[Federal Register Volume 81, Number 135 (Thursday, July 14, 2016)]
[Proposed Rules]
[Pages 45604-45788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16098]



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Vol. 81

Thursday,

No. 135

July 14, 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 416, 419, 482, et al.





Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Organ Procurement Organization Reporting and Communication; 
Transplant Outcome Measures and Documentation Requirements; Electronic 
Health Record (EHR) Incentive Programs; Payment to Certain Off-Campus 
Outpatient Departments of a Provider; Hospital Value-Based Purchasing 
(VBP) Program; Proposed Rule

  Federal Register / Vol. 81 , No. 135 / Thursday, July 14, 2016 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 416, 419, 482, 486, 488, and 495

[CMS-1656-P]
RIN 0938-AS82


Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Organ Procurement Organization Reporting and Communication; 
Transplant Outcome Measures and Documentation Requirements; Electronic 
Health Record (EHR) Incentive Programs; Payment to Certain Off-Campus 
Outpatient Departments of a Provider; Hospital Value-Based Purchasing 
(VBP) Program

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital 
outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for CY 2017 to 
implement applicable statutory requirements and changes arising from 
our continuing experience with these systems. In this proposed rule, we 
describe the proposed changes to the amounts and factors used to 
determine the payment rates for Medicare services paid under the OPPS 
and those paid under the ASC payment system. In addition, this proposed 
rule would update and refine the requirements for the Hospital 
Outpatient Quality Reporting (OQR) Program and the ASC Quality 
Reporting (ASCQR) Program.
    Further, in this proposed rule, we are proposing to make changes to 
tolerance thresholds for clinical outcomes for solid organ transplant 
programs; to Organ Procurement Organizations (OPOs) definitions, 
outcome measures, and organ transport documentation; and to the 
Medicare and Medicaid Electronic Health Record Incentive Programs. We 
also are proposing to remove the HCAHPS Pain Management dimension from 
the Hospital Value-Based Purchasing (VBP) Program. In addition, we are 
proposing to implement section 603 of the Bipartisan Budget Act of 2015 
relating to payment for certain items and services furnished by certain 
off-campus outpatient departments of a provider.

DATES: Comment period: To be assured consideration, comments on all 
sections of this proposed rule must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on September 
6, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1656-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-1656-P, P.O. Box 8013, Baltimore, MD 
21244-1850.

    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-1656-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.

    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue SW., Washington, DC 20201.

    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-7195 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
    Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact 
Carol Schwartz at (410) 786-0576.
    Ambulatory Surgical Center (ASC) Payment System, contact Elisabeth 
Daniel at (410) 786-0237.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Administration, Validation, and Reconsideration Issues, contact Anita 
Bhatia at (410) 786-7236.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Measures, contact Vinitha Meyyur at (410) 786-8819.
    Blood and Blood Products, contact Lela Strong at (410) 786-3213.
    Cancer Hospital Payments, contact David Rice at (410) 786-6004.
    Chronic Care Management (CCM) Hospital Services, contact Twi 
Jackson at (410) 786-1159.
    CPT and Level II Alphanumeric HCPCS Codes--Process for Requesting 
Comments, contact Marjorie Baldo at (410) 786-4617.
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver at (410) 786-9379.
    Composite APCs (Extended Assessment and Management, Low Dose 
Brachytherapy, Multiple Imaging), contact Twi Jackson at (410) 786-
1159.
    Comprehensive APCs, contact Lela Strong at (410) 786-3213.
    Hospital Observation Services, contact Twi Jackson at (410) 786-
1159.
    Hospital Outpatient Quality Reporting (OQR) Program Administration, 
Validation, and Reconsideration Issues, contact Elizabeth Bainger at 
(410) 786-0529.
    Hospital Outpatient Quality Reporting (OQR) Program Measures, 
contact Vinitha Meyyur at (410) 786-8819.
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Twi Jackson at (410) 786-1159.

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    Hospital Value-Based Purchasing (VBP) Program, contact Grace Im at 
(410) 786-0700.
    Inpatient Only Procedures List, contact Lela Strong at (410) 786-
3213.
    Medicare Electronic Health Record (EHR) Incentive Program, contact 
Kathleen Johnson at (410) 786-3295 or Steven Johnson at (410) 786-3332.
    New Technology Intraocular Lenses (NTIOLs), contact Elisabeth 
Daniel at (410) 786-0237.
    No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson 
at (410) 786-1159.
    OPPS Brachytherapy, contact Elisabeth Daniel at (410) 786-0237.
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier 
Payments, and Wage Index), contact David Rice at (410) 786-6004 or 
Erick Chuang at (410) 786-1816.
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Twi Jackson at (410) 786-1159.
    OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo at 
(410) 786-4617.
    OPPS Packaged Items/Services, contact Lela Strong at (410) 786-
3213.
    OPPS Pass-Through Devices and New Technology Procedures/Services, 
contact Carol Schwartz at (410) 786-0576.
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova at (410) 786-2682.
    Organ Procurement Organization (OPO) Reporting and Communication, 
contact Peggye Wilkerson at (410) 786-4857 or Melissa Rice at (410) 
786-3270.
    Partial Hospitalization Program (PHP) and Community Mental Health 
Center (CMHC) Issues, contact Marissa Kellam at (410) 786-3012 or 
Katherine Lucas at (410) 786-7723.
    Rural Hospital Payments, contact David Rice at (410) 786-6004.
    Section 603 of the Bipartisan Budget Act of 2015 (Off-Campus 
Departments of a Provider), contact David Rice at (410) 786-6004 or 
Elisabeth Daniel at (410) 786-0237.
    Transplant Enforcement, contact Paula DiStabile at (410) 786-3039 
or Caecilia Blondiaux at (410) 786-2190.
    All Other Issues Related to Hospital Outpatient and Ambulatory 
Surgical Center Payments Not Previously Identified, contact Marjorie 
Baldo at (410) 786-4617.

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

Electronic Access

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

Addenda Available Only Through the Internet on the CMS Web Site

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

Alphabetical List of Acronyms Appearing in This Federal Register 
Document

ACOT Advisory Committee on Organ Transplantation
AHA American Hospital Association
AMA American Medical Association
AMI Acute myocardial infarction
APC Ambulatory Payment Classification
APU Annual payment update
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center Quality Reporting
ASP Average sales price
AUC Appropriate use criteria
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Public 
Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAHPS Consumer Assessment of Healthcare Providers and Systems
CAP Competitive Acquisition Program
C-APC Comprehensive Ambulatory Payment Classification
CASPER Certification and Survey Provider Enhanced Reporting
CAUTI Catheter-associated urinary tract infection
CBSA Core-Based Statistical Area
CCM Chronic care management
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CfC Conditions of coverage
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American 
Medical Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DIR Direct or indirect remuneration
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and 
Supplies
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and management
ECD Expanded criteria donor
EBRT External beam radiotherapy
ECG Electrocardiogram
ED Emergency department
EDTC Emergency department transfer communication
EHR Electronic health record
E/M Evaluation and management
ESRD End-stage renal disease
ESRD QIP End-Stage Renal Disease Quality Improvement Program

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FACA Federal Advisory Committee Act, Public Law 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FTE Full-time equivalent
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
GME Graduate medical education
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and 
Systems
HCERA Health Care and Education Reconciliation Act of 2010, Public 
Law 111-152
HCP Health care personnel
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HCUP Healthcare Cost and Utilization Project
HEU Highly enriched uranium
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services
HIE Health information exchange
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Public Law 104-191
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
HPMS Health Plan Management System
IBD Inflammatory bowel disease
ICC Interclass correlation coefficient
ICD Implantable cardioverter defibrillator
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10 International Classification of Diseases, Tenth Revision
ICH In-center hemodialysis
ICR Information collection requirement
IME Indirect medical education
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IHS Indian Health Service
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IORT Intraoperative radiation treatment
IPFQR Inpatient Psychiatric Facility Quality Reporting
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
IRF Inpatient rehabilitation facility
IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program
IT Information technology
LCD Local coverage determination
LDR Low dose rate
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality Reporting
MAC Medicare Administrative Contractor
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public 
Law 114-10
MAP Measure Application Partnership
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MEG Magnetoencephalography
MFP Multifactor productivity
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act under Division B, 
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008, 
Public Law 110-275
MLR Medical loss ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public 
Law 110-173
MPFS Medicare Physician Fee Schedule
MR Medical review
MRA Magnetic resonance angiography
MRgFUS Magnetic Resonance Image Guided Focused Ultrasound
MRI Magnetic resonance imaging
MRSA Methicillin-Resistant Staphylococcus Aures
MS-DRG Medicare severity diagnosis-related group
MSIS Medicaid Statistical Information System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NEMA National Electrical Manufacturers Association
NHSN National Healthcare Safety Network
NOTA National Organ and Transplantation Act
NOS Not otherwise specified
NPI National Provider Identifier
NPWT Negative Pressure Wound Therapy
NQF National Quality Forum
NQS National Quality Strategy
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509
O/E Observed to expected event
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
OPD [Hospital] Outpatient Department
OPO Organ Procurement Organization
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OPTN Organ Procurement and Transplantation Network
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDC Per day cost
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment Patterns Electronic Report
PHP Partial hospitalization program
PHS Public Health Service Act, Public Law 96-88
PN Pneumonia
POS Place of service
PPI Producer Price Index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
QDC Quality data code
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAD Self-administered drug
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIA Systems Improvement Agreement
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SRTR Scientific Registry of Transplant Recipients
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TIP Transprostatic implant procedure
TOPs Transitional Outpatient Payments
USPSTF United States Preventive Services Task Force
VBP Value-based purchasing
WAC Wholesale acquisition cost

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    1. Purpose
    2. Summary of the Major Provisions
    3. Summary of Costs and Benefits
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    1. Authority of the Panel
    2. Establishment of the Panel
    3. Panel Meetings and Organizational Structure
    F. Public Comments Received in Response to CY 2016 OPPS/ASC 
Final Rule With Comment Period
II. Proposed Updates Affecting OPPS Payments
    A. Proposed Recalibration of APC Relative Payment Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Proposed Data Development Process and Calculation of Costs 
Used for Ratesetting
    a. Recommendations of the Panel Regarding Data Development
    b. Proposed Calculation of Single Procedure APC Criteria-Based 
Costs
    (1) Blood and Blood Products
    (2) Brachytherapy Sources
    c. Proposed Comprehensive APCs (C-APCs) for CY 2017
    (1) Background
    (2) Proposed C-APCs for CY 2017
    (a) Proposed Additional CY 2017 C-APCs

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    (b) Proposed New Allogeneic Hematopoietic Stem Cell 
Transplantation (HSCT) C-APC
    d. Proposed Calculation of Composite APC Criteria-Based Costs
    (1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
    (2) Mental Health Services Composite APC
    (3) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 
8007, and 8008)
    3. Proposed Changes to Packaged Items and Services
    a. Background and Rationale for Packaging in the OPPS
    b. Proposed Clinical Diagnostic Laboratory Test Packaging Policy
    (1) Background
    (2) Proposed ``Unrelated'' Laboratory Test Exception
    (3) Proposed Molecular Pathology Test Exception
    c. Conditional Packaging Status Indicators ``Q1'' and ``Q2''
    (1) Background
    (2) Proposed Change in Conditional Packaging Status Indicators 
Logic
    4. Proposed Calculation of OPPS Scaled Payment Weights
    B. Proposed Conversion Factor Update
    C. Proposed Wage Index Changes
    D. Proposed Statewide Average Default CCRs
    E. Proposed Adjustment for Rural SCHs and EACHs under Section 
1833(t)(13)(B) of the Act
    F. Proposed OPPS Payment to Certain Cancer Hospitals Described 
by Section 1886(d)(1)(B)(v) of the Act
    1. Background
    2. Proposed Payment Adjustment for Certain Cancer Hospitals for 
CY 2017
    G. Proposed Hospital Outpatient Outlier Payments
    1. Background
    2. Proposed Outlier Calculation
    H. Proposed Calculation of an Adjusted Medicare Payment From the 
National Unadjusted Medicare Payment
    I. Proposed Beneficiary Copayments
    1. Background
    2. Proposed OPPS Copayment Policy
    3. Proposed Calculation of an Adjusted Copayment Amount for an 
APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
    A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Proposed Treatment of New CY 2016 Level II HCPCS and CPT 
Codes Effective April 1, 2016 and July 1, 2016 for Which We Are 
Soliciting Public Comments in this CY 2017 OPPS/ASC Proposed Rule
    2. Proposed Process for New Level II HCPCS Codes That Will Be 
Effective October 1, 2016 and January 1, 2017 for Which We Will Be 
Soliciting Public Comments in the CY 2017 OPPS/ASC Final Rule With 
Comment Period
    3. Proposed Treatment of New and Revised CY 2017 Category I and 
III CPT Codes That Will Be Effective January 1, 2017 for Which We 
Are Soliciting Public Comments in This CY 2017 OPPS/ASC Proposed 
Rule
    B. Proposed OPPS Changes--Variations Within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. Proposed APC Exceptions to the 2 Times Rule
    C. Proposed New Technology APCs
    1. Background
    2. Proposed Additional New Technology APC Groups
    3. Proposed Procedures Assigned to New Technology APC Groups for 
CY 2017
    a. Overall Proposal
    b. Retinal Prosthesis Implant Procedures
    D. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
    1. Imaging
    2. Strapping and Cast Application (APCs 5101 and 5102)
    3. Transprostatic Urethral Implant Procedure
IV. Proposed OPPS Payment for Devices
    A. Proposed Pass-Through Payments for Devices
    1. Expiration Dates for Current Transitional Pass-Through 
Devices
    a. Background
    b. Proposed CY 2017 Pass-Through Device Policy
    2. New Device Pass-Through Applications
    a. Background
    b. Applications Received for Device Pass-Through Payment for CY 
2017
    (1) BioBag[supreg] (Larval Debridement Therapy in a Contained 
Dressing)
    (2) ENCORETM Suspension System
    (3) Endophys Pressure Sensing System (Endophys PSS) or Endophys 
Pressure Sensing Kit
    3. Proposal to Change the Beginning Eligibility Date for Device 
Pass-Through Payment Status
    4. Proposal To Make the Transitional Pass-Through Payment Period 
3 Years for All Pass-Through Devices and Expire Pass-Through Status 
on a Quarterly Rather Than Annual Basis
    (a) Background
    (b) Proposed CY 2017 Policy
    5. Proposed Changes to Cost-to-Charge Ratios (CCRs) That Are 
Used To Determine Device Pass-Through Payment
    a. Background
    b. Proposed CY 2017 Policy
    6. Proposed Provisions for Reducing Transitional Pass-Through 
Payments To Offset Costs Packaged into APC Groups
    a. Background
    b. Proposed CY 2017 Policy
    B. Proposed Device-Intensive Procedures
    1. Background
    2. Proposed HCPCS Code-Level Device-Intensive Determination
    3. Proposed Changes to Device Edit Policy
    4. Proposed Adjustment to OPPS Payment for No Cost/Full Credit 
and Partial Credit Devices
    a. Background
    b. Proposed Policy for CY 2017
    5. Proposed Payment Policy for Low Volume Device-Intensive 
Procedures
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. Proposed OPPS Transitional Pass-Through Payment for 
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Proposal To Make the Transitional Pass-Through Payment Period 
3 Years for All Pass-Through Drugs, Biologicals and 
Radiopharmaceuticals and Expire Pass-Through Status on a Quarterly 
Rather Than Annual Basis
    3. Proposed Drugs and Biologicals With Expiring Pass-Through 
Payment Status in CY 2016
    4. Proposed Drugs, Biologicals, and Radiopharmaceuticals With 
New or Continuing Pass-Through Status in CY 2017
    5. Proposed Provisions for Reducing Transitional Pass-Through 
Payments for Policy-Packaged Drugs and Biologicals To Offset Costs 
Packaged Into APC Groups
    B. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals Without Pass-Through Status
    1. Proposed Criteria for Packaging Payment for Drugs, 
Biologicals, and Radiopharmaceuticals
    a. Proposed Packaging Threshold
    b. Proposed Packaging of Payment for HCPCS Codes That Describe 
Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals Under the Cost Threshold (Threshold Packaging 
Policy)
    c. Proposed High Cost/Low Cost Threshold for Packaged Skin 
Substitutes
    d. Proposed Packaging Determination for HCPCS Codes That 
Describe the Same Drug or Biological But Different Dosages
    2. Proposed Payment for Drugs and Biologicals Without Pass-
Through Status That Are Not Packaged
    a. Proposed Payment for Specified Covered Outpatient Drugs 
(SCODs) and Other Separately Payable and Packaged Drugs and 
Biologicals
    b. Proposed CY 2017 Payment Policy
    c. Biosimilar Biological Products
    3. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
    4. Proposed Payment Adjustment Policy for Radioisotopes Derived 
From Non-Highly Enriched Uranium Sources
    5. Proposed Payment for Blood Clotting Factors
    6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital 
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits and 
Critical Care Services
VIII. Proposed Payment for Partial Hospitalization Services
    A. Background
    B. Proposed PHP APC Update for CY 2017
    1. Proposed PHP APC Changes and Effect on Geometric Mean Per 
Diem Costs
    a. Proposed Changes to PHP APCs
    b. Rationale for Proposed Changes in PHP APCs

