an average of
Factor 3 calculated using low-income insured days (proxy data)
determined using Medicaid days from FY 2012 and FY 2013 cost reports
and FY 2014 and FY 2015 SSI ratios, and Factor 3 calculated using
uncompensated care data based on FY 2014 Worksheet S-10. We are
proposing to compute this average for each hospital by--
Step 1: Calculating Factor 3 using the low-income insured
days proxy based on FY 2012 cost report data and the FY 2014 SSI ratio;
Step 2: Calculating Factor 3 using the insured low-income
days proxy based on FY 2013 cost report data and the FY 2015 SSI ratio;
Step 3: Calculating Factor 3 based on the FY 2014
Worksheet S-10 data; and
Step 4: Averaging the Factor 3 values that are computed in
Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2012, FY
2013, and FY 2014 for each hospital, and dividing that amount by the
number of cost reporting periods with data to compute an average Factor
3.
The denominator would be the sum of the averages of the FY 2012, FY
2013, and FY 2014 amounts from Step 4 for each hospital that is
estimated to be eligible for Medicare DSH payments in FY 2018. For
example, assuming there are only three hospitals in the IPPS and
Hospitals A and B are estimated to be eligible for Medicare DSH
payments in FY 2018, while Hospital C is estimated as ineligible for
Medicare DSH payments in FY 2018, each hospital's proposed share of the
overall amount available for uncompensated care payments would be
calculated as follows:
[(Hospital A FY 2012 Factor 3 proxy) + (Hospital A FY 2013 Factor 3
proxy) + (Hospital A FY 2014 Factor 3 S-10)] / 3 = X
[(Hospital B FY 2012 Factor 3 proxy) + (Hospital B FY 2013 Factor 3
proxy) + (Hospital B FY 2014 Factor 3 S-10)] / 3 = Y
[(Hospital C FY 2012 Factor 3 proxy) + (Hospital C FY 2013 Factor 3
proxy) + (Hospital C FY 2014 Factor 3 S-10)] / 3 = Z
Hospital A's Factor 3 or proposed share of the overall uncompensated
care amount in FY 2018 would be equal to (X) / (X+Y).
Hospital B's Factor 3 or proposed share of the overall uncompensated
care amount in FY 2018 would be equal to (Y) / (X+Y).
Hospital C's Factor 3 or proposed share of the overall uncompensated
care amount in FY 2018 would be equal to (Z) / (X+Y).
We note that, under this proposal, the methodology for calculating
Factor 3 for each subsequent year would remain unchanged (such as using
all cost reports for eligible hospitals that begin during the relevant
cost reporting years, including cost reporting periods that are not 12
months in length, and using a proxy for Medicare SSI days for hospitals
in Puerto Rico, as described earlier for the calculation of Factor 3
for FY 2017). With regard to FY 2019 and subsequent years, we believe
it would continue to be appropriate to advance the 3-year time period
we are using by 1 year to compute Factor 3. Accordingly, we are
proposing to use FY 2013, FY 2014, and FY 2015 cost report data from
the most recent available update of HCRIS to compute Factor 3 and
allocate uncompensated care payments for FY 2019. As we stated earlier,
with regard to the data used to compute Factor 3, we believe that it
would be appropriate to use Worksheet S-10 data from FY 2014 and
subsequent periods to calculate Factor 3 and hospitals' uncompensated
care payments for FY 2018 and subsequent fiscal years. Because we are
proposing to use FY 2013, FY 2014, and FY 2015 cost reports to
determine Factor 3 for FY 2019, we are proposing to calculate Factor 3
with a proxy calculated based on FY 2013 cost report data and FY 2015
SSI ratios and based on Worksheet S-10 uncompensated care costs from FY
2014 and FY 2015 cost reports. We are proposing to calculate Factor 3
for FY 2019 based on an average of Factor 3 amounts calculated using
data from the three cost reporting periods in the manner described
earlier for FY 2018. For FY 2020, we are proposing to continue to
advance the three cost reports used by 1 year, and we are proposing to
calculate Factor 3 using only data from the Worksheet S-10, from cost
reports from FY 2014, FY 2015, and FY 2016. For FY 2021 and subsequent
fiscal years, we would continue to base our estimates of the amount of
hospital uncompensated care on uncompensated care costs, using three
cost reporting periods from the most recently available HCRIS database,
and in each fiscal year, the cost reporting periods would be advanced
forward by 1 year (for example, for FY 2021, FY 2015, FY 2016, and FY
2017 cost reports would be used). We are soliciting comments on the
proposed data sources, time periods, and method for calculating
uncompensated care costs in FY 2018 and subsequent years.
Although our proposal for FY 2018 is to calculate Factor 3 based on
an average of the Factor 3 amounts calculated using 2 years of proxy
data and 1 year of data from the FY 2014 Worksheet S-10, readers may
find it useful to review a file posted on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html
[[Page 25092]]
under the Downloads section, which shows preliminary uncompensated care
costs calculated by hospital using only Worksheet S-10 data from FY
2014 cost reports extracted from the December 2015 update of HCRIS. To
the extent that hospitals have either not submitted a Worksheet S-10
with their FY 2014 cost report or find errors on a submitted Worksheet
S-10, we encourage hospitals to work with MACs to complete and revise,
as appropriate, their FY 2014 Worksheet S-10 as soon as possible.
(3) Proposed Definition of Uncompensated Care for FY 2018 and
Subsequent Fiscal Years
In the FY 2014 IPPS/LTCH PPS rulemaking, we considered three
potential definitions of uncompensated care: Charity care; charity care
+ bad debt; and charity care + bad debt + Medicaid shortfalls. As we
explained in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50634), we
considered proposing to define the amount of uncompensated care for a
hospital as the uncompensated care costs of that hospital and
considered potential data sources for those costs. We examined the
literature on uncompensated care and the concepts of uncompensated care
used in various public and private programs, and considered input from
stakeholders and public comments in various forums, including the
national provider call that we held in January 2013. Our review of the
information from these sources indicated that there is some variation
in how different States, provider organizations, and Federal programs
define ``uncompensated care.'' However, a common theme of almost all
these definitions is that they include both ``charity care'' and ``bad
debt'' as components of ``uncompensated care.'' Therefore, a definition
that incorporates the most commonly used factors within uncompensated
care as reported by stakeholders would include charity care costs and
bad debt costs. Worksheet S-10 employs the definition of charity care
plus non-Medicare bad debt. Specifically:
[GRAPHIC] [TIFF OMITTED] TP27AP16.003
Where:
Cost of charity care = Cost of initial obligation of
patients approved for charity care (line 21) minus partial payment
by patients approved for charity care (line 22).