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    c. Alternatives Considered
    2. Development of the Proposed PHP APC Geometric Mean Per Diem 
Costs and Payment Rates
    a. CMHC Data Preparation: Data Trims, Exclusions, and CCR 
Adjustments
    b. Hospital-Based PHP Data Preparation: Data Trims and 
Exclusions
    3. PHP Ratesetting Process
    C. Proposed Outlier Policy for CMHCs
    1. Estimated Outlier Thresholds
    2. Proposed CMHC Outlier Cap
    3. Implementation Strategy for a Proposed 8-Percent Cap on CMHS 
Outlier Payments
    4. Summary of Proposals
IX. Proposed Procedures That Would Be Paid Only as Inpatient 
Procedures
    A. Background
    B. Proposed Changes to the Inpatient Only (IPO) List
    C. Solicitation of Public Comments on Possible Removal of Total 
Knee Arthroplasty (TKA) Procedures From the IPO List
    1. Background
    2. Discussion of TKA and the IPO List
    3. Topics and Questions for Public Comment
X. Proposed Nonrecurring Policy Changes
    A. Implementation of Section 603 of the Bipartisan Budget Act of 
2015 Relating to Payment for Certain Items and Services Furnished by 
Certain Off-Campus Departments of a Provider
    1. Background
    2. Defining Applicable Items and Services and Off-Campus 
Outpatient Department of a Provider As Set Forth in Sections 
1833(t)(21)(A) and (B) of the Act
    a. Background on the Provider-Based Status Rules
    b. Proposed Exemption of Items and Services Furnished in a 
Dedicated Emergency Department or an On-Campus PBD as Defined at 
Sections 1833(t)(21)(B)(i)(I) and (II) of the Act (Excepted Off-
Campus PBD)
    (1) Dedicated Emergency Departments (EDs)
    (2) On-Campus Locations
    (3) Within the Distance From Remote Locations
    c. Applicability of Exception at Section 1833(t)(21)(B)(ii) of 
the Act
    (1) Relocation of Off-Campus PBDs Excepted Under Section 
1833(t)(21)(B)(ii) of the Act
    (2) Expansion of Clinical Family of Services at an Off-Campus 
PBD Excepted Under Section 1833(t)(21)(B)(ii) of the Act
    d. Change of Ownership and Excepted Status
    e. Comment Solicitation for Data Collection Under Section 
1833(t)(21)(D) of the Act
    3. Payment for Services Furnished in Off-Campus PBDs to Which 
Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply 
(Nonexcepted Off-Campus PBDs)
    a. Background on Medicare Payment for Services Furnished in an 
Off-Campus PBD
    b. Proposed Payment for Items and Services Furnished in Off-
Campus PBD That Are Subject to Sections 1833(t)(1)(B)(v) and 
(t)(21)(C) of the Act
    (1) Definition of ``Applicable Payment System'' for Nonexcepted 
Items and Services
    (2) Definition of Applicable Items and Services and Section 603 
Amendments to Section 1833(t)(1)(B) of the Act and Proposed Payment 
for Nonexcepted Items and Services for CY 2017
    (3) Comment Solicitation on Allowing Direct Billing and Payment 
for Nonexcepted Items and Services in CY 2018
    4. Beneficiary Cost-Sharing
    5. Summary of Proposals
    6. Proposed Changes to Regulations
    B. Changes for Payment for Film X-Ray
    C. Changes to Certain Scope of Services Elements for Chronic 
Care Management (CCM) Services
    D. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
XI. Proposed CY 2017 OPPS Payment Status and Comment Indicators
    A. Proposed CY 2017 OPPS Payment Status Indicator Definitions
    B. Proposed CY 2017 Comment Indicator Definitions
XII. Proposed Updates to the Ambulatory Surgical Center (ASC) 
Payment System
    A. Background
    1. Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System
    2. Policies Governing Changes to the Lists of Codes and Payment 
Rates for ASC Covered Surgical Procedures and Covered Ancillary 
Services
    B. Proposed Treatment of New and Revised Codes
    1. Background on Current Process for Recognizing New and Revised 
Category I and Category III CPT Codes and Level II HCPCS Codes
    2. Proposed Treatment of New and Revised Level II HCPCS Codes 
and Category III CPT Codes Implemented in April 2016 and July 2016 
for Which We Are Soliciting Public Comments in This Proposed Rule
    3. Proposed Process for Recognizing New and Revised Category I 
and Category III CPT Codes That Will Be Effective January 1, 2017 
for Which We Will Be Soliciting Public Comments in the CY 2017 OPPS/
ASC Final Rule With Comment Period
    4. Proposed Process for New and Revised Level II HCPCS Codes 
That Will Be Effective October 1, 2016 and January 1, 2017 for Which 
We Will be Soliciting Public Comments in the CY 2017 OPPS/ASC Final 
Rule with Comment Period
    C. Proposed Update to the Lists of ASC Covered Surgical 
Procedures and Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Proposed Covered Surgical Procedures Designated as Office-
Based
    b. ASC Covered Surgical Procedures Designated as Device-
Intensive--Finalized Policy for CY 2016 and Proposed Policy for CY 
2017
    c. Proposed Adjustment to ASC Payments for No Cost/Full Credit 
and Partial Credit Devices
    d. Proposed Additions to the List of ASC Covered Surgical 
Procedures
    2. Covered Ancillary Services
    D. Proposed ASC Payment for Covered Surgical Procedures and 
Covered Ancillary Services
    1. Proposed ASC Payment for Covered Surgical Procedures
    a. Background
    b. Proposed Update to ASC Covered Surgical Procedure Payment 
Rates for CY 2017
    2. Proposed Payment for Covered Ancillary Services
    a. Background
    b. Proposed Payment for Covered Ancillary Services for CY 2017
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests to Establish New NTIOL Classes for CY 2017
    3. Payment Adjustment
    F. Proposed ASC Payment and Comment Indicators
    1. Background
    2. Proposed ASC Payment and Comment Indicators
    G. Calculation of the Proposed ASC Conversion Factor and the 
Proposed ASC Payment Rates
    1. Background
    2. Proposed Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2017 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Display of Proposed CY 2017 ASC Payment Rates
XIII. Requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program
    A. Background
    1. Overview
    2. Statutory History of the Hospital OQR Program
    3. Regulatory History of the Hospital OQR Program
    B. Hospital OQR Program Quality Measures
    1. Considerations in the Selection of Hospital OQR Program 
Quality Measures
    2. Retention of Hospital OQR Program Measures Adopted in 
Previous Payment Determinations
    3. Removal of Quality Measures from the Hospital OQR Program 
Measure Set
    a. Considerations in Removing Quality Measures From the Hospital 
OQR Program
    b. Criteria for Removal of ``Topped-Out'' Measures
    4. Hospital OQR Program Quality Measures Adopted in Previous 
Rulemaking
    5. Proposed New Hospital OQR Program Quality Measures for the CY 
2020 Payment Determination and Subsequent Years
    a. OP-35: Admissions and Emergency Department Visits for 
Patients Receiving Outpatient Chemotherapy Measure
    b. OP-36: Hospital Visits after Hospital Outpatient Surgery 
Measure (NQF #2687)
    c. OP-37a-e: Outpatient and Ambulatory Surgery Consumer 
Assessment of

[[Page 45609]]

Healthcare Providers and Systems (OAS CAHPS) Survey Measures
    d. Summary of Previously Adopted and Newly Proposed Hospital OQR 
Program Measures for the CY 2020 Payment Determinations and 
Subsequent Years
    6. Hospital OQR Program Measures and Topics for Future 
Consideration
    a. Future Measure Topics
    b. Electronic Clinical Quality Measures
    c. Possible Future eCQM: Safe Use of Opioids-Concurrent 
Prescribing
    7. Maintenance of Technical Specifications for Quality Measures
    8. Public Display of Quality Measures
    C. Administrative Requirements
    1. QualityNet Account and Security Administrator
    2. Requirements Regarding Participation Status
    D. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    1. Hospital OQR Program Annual Payment Determinations
    2. Requirements for Chart-Abstracted Measures Where Patient-
Level Data Are Submitted Directly to CMS for the CY 2019 Payment 
Determination and Subsequent Years
    3. Claims-Based Measure Data Requirements for the CY 2019 
Payment Determination and Subsequent Years and CY 2020 Payment 
Determination and Subsequent Years
    4. Proposed Data Submission Requirements for the Proposed OP-
37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures 
for the CY 2020 Payment Determination and Subsequent Years
    a. Survey Requirements
    b. Vendor Requirements
    5. Data Submission Requirements for Previously Finalized 
Measures for Data Submitted via a Web Based Tool for the CY 2019 
Payment Determination and Subsequent Years
    6. Population and Sampling Data Requirements for the CY 2019 
Payment Determination and Subsequent Years
    7. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2019 
Payment Determination and Subsequent Years
    8. Proposed Extension or Exemption Process for the CY 2019 
Payment Determination and Subsequent Years
    9. Hospital OQR Program Reconsideration and Appeals Procedures 
for the CY 2019 Payment Determination and Subsequent Years--
Clarification
    E. Proposed Payment Reduction for Hospitals That Fail To Meet 
the Hospital Outpatient Quality Reporting (OQR) Program Requirements 
for the CY 2017 Payment Determination
    1. Background
    2. Proposed Reporting Ratio Application and Associated 
Adjustment Policy for CY 2017
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    1. Overview
    2. Statutory History of the ASCQR Program
    3. Regulatory History of the ASCQR Program
    B. ASCQR Program Quality Measures
    1. Considerations in the Selection of ASCQR Program Quality 
Measures
    2. Policies for Retention and Removal of Quality Measures from 
the ASCQR Program
    3. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    4. Proposed ASCQR Program Quality Measures for the CY 2020 
Payment Determination and Subsequent Years
    a. ASC-13: Normothermia Outcome
    b. ASC-14: Unplanned Anterior Vitrectomy
    c. ASC-15a-e: Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey 
Measures
    5. ASCQR Program Measure for Future Consideration
    6. Maintenance of Technical Specifications for Quality Measures
    7. Public Reporting of ASCQR Program Data
    C. Administrative Requirements
    1. Requirements Regarding QualityNet Account and Security 
Administrator
    2. Requirements Regarding Participation Status
    D. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    1. Requirements Regarding Data Processing and Collection Periods 
for Claims-Based Measures Using Quality Data Codes (QDCs)
    2. Minimum Threshold, Minimum Case Volume, and Data Completeness 
for Claims-Based Measures Using QDCs
    3. Requirements for Data Submitted Via a CMS Online Data 
Submission Tool
    a. Requirements for Data Submitted via a non-CMS Online Data 
Submission Tool
    b. Requirements for Data Submitted via a CMS Online Data 
Submission Tool
    4. Claims-Based Measure Data Requirements for the CY 2019 
Payment Determination and Subsequent Years
    5. Proposed Data Submission Requirements for the Proposed ASC-
15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures 
for the CY 2020 Payment Determination and Subsequent Years
    a. Survey Requirements
    b. Vendor Requirements
    6. Extraordinary Circumstances Extensions or Exemptions for the 
CY 2019 Payment Determination and Subsequent Years
    7. ASCQR Program Reconsideration Procedures
    E. Payment Reduction for ASCs That Fail To Meet the ASCQR 
Program Requirements
XV. Transplant Outcomes: Restoring the Tolerance Range for Patient 
and Graft Survival
    A. Background
    B. Proposed Revisions to Performance Thresholds
XVI. Organ Procurement Organizations (OPOs): Changes to Definitions, 
Outcome Measures, and Documentation Requirements
    A. Background
    1. Organ Procurement Organizations (OPOs)
    2. Statutory Provisions
    3. HHS Initiatives Related to OPO Services
    4. Requirements for OPOs
    B. Proposed Provisions
    1. Definition of ``Eligible Death''
    2. Aggregate Donor Yield for OPO Outcome Performance Measures
    3. Organ Preparation and Transport-Documentation With the Organ
XVII. Transplant Enforcement Technical Corrections and Proposals
    A. Technical Corrections to Transplant Enforcement Regulatory 
References
    B. Other Proposed Revisions to Sec.  488.61
XVIII. Proposed Changes to the Medicare and Medicaid Electronic 
Health Record (EHR) Incentive Programs
    A. Background
    B. Summary of Proposals Included in this Proposed Rule
    C. Proposed Revisions to Objectives and Measures for Eligible 
Hospitals and CAHs
    1. Removal of the Clinical Decision Support (CDS) and 
Computerized Provider Order Entry (CPOE) Objectives and Measures for 
Eligible Hospitals and CAHs
    2. Reduction of Measure Thresholds for Eligible Hospitals and 
CAHs for 2017 and 2018
    a. Proposed Changes to the Objectives and Measures for Modified 
Stage 2 (42 CFR 495.22) in 2017
    b. Proposed Changes to the Objectives and Measures for Stage 3 
(42 CFR 495.24) in 2017 and 2018
    D. Proposed Revisions to the EHR Reporting Period in 2016 for 
EPs, Eligible Hospitals and CAHs
    1. Definition of ``EHR Reporting Period'' and ``EHR Reporting 
Period for a Payment Adjustment Year''
    2. Clinical Quality Measurement
    E. Proposal to Require Modified Stage 2 for New Participants in 
2017
    F. Proposed Significant Hardship Exception for New Participants 
Transitioning to MIPS in 2017
    G. Proposed Modifications To Measure Calculations for Actions 
Outside the EHR Reporting Period
XIX. Proposed Additional Hospital Value-Based Purchasing (VBP) 
Program Policies
    A. Background
    B. Proposed Removal of the HCAHPS Pain Management Dimension From 
the Hospital VBP Program
    1. Background of the HCAHPS Survey in the Hospital VBP Program
    2. Background of the Patient- and Caregiver-Centered Experience 
of Care/Care Coordination Domain Performance Scoring Methodology
    3. Proposed Removal of the HCAHPS Pain Management Dimension From 
the Hospital VBP Program Beginning With the FY 2018 Program Year
XX. Files Available to the Public Via the Internet

[[Page 45610]]

XXI. Collection of Information Requirements
    A. Legislative Requirements for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
    D. ICRs Relating to Proposed Changes in Transplant Enforcement 
Performance Thresholds
    E. ICRs for Proposed Changes to Organ Procurement Organizations 
(OPOs)
    F. ICRs Relating to Proposed Changes to Medicare Electronic 
Health Record (EHR) Incentive Program
    G. ICRs Relating to Proposed Additional Hospital VBP Program 
Policies
    H. ICRs for Site Neutral OPPS Payments for Off-Campus Provider-
Based Departments Proposals for CY 2017
XXII. Response to Comments
XXIII. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the OPPS and ASC Payment Provisions
    4. Detailed Economic Analyses
    a. Estimated Effects of Proposed OPPS Changes in This Proposed 
Rule
    (1) Limitations of Our Analysis
    (2) Estimated Effects of Proposed OPPS Changes on Hospitals
    (3) Estimated Effects of Proposed OPPS Changes on CMHCs
    (4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
    (5) Estimated Effects of Proposed OPPS Changes on Other 
Providers
    (6) Estimated Effects of Proposed OPPS Changes on the Medicare 
and Medicaid Programs
    (7) Alternative OPPS Policies Considered
    b. Estimated Effects of Proposed CY 2017 ASC Payment System 
Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of Proposed CY 2017 ASC Payment System 
Policies on ASCs
    (3) Estimated Effects of Proposed ASC Payment System Policies on 
Beneficiaries
    (4) Alternative ASC Payment Policies Considered
    c. Accounting Statements and Tables
    d. Effects of Proposed Requirements for the Hospital OQR Program
    e. Effects of Proposed Policies for the ASCQR Program
    f. Effects of Proposed Changes to Transplant Performance 
Thresholds
    g. Effects of Proposed Changes Relating to Organ Procurement 
Organizations (OPOs)
    h. Effects of Proposed Changes Relating to Medicare Electronic 
Health Record (EHR) Incentive Program
    i. Effects of Proposed Requirements for the Hospital VBP Program
    j. Effects of Proposed Implementation of Section 603 of the 
Bipartisan Budget Act of 2015 Relating to Payment for Certain Items 
and Services Furnished by Certain Off-Campus Departments of a 
Provider
    B. Regulatory Flexibility Act (RFA) Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Conclusion
XXIV. Federalism Analysis

Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this proposed rule, we are proposing to update the payment 
policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory 
surgical centers (ASCs) beginning January 1, 2017. Section 1833(t) of 
the Social Security Act (the Act) requires us to annually review and 
update the payment rates for services payable under the Hospital 
Outpatient Prospective Payment System (OPPS). Specifically, section 
1833(t)(9)(A) of the Act requires the Secretary to review certain 
components of the OPPS not less often than annually, and to revise the 
groups, relative payment weights, and other adjustments that take into 
account changes in medical practices, changes in technologies, and the 
addition of new services, new cost data, and other relevant information 
and factors. In addition, under section 1833(i) of the Act, we annually 
review and update the ASC payment rates. We describe these and various 
other statutory authorities in the relevant sections of this proposed 
rule. In addition, this proposed rule would update and refine the 
requirements for the Hospital Outpatient Quality Reporting (OQR) 
Program and the ASC Quality Reporting (ASCQR) Program.
    In addition, we are proposing changes to the conditions for 
coverage (CfCs) for organ procurement organizations (OPOs); revisions 
to the outcome requirements for solid organ transplant programs 
transplant enforcement and for transplant documentation requirements; a 
technical correction to enforcement provisions for organ transplant 
centers; modifications to the Medicare and Medicaid Electronic Health 
Record (EHR) Incentive Programs to reduce hospital administrative 
burden and to allow hospitals to focus more on patient care; and the 
removal of the HCAHPS Pain Management dimension from the Hospital 
Value-Based Purchasing (VBP) Program.
    Further, we are proposing policies to implement section 603 of the 
Bipartisan Budget Act of 2015 relating to payment for certain items and 
services furnished by certain off-campus outpatient departments of a 
provider.
2. Summary of the Major Provisions
     OPPS Update: For CY 2017, we are proposing to increase the 
payment rates under the OPPS by an Outpatient Department (OPD) fee 
schedule increase factor of 1.55 percent. This proposed increase factor 
is based on the proposed hospital inpatient market basket percentage 
increase of 2.8 percent for inpatient services paid under the hospital 
inpatient prospective payment system (IPPS), minus the proposed 
multifactor productivity (MFP) adjustment of 0.5 percentage point, and 
minus a 0.75 percentage point adjustment required by the Affordable 
Care Act. Based on this proposed update, we estimate that proposed 
total payments to OPPS providers (including beneficiary cost-sharing 
and estimated changes in enrollment, utilization, and case-mix), for CY 
2017 would be approximately $63 billion, an increase of approximately 
$5.1 billion compared to estimated CY 2016 OPPS payments.
    We are proposing to continue to implement the statutory 2.0 
percentage point reduction in payments for hospitals failing to meet 
the hospital outpatient quality reporting requirements, by applying a 
proposed reporting factor of 0.980 to the OPPS payments and copayments 
for all applicable services.
     Rural Adjustment: We are proposing to continue the 
adjustment of 7.1 percent to the OPPS payments to certain rural sole 
community hospitals (SCHs), including essential access community 
hospitals (EACHs). This proposed adjustment would apply to all services 
paid under the OPPS, excluding separately payable drugs and 
biologicals, devices paid under the pass-through payment policy, and 
items paid at charges reduced to cost.
     Cancer Hospital Payment Adjustment: For CY 2017, we are 
proposing to continue to provide additional payments to cancer 
hospitals so that the cancer hospital's payment-to-cost ratio (PCR) 
after the additional payments is equal to the weighted average PCR for 
the other OPPS hospitals using the most recently submitted or settled 
cost report data. Based on those data, a proposed target PCR of 0.92 
would be used to determine the CY 2017 cancer hospital payment 
adjustment to be paid at cost report settlement. That is, the proposed 
payment adjustments would be the additional payments needed to result 
in a PCR equal to 0.92 for each cancer hospital.
     Comprehensive APCs: For CY 2017, we are not proposing 
extensive changes to the already established methodology

[[Page 45611]]

used for C-APCs. However, we are proposing to create 25 new C-APCs that 
meet the previously established criteria, which, when combined with the 
existing 37 C-APCs, would bring the total number to 62 C-APCs as of 
January 1, 2017.
     Chronic Care Management (CCM): For CY 2017, we are 
proposing some minor changes to certain CCM scope of service elements. 
Refer to the CY 2017 MPFS proposed rule for a detailed discussion of 
these changes to the scope of service elements for CCM. We are 
proposing that these changes will also apply to CCM furnished to 
hospital outpatients.
     Device-Intensive Procedures: For CY 2017, we are proposing 
that the payment rate for any device-intensive procedure that is 
assigned to an APC with fewer than 100 total claims for all procedures 
in the APC be based on the median cost instead of the geometric mean 
cost. We believe that this approach will mitigate significant year-to-
year payment rate fluctuations while preserving accurate claims-data-
based payment rates for low volume device-intensive procedures. In 
addition, we are proposing to revise the device intensive calculation 
methodology and calculate the device offset amount at the HCPCS code 
level rather than at the APC level to ensure that device intensive 
status is properly assigned to all device-intensive procedures.
     Outpatient Laboratory Tests: For CY 2017, we are proposing 
to discontinue the use of the ``L1'' modifier to identify unrelated 
laboratory tests on claims. In addition, we are proposing to expand the 
laboratory packaging exclusion that currently applies to Molecular 
Pathology tests to all laboratory tests designated as advanced 
diagnostic laboratory tests (ADLTs) that meet the criteria of section 
1834A(d)(5)(A) of the Act.
     Packaging Policies: The OPPS currently packages many 
categories of items and services that are typically provided as part of 
the outpatient hospital service (for example, operating and recovery 
room, anesthesia, among others). Packaging encourages hospital 
efficiency, flexibility, and long-term cost containment, and it also 
promotes the stability of payment for services over time. In CY 2014 
and 2015, we added several new categories of packaged items and 
services. Among these were laboratory tests, ancillary services, 
services described by add-on codes, and drugs used in a diagnostic test 
or surgical procedure. For CY 2017, we are proposing to align the 
packaging logic for all of the conditional packaging status indicators 
so that packaging would occur at the claim level (instead of based on 
the date of service) to promote consistency and ensure that items and 
services that are provided during a hospital stay that may span more 
than one day are appropriately packaged according to OPPS packaging 
policies.
     Payment Modifier for X-ray Films: Section 502(b) of 
Division O, Title V of the Consolidated Appropriations Act, 2016 (Pub. 
L. 114-113) amended section 1833(t)(16) of the Act by adding new 
subparagraph (F). New section 1833(t)(16)(F)(i) of the Act provides 
that, effective for services furnished during 2017 or any subsequent 
year, the payment under the OPPS for imaging services that are X-rays 
taken using film (including the X-ray component of a packaged service) 
that would otherwise be made under the OPPS (without application of 
this paragraph and before application of any other adjustment) shall be 
reduced by 20 percent. We are proposing that, effective for services 
furnished on or after January 1, 2017, hospitals would be required to 
use a modifier on claims for X-rays that are taken using film. The use 
of this proposed modifier would result in a 20-percent payment 
reduction for the X-ray service, as specified under section 
1833(t)(16)(F)(i) of the Act, of the determined OPPS payment amount 
(without application of paragraph (F) and before any other adjustments 
under section 1833(t)).
     Payment for Certain Items and Services Furnished by 
Certain Off-Campus Departments of a Provider: We are proposing to 
implement section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 
114-74). This provision requires that certain items and services 
furnished in certain off-campus provider-based departments (PBDs) 
(collectively referenced as nonexcepted items and services) shall not 
be considered covered OPD services for purposes of OPPS payment and 
those items and services will instead be paid ``under the applicable 
payment system'' beginning January 1, 2017. We are making several 
proposals relating to which off-campus PBDs and which items and 
services furnished by such off-campus PBDs may be exempt from 
application of payment changes under this provision.
    In addition, we are proposing that the Medicare Physician Fee 
Schedule (MPFS) will be the ``applicable payment system'' for the 
majority of the items and services furnished by nonexcepted off-campus 
PBDs. We are proposing that physicians furnishing services in these 
departments would be paid based on the professional claim and would be 
paid at the nonfacility rate for services which they are permitted to 
bill. We are proposing to pay physicians at the nonfacility rate 
because we are not able to operationalize a mechanism to provide 
payment to the off-campus PBD for nonexcepted items and services under 
a payment system other than the OPPS at this time. We are clarifying 
that, for CY 2017, provided an off-campus PBD can meet all Federal and 
other requirements, a hospital also has the option of enrolling the 
off-campus PBD as the provider/supplier it wishes to bill as in order 
to meet the requirements of that payment system (such as an ASC or a 
group practice to be paid under the MPFS, in which case the physician 
would be paid at the facility rate). We intend that this payment 
proposal would be a transitional policy, applicable in CY 2017 only, 
while we continue to explore operational changes that would allow a 
nonexcepted off-campus PBD to bill Medicare under an applicable payment 
system, which, in the majority of cases, we expect will be the MPFS.
     Ambulatory Surgical Center Payment Update: For CY 2017, we 
are proposing to increase payment rates under the ASC payment system by 
1.2 percent for ASCs that meet the quality reporting requirements under 
the ASCQR Program. This proposed increase is based on a projected CPI-U 
update of 1.7 percent minus a multifactor productivity adjustment 
required by the Affordable Care Act of 0.5 percentage point. Based on 
this proposed update, we estimate that proposed total payments to ASCs 
(including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix), for CY 2017 would be 
approximately $4.42 billion, an increase of approximately $214 million 
compared to estimated CY 2016 Medicare payments.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are making proposals for the CY 2018 
payment determination, the CY 2019 payment determination and the CY 
2020 payment determination and subsequent years. For the CY 2018 
payment determination and subsequent years, we are proposing to 
publicly display data on the Hospital Compare Web site, or other CMS 
Web site, as soon as possible after measure data have been submitted to 
CMS. In addition, we are proposing that hospitals will generally have 
approximately 30 days to preview their data. We are also proposing to 
announce the timeframes for the preview period on a CMS Web site and/or 
on our applicable listservs. For the CY 2019

[[Page 45612]]

payment determination and subsequent years, we are proposing to change 
the timeframe for extraordinary circumstances exemptions (ECE) from 45 
days to 90 days from the date that the extraordinary circumstance 
occurred. For the CY 2020 payment determination and subsequent years, 
we are proposing to adopt a total of seven measures: Two claims-based 
measures and five Outpatient and Ambulatory Surgery Consumer Assessment 
of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures. 
The two proposed claims-based measures are: (1) OP-35: Admissions and 
Emergency Department Visits for Patients Receiving Outpatient 
Chemotherapy and (2) OP-36: Hospital Visits after Hospital Outpatient 
Surgery (NQF #2687). The five proposed survey-based measures are: (1) 
OP-37a: OAS CAHPS--About Facilities and Staff; (2) OP-37b: OAS CAHPS--
Communication About Procedure; (3) OP-37c: OAS CAHPS--Preparation for 
Discharge and Recovery; (4) OP-37d: OAS CAHPS--Overall Rating of 
Facility; and (5) OP-37e: OAS CAHPS--Recommendation of Facility.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are making proposals for the CY 2018 
payment determination, 2019 payment determination and CY 2020 payment 
determination and subsequent years. For the CY 2018 payment 
determination and subsequent years, we are proposing to publicly 
display data on the Hospital Compare Web site, or other CMS Web site, 
as soon as possible after measure data have been submitted to CMS. In 
addition, we are proposing that ASCs will generally have approximately 
30 days to preview their data. We are also proposing to announce the 
timeframes for the preview period on a CMS Web site and/or on our 
applicable listservs. For the CY 2019 payment determination and 
subsequent years, we are proposing to change the submission deadline 
from August 15 in the year prior to the affected payment determination 
year to May 15 for all data submitted via a CMS Web-based tool. We also 
are proposing to extend the submission deadline for Extraordinary 
Circumstance Extensions and Exemptions requests. For the CY 2020 
payment determination and subsequent years, we are proposing to adopt a 
total of seven measures: Two measures collected via a CMS Web-based 
tool and five Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey-based measures. The 
two proposed measures that require data to be submitted directly to CMS 
via a CMS Web-based tool are: (1) ASC-13: Normothermia Outcome and (2) 
ASC-14: Unplanned Anterior Vitrectomy. The five proposed survey-based 
measures are: (1) ASC-15a: OAS CAHPS--About Facilities and Staff; (2) 
ASC-15b: OAS CAHPS--Communication About Procedure; (3) ASC-15c: OAS 
CAHPS--Preparation for Discharge and Recovery; (4) ASC-15d: OAS CAHPS--
Overall Rating of Facility; and (5) ASC-15e: OAS CAHPS--Recommendation 
of Facility.
     Hospital Value-Based Purchasing (VBP) Program Update: 
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 remove the HCAHPS Pain 
Management dimension of the Hospital VBP Program, beginning with the FY 
2018 program year.
     Medicare and Medicaid Electronic Health Record (EHR) 
Incentive Programs: In this proposed rule, we are proposing changes to 
the objectives and measures of meaningful use for Modified Stage 2 and 
Stage 3 starting with the EHR reporting periods in calendar year 2017. 
Under both Modified Stage 2 in 2017 and Stage 3 in 2017 and 2018, for 
eligible hospitals and CAHs attesting under the Medicare EHR Incentive 
Program, we are proposing to eliminate the Clinical Decision Support 
(CDS) and Computerized Provider Order Entry (CPOE) objectives and 
measures, and lower the reporting thresholds for a subset of the 
remaining objectives and measures, generally to the Modified Stage 2 
thresholds. The proposal to reduce measure thresholds is intended to 
respond to input we have received from hospitals, hospital 
associations, health systems, and vendors expressing concerns about the 
established measures. The proposed requirements focus on reducing 
hospital administrative burden, allowing eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program to focus more on 
providing quality patient care, as well as focus on updating and 
optimizing CEHRT functionalities to sufficiently meet the requirements 
of the EHR Incentive Program and prepare for Stage 3 of meaningful use.
    In addition, we are proposing changes to the EHR reporting period 
in calendar year 2016 for eligible professionals, eligible hospitals, 
and CAHs; reporting requirements for eligible professionals, eligible 
hospitals, and CAHs that are new participants in 2017; and the policy 
on measure calculations for actions outside the EHR reporting period. 
Finally, we are proposing a one-time significant hardship exception 
from the 2018 payment adjustment for certain eligible professionals who 
are new participants in the EHR Incentive Program in 2017 and are 
transitioning to the Merit-Based Incentive Payment System in 2017. We 
believe these proposals are responsive to additional stakeholder 
feedback received through both correspondence and in-person meetings 
and would result in continued advancement of certified EHR technology 
utilization, particularly among those eligible professionals, eligible 
hospitals and CAHs that have not previously achieved meaningful use, 
and result in a program more focused on supporting interoperability and 
data sharing for all participants under the Medicare and Medicaid EHR 
Incentive Programs.
     Transplant Performance Thresholds. With respect to solid 
organ transplant programs, we are proposing to restore the effective 
tolerance range for clinical outcomes that was allowed in our original 
2007 rule. These outcomes requirements in the Medicare Conditions of 
Participation (CoPs) have been affected by the nationwide improvement 
in transplant outcomes, making it now more difficult for transplant 
programs to maintain compliance with, in effect, increasingly stringent 
Medicare standards for patient and graft survival.
     Organ Procurement Organizations (OPOs) Changes. In this 
proposed rule, we are proposing to: Change the current ``eligible 
death'' definition to be consistent with the OPTN definition; modify 
CMS current outcome measures to be consistent with yield calculations 
currently utilized by the SRTR; and modify current requirements for 
documentation of donor information which is sent to the transplant 
center along with the organ.
3. Summary of Costs and Benefits
    In sections XXIII. and XXIV. of this proposed rule, we set forth a 
detailed analysis of the regulatory and Federalism impacts that the 
proposed changes would have on affected entities and beneficiaries. Key 
estimated impacts are described below.
a. Impacts of the Proposed OPPS Update
(1) Impacts of All OPPS Proposed Changes
    Table 30 in section XXIII. of this proposed rule displays the 
distributional impact of all the proposed OPPS changes on various 
groups of hospitals and CMHCs for CY 2017

[[Page 45613]]

compared to all estimated OPPS payments in CY 2016. We estimate that 
the proposed policies in this proposed rule would result in a 1.6 
percent overall increase in OPPS payments to providers. We estimate 
that proposed total OPPS payments for CY 2017, including beneficiary 
cost-sharing, to the approximate 3,900 facilities paid under the OPPS 
(including general acute care hospitals, children's hospitals, cancer 
hospitals, and CMHCs) would increase by approximately $671 million 
compared to CY 2016 payments, excluding our estimated changes in 
enrollment, utilization, and case-mix.
    We estimated the isolated impact of our proposed OPPS policies on 
CMHCs because CMHCs are only paid for partial hospitalization services 
under the OPPS. Continuing the provider-specific structure that we 
adopted beginning in CY 2011 and basing payment fully on the type of 
provider furnishing the service, we estimate an 8.4 percent decrease in 
CY 2017 payments to CMHCs relative to their CY 2016 payments.
(2) Impacts of the Proposed Updated Wage Indexes
    We estimate that our proposed update of the wage indexes based on 
the FY 2017 IPPS proposed rule wage indexes results in no change for 
urban hospitals and a 0.3 percent increase for rural hospitals under 
the OPPS. These wage indexes include the continued implementation of 
the OMB labor market area delineations based on 2010 Decennial Census 
data.
(3) Impacts of the Proposed Rural Adjustment and the Cancer Hospital 
Payment Adjustment
    There are no significant impacts of our proposed CY 2017 payment 
policies for hospitals that are eligible for the rural adjustment or 
for the cancer hospital payment adjustment. We are not proposing to 
make any change in policies for determining the rural and cancer 
hospital payment adjustments, and the adjustment amounts do not 
significantly impact the budget neutrality adjustments for these 
policies.
(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the 
proposed OPD fee schedule increase factor of 1.6 percent to the 
conversion factor for CY 2017 would mitigate the impacts of the budget 
neutrality adjustments. As a result of the OPD fee schedule increase 
factor and other budget neutrality adjustments, we estimate that rural 
and urban hospitals would experience increases of approximately 1.6 
percent for urban hospitals and 2.3 percent for rural hospitals. 
Classifying hospitals by teaching status or type of ownership suggests 
that these hospitals will receive similar increases.
b. Impacts of the Proposed ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The proposed percentage change in 
estimated total payments by specialty groups under the proposed CY 2017 
payment rates compared to estimated CY 2016 payment rates ranges 
between 6 percent for musculoskeletal system procedures and -2 percent 
for integumentary system procedures.
c. Impacts of the Hospital OQR Program
    We do not expect our proposed CY 2017 policies to significantly 
affect the number of hospitals that do not receive a full annual 
payment update.
d. Impacts of the ASCQR Program
    We do not expect our proposed CY 2017 policies to significantly 
affect the number of ASCs that do not receive a full annual payment 
update.
e. Impacts for Proposed Implementation of Section 603 of the Bipartisan 
Budget Act of 2015
    We estimate that implementation of section 603 will reduce net OPPS 
payments by $500 million in CY 2017, relative to a baseline where 
section 603 was not implemented in CY 2017. We estimate that section 
603 would increase payments to physicians under the MPFS by $170 
million in CY 2017, resulting in a net Medicare Part B impact from the 
provision of reducing CY 2017 Part B expenditures by $330 million. 
These estimates include both the FFS impact of the provision and the 
Medicare Advantage impact of the provision. These estimates also 
reflect that the reduced spending from implementation of section 603 
results in a lower Part B premium; the reduced Part B spending is 
slightly offset by lower aggregate Part B premium collections.

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Social Security Act was enacted, Medicare 
payment for hospital outpatient services was based on hospital-specific 
costs. In an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: The Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on 
March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; and the Consolidated

[[Page 45614]]

Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 
2015.
    Under the OPPS, we pay for hospital Part B services on a rate-per-
service basis that varies according to the APC group to which the 
service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C. of this proposed rule. Section 
1833(t)(1)(B) of the Act provides for payment under the OPPS for 
hospital outpatient services designated by the Secretary (which 
includes partial hospitalization services furnished by CMHCs), and 
certain inpatient hospital services that are paid under Medicare Part 
B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use (section 1833(t)(2)(B) of 
the Act). In accordance with section 1833(t)(2) of the Act, subject to 
certain exceptions, items and services within an APC group cannot be 
considered comparable with respect to the use of resources if the 
highest median cost (or mean cost, if elected by the Secretary) for an 
item or service in the APC group is more than 2 times greater than the 
lowest median cost (or mean cost, if elected by the Secretary) for an 
item or service within the same APC group (referred to as the ``2 times 
rule''). In implementing this provision, we generally use the cost of 
the item or service assigned to an APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
clinical information and cost data to appropriately assign them to a 
clinical APC group, we have established special APC groups based on 
costs, which we refer to as New Technology APCs. These New Technology 
APCs are designated by cost bands which allow us to provide appropriate 
and consistent payment for designated new procedures that are not yet 
reflected in our claims data. Similar to pass-through payments, an 
assignment to a New Technology APC is temporary; that is, we retain a 
service within a New Technology APC until we acquire sufficient data to 
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

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

D. Prior Rulemaking

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

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an external advisory panel of 
experts to annually review the clinical integrity of the payment groups 
and their weights under the OPPS. In CY 2000, based on section 
1833(t)(9)(A) of the Act and section 222 of the Public Health Service 
(PHS) Act, the Secretary established the Advisory Panel on Ambulatory 
Payment Classification Groups (APC Panel) to fulfill this requirement. 
In CY 2011, based on section 222 of the PHS Act which gives 
discretionary authority to the Secretary to convene advisory councils 
and committees, the Secretary expanded the panel's scope to include the 
supervision of hospital outpatient therapeutic services in addition to 
the APC groups and weights. To reflect this new role of the panel, the 
Secretary changed the panel's name to the Advisory Panel on Hospital 
Outpatient Payment (the HOP Panel, or the Panel). The Panel is not 
restricted to using data compiled by CMS, and in conducting its review, 
it may use data collected or developed by organizations outside the 
Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the HOP Panel, and at that time named the APC Panel. This 
expert panel is composed of appropriate representatives

[[Page 45615]]

of providers (currently employed full-time, not as consultants, in 
their respective areas of expertise), reviews clinical data, and 
advises CMS about the clinical integrity of the APC groups and their 
payment weights. Since CY 2012, the Panel also is charged with advising 
the Secretary on the appropriate level of supervision for individual 
hospital outpatient therapeutic services. The Panel is technical in 
nature, and it is governed by the provisions of the Federal Advisory 
Committee Act (FACA). The current charter specifies, among other 
requirements, that: The Panel continues to be technical in nature; is 
governed by the provisions of the FACA; may convene up to three 
meetings per year; has a Designated Federal Official (DFO); and is 
chaired by a Federal Official designated by the Secretary. The Panel's 
charter was amended on November 15, 2011, renaming the Panel and 
expanding the Panel's authority to include supervision of hospital 
outpatient therapeutic services and to add Critical Access Hospital 
(CAH) representation to its membership. The current charter was renewed 
on November 6, 2014 (80 FR 23009) and the number of panel members was 
revised from up to 19 to up to 15 members.
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held multiple meetings, with the last meeting taking 
place on March 14, 2016. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership, to announce new members and 
to announce any other changes that the public should be aware of. 
Beginning in CY 2017, we will transition to one meeting per year, which 
will be scheduled in the summer (81 FR 31941).
    The Panel has established an operational structure that, in part, 
currently includes the use of three subcommittees to facilitate its 
required review process. The three current subcommittees are the Data 
Subcommittee, the Visits and Observation Subcommittee, and the 
Subcommittee for APC Groups and Status Indicator (SI) Assignments.
    The Data Subcommittee is responsible for studying the data issues 
confronting the Panel and for recommending options for resolving them. 
The Visits and Observation Subcommittee reviews and makes 
recommendations to the Panel on all technical issues pertaining to 
observation services and hospital outpatient visits paid under the OPPS 
(for example, APC configurations and APC relative payment weights). The 
Subcommittee for APC Groups and SI Assignments advises the Panel on the 
following issues: The appropriate status indicators to be assigned to 
HCPCS codes, including but not limited to whether a HCPCS code or a 
category of codes should be packaged or separately paid; and the 
appropriate APC assignment of HCPCS codes regarding services for which 
separate payment is made.
    Each of these subcommittees was established by a majority vote from 
the full Panel during a scheduled Panel meeting, and the Panel 
recommended at the March 14, 2016 meeting that the subcommittees 
continue. We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
March 14, 2016 Panel meeting are included in the sections of this 
proposed rule that are specific to each recommendation. For discussions 
of earlier Panel meetings and recommendations, we refer readers to 
previously published OPPS/ASC proposed and final rules, the CMS Web 
site mentioned earlier in this section, and the FACA database at: 
http://facadatabase.gov/.

F. Public Comments Received on the CY 2016 OPPS/ASC Final Rule With 
Comment Period

    We received 25 timely pieces of correspondence on the CY 2016 OPPS/
ASC final rule with comment period that appeared in the Federal 
Register on November 13, 2015 (80 FR 70298), some of which contained 
comments on the interim APC assignments and/or status indicators of new 
or replacement Level II HCPCS codes (identified with comment indicator 
``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that 
final rule). Summaries of the public comments on new or replacement 
Level II HCPCS codes will be set forth in the CY 2017 final rule with 
comment period under the appropriate subject matter headings.

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    For CY 2017, we are proposing to recalibrate the APC relative 
payment weights for services furnished on or after January 1, 2017, and 
before January 1, 2018 (CY 2017), using the same basic methodology that 
we described in the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70309 through 70321). That is, we are proposing to recalibrate the 
relative payment weights for each APC based on claims and cost report 
data for hospital outpatient department (HOPD) services, using the most 
recent available data to construct a database for calculating APC group 
weights. For this proposed rule, for the purpose of recalibrating the 
proposed APC relative payment weights for CY 2017, we used 
approximately 163 million final action claims (claims for which all 
disputes and adjustments have been resolved and payment has been made) 
for HOPD services furnished on or after January 1, 2015, and before 
January 1, 2016. For exact numbers of claims used and additional 
details on the claims accounting process, we refer readers to the 
claims accounting narrative under supporting documentation for this CY 
2017 OPPS/ASC proposed rule on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Addendum N to this proposed rule includes the proposed list of 
bypass codes for CY 2017. The proposed list of bypass codes contains 
codes that were reported on claims for services in CY 2015 and, 
therefore, includes codes that were in effect in CY 2015 and used for 
billing but were deleted for CY 2016. We are retaining these deleted 
bypass codes on the proposed CY 2017 bypass list because these codes 
existed in CY 2015 and were covered OPD services in that period, and CY 
2015 claims data are used to calculate CY 2017 payment rates. Keeping 
these deleted bypass codes on the bypass list potentially allows us to 
create more ``pseudo''

[[Page 45616]]

single procedure claims for ratesetting purposes. ``Overlap bypass 
codes'' that are members of the proposed multiple imaging composite 
APCs are identified by asterisks (*) in the third column of Addendum N 
to this proposed rule. HCPCS codes that we are proposing to add for CY 
2017 are identified by asterisks (*) in the fourth column of Addendum 
N.
    We are proposing a CY 2017 bypass list of 194 HCPCS codes, as 
displayed in Addendum N to this proposed rule (which is available via 
the Internet on the CMS Web site). Table 1 below contains the list of 
codes that we are proposing to remove from the CY 2017 bypass list.

Table 1--HCPCS Codes Proposed to be removed from the CY 2017 Bypass List
------------------------------------------------------------------------
            HCPCS Code                     HCPCS short descriptor
------------------------------------------------------------------------
95925.............................  Somatosensory testing.
95808.............................  Polysom any age 1-3> param.
90845.............................  Psychoanalysis.
96151.............................  Assess hlth/behave subseq.
31505.............................  Diagnostic laryngoscopy.
95872.............................  Muscle test one fiber.
------------------------------------------------------------------------

b. Proposed Calculation and Use of Cost-To-Charge Ratios (CCRs)
    For CY 2017, we are proposing to continue to use the hospital-
specific overall ancillary and departmental cost-to-charge ratios 
(CCRs) to convert charges to estimated costs through application of a 
revenue code-to-cost center crosswalk. To calculate the APC costs on 
which the proposed CY 2017 APC payment rates are based, we calculated 
hospital-specific overall ancillary CCRs and hospital-specific 
departmental CCRs for each hospital for which we had CY 2015 claims 
data by comparing these claims data to the most recently available 
hospital cost reports, which, in most cases, are from CY 2014. For the 
proposed CY 2017 OPPS payment rates, we used the set of claims 
processed during CY 2015. We applied the hospital-specific CCR to the 
hospital's charges at the most detailed level possible, based on a 
revenue code-to-cost center crosswalk that contains a hierarchy of CCRs 
used to estimate costs from charges for each revenue code. That 
crosswalk is available for review and continuous comment on the CMS Web 
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2015 
(the year of claims data we used to calculate the proposed CY 2017 OPPS 
payment rates) and found that the National Uniform Billing Committee 
(NUBC) did not add any new revenue codes to the NUBC 2015 Data 
Specifications Manual.
    In accordance with our longstanding policy, we calculated CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculated CCRs was the hospital-specific departmental level. For a 
discussion of the hospital-specific overall ancillary CCR calculation, 
we refer readers to the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 67983 through 67985). The calculation of blood costs is a 
longstanding exception (since the CY 2005 OPPS) to this general 
methodology for calculation of CCRs used for converting charges to 
costs on each claim. This exception is discussed in detail in the CY 
2007 OPPS/ASC final rule with comment period and discussed further in 
section II.A.2.b.(1) of this proposed rule.
2. Proposed Data Development Process and Calculation of Costs Used for 
Ratesetting
    In this section of this proposed rule, we discuss the use of claims 
to calculate the proposed OPPS payment rates for CY 2017. The Hospital 
OPPS page on the CMS Web site on which this proposed rule is posted 
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used 
in the development of the proposed payment rates. That accounting 
provides additional detail regarding the number of claims derived at 
each stage of the process. In addition, below in this section we 
discuss the file of claims that comprises the data set that is 
available for purchase under a CMS data use agreement. The CMS Web 
site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing 
the ``OPPS Limited Data Set,'' which now includes the additional 
variables previously available only in the OPPS Identifiable Data Set, 
including ICD-9-CM diagnosis codes and revenue code payment amounts. 
This file is derived from the CY 2015 claims that were used to 
calculate the proposed payment rates for the CY 2017 OPPS.
    In the history of the OPPS, we have traditionally established the 
scaled relative weights on which payments are based using APC median 
costs, which is a process described in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74188). However, as discussed in more detail 
in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68259 through 68271), we finalized the use of geometric 
mean costs to calculate the relative weights on which the CY 2013 OPPS 
payment rates were based. While this policy changed the cost metric on 
which the relative payments are based, the data process in general 
remained the same, under the methodologies that we used to obtain 
appropriate claims data and accurate cost information in determining 
estimated service cost. For CY 2017, we are proposing to continue to 
use geometric mean costs to calculate the relative weights on which the 
proposed CY 2017 OPPS payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.d. of this proposed rule to calculate the costs we used to 
establish the proposed relative payment weights used in calculating the 
proposed OPPS payment rates for CY 2017 shown in Addenda A and B to 
this proposed rule (which are available via the Internet on the CMS Web 
site). We refer readers to section II.A.4. of this proposed rule for a 
discussion of the conversion of APC costs to scaled payment weights.
    For details of the claims process used in this proposed rule, we 
refer readers to the claims accounting narrative under supporting 
documentation for this CY 2017 OPPS/ASC proposed rule on the CMS Web 
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
a. Recommendations of the Advisory Panel on Hospital Outpatient Payment 
(the Panel) Regarding Data Development
    At the March 14, 2016 meeting of the Panel, we discussed our 
standard analysis of APCs, specifically those APCs for which geometric 
mean costs in the CY 2015 claims data through September 2015 varied 
significantly from the CY 2014 claims data used for the CY 2016 OPPS/
ASC final rule with comment period. At the March 14, 2016 Panel 
meeting, the Panel made three recommendations related to the data 
process. The Panel's data-related recommendations and our responses 
follow.
    Recommendation: The Panel recommends that CMS provide the data 
subcommittee a list of APCs fluctuating significantly in costs prior to 
each HOP Panel meeting.
    CMS Response: We are accepting this recommendation.

[[Page 45617]]

    Recommendation: The Panel recommends that the work of the data 
subcommittee continue.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that Michael Schroyer continue 
serving as subcommittee Chair for the August 2016 HOP Panel.
    CMS Response: We are accepting this recommendation.
b. Proposed Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    For CY 2017, we are proposing to continue to establish payment 
rates for blood and blood products using our blood-specific CCR 
methodology, which utilizes actual or simulated CCRs from the most 
recently available hospital cost reports to convert hospital charges 
for blood and blood products to costs. This methodology has been our 
standard ratesetting methodology for blood and blood products since CY 
2005. It was developed in response to data analysis indicating that 
there was a significant difference in CCRs for those hospitals with and 
without blood-specific cost centers, and past public comments 
indicating that the former OPPS policy of defaulting to the overall 
hospital CCR for hospitals not reporting a blood-specific cost center 
often resulted in an underestimation of the true hospital costs for 
blood and blood products. Specifically, in order to address the 
differences in CCRs and to better reflect hospitals' costs, we are 
proposing to continue to simulate blood CCRs for each hospital that 
does not report a blood cost center by calculating the ratio of the 
blood-specific CCRs to hospitals' overall CCRs for those hospitals that 
do report costs and charges for blood cost centers. We also are 
proposing to apply this mean ratio to the overall CCRs of hospitals not 
reporting costs and charges for blood cost centers on their cost 
reports in order to simulate blood-specific CCRs for those hospitals. 
We are proposing to calculate the costs upon which the proposed CY 2017 
payment rates for blood and blood products are based using the actual 
blood-specific CCR for hospitals that reported costs and charges for a 
blood cost center and a hospital-specific, simulated blood-specific CCR 
for hospitals that did not report costs and charges for a blood cost 
center.
    We continue to believe that the hospital-specific, simulated blood-
specific CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as 
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into 
account the unique charging and cost accounting structure of each 
hospital, we believe that it yields more accurate estimated costs for 
these products. We continue to believe that this methodology in CY 2017 
would result in costs for blood and blood products that appropriately 
reflect the relative estimated costs of these products for hospitals 
without blood cost centers and, therefore, for these blood products in 
general.
    We note that, as discussed in section II.A.2.e. of the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74861 through 74910), 
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66798 
through 66810), and the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70325 through 70339), we defined a comprehensive APC (C-APC) as 
a classification for the provision of a primary service and all 
adjunctive services provided to support the delivery of the primary 
service. Under this policy, we include the costs of blood and blood 
products when calculating the overall costs of these C-APCs. We are 
proposing to continue to apply the blood-specific CCR methodology 
described in this section when calculating the costs of the blood and 
blood products that appear on claims with services assigned to the C-
APCs. Because the costs of blood and blood products will be reflected 
in the overall costs of the C-APCs (and, as a result, in the proposed 
payment rates of the C-APCs), we are proposing to not make separate 
payments for blood and blood products when they appear on the same 
claims as services assigned to the C-APCs (we refer readers to the CY 
2015 OPPS/ASC final rule with comment period (79 FR 66796)).
    We are inviting public comments on these proposals. We refer 
readers to Addendum B to this proposed rule (which is available via the 
Internet on the CMS Web site) for the proposed CY 2017 payment rates 
for blood and blood products (which are identified with status 
indicator ``R''). For a more detailed discussion of the blood-specific 
CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 
FR 50524 through 50525). For a full history of OPPS payment for blood 
and blood products, we refer readers to the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66807 through 66810).
(b) Solicitation of Public Comments
    As discussed in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70323), we are in the process of examining the current set of 
HCPCS P-codes for blood products, which became effective many years 
ago. Because these HCPCS P-codes were created many years ago, we are 
considering whether this code set could benefit from some code 
descriptor revisions, updating, and/or consolidation to make these 
codes properly reflect current product descriptions and utilization 
while minimizing redundancy and potentially outdated descriptors. We 
are requesting public comments regarding the adequacy and necessity (in 
terms of the existing granularity) of the current descriptors for the 
HCPCS P-codes describing blood products. Specifically, there are three 
main categories of blood products: Red blood cells; platelets; and 
plasma. In each of these categories, there are terms that describe 
various treatments or preparations of the blood products, with each, in 
several cases, represented individually and in combination. For 
example, for pheresis platelets, there are codes for ``leukocyte 
reduced,'' ``irradiated,'' ``leukocyte reduced + irradiated,'' 
``leukocyte reduced + irradiated + CMV-negative,'' among others. We are 
asking the blood product stakeholder community whether the current 
blood product HCPCS P-code descriptors with the associated granularity 
best describe the state of the current technology for blood products 
that hospitals currently provide to hospital outpatients. In several 
cases, the hospital costs as calculated from the CMS claims data are 
similar for blood products of the same type (for example, pheresis 
platelets) that have different code descriptors, which indicates to us 
that there is not a significant difference in the resources needed to 
produce the similar products. Again, we are inviting public comments on 
the current set of active HCPCS P-codes that describe blood products 
regarding how the code descriptors could be revised and updated (if 
necessary) to reflect the current blood products provided to hospital 
outpatients. The current set of active HCPCS P-codes that describe 
blood

[[Page 45618]]

products can be found in Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site).
(2) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 through 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges adjusted to cost, also would provide 
hospitals with incentives for efficiency in the provision of 
brachytherapy services to Medicare beneficiaries. Moreover, this 
approach is consistent with our payment methodology for the vast 
majority of items and services paid under the OPPS. We refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    In this proposed rule, for CY 2017, we are proposing to use the 
costs derived from CY 2015 claims data to set the proposed CY 2017 
payment rates for brachytherapy sources because CY 2015 is the same 
year of data we are proposing to use to set the proposed payment rates 
for most other items and services that would be paid under the CY 2017 
OPPS. We are proposing to base the proposed payment rates for 
brachytherapy sources on the geometric mean unit costs for each source, 
consistent with the methodology that we are proposing for other items 
and services paid under the OPPS, as discussed in section II.A.2. of 
this proposed rule. We also are proposing to continue the other payment 
policies for brachytherapy sources that we finalized and first 
implemented in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60537). We are proposing to pay for the stranded and nonstranded not 
otherwise specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate 
equal to the lowest stranded or nonstranded prospective payment rate 
for such sources, respectively, on a per source basis (as opposed to, 
for example, a per mCi), which is based on the policy we established in 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). For 
CY 2017 and subsequent years, we also are proposing to continue the 
policy we first implemented in the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60537) regarding payment for new brachytherapy 
sources for which we have no claims data, based on the same reasons we 
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66786; which was delayed until January 1, 2010 by section 142 of Public 
Law 110-275). Specifically, this policy is intended to enable us to 
assign new HCPCS codes for new brachytherapy sources to their own APCs, 
with prospective payment rates set based on our consideration of 
external data and other relevant information regarding the expected 
costs of the sources to hospitals.
    The proposed CY 2017 payment rates for brachytherapy sources are 
included in Addendum B to this proposed rule (which is available via 
the Internet on the CMS Web site) and are identified with status 
indicator ``U''. We note that, for CY 2017, we are proposing to assign 
new proposed status indicator ``E2'' (Items and Services for Which 
Pricing Information and Claims Data Are Not Available) to HCPCS code 
C2644 (Brachytherapy cesium-131 chloride) because this code was not 
reported on CY 2015 claims. Therefore, we are unable to calculate a 
proposed payment rate based on the general OPPS ratesetting methodology 
described earlier. Although HCPCS code C2644 became effective July 1, 
2014, and although we would expect that if a hospital furnished a 
brachytherapy source described by this code in CY 2015, HCPCS code 
C2644 should appear on the CY 2015 claims, there are no CY 2015 claims 
reporting this code. In addition, unlike new brachytherapy sources 
HCPCS codes, we will not consider external data to determine a proposed 
payment rate for HCPCS code C2644 for CY 2017. Therefore, we are 
proposing to assign new proposed status indicator ``E2'' to HCPCS code 
C2644.
    We are inviting public comments on this proposed policy. We also 
are requesting recommendations for new HCPCS codes to describe new 
brachytherapy sources consisting of a radioactive isotope, including a 
detailed rationale to support recommended new sources.
    We continue to invite hospitals and other parties to submit 
recommendations to us for new codes to describe new brachytherapy 
sources. Such recommendations should be directed to the Division of 
Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244. We will 
continue to add new brachytherapy source codes and descriptors to our 
systems for payment on a quarterly basis.
c. Proposed Comprehensive APCs (C-APCs) for CY 2017
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public comments received regarding specific provisions of 
the C-APC policy (79 FR 66798 through 66810).
    A C-APC is defined as a classification for the provision of a 
primary service and all adjunctive services provided to support the 
delivery of the primary service. We established C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70332), we finalized 10 additional C-APCs to be 
paid under the existing C-APC payment policy.
    Under this policy, we designated a service described by a HCPCS 
code assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1''. When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as

[[Page 45619]]

being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into the payments for the primary services. This results 
in a single prospective payment for each of the primary, comprehensive 
services based on the costs of all reported services at the claim 
level.
    Services excluded from the C-APC policy include services that are 
not covered OPD services, services that cannot by statute be paid for 
under the OPPS, and services that are required by statute to be 
separately paid. This includes certain mammography and ambulance 
services that are not covered OPD services in accordance with section 
1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also are 
required by statute to receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through drugs and devices, which also 
require separate payment under section 1833(t)(6) of the Act; self-
administered drugs (SADs) that are not otherwise packaged as supplies 
because they are not covered under Medicare Part B under section 
1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 
and 79 FR 66800 through 66801). A list of services excluded from the C-
APC policy is included in Addendum J to this proposed rule (which is 
available via the Internet on the CMS Web site).
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and 
implemented beginning in CY 2015 is summarized as follows (78 FR 74887 
and 79 FR 66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-APC payment policy as including 
all covered OPD services on a hospital outpatient claim reporting a 
primary service that is assigned to status indicator ``J1,'' excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS. Services and procedures described by HCPCS 
codes assigned to status indicator ``J1'' are assigned to C-APCs based 
on our usual APC assignment methodology by evaluating the geometric 
mean costs of the primary service claims to establish resource 
similarity and the clinical characteristics of each procedure to 
establish clinical similarity within each APC. In the CY 2016 OPPS/ASC 
final rule with comment period, we expanded the C-APC payment 
methodology with the establishment of status indicator ``J2''. The 
assignment of status indicator ``J2'' to a specific combination of 
services performed in combination with each other, as opposed to a 
single, primary service, allows for all other OPPS payable services and 
items reported on the claim (excluding services that are not covered 
OPD services or that cannot by statute be paid for under the OPPS) to 
be deemed adjunctive services representing components of a 
comprehensive service and resulting in a single prospective payment for 
the comprehensive service based on the costs of all reported services 
on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
provided during the delivery of the comprehensive service, include 
diagnostic procedures, laboratory tests, and other diagnostic tests and 
treatments that assist in the delivery of the primary procedure; visits 
and evaluations performed in association with the procedure; uncoded 
services and supplies used during the service; durable medical 
equipment as well as prosthetic and orthotic items and supplies when 
provided as part of the outpatient service; and any other components 
reported by HCPCS codes that represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for outpatient department services that are 
similar to therapy services and delivered either by therapists or 
nontherapists is included as part of the payment for the packaged 
complete comprehensive service. These services that are provided during 
the perioperative period are adjunctive services and are deemed to be 
not therapy services as described in section 1834(k) of the Act, 
regardless of whether the services are delivered by therapists or other 
nontherapist health care workers. We have previously noted that therapy 
services are those provided by therapists under a plan of care in 
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the 
Act and are paid for under section 1834(k) of the Act, subject to 
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). 
However, certain other services similar to therapy services are 
considered and paid for as outpatient department services. Payment for 
these nontherapy outpatient department services that are reported with 
therapy codes and provided with a comprehensive service is included in 
the payment for the packaged complete comprehensive service. We note 
that these services, even though they are reported with therapy codes, 
are outpatient department services and not therapy services. Therefore, 
the requirement for functional reporting under the regulations at 42 
CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. We refer 
readers to the July 2016 OPPS Change Request 9658 (Transmittal 3523) 
for further instructions on reporting these services in the context of 
a C-APC service.
    Items included in the packaged payment provided in conjunction with 
the primary service also include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged 
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We 
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit 
Policy Manual for a description of our policy on SADs treated as 
hospital outpatient supplies, including lists of SADs that function as 
supplies and those that do not function as supplies.
    We define each hospital outpatient claim reporting a single unit of 
a single primary service assigned to status indicator ``J1'' as a 
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). We 
sum all line item charges for services included on the C-APC claim, 
convert the charges to costs, and calculate the comprehensive geometric 
mean cost of one unit of each service assigned to status indicator 
``J1.'' (We note that we use the term ``comprehensive'' to describe the 
geometric mean cost of a claim reporting ``J1'' service(s) or the 
geometric mean cost of a C-APC, inclusive of all of the items and 
services included in the C-APC service payment bundle.) Charges for 
services that would otherwise be separately payable are added to the 
charges for the primary service. This process differs from our 
traditional cost accounting methodology only in that all such services 
on the claim are packaged (except certain services as described above). 
We apply our standard data trims, excluding claims with extremely high 
primary units or extreme costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to their comprehensive geometric mean 
costs. For the minority of claims

[[Page 45620]]

reporting more than one primary service assigned to status indicator 
``J1'' or units thereof, we identify one ``J1'' service as the primary 
service for the claim based on our cost-based ranking of primary 
services. We then assign these multiple ``J1'' procedure claims to the 
C-APC to which the service designated as the primary service is 
assigned. If the reported ``J1'' services reported on a claim map to 
different C-APCs, we designate the ``J1'' service assigned to the C-APC 
with the highest comprehensive geometric mean cost as the primary 
service for that claim. If the reported multiple ``J1'' services on a 
claim map to the same C-APC, we designate the most costly service (at 
the HCPCS code level) as the primary service for that claim. This 
process results in initial assignments of claims for the primary 
services assigned to status indicator ``J1'' to the most appropriate C-
APCs based on both single and multiple procedure claims reporting these 
services and clinical and resource homogeneity.
    Complexity Adjustments. We use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying ``J1'' service code 
combinations or code combinations of ``J1'' services and certain add-on 
codes (as described further below) from the originating C-APC (the C-
APC to which the designated primary service is first assigned) to the 
next higher paying C-APC in the same clinical family of C-APCs. We 
implement this type of complexity adjustment when the code combination 
represents a complex, costly form or version of the primary service 
according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule in the originating C-APC 
(cost threshold).
    After designating a single primary service for a claim, we evaluate 
that service in combination with each of the other procedure codes 
reported on the claim assigned to status indicator ``J1'' (or certain 
add-on codes) to determine if they meet the complexity adjustment 
criteria. For new HCPCS codes, we determine initial C-APC assignments 
and complexity adjustments using the best available information, 
crosswalking the new HCPCS codes to predecessor codes when appropriate.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a complex version of 
the primary service because it is sufficiently costly, frequent, and a 
subset of the primary comprehensive service overall according to the 
criteria described above, we promote the complex version of the primary 
service as described by the code combination to the next higher cost C-
APC within the clinical family unless the primary service is already 
assigned to the highest cost APC within the C-APC clinical family or 
assigned to the only C-APC in a clinical family. We do not create new 
APCs with a comprehensive geometric mean cost that is higher than the 
highest geometric mean cost (or only) C-APC in a clinical family just 
to accommodate potential complexity adjustments. Therefore, the highest 
payment for any code combination for services assigned to a C-APC would 
be the highest paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service-add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1''service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2017, we are proposing to apply the frequency and 
cost criteria thresholds discussed above, testing claims reporting one 
unit of a single primary service assigned to status indicator ``J1'' 
and any number of units of a single add-on code. If the frequency and 
cost criteria thresholds for a complexity adjustment are met, and 
reassignment to the next higher cost APC in the clinical family is 
appropriate, we make a complexity adjustment for the code combination; 
that is, we reassign the primary service code reported in conjunction 
with the add-on code combination to a higher cost C-APC within the same 
clinical family of C-APCs. If any add-on code combination reported in 
conjunction with the primary service code does not qualify for a 
complexity adjustment, payment for these services is packaged within 
the payment for the complete comprehensive service. We list the 
complexity adjustments proposed for add-on code combinations for CY 
2017, along with all of the other proposed complexity adjustments, in 
Addendum J to this proposed rule (which is available via the Internet 
on the CMS Web site). For CY 2017, we are proposing to discontinue the 
requirement that a code combination (that qualifies for a complexity 
adjustment by satisfying the frequency and cost criteria thresholds 
described earlier) also not create a 2 times rule violation in the 
higher level or receiving APC (80 FR 70328). We believe that this 
requirement is not useful because most code combinations fall below our 
established frequency threshold for considering 2 times rule 
violations, which is described in section III.B. of this proposed rule. 
Therefore, because the 2 times rule would not typically apply to 
complexity-adjusted code combinations, we are proposing to discontinue 
this requirement.
    We are providing in Addendum J to this proposed rule a breakdown of 
cost statistics for each code combination that would qualify for a 
complexity adjustment (including primary code and add-on code 
combinations). Addendum J to this proposed rule also contains summary 
cost statistics for each of the code combinations that describe a 
complex code combination that would qualify for a complexity adjustment 
and are proposed to be reassigned to the next higher cost C-APC within 
the clinical family. The combined statistics for all proposed 
reassigned complex code combinations are represented by an alphanumeric 
code with the first 4 digits of the designated primary service followed 
by a letter. For example, the proposed geometric mean cost listed in 
Addendum J for the code combination described by complexity adjustment 
assignment 3320R, which is assigned to C-APC 5224 (Level 4 Pacemaker 
and Similar Procedures), includes all code combinations that are 
proposed to be reassigned to C-APC 5224 when CPT code 33208 is the 
primary code. Providing the information contained in Addendum J to this 
proposed rule allows stakeholders the opportunity to better assess the 
impact associated with the proposed reassignment of each of the code 
combinations eligible for a complexity adjustment.
(2) Proposed C-APCs for CY 2017
(a) Proposed Additional C-APCs for CY 2017
    For CY 2017 and subsequent years, we are proposing to continue to 
apply the C-APC payment policy methodology made effective in CY 2015, 
as described in detail below. We are proposing to continue to define 
the services assigned to C-APCs as primary services or a specific 
combination of services performed in combination with each other. We 
also are proposing to

[[Page 45621]]

define a C-APC as a classification for the provision of a primary 
service or specific combination of services and all adjunctive services 
and supplies provided to support the delivery of the primary or 
specific combination of services. We also are proposing to continue to 
follow the C-APC payment policy methodology of packaging all covered 
OPD services on a hospital outpatient claim reporting a primary service 
that is assigned to status indicator ``J1'' or reporting the specific 
combination of services assigned to status indicator ``J2,'' excluding 
services that are not covered OPD services or that cannot by statute be 
paid under the OPPS.
    As a result of our annual review of the services and APC 
assignments under the OPPS, we are proposing 25 additional C-APCs to be 
paid under the existing C-APC payment policy beginning in CY 2017. The 
proposed CY 2017 C-APCs are listed in Table 2 below. All C-APCs, 
including those effective in CY 2016 and those being proposed for CY 
2017, also are displayed in Addendum J to this proposed rule. Addendum 
J to this proposed rule (which is available via the Internet on the CMS 
Web site) also contains all of the data related to the C-APC payment 
policy methodology, including the list of proposed complexity 
adjustments and other information.

                                        Table 2--Proposed CY 2017 C-APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                 Proposed new C-
                  C-APC                          CY 2017 APC title           Clinical family           APC
----------------------------------------------------------------------------------------------------------------
5072.....................................  Level 2 Excision/Biopsy/      EBIDX                              (*)
                                            Incision and Drainage.
5073.....................................  Level 3 Excision/Biopsy/      EBIDX                              (*)
                                            Incision and Drainage.
5091.....................................  Level 1 Breast/Lymphatic      BREAS                              (*)
                                            Surgery and Related
                                            Procedures.
5092.....................................  Level 2 Breast/Lymphatic      BREAS                              (*)
                                            Surgery and Related
                                            Procedures.
5093.....................................  Level 3 Breast/Lymphatic      BREAS                   ...............
                                            Surgery & Related
                                            Procedures.
5094.....................................  Level 4 Breast/Lymphatic      BREAS                   ...............
                                            Surgery & Related
                                            Procedures.
5112.....................................  Level 2 Musculoskeletal       ORTHO                              (*)
                                            Procedures.
5113.....................................  Level 3 Musculoskeletal       ORTHO                              (*)
                                            Procedures.
5114.....................................  Level 4 Musculoskeletal       ORTHO                   ...............
                                            Procedures.
5115.....................................  Level 5 Musculoskeletal       ORTHO                   ...............
                                            Procedures.
5116.....................................  Level 6 Musculoskeletal       ORTHO                   ...............
                                            Procedures.
5153.....................................  Level 3 Airway Endoscopy....  AENDO                              (*)
5154.....................................  Level 4 Airway Endoscopy....  AENDO                              (*)
5155.....................................  Level 5 Airway Endoscopy....  AENDO                              (*)
5164.....................................  Level 4 ENT Procedures......  ENTXX                              (*)
5165.....................................  Level 5 ENT Procedures......  ENTXX                   ...............
5166.....................................  Cochlear Implant Procedure..  COCHL                   ...............
5191.....................................  Level 1 Endovascular          VASCX                              (*)
                                            Procedures.
5192.....................................  Level 2 Endovascular          VASCX                   ...............
                                            Procedures.
5193.....................................  Level 3 Endovascular          VASCX                   ...............
                                            Procedures.
5194.....................................  Level 4 Endovascular          VASCX                   ...............
                                            Procedures.
5200.....................................  Implantation Wireless PA      WPMXX                              (*)
                                            Pressure Monitor.
5211.....................................  Level 1 Electrophysiologic    EPHYS                   ...............
                                            Procedures.
5212.....................................  Level 2 Electrophysiologic    EPHYS                   ...............
                                            Procedures.
5213.....................................  Level 3 Electrophysiologic    EPHYS                   ...............
                                            Procedures.
5222.....................................  Level 2 Pacemaker and         AICDP                   ...............
                                            Similar Procedures.
5223.....................................  Level 3 Pacemaker and         AICDP                   ...............
                                            Similar Procedures.
5224.....................................  Level 4 Pacemaker and         AICDP                   ...............
                                            Similar Procedures.
5231.....................................  Level 1 ICD and Similar       AICDP                   ...............
                                            Procedures.
5232.....................................  Level 2 ICD and Similar       AICDP                   ...............
                                            Procedures.
5244.....................................  Level 4 Blood Product         SCTXX                              (*)
                                            Exchange and Related
                                            Services.
5302.....................................  Level 2 Upper GI Procedures.  GIXXX                              (*)
5303.....................................  Level 3 Upper GI Procedures.  GIXXX                              (*)
5313.....................................  Level 3 Lower GI Procedures.  GIXXX                              (*)
5331.....................................  Complex GI Procedures.......  GIXXX                   ...............
5341.....................................  Abdominal/Peritoneal/Biliary  GIXXX                              (*)
                                            and Related Procedures.
5361.....................................  Level 1 Laparoscopy &         LAPXX                   ...............
                                            Related Services.
5362.....................................  Level 2 Laparoscopy &         LAPXX                   ...............
                                            Related Services.
5373.....................................  Level 3 Urology & Related     UROXX                              (*)
                                            Services.
5374.....................................  Level 4 Urology & Related     UROXX                              (*)
                                            Services.
5375.....................................  Level 5 Urology & Related     UROXX                   ...............
                                            Services.
5376.....................................  Level 6 Urology & Related     UROXX                   ...............
                                            Services.
5377.....................................  Level 7 Urology & Related     UROXX                   ...............
                                            Services.
5414.....................................  Level 4 Gynecologic           GYNXX                              (*)
                                            Procedures.
5415.....................................  Level 5 Gynecologic           GYNXX                   ...............
                                            Procedures.
5416.....................................  Level 6 Gynecologic           GYNXX                   ...............
                                            Procedures.
5431.....................................  Level 1 Nerve Procedures....  NERVE                              (*)
5432.....................................  Level 2 Nerve Procedures....  NERVE                              (*)
5462.....................................  Level 2 Neurostimulator &     NSTIM                   ...............
                                            Related Procedures.
5463.....................................  Level 3 Neurostimulator &     NSTIM                   ...............
                                            Related Procedures.
5464.....................................  Level 4 Neurostimulator &     NSTIM                   ...............
                                            Related Procedures.
5471.....................................  Implantation of Drug          PUMPS                   ...............
                                            Infusion Device.
5491.....................................  Level 1 Intraocular           INEYE                              (*)
                                            Procedures.
5492.....................................  Level 2 Intraocular           INEYE                   ...............
                                            Procedures.
5493.....................................  Level 3 Intraocular           INEYE                   ...............
                                            Procedures.
5494.....................................  Level 4 Intraocular           INEYE                   ...............
                                            Procedures.
5495.....................................  Level 5 Intraocular           INEYE                   ...............
                                            Procedures.

[[Page 45622]]

 
5503.....................................  Level 3 Extraocular, Repair,  EXEYE                              (*)
                                            and Plastic Eye Procedures.
5504.....................................  Level 4 Extraocular, Repair,  EXEYE                              (*)
                                            and Plastic Eye Procedures.
5627.....................................  Level 7 Radiation Therapy...  RADTX                   ...............
5881.....................................  Ancillary Outpatient          N/A                     ...............
                                            Services When Patient Dies.
8011.....................................  Comprehensive Observation     N/A                     ...............
                                            Services.
----------------------------------------------------------------------------------------------------------------
* Proposed New C-APC for CY 2017.
C-APC Clinical Family Descriptor Key:
 
AENDO = Airway Endoscopy.
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices.
BREAS = Breast Surgery.
COCHL = Cochlear Implant.
EBIDX = Excision/Biopsy/Incision and Drainage.
ENTXX = ENT Procedures.
EPHYS = Cardiac Electrophysiology.
EXEYE = Extraocular Ophthalmic Surgery.
GIXXX = Gastrointestinal Procedures.
GYNXX = Gynecologic Procedures.
INEYE = Intraocular Surgery.
LAPXX = Laparoscopic Procedures.
NERVE = Nerve Procedures.
NSTIM = Neurostimulators.
ORTHO = Orthopedic Surgery.
PUMPS = Implantable Drug Delivery Systems.
RADTX = Radiation Oncology.
SCTXX = Stem Cell Transplant.
UROXX = Urologic Procedures.
VASCX = Vascular Procedures.
WPMXX = Wireless PA Pressure Monitor.

(b) Proposed New Allogeneic Hematopoietic Stem Cell Transplantation 
(HSCT) C-APC
    Allogeneic hematopoietic stem cell transplantation (HSCT) involves 
the intravenous infusion of hematopoietic stem cells derived from the 
bone marrow, umbilical cord blood, or peripheral blood of a donor to a 
recipient. Allogeneic hematopoietic stem cell collection procedures, 
which are performed not on the beneficiary but on a donor, cannot be 
paid separately under the OPPS because hospitals may bill and receive 
payment only for services provided to a Medicare beneficiary who is the 
recipient of the HSCT and whose illness is being treated with the 
transplant. Currently, under the OPPS, payment for these acquisition 
services is packaged into the APC payment for the allogeneic HSCT when 
the transplant occurs in the hospital outpatient setting (74 FR 60575). 
In the CY 2016 OPPS/ASC final rule with comment period, we assigned 
allogeneic HSCT to APC 5281 (Apheresis and Stem Cell Procedures), which 
has a CY 2016 OPPS payment rate of $3,015.
    As provided in the Medicare Claims Processing Manual, Pub. 100-04, 
Chapter 4, section 231.11, donor acquisition charges for allogeneic 
HSCT may include, but are not limited to, charges for the costs of 
several services. These services include, but are not necessarily 
limited to, National Marrow Donor Program fees, if applicable, tissue 
typing of donor and recipient, donor evaluation, physician pre-
procedure donor evaluation services, costs associated with the 
collection procedure (for example, general routine and special care 
services, procedure/operating room and other ancillary services, 
apheresis services, among others), post-operative/post-procedure 
evaluation of donor, and the preparation and processing of stem cells.
    When the allogeneic stem cell transplant occurs in the hospital 
outpatient setting, providers are instructed to report stem cell donor 
acquisition charges for allogeneic HSCT separately in Field 42 on Form 
CMS-1450 (or UB-04) by using revenue code 0819 (Organ Acquisition: 
Other Donor). Revenue code 0819 charges should include all services 
required to acquire hematopoietic stem cells from a donor, as defined 
earlier, and should be reported on the same date of service as the 
transplant procedure in order to be appropriately packaged for payment 
purposes. Revenue code 0819 maps to cost center code 086XX (Other organ 
acquisition where XX is ``00'' through ``19'') and is reported on line 
112 (or applicable subscripts of line 112) of the Medicare cost report.
    In recent years, we have received comments from stakeholders 
detailing concerns about the accuracy of ratesetting for allogeneic 
HSCT (79 FR 40950 through 40951; 79 FR 66809; and 80 FR 70414 through 
70415). Stakeholders have presented several issues that could result in 
an inappropriate estimation of provider costs for these procedures, 
including outpatient allogeneic HCST reported on claims being 
identified as multiple procedure claims that are unusable under the 
standard OPPS ratesetting methodology. Stakeholders also have indicated 
that the requirement for the reporting of revenue code 0819 on claims 
reporting allogeneic HSCTs and the lack of a dedicated cost center for 
stem cell transplantation donor acquisition costs have led to an overly 
broad CCR being applied to these procedures, which comprise a very low 
volume of the services reported within the currently assigned cost 
center. In addition, commenters noted that it is likely that there are 
services being reported with the same revenue code (0819) and mapped to 
the same cost center code (086XX) as allogeneic HSCT donor acquisition 
charges that are unrelated to these services. Lastly, providers have 
commented that the donor acquisition costs of allogeneic HSCT are much 
higher relative to their charges when compared to the other items and 
services that are reported in the current cost center. Providers also 
have stated that hospitals have difficulty applying an appropriate 
markup to donor acquisition charges that will sufficiently generate a 
cost that approximates the total cost of donor acquisition. Through our 
examination of

[[Page 45623]]

the CY 2016 claims data, we believe that the issues presented above 
provide a persuasive rationale for payment adjustment for donor 
acquisition costs for allogeneic HCST.
    Stakeholders suggested that the establishment of a C-APC for stem 
cell transplant services would improve payment adequacy by allowing the 
use of multiple procedure claims, provided CMS also create a separate 
and distinct CCR for donor search and acquisition charges so that they 
are not diluted by lower cost services. In the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70414 through 70415), we stated that we 
would not create a new C-APC for stem cell transplant procedures at 
that time and that we would instead continue to pay for the services 
through the assigned APCs while continuing to monitor the issue.
    Based on our current analysis of this longstanding issue and 
stakeholder input, for CY 2017, we are proposing to create a new C-APC 
5244 (Level 4 Blood Product Exchange and Related Services) and to 
assign procedures described by CPT code 38240 (Hematopoietic progenitor 
cell (HPC); allogeneic transplantation per donor) to this C-APC and to 
assign status indicator ``J1'' to the code. The creation of a new C-APC 
for allogeneic HSCT and the assignment of status indicator ``J1'' to 
CPT code 38240 would allow for the costs for all covered OPD services, 
including donor acquisition services, included on the claim to be 
packaged into the C-APC payment rate. These costs also will be analyzed 
using our comprehensive cost accounting methodology to establish future 
C-APC payment rates. We are proposing to establish a payment rate for 
proposed new C-APC 5244 of $15,267 for CY 2017.
    In order to develop an accurate estimate of allogeneic HSCT donor 
acquisition costs for future ratesetting, for CY 2017 and subsequent 
years, we are proposing to update the Medicare hospital cost report 
(Form CMS-2552-10) by adding a new standard cost center 112.50, 
``Allogeneic Stem Cell Acquisition,'' to Worksheet A (and applicable 
worksheets) with the standard cost center code of ``11250.'' The 
proposed new cost center, line 112.50, would be used for the recording 
of any acquisition costs related to allogeneic stem cell transplants as 
defined in Section 231.11, Chapter 4, of the Medicare Claims Processing 
Manual (Pub. 100-04). Acquisition charges for allogeneic stem cell 
transplants apply only to allogeneic transplants for which stem cells 
are obtained from a donor (rather than from the recipient). Acquisition 
charges do not apply to autologous transplants (transplanted stem cells 
are obtained from the recipient) because autologous transplants involve 
services provided to a beneficiary only (and not to a donor), for which 
the hospital may bill and receive payment. Acquisition costs for 
allogeneic stem cells are included in the prospective payment. This 
cost center flows through cost finding and accumulates any appropriate 
overhead costs.
    In conjunction with our proposed addition of the new ``Allogeneic 
Stem Cell Acquisition'' standard cost center, we are proposing to use 
the newly created revenue code 0815 (Allogeneic Stem Cell Acquisition 
Services) to identify hospital charges for stem cell acquisition for 
allogeneic bone marrow/stem cell transplants. Specifically, for CY 2017 
and subsequent years, we are proposing to require hospitals to identify 
stem cell acquisition charges for allogeneic bone marrow/stem cell 
transplants separately in Field 42 on Form CMS-1450 (or UB-04), when an 
allogeneic stem cell transplant occurs. Revenue code 0815 charges 
should include all services required to acquire stem cells from a 
donor, as defined above, and should be reported on the same date of 
service as the transplant procedure in order to be appropriately 
packaged for payment purposes. The proposed new revenue code 0815 would 
map to the proposed new line 112.50 (with the cost center code of 
``11250'') on the Form CMS-2552-10 cost report. In addition, for CY 
2017 and subsequent years, we are proposing to no longer use revenue 
code 0819 for the identification of stem cell acquisition charges for 
allogeneic bone marrow/stem cell transplants. We are inviting public 
comments on these proposals.
d. Proposed Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for low dose rate (LDR) prostate brachytherapy, 
mental health services, and multiple imaging services. We refer readers 
to the CY 2008 OPPS/ASC final rule with comment period for a full 
discussion of the development of the composite APC methodology (72 FR 
66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74163) for more recent 
background.
    In this proposed rule, for CY 2017 and subsequent years, we are 
proposing to continue our composite APC payment policies for LDR 
prostate brachytherapy services, mental health services, and multiple 
imaging services, as discussed below.
(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
    LDR prostate brachytherapy is a treatment for prostate cancer in 
which hollow needles or catheters are inserted into the prostate, 
followed by permanent implantation of radioactive sources into the 
prostate through the needles/catheters. At least two CPT codes are used 
to report the composite treatment service because there are separate 
codes that describe placement of the needles/catheters and the 
application of the brachytherapy sources: CPT code 55875 (Transperineal 
placement of needles or catheters into prostate for interstitial 
radioelement application, with or without cystoscopy) and CPT code 
77778 (Interstitial radiation source application; complex), which are 
generally present together on claims for the same date of service in 
the same operative session. In order to base payment on claims for the 
most common clinical scenario, and to further our goal of providing 
payment under the OPPS for a larger bundle of component services 
provided in a single hospital encounter, beginning in CY 2008, we began 
providing a single payment for LDR prostate brachytherapy when the 
composite service, reported as CPT codes 55875 and 77778, is furnished 
in a single hospital encounter. We base the payment for composite APC 
8001 (LDR Prostate Brachytherapy Composite) on the geometric mean cost 
derived from claims for the same date of service that contain both CPT 
codes 55875 and 77778 and that do not contain other separately paid 
codes that

[[Page 45624]]

are not on the bypass list. We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66652 through 66655) for a full 
history of OPPS payment for LDR prostate brachytherapy services and a 
detailed description of how we developed the LDR prostate brachytherapy 
composite APC.
    In this proposed rule, for CY 2017, we are proposing to continue to 
pay for LDR prostate brachytherapy services using the composite APC 
payment methodology proposed and implemented for CY 2008 through CY 
2016. That is, we are proposing to use CY 2015 claims reporting charges 
for both CPT codes 55875 and 77778 on the same date of service with no 
other separately paid procedure codes (other than those on the bypass 
list) to calculate the proposed payment rate for composite APC 8001. 
Consistent with our CY 2008 through CY 2016 practice, in this proposed 
rule, we are proposing not to use the claims that meet these criteria 
in the calculation of the geometric mean costs of procedures or 
services assigned to APC 5375 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures) and APC 5641 (Complex Interstitial Radiation 
Source Application), the APCs to which CPT codes 55875 and 77778 are 
assigned, respectively. We are proposing to continue to calculate the 
proposed geometric mean costs of procedures or services assigned to 
APCs 5375 and 5641 using single and ``pseudo'' single procedure claims. 
We continue to believe that composite APC 8001 contributes to our goal 
of creating hospital incentives for efficiency and cost containment, 
while providing hospitals with the most flexibility to manage their 
resources. We also continue to believe that data from claims reporting 
both services required for LDR prostate brachytherapy provide the most 
accurate geometric mean cost upon which to base the proposed composite 
APC payment rate.
    Using a partial year of CY 2015 claims data available for this CY 
2017 proposed rule, we were able to use 202 claims that contained both 
CPT codes 55875 and 77778 to calculate the proposed geometric mean cost 
of approximately $3,581 for these procedures upon which the proposed CY 
2017 payment rate for composite APC 8001 is based.
(2) Mental Health Services Composite APC
    In this proposed rule, for CY 2017, we are proposing to continue 
our longstanding policy of limiting the aggregate payment for specified 
less resource-intensive mental health services furnished on the same 
date to the payment for a day of partial hospitalization services 
provided by a hospital, which we consider to be the most resource-
intensive of all outpatient mental health services. We refer readers to 
the April 7, 2000 OPPS final rule with comment period (65 FR 18452 
through 18455) for the initial discussion of this longstanding policy 
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) 
for more recent background.
    Specifically, we are proposing that when the aggregate payment for 
specified mental health services provided by one hospital to a single 
beneficiary on one date of service based on the payment rates 
associated with the APCs for the individual services exceeds the 
maximum per diem payment rate for partial hospitalization services 
provided by a hospital, those specified mental health services would be 
assigned to composite APC 8010 (Mental Health Services Composite). We 
also are proposing to continue to set the payment rate for composite 
APC 8010 at the same payment rate that we are proposing to establish 
for APC 5862 (Level 2 Partial Hospitalization (4 or more services) for 
hospital-based PHPs), which is the maximum partial hospitalization per 
diem payment rate for a hospital, and that the hospital continue to be 
paid the payment rate for composite APC 8010. Under this policy, the I/
OCE would continue to determine whether to pay for these specified 
mental health services individually, or to make a single payment at the 
same payment rate established for APC 5862 for all of the specified 
mental health services furnished by the hospital on that single date of 
service. We continue to believe that the costs associated with 
administering a partial hospitalization program at a hospital represent 
the most resource-intensive of all outpatient mental health services. 
Therefore, we do not believe that we should pay more for mental health 
services under the OPPS than the highest partial hospitalization per 
diem payment rate for hospitals.
(3) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for more than one imaging procedure within an 
imaging family on the same date of service, in order to reflect and 
promote the efficiencies hospitals can achieve when performing multiple 
imaging procedures during a single session (73 FR 41448 through 41450). 
We utilize three imaging families based on imaging modality for 
purposes of this methodology: (1) Ultrasound; (2) computed tomography 
(CT) and computed tomographic angiography (CTA); and (3) magnetic 
resonance imaging (MRI) and magnetic resonance angiography (MRA). The 
HCPCS codes subject to the multiple imaging composite policy and their 
respective families are listed in Table 12 of the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74920 through 74924).
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast. 
The five multiple imaging composite APCs established in CY 2009 are:
     APC 8004 (Ultrasound Composite);
     APC 8005 (CT and CTA without Contrast Composite);
     APC 8006 (CT and CTA with Contrast Composite);
     APC 8007 (MRI and MRA without Contrast Composite); and
     APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes any 
packaged services furnished on the same date of service. The standard 
(noncomposite) APC assignments continue to apply for single imaging 
procedures and multiple imaging procedures performed across families. 
For a full discussion of the development of the multiple imaging 
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68559 through 68569).
    In this proposed rule, for CY 2017 and subsequent years, we are 
proposing to continue to pay for all multiple imaging procedures within 
an imaging family performed on the same date of service

[[Page 45625]]

using the multiple imaging composite APC payment methodology. We 
continue to believe that this policy will reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session.
    The proposed CY 2017 payment rates for the five multiple imaging 
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) are based on 
proposed geometric mean costs calculated from a partial year of CY 2015 
claims data available for this proposed rule that qualified for 
composite payment under the current policy (that is, those claims 
reporting more than one procedure within the same family on a single 
date of service). To calculate the proposed geometric mean costs, we 
used the same methodology that we used to calculate the final CY 2014 
and CY 2015 geometric mean costs for these composite APCs, as described 
in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). 
The imaging HCPCS codes referred to as ``overlap bypass codes'' that we 
removed from the bypass list for purposes of calculating the proposed 
multiple imaging composite APC geometric mean costs, in accordance with 
our established methodology as stated in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 74918), are identified by asterisks in 
Addendum N to this CY 2017 proposed rule (which is available via the 
Internet on the CMS Web site) and are discussed in more detail in 
section II.A.1.b. of this proposed rule.
    For this CY 2017 OPPS/ASC proposed rule, we were able to identify 
approximately 599,294 ``single session'' claims out of an estimated 1.6 
million potential claims for payment through composite APCs from our 
ratesetting claims data, which represents approximately 38 percent of 
all eligible claims, to calculate the proposed CY 2017 geometric mean 
costs for the multiple imaging composite APCs. Table 3 below lists the 
proposed HCPCS codes that would be subject to the multiple imaging 
composite APC policy and their respective families and approximate 
composite APC proposed geometric mean costs for CY 2017.

              Table 3--Proposed OPPS Imaging Families and Multiple Imaging Procedure Composite APCs
----------------------------------------------------------------------------------------------------------------
                                              Family 1--Ultrasound
-----------------------------------------------------------------------------------------------------------------
    CY 2017 APC 8004 (ultrasound composite)            CY 2017 Approximate APC geometric mean cost = $303
----------------------------------------------------------------------------------------------------------------
76604.........................................  Us exam, chest.
76700.........................................  Us exam, abdom, complete.
76705.........................................  Echo exam of abdomen.
76770.........................................  Us exam abdo back wall, comp.
76775.........................................  Us exam abdo back wall, lim.
76776.........................................  Us exam k transpl w/Doppler.
76831.........................................  Echo exam, uterus.
76856.........................................  Us exam, pelvic, complete.
76870.........................................  Us exam, scrotum.
76857.........................................  Us exam, pelvic, limited.
----------------------------------------------------------------------------------------------------------------


 
                                 Family 2--CT and CTA with and without Contrast
-----------------------------------------------------------------------------------------------------------------
 CY 2017 APC 8005 (CT and CTA without contrast
                  composite)*                          CY 2017 Approximate APC geometric mean cost = $292
----------------------------------------------------------------------------------------------------------------
70450.........................................  Ct head/brain w/o dye.
70480.........................................  Ct orbit/ear/fossa w/o dye.
70486.........................................  Ct maxillofacial w/o dye.
70490.........................................  Ct soft tissue neck w/o dye.
71250.........................................  Ct thorax w/o dye.
72125.........................................  Ct neck spine w/o dye.
72128.........................................  Ct chest spine w/o dye.
72131.........................................  Ct lumbar spine w/o dye.
72192.........................................  Ct pelvis w/o dye.
73200.........................................  Ct upper extremity w/o dye.
73700.........................................  Ct lower extremity w/o dye.
74150.........................................  Ct abdomen w/o dye.
74261.........................................  Ct colonography, w/o dye.
74176.........................................  Ct angio abd & pelvis.
----------------------------------------------------------------------------------------------------------------


 
  CY 2017 APC 8006 (CT and CTA with contrast
                  composite)                           CY 2017 Approximate APC geometric mean cost = $515
----------------------------------------------------------------------------------------------------------------
70487.........................................  Ct maxillofacial w/dye.
70460.........................................  Ct head/brain w/dye.
70470.........................................  Ct head/brain w/o & w/dye.
70481.........................................  Ct orbit/ear/fossa w/dye.
70482.........................................  Ct orbit/ear/fossa w/o & w/dye.
70488.........................................  Ct maxillofacial w/o & w/dye.
70491.........................................  Ct soft tissue neck w/dye.
70492.........................................  Ct sft tsue nck w/o & w/dye.
70496.........................................  Ct angiography, head.
70498.........................................  Ct angiography, neck.
71260.........................................  Ct thorax w/dye.
71270.........................................  Ct thorax w/o & w/dye.
71275.........................................  Ct angiography, chest.

[[Page 45626]]

 
72126.........................................  Ct neck spine w/dye.
72127.........................................  Ct neck spine w/o & w/dye.
72129.........................................  Ct chest spine w/dye.
72130.........................................  Ct chest spine w/o & w/dye.
72132.........................................  Ct lumbar spine w/dye.
72133.........................................  Ct lumbar spine w/o & w/dye.
72191.........................................  Ct angiograph pelv w/o & w/dye.
72193.........................................  Ct pelvis w/dye.
72194.........................................  Ct pelvis w/o & w/dye.
73201.........................................  Ct upper extremity w/dye.
73202.........................................  Ct uppr extremity w/o & w/dye.
73206.........................................  Ct angio upr extrm w/o & w/dye.
73701.........................................  Ct lower extremity w/dye.
73702.........................................  Ct lwr extremity w/o & w/dye.
73706.........................................  Ct angio lwr extr w/o & w/dye.
74160.........................................  Ct abdomen w/dye.
74170.........................................  Ct abdomen w/o & w/dye.
74175.........................................  Ct angio abdom w/o & w/dye.
74262.........................................  Ct colonography, w/dye.
75635.........................................  Ct angio abdominal arteries.
74177.........................................  Ct angio abd & pelv w/contrast.
74178.........................................  Ct angio abd & pelv 1+ regns.
----------------------------------------------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the same session as a ``with contrast'' CT
 or CTA procedure, the I/OCE assigns the procedure to APC 8006 rather than APC 8005.
----------------------------------------------------------------------------------------------------------------


 
                                 Family 3--MRI and MRA with and without Contrast
-----------------------------------------------------------------------------------------------------------------
CY 2017 APC 8007 (MRI and MRA without contrast
                  composite)*                          CY 2017 Approximate APC geometric mean cost = $587
----------------------------------------------------------------------------------------------------------------
70336.........................................  Magnetic image, jaw joint.
70540.........................................  Mri orbit/face/neck w/o dye.
70544.........................................  Mr angiography head w/o dye.
70547.........................................  Mr angiography neck w/o dye.
70551.........................................  Mri brain w/o dye.
70554.........................................  Fmri brain by tech.
71550.........................................  Mri chest w/o dye.
72141.........................................  Mri neck spine w/o dye.
72146.........................................  Mri chest spine w/o dye.
72148.........................................  Mri lumbar spine w/o dye.
72195.........................................  Mri pelvis w/o dye.
73218.........................................  Mri upper extremity w/o dye.
73221.........................................  Mri joint upr extrem w/o dye.
73718.........................................  Mri lower extremity w/o dye.
73721.........................................  Mri jnt of lwr extre w/o dye.
74181.........................................  Mri abdomen w/o dye.
75557.........................................  Cardiac mri for morph.
75559.........................................  Cardiac mri w/stress img.
C8901.........................................  MRA w/o cont, abd.
C8904.........................................  MRI w/o cont, breast, uni.
C8907.........................................  MRI w/o cont, breast, bi.
C8910.........................................  MRA w/o cont, chest.
C8913.........................................  MRA w/o cont, lwr ext.
C8919.........................................  MRA w/o cont, pelvis.
C8932.........................................  MRA, w/o dye, spinal canal.
C8935.........................................  MRA, w/o dye, upper extr.
----------------------------------------------------------------------------------------------------------------


 
  CY 2017 APC 8008 (MRI and MRA with contrast
                  composite)                           CY 2017 approximate APC geometric mean cost = $900
----------------------------------------------------------------------------------------------------------------
70549.........................................  Mr angiograph neck w/o & w/dye.
70542.........................................  Mri orbit/face/neck w/dye.
70543.........................................  Mri orbt/fac/nck w/o & w/dye.
70545.........................................  Mr angiography head w/dye.
70546.........................................  Mr angiograph head w/o & w/dye.
70547.........................................  Mr angiography neck w/o dye.
70548.........................................  Mr angiography neck w/dye.
70552.........................................  Mri brain w/dye.
70553.........................................  Mri brain w/o & w/dye.
71551.........................................  Mri chest w/dye.
71552.........................................  Mri chest w/o & w/dye.
72142.........................................  Mri neck spine w/dye.
72147.........................................  Mri chest spine w/dye.

[[Page 45627]]

 
72149.........................................  Mri lumbar spine w/dye.
72156.........................................  Mri neck spine w/o & w/dye.
72157.........................................  Mri chest spine w/o & w/dye.
72158.........................................  Mri lumbar spine w/o & w/dye.
72196.........................................  Mri pelvis w/dye.
72197.........................................  Mri pelvis w/o & w/dye.
73219.........................................  Mri upper extremity w/dye.
73220.........................................  Mri uppr extremity w/o & w/dye.
73222.........................................  Mri joint upr extrem w/dye.
73223.........................................  Mri joint upr extr w/o & w/dye.
73719.........................................  Mri lower extremity w/dye.
73720.........................................  Mri lwr extremity w/o & w/dye.
73722.........................................  Mri joint of lwr extr w/dye.
73723.........................................  Mri joint lwr extr w/o & w/dye.
74182.........................................  Mri abdomen w/dye.
74183.........................................  Mri abdomen w/o & w/dye.
75561.........................................  Cardiac mri for morph w/dye.
75563.........................................  Card mri w/stress img & dye.
C8900.........................................  MRA w/cont, abd.
C8902.........................................  MRA w/o fol w/cont, abd.
C8903.........................................  MRI w/cont, breast, uni.
C8905.........................................  MRI w/o fol w/cont, brst, un.
C8906.........................................  MRI w/cont, breast, bi.
C8908.........................................  MRI w/o fol w/cont, breast,.
C8909.........................................  MRA w/cont, chest.
C8911.........................................  MRA w/o fol w/cont, chest.
C8912.........................................  MRA w/cont, lwr ext.
C8914.........................................  MRA w/o fol w/cont, lwr ext.
C8918.........................................  MRA w/cont, pelvis.
C8920.........................................  MRA w/o fol w/cont, pelvis.
C8931.........................................  MRA, w/dye, spinal canal.
C8933.........................................  MRA, w/o&w/dye, spinal canal.
C8934.........................................  MRA, w/dye, upper extremity.
C8936.........................................  MRA, w/o&w/dye, upper extr.
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the same session as a ``with contrast'' MRI
  or MRA procedure, the I/OCE assigns the procedure to APC 8008 rather than APC 8007.

3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or a bundle of specific services for a particular 
patient. The OPPS packages payment for multiple interrelated items and 
services into a single payment to create incentives for hospitals to 
furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more costly than 
others, packaging encourages hospitals to use the most cost-efficient 
item that meets the patient's needs, rather than to routinely use a 
more expensive item, which often results if separate payment is 
provided for the item.
    Packaging also encourages hospitals to effectively negotiate with 
manufacturers and suppliers to reduce the purchase price of items and 
services or to explore alternative group purchasing arrangements, 
thereby encouraging the most economical health care delivery. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while scrutinizing the 
services ordered by practitioners to maximize the efficient use of 
hospital resources. Packaging payments into larger payment bundles 
promotes the predictability and accuracy of payment for services over 
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated 
with higher cost cases requiring many ancillary items and services and 
lower cost cases requiring fewer ancillary items and services. Because 
packaging encourages efficiency and is an essential component of a 
prospective payment system, packaging payment for items and services 
that are typically integral, ancillary, supportive, dependent, or 
adjunctive to a primary service has been a fundamental part of the OPPS 
since its implementation in August 2000. For an extensive discussion of 
the history and background of the OPPS packaging policy, we refer 
readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66817), and the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70343). As we continue to develop 
larger payment groups that more broadly reflect services provided in an 
encounter or episode of care, we have expanded the OPPS packaging 
policies. Most, but not necessarily all, items and services currently 
packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching 
goal is to make OPPS payments for all services paid under the OPPS more 
consistent with those of a

[[Page 45628]]

prospective payment system and less like those of a per service fee 
schedule, which pays separately for each coded item. As a part of this 
effort, we have continued to examine the payment for items and services 
provided under the OPPS to determine which OPPS services can be 
packaged to further achieve the objective of advancing the OPPS toward 
a more prospective payment system.
    For CY 2017, we have examined our OPPS packaging policies, 
reviewing categories of integral, ancillary, supportive, dependent, or 
adjunctive items and services that are packaged into payment for the 
primary service that they support. In this CY 2017 proposed rule, we 
are proposing some modifications to our packaging policies and to 
package the costs of two drugs that function as supplies in a surgical 
procedure.
b. Proposed Clinical Diagnostic Laboratory Test Packaging Policy
(1) Background
    In CY 2014, we finalized a policy to package payment for most 
clinical diagnostic laboratory tests in the OPPS (78 FR 74939 through 
74942, and 42 CFR 419.2(b)(17)). In CY 2016, we made some minor 
modifications to this policy (80 FR 70348 through 70350). Under current 
policy, certain clinical diagnostic laboratory tests that are listed on 
the Clinical Laboratory Fee Schedule (CLFS) are packaged in the OPPS as 
integral, ancillary, supportive, dependent, or adjunctive to the 
primary service or services provided in the hospital outpatient 
setting. Specifically, we conditionally package laboratory tests and 
only pay separately for laboratory tests when (1) they are the only 
services provided to a beneficiary on a claim; (2) they are 
``unrelated'' laboratory tests, meaning they are on the same claim as 
other hospital outpatient services, but are ordered for a different 
diagnosis than the other hospital outpatient services and are ordered 
by a different practitioner than the practitioner who ordered the other 
hospital outpatient services; (3) they are molecular pathology tests; 
or (4) the laboratory tests are considered preventive services.
(2) Proposed ``Unrelated'' Laboratory Test Exception
    Laboratory tests are separately paid in the HOPD when they are 
considered ``unrelated'' laboratory tests. Unrelated laboratory tests 
are tests on the same claim as other hospital outpatient services, but 
are ordered for a different diagnosis than the other hospital 
outpatient services and are ordered by a different practitioner than 
the practitioner who ordered the other hospital outpatient services. 
Unrelated laboratory tests are designated for separate payment by 
hospitals with the ``L1'' modifier. This is the only use of the ``L1'' 
modifier.
    For CY 2017, we are proposing to discontinue the unrelated 
laboratory test exception (and the ``L1'' modifier) for the following 
reasons: We believe that, in most cases, ``unrelated'' laboratory tests 
are not significantly different than most other packaged laboratory 
tests provided in the HOPD. Multiple hospitals have informed us that 
the ``unrelated'' laboratory test exception is not useful to them 
because they cannot determine when a laboratory test has been ordered 
by a different physician and for a different diagnosis than the other 
services reported on the same claim. We agree with these hospitals, and 
we also believe that the requirements for ``unrelated'' laboratory 
tests (different diagnosis and different ordering physician) do not 
necessarily correlate with the relatedness of a laboratory test to the 
other HOPD services that a patient receives during the same hospital 
stay. In the context of most hospital outpatient encounters, most 
laboratory tests are related in some way to other services being 
provided because most common laboratory tests evaluate the functioning 
of the human body as a physiologic system and therefore relate to other 
tests and interventions that a patient receives. Also, it is not 
uncommon for beneficiaries to have multiple diagnoses, and often times 
the various diagnoses are related in some way. Therefore, the 
associated diagnosis is not necessarily indicative of how related a 
laboratory test is to other hospital outpatient services performed 
during a hospital stay, especially give the granularity of ICD-10 
diagnosis coding. Packaging of other ancillary services in the OPPS is 
not dependent upon a common diagnosis with the primary service into 
which an ancillary service is packaged. Therefore, we do not believe 
that this should be a requirement for laboratory test packaging. 
Furthermore, we believe that just because a laboratory test is ordered 
by a different physician than the physician who ordered the other 
hospital outpatient services furnished during a hospital outpatient 
stay does not necessarily mean that the laboratory test is not related 
to other services being provided to a beneficiary.
    Therefore, because the ``different physician, different diagnosis'' 
criteria for ``unrelated'' laboratory tests do not clearly identify or 
distinguish laboratory tests that are integral, ancillary, supportive, 
dependent, or adjunctive to other hospital outpatient services provided 
to the beneficiary during the hospital stay, we are proposing to no 
longer permit the use of the ``L1'' modifier to self-designate an 
exception to the laboratory test packaging under these circumstances, 
and seek separate payment for such laboratory tests at the CLFS payment 
rates. Instead, we are proposing to package any and all laboratory 
tests if they appear on a claim with other hospital outpatient 
services. We are inviting public comments on this proposal.
(3) Proposed Molecular Pathology Test Exception
    In 2014, we excluded from the laboratory packaging policy molecular 
pathology tests described by CPT codes in the ranges of 81200 through 
81383, 81400 through 81408, and 81479 (78 FR 74939 through 74942). In 
2016, we expanded this policy to include not only the original code 
range but also all new molecular pathology test codes. Molecular 
pathology laboratory tests were excluded from packaging because we 
believed that these relatively new tests may have a different pattern 
of clinical use than more conventional laboratory tests, which may make 
them generally less tied to a primary service in the hospital 
outpatient setting than the more common and routine laboratory tests 
that are packaged (80 FR 70348 through 70350).
    In response to the CY 2016 OPPS/ASC proposed rule, commenters 
argued that CMS' rationale for excluding molecular pathology tests from 
the laboratory test packaging policy also applies to certain CPT codes 
that describe some new multianalyte assays with algorithmic analyses 
(MAAAs).
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70349 
through 70350), we stated that ``we may consider whether additional 
exceptions to the OPPS laboratory test packaging policy should apply to 
tests other than molecular pathology tests in the future.'' After 
further consideration, we agree with these commenters that the 
exception that currently applies to molecular pathology tests may be 
appropriately applied to other laboratory tests that, like molecular 
pathology tests, are relatively new and may have a different pattern of 
clinical use than more conventional laboratory tests, which may make 
them generally less tied to a primary service in the hospital 
outpatient setting than the more common and routine laboratory tests 
that are packaged. Therefore, for

[[Page 45629]]

CY 2017, we are proposing an expansion of the laboratory packaging 
exception that currently applies to molecular pathology tests to also 
apply to all advanced diagnostic laboratory tests (ADLTs) that meet the 
criteria of section 1834A(d)(5)(A) of the Act. We believe that some of 
these diagnostic tests that meet these criteria will not be molecular 
pathology tests but will also have a different pattern of clinical use 
than more conventional laboratory tests, which may make them generally 
less tied to a primary service in the hospital outpatient setting than 
the more common and routine laboratory tests that are packaged. We 
would assign status indicator ``A'' (Separate payment under the CLFS) 
to ADLTs once a laboratory test is designated an ADLT under the CLFS. 
We are inviting public comments on this proposal.
c. Conditional Packaging Status Indicators ``Q1'' and ``Q2''
(1) Background
    Packaged payment versus separate payment of items and services in 
the OPPS is designated at the code level through the assignment of a 
status indicator to all CPT and HCPCS codes. One type of packaging in 
the OPPS is conditional packaging, which means that, under certain 
circumstances, items and services are packaged, and under other 
circumstances, they are paid separately. There are several different 
conditional packaging status indicators. Two of these status indicators 
indicate package of the services with other services furnished on the 
same date of service: status indicator ``Q1,'' which packages items or 
services on the same date of service with services assigned status 
indicator ``S'' (Procedure or Service, Not Discounted When Multiple), 
``T'' (Procedure or Service, Multiple Procedure Reduction Applies), or 
``V'' (Clinic or Emergency Department Visit); and status indicator 
``Q2,'' which packages items or services on the same date of service 
with services assigned status indicator ``T.'' Other conditional 
packaging status indicators, ``Q4'' (Conditionally packaged laboratory 
tests) and ``J1''/``J2'' (Hospital Part B services paid through a 
comprehensive APC), package services on the same claim, regardless of 
the date of service.
(2) Proposed Change in Conditional Packaging Status Indicators Logic
    We do not believe that some conditional packaging status indicators 
should package based on date of service, while other conditional 
packaging status indicators package based on services reported on the 
same claim. For CY 2017, we are proposing to align the packaging logic 
for all of the conditional packaging status indicators and change the 
logic for status indicators ``Q1'' and ``Q2'' so that packaging would 
occur at the claim level (instead of based on the date of service) to 
promote consistency and ensure that items and services that are 
provided during a hospital stay that may span more than one day are 
appropriately packaged according to OPPS packaging policies. We point 
out that this would increase the conditional packaging of conditionally 
packaged items and services because conditional packaging would occur 
whenever a conditionally packaged item or service is reported on the 
same claim as a primary service without regard to the date of service. 
We are inviting public comments on this proposal.
4. Proposed Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70350 through 70351), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2016 that were shown in Addenda A and B to that final 
rule with comment period (which were made available via the Internet on 
the CMS Web site) using the APC costs discussed in sections II.A.1. and 
II.A.2. of that final rule with comment period. For CY 2017, we are 
proposing to continue to apply the policy established in CY 2016 and 
calculate relative payment weights for each APC for CY 2017 using 
geometric mean-based APC costs.
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a new policy that 
created alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit 
for assessment and management of a patient), representing any and all 
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 
(Hospital Clinic Visits). We also finalized a policy to use CY 2012 
claims data to develop the CY 2014 OPPS payment rates for HCPCS code 
G0463 based on the total geometric mean cost of the levels one through 
five CPT E/M codes for clinic visits previously recognized under the 
OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In 
addition, we finalized a policy to no longer recognize a distinction 
between new and established patient clinic visits.
    For CY 2016, we deleted APC 0634 and moved the outpatient clinic 
visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and Related 
Services) (80 FR 70351). For CY 2017, we are proposing to continue to 
standardize all of the relative payment weights to APC 5012. We believe 
that standardizing relative payment weights to the geometric mean of 
the APC to which HCPCS code G0463 is assigned maintains consistency in 
calculating unscaled weights that represent the cost of some of the 
most frequently provided OPPS services. For CY 2017, we are proposing 
to assign APC 5012 a relative payment weight of 1.00 and to divide the 
geometric mean cost of each APC by the proposed geometric mean cost for 
APC 5012 to derive the proposed unscaled relative payment weight for 
each APC. The choice of the APC on which to standardize the proposed 
relative payment weights does not affect payments made under the OPPS 
because we scale the weights for budget neutrality.
    Section 1833(t)(9)(B) of the Act requires that APC reclassification 
and recalibration changes, wage index changes, and other adjustments be 
made in a budget neutral manner. Budget neutrality ensures that the 
estimated aggregate weight under the OPPS for CY 2017 is neither 
greater than nor less than the estimated aggregate weight that would 
have been made without the changes. To comply with this requirement 
concerning the APC changes, we are proposing to compare the estimated 
aggregate weight using the CY 2016 scaled relative payment weights to 
the estimated aggregate weight using the proposed CY 2017 unscaled 
relative payment weights.
    For CY 2016, we multiplied the CY 2016 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2015 claims to calculate the total relative 
payment weight for each service. We then added together the total 
relative payment weight for each of these services in order to 
calculate an estimated aggregate weight for the year. For CY 2017, we 
are proposing to apply the same process using the estimated CY 2017 
unscaled relative payment weights rather than scaled relative payment 
weights. We are proposing to calculate the weight scalar by dividing 
the CY 2016 estimated aggregate weight by the unscaled CY 2017 
estimated aggregate weight.
    For a detailed discussion of the weight scalar calculation, we 
refer

[[Page 45630]]

readers to the OPPS claims accounting document available on the CMS Web 
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2017 OPPS proposed 
rule link and open the claims accounting document link at the bottom of 
the page.
    In this CY 2017 proposed rule, we are proposing to compare the 
estimated unscaled relative payment weights in CY 2017 to the estimated 
total relative payment weights in CY 2016 using CY 2015 claims data, 
holding all other components of the payment system constant to isolate 
changes in total weight. Based on this comparison, we are proposing to 
adjust the calculated CY 2017 unscaled relative payment weights for 
purposes of budget neutrality. We are proposing to adjust the estimated 
CY 2017 unscaled relative payment weights by multiplying them by a 
weight scalar of 1.4059 to ensure that the proposed CY 2017 relative 
payment weights are scaled to be budget neutral. The proposed CY 2017 
relative payment weights listed in Addenda A and B to this proposed 
rule (which are available via the Internet on the CMS Web site) are 
scaled and incorporate the recalibration adjustments discussed in 
sections II.A.1. and II.A.2. of this proposed rule.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act provides that 
additional expenditures resulting from this paragraph shall not be 
taken into account in establishing the conversion factor, weighting, 
and other adjustment factors for 2004 and 2005 under paragraph (9), but 
shall be taken into account for subsequent years. Therefore, the cost 
of those SCODs (as discussed in section V.B.3. of this proposed rule) 
is included in the budget neutrality calculations for the CY 2017 OPPS.

B. Proposed Conversion Factor Update

    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2017 IPPS/LTCH PPS 
proposed rule (81 FR 25077), consistent with current law, based on IHS 
Global Insight, Inc.'s first quarter 2016 forecast of the FY 2017 
market basket increase, the proposed FY 2017 IPPS market basket update 
is 2.8 percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) of 
the Act, as added by section 3401(i) of the Patient Protection and 
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 
10319(g) of that law and further amended by section 1105(e) of the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), 
provide adjustments to the OPD fee schedule increase factor for CY 
2017.
    Specifically, section 1833(t)(3)(F)(i) of the Act requires that, 
for 2012 and subsequent years, the OPD fee schedule increase factor 
under subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51689 through 51692), we finalized our methodology for calculating and 
applying the MFP adjustment. In the FY 2017 IPPS/LTCH PPS proposed rule 
(81 FR 25077), we discussed the calculation of the proposed MFP 
adjustment for FY 2017, which is -0.5 percentage point.
    We are proposing that if more recent data become subsequently 
available after the publication of this CY 2017 OPPS/ASC proposed rule 
(for example, a more recent estimate of the market basket increase and 
the MFP adjustment), we would use such updated data, if appropriate, to 
determine the CY 2017 market basket update and the MFP adjustment, 
components in calculating the OPD fee schedule increase factor under 
sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in the CY 2017 
OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(3)(F)(ii) of the Act requires that, 
for each of years 2010 through 2019, the OPD fee schedule increase 
factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the 
adjustment described in section 1833(t)(3)(G) of the Act. For CY 2017, 
section 1833(t)(3)(G)(v) of the Act provides a -0.75 percentage point 
reduction to the OPD fee schedule increase factor under section 
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act, we are proposing to 
apply a -0.75 percentage point reduction to the OPD fee schedule 
increase factor for CY 2017.
    We note that section 1833(t)(3)(F) of the Act provides that 
application of this subparagraph may result in the OPD fee schedule 
increase factor under section 1833(t)(3)(C)(iv) of the Act being less 
than 0.0 percent for a year, and may result in OPPS payment rates being 
less than rates for the preceding year. As described in further detail 
below, we are proposing to apply an OPD fee schedule increase factor of 
1.55 percent for the CY 2017 OPPS (which is 2.8 percent, the proposed 
estimate of the hospital inpatient market basket percentage increase, 
less the proposed 0.5 percentage point MFP adjustment, and less the 
0.75 percentage point additional adjustment).
    Hospitals that fail to meet the Hospital OQR Program reporting 
requirements are subject to an additional reduction of 2.0 percentage 
points from the OPD fee schedule increase factor adjustment to the 
conversion factor that would be used to calculate the OPPS payment 
rates for their services, as required by section 1833(t)(17) of the 
Act. For further discussion of the Hospital OQR Program, we refer 
readers to section XIII. of this proposed rule.
    In this CY 2017 OPPS/ASC proposed rule, we are proposing to amend 
42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (8) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2016, 
we reduce the OPD fee schedule increase factor by the MFP adjustment as 
determined by CMS, and to reflect the requirement in section 
1833(t)(3)(G)(v) of the Act, as required by section 1833(t)(3)(F)(ii) 
of the Act, that we reduce the OPD fee schedule increase factor by an 
additional 0.75 percentage point for CY 2017.
    To set the OPPS conversion factor for CY 2017, we are proposing to 
increase the CY 2016 conversion factor of $73.725 by 1.55 percent. In 
accordance with section 1833(t)(9)(B) of the Act, we are proposing to 
further adjust the conversion factor for CY 2017 to ensure that any 
revisions made to the wage index and rural adjustment are made on a 
budget neutral basis. We are proposing to calculate an overall proposed 
budget neutrality factor of 1.0000 for wage index changes by comparing 
proposed total estimated payments from our simulation model using the 
proposed FY 2017 IPPS wage indexes to those payments using the FY 2016 
IPPS wage indexes, as adopted on a calendar year basis for the OPPS.
    For CY 2017, we are proposing to maintain the current rural 
adjustment

[[Page 45631]]

policy, as discussed in section II.E. of this proposed rule. Therefore, 
the proposed budget neutrality factor for the rural adjustment would be 
1.0000.
    For CY 2017, we are proposing to continue previously established 
policies for implementing the cancer hospital payment adjustment 
described in section 1833(t)(18) of the Act, as discussed in section 
II.F. of this proposed rule. We are proposing to calculate a CY 2017 
budget neutrality adjustment factor for the cancer hospital payment 
adjustment by comparing estimated total CY 2017 payments under section 
1833(t) of the Act, including the proposed CY 2017 cancer hospital 
payment adjustment, to estimated CY 2017 total payments using the CY 
2016 final cancer hospital payment adjustment as required under section 
1833(t)(18)(B) of the Act. The CY 2017 proposed estimated payments 
applying the proposed CY 2017 cancer hospital payment adjustment are 
identical to estimated payments applying the CY 2016 final cancer 
hospital payment adjustment. Therefore, we are proposing to apply a 
budget neutrality adjustment factor of 1.0000 to the conversion factor 
for the cancer hospital payment adjustment.
    For CY 2017, we are proposing to apply a budget neutrality 
adjustment factor of 1.0003 to increase the conversion factor to 
account for our proposal to package unrelated laboratory tests into 
OPPS payment.
    For this proposed rule, we estimate that proposed pass-through 
spending for drugs, biologicals, and devices for CY 2017 would equal 
approximately $148.3 million, which represents 0.24 percent of total 
projected CY 2017 OPPS spending. Therefore, the proposed conversion 
factor would be adjusted by the difference between the 0.26 percent 
estimate of pass-through spending for CY 2016 and the 0.24 percent 
estimate of proposed pass-through spending for CY 2017, resulting in a 
proposed adjustment for CY 2017 of 0.02 percent. Proposed estimated 
payments for outliers would be 1.0 percent of total OPPS payments for 
CY 2017. We currently estimated that outlier payments will be 0.96 
percent of total OPPS payments in CY 2016; the 1.0 percent for proposed 
outlier payments in CY 2017 would constitute a 0.04 percent increase in 
payment in CY 2017 relative to CY 2016.
    For this proposed rule, we also are proposing that hospitals that 
fail to meet the reporting requirements of the Hospital OQR Program 
would continue to be subject to a further reduction of 2.0 percentage 
points to the OPD fee schedule increase factor. For hospitals that fail 
to meet the requirements of the Hospital OQR Program, we are proposing 
to make all other adjustments discussed above, but use a reduced OPD 
fee schedule update factor of -0.45 percent (that is, the proposed OPD 
fee schedule increase factor of 1.55 percent further reduced by 2.0 
percentage points). This would result in a proposed reduced conversion 
factor for CY 2017 of 73.411 for hospitals that fail to meet the 
Hospital OQR requirements (a difference of -1.498 in the conversion 
factor relative to hospitals that met the requirements).
    In summary, for CY 2017, we are proposing to amend Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (8) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2017 to satisfy the statutory requirements of sections 
1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We are proposing to use a 
reduced conversion factor of 73.411 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -1.498 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2017, we are proposing to continue previously established 
policies for implementing the cancer hospital payment adjustment 
described in section 1833(t)(18) of the Act, as discussed in section 
II.F. of this proposed rule.
    As a result of these proposed policies, the proposed OPD fee 
schedule increase factor for the CY 2017 OPPS is 1.55 percent (which is 
2.8 percent, the estimate of the hospital inpatient market basket 
percentage increase, less the 0.5 percentage point MFP adjustment, and 
less the 0.75 percentage point additional adjustment). For CY 2017, we 
are proposing to use a conversion factor of $74.909 in the calculation 
of the national unadjusted payment rates for those items and services 
for which payment rates are calculated using geometric mean costs, that 
is, the OPD fee schedule increase factor of 1.55 percent for CY 2017, 
the required wage index budget neutrality adjustment of approximately 
1.0000, the cancer hospital payment adjustment of 1.0000, the packaging 
of unrelated laboratory tests adjustment factor of 1.0003, and the 
adjustment of -0.06 percentage point of projected OPPS spending for the 
difference in the pass-through spending and outlier payments that 
result in a proposed conversion factor for CY 2017 of $74.909.

C. Proposed Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust the portion of payment and 
coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion 
of the OPPS payment rate is called the OPPS labor-related share. Budget 
neutrality is discussed in section II.B. of this proposed rule.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). We are proposing to continue this policy 
for the CY 2017 OPPS. We refer readers to section II.H. of this 
proposed rule for a description and an example of how the wage index 
for a particular hospital is used to determine payment for the 
hospital.
    As discussed in section II.A.2.c. of this proposed rule, for 
estimating APC costs, we standardize 60 percent of estimated claims 
costs for geographic area wage variation using the same proposed FY 
2017 pre-reclassified wage index that the IPPS uses to standardize 
costs. This standardization process removes the effects of differences 
in area wage levels from the determination of a national unadjusted 
OPPS payment rate and copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS 
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-reclassified wage 
index as the calendar year wage index for adjusting the OPPS standard 
payment amounts for labor market differences. Therefore, the wage index 
that applies to a particular acute care, short-stay hospital under the 
IPPS also applies to that hospital under the OPPS. As initially 
explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we 
believe that using the IPPS wage index as the source of an adjustment 
factor for the OPPS is reasonable and logical, given the inseparable, 
subordinate status of the HOPD within the hospital overall. In 
accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index 
is updated annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed

[[Page 45632]]

in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74191). 
Section 10324 of the Affordable Care Act added section 
1886(d)(3)(E)(iii)(II) to the Act, which defines a frontier State and 
amended section 1833(t) of the Act to add new paragraph (19), which 
requires a frontier State wage index floor of 1.00 in certain cases, 
and states that the frontier State floor shall not be applied in a 
budget neutral manner. We codified these requirements at Sec.  
419.43(c)(2) and (c)(3) of our regulations. For the CY 2017 OPPS, we 
are proposing to implement this provision in the same manner as we have 
since CY 2011. Under this policy, the frontier State hospitals would 
receive a wage index of 1.00 if the otherwise applicable wage index 
(including reclassification, rural and imputed floors, and rural floor 
budget neutrality) is less than 1.00. Because the HOPD receives a wage 
index based on the geographic location of the specific inpatient 
hospital with which it is associated, the frontier State wage index 
adjustment applicable for the inpatient hospital also would apply for 
any associated HOPD. We refer readers to the following sections in the 
FY 2011 through FY 2016 IPPS/LTCH PPS final rules for discussions 
regarding this provision, including our methodology for identifying 
which areas meet the definition of ``frontier States'' as provided for 
in section 1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160 
through 50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 
77 FR 53369 through 53370; for FY 2014, 78 FR 50590 through 50591; for 
FY 2015, 79 FR 49971; and for FY 2016, 80 FR 49498.
    In addition to the changes required by the Affordable Care Act, we 
note that the proposed FY 2017 IPPS wage indexes continue to reflect a 
number of adjustments implemented over the past few years, including, 
but not limited to, reclassification of hospitals to different 
geographic areas, the rural floor and imputed floor provisions, an 
adjustment for occupational mix, and an adjustment to the wage index 
based on commuting patterns of employees (the out-migration 
adjustment). We refer readers to the FY 2017 IPPS/LTCH PPS proposed 
rule (81 FR 25062 through 25076) for a detailed discussion of all 
proposed changes to the FY 2017 IPPS wage indexes. In addition, we 
refer readers to the CY 2005 OPPS final rule with comment period (69 FR 
65842 through 65844) and subsequent OPPS rules for a detailed 
discussion of the history of these wage index adjustments as applied 
under the OPPS.
    As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 
through 49963) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49488 
through 49489 and 49494 through 49496), the Office of Management and 
Budget (OMB) issued revisions to the labor market area delineations on 
February 28, 2013 (based on 2010 Decennial Census data), that included 
a number of significant changes such as new Core Based Statistical 
Areas (CBSAs), urban counties that became rural, rural counties that 
became urban, and existing CBSAs that were split apart (OMB Bulletin 
13-01). This bulletin can be found at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH 
PPS final rule (79 FR 49950 through 49985), we adopted the use of the 
OMB labor market area delineations that were based on the 2010 
Decennial Census data, effective October 1, 2014.
    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 and OPPS 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.
    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25062), we 
proposed to implement these revisions, effective October 1, 2016, 
beginning with the FY 2017 wage indexes. In the FY 2017 IPPS/LTCH PPS 
proposed rule, we proposed to use these new definitions to calculate 
area IPPS 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. We believe that it is important for the OPPS 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. Therefore, for purposes of the OPPS, we are 
proposing to implement these revisions to the OMB statistical area 
delineations, effective January 1, 2017, beginning with the CY 2017 
OPPS wage indexes. Tables 2 and 3 for the FY 2017 IPPS/LTCH PPS 
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 for the CY 2017 OPPS wage indexes.
    For this CY 2017 OPPS/ASC proposed rule, we are proposing to use 
the proposed FY 2017 hospital IPPS post-reclassified wage index for 
urban and rural areas as the proposed wage index for the OPPS to 
determine the wage adjustments for both the OPPS payment rate and the 
copayment standardized amount for CY 2017. Thus, any adjustments that 
were proposed for the FY 2017 IPPS post-reclassified wage index would 
be reflected in the proposed CY 2017 OPPS wage index, including the 
revisions to the OMB labor market delineations discussed

[[Page 45633]]

above, as set forth in OMB Bulletin No. 15-01. (We refer readers to the 
FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25062 through 25076) and the 
proposed FY 2017 hospital wage index files posted on the CMS Web site.)
    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to assign the wage index that would be applicable if the hospital were 
paid under the IPPS, based on its geographic location and any 
applicable wage index adjustments. We are proposing to continue this 
policy for CY 2017. The following is a brief summary of the major 
proposed FY 2017 IPPS wage index policies and adjustments that we are 
proposing to apply to these hospitals under the OPPS for CY 2017. We 
further refer readers to the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 
25062 through 25076) for a detailed discussion of the proposed changes 
to the FY 2017 IPPS wage indexes.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA)). Applying this adjustment is consistent with our policy of 
adopting IPPS wage index policies for hospitals paid under the OPPS. We 
note that, because non-IPPS hospitals cannot reclassify, they would be 
eligible for the out-migration wage adjustment if they are located in a 
section 505 out-migration county. This is the same out-migration 
adjustment policy that would apply if the hospital were paid under the 
IPPS. For CY 2017, we are proposing to continue our policy of allowing 
non-IPPS hospitals paid under the OPPS to qualify for the out-migration 
adjustment if they are located in a section 505 out-migration county 
(section 505 of the MMA).
    As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we 
adopted the OMB labor market area delineations issued by OMB in OMB 
Bulletin No. 13-01 on February 28, 2013, based on standards published 
on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data 
to delineate labor market areas for purposes of the IPPS wage index. 
For IPPS wage index purposes, for hospitals that were located in urban 
CBSAs in FY 2014 but were designated as rural under these revised OMB 
labor market area delineations, we generally assigned them the urban 
wage index value of the CBSA in which they were physically located for 
FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To 
be consistent, we applied the same policy to hospitals paid under the 
OPPS but not under the IPPS so that such hospitals will maintain the 
wage index of the CBSA in which they were physically located for FY 
2014 for 3 calendar years (until December 31, 2017). Thus, for the CY 
2017 OPPS, consistent with the FY 2017 IPPS/LTCH PPS proposed rule (81 
FR 25066 through 25067), this 3-year transition will continue for the 
third year in CY 2017.
    In addition, for the FY 2017 IPPS, we proposed to extend the 
imputed floor policy (both the original methodology and alternative 
methodology) for another year, through September 30, 2017 (81 FR 25067 
through 25068). For purposes of the CY 2017 OPPS, we also are proposing 
to apply the imputed floor policy to hospitals paid under the OPPS but 
not under the IPPS so long as the IPPS continues an imputed floor 
policy.
    For CMHCs, for CY 2017, we are proposing to continue to calculate 
the wage index by using the post-reclassification IPPS wage index based 
on the CBSA where the CMHC is located. As with OPPS hospitals and for 
the same reasons, for CMHCs previously located in urban CBSAs that were 
designated as rural under the revised OMB labor market area 
delineations in OMB Bulletin No. 13-01, we finalized a policy to 
maintain the urban wage index value of the CBSA in which they were 
physically located for CY 2014 for 3 calendar years (until December 31, 
2017). Consistent with our current policy, the wage index that applies 
to CMHCs includes both the imputed floor adjustment and the rural floor 
adjustment, but does not include the out-migration adjustment because 
that adjustment only applies to hospitals.
    Table 2 associated with the FY 2017 IPPS/LTCH PPS proposed rule 
(available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
identifies counties eligible for the out-migration adjustment and IPPS 
hospitals that would receive the adjustment for FY 2017. We are 
including the out-migration adjustment information from Table 2 
associated with the FY 2017 IPPS/LTCH PPS proposed rule as Addendum L 
to this proposed rule with the addition of non-IPPS hospitals that 
would receive the section 505 out-migration adjustment under the CY 
2017 OPPS. Addendum L is available via the Internet on the CMS Web 
site. With the exception of the proposed out-migration wage adjustment 
table (Addendum L to this proposed rule, which is available via the 
Internet on the CMS Web site), which includes non-IPPS hospitals paid 
under the OPPS, we are not reprinting the proposed FY 2017 IPPS wage 
indexes referenced in this discussion of the wage index. We refer 
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the proposed FY 
2017 IPPS wage index tables and Addendum L.

D. Proposed Statewide Average Default CCRs

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. MACs 
cannot calculate a CCR for some hospitals because there is no cost 
report available. For these hospitals, CMS uses the statewide average 
default CCRs to determine the payments mentioned above until a 
hospital's MAC is able to calculate the hospital's actual CCR from its 
most recently submitted Medicare cost report. These hospitals include, 
but are not limited to, hospitals that are new, hospitals that have not 
accepted assignment of an existing hospital's provider agreement, and 
hospitals that have not yet submitted a cost report. CMS also uses the 
statewide average default CCRs to determine payments for hospitals that 
appear to have a biased CCR (that is, the CCR falls outside the 
predetermined ceiling threshold for a valid CCR) or for hospitals in 
which the most recent cost report reflects an all-inclusive rate status 
(Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 
10.11). In this proposed rule, we are proposing to update the default 
ratios for CY 2017 using the most recent cost report data. We discuss 
our policy for using default CCRs, including setting the ceiling 
threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68594 through 68599) in the context of our 
adoption of an outlier reconciliation policy for cost reports beginning 
on or after January 1, 2009.
    For detail on our process for calculating the statewide average 
CCRs, we refer readers to the CY 2017 OPPS NPRM Claims Accounting 
Narrative that is posted on the CMS Web site. Table 4 below lists the 
proposed statewide

[[Page 45634]]

average default CCRs for OPPS services furnished on or after January 1, 
2017.

                                TABLE 4--Proposed CY 2017 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                               Previous default
                   State                             Urban/Rural           Proposed CY 2017   CCR  (CY 2016 OPPS
                                                                              default CCR         final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA....................................  RURAL.......................               0.472               0.588
ALASKA....................................  URBAN.......................               0.261               0.269
ALABAMA...................................  RURAL.......................               0.207               0.224
ALABAMA...................................  URBAN.......................               0.162               0.168
ARKANSAS..................................  RURAL.......................               0.215               0.223
ARKANSAS..................................  URBAN.......................               0.208               0.218
ARIZONA...................................  RURAL.......................               0.251               0.246
ARIZONA...................................  URBAN.......................               0.171               0.170
CALIFORNIA................................  RURAL.......................               0.188               0.179
CALIFORNIA................................  URBAN.......................               0.187               0.190
COLORADO..................................  RURAL.......................               0.356               0.366
COLORADO..................................  URBAN.......................               0.210               0.208
CONNECTICUT...............................  RURAL.......................               0.445               0.366
CONNECTICUT...............................  URBAN.......................               0.256               0.257
DISTRICT OF COLUMBIA......................  URBAN.......................               0.293               0.298
DELAWARE..................................  URBAN.......................               0.303               0.308
FLORIDA...................................  RURAL.......................               0.170               0.170
FLORIDA...................................  URBAN.......................               0.145               0.150
GEORGIA...................................  RURAL.......................               0.242               0.251
GEORGIA...................................  URBAN.......................               0.192               0.199
HAWAII....................................  RURAL.......................               0.340               0.339
HAWAII....................................  URBAN.......................               0.323               0.313
IOWA......................................  RURAL.......................               0.295               0.305
IOWA......................................  URBAN.......................               0.247               0.256
IDAHO.....................................  RURAL.......................               0.338               0.337
IDAHO.....................................  URBAN.......................               0.452               0.459
ILLINOIS..................................  RURAL.......................               0.240               0.234
ILLINOIS..................................  URBAN.......................               0.207               0.208
INDIANA...................................  RURAL.......................               0.277               0.314
INDIANA...................................  URBAN.......................               0.233               0.237
KANSAS....................................  RURAL.......................               0.281               0.287
KANSAS....................................  URBAN.......................               0.199               0.209
KENTUCKY..................................  RURAL.......................               0.193               0.202
KENTUCKY..................................  URBAN.......................               0.190               0.203
LOUISIANA.................................  RURAL.......................               0.225               0.256
LOUISIANA.................................  URBAN.......................               0.200               0.202
MASSACHUSETTS.............................  RURAL.......................               0.324               0.324
MASSACHUSETTS.............................  URBAN.......................               0.326               0.330
MAINE.....................................  RURAL.......................               0.452               0.470
MAINE.....................................  URBAN.......................               0.418               0.395
MARYLAND..................................  RURAL.......................               0.269               0.277
MARYLAND..................................  URBAN.......................               0.230               0.234
MICHIGAN..................................  RURAL.......................               0.293               0.317
MICHIGAN..................................  URBAN.......................               0.319               0.319
MINNESOTA.................................  RURAL.......................               0.414               0.449
MINNESOTA.................................  URBAN.......................               0.326               0.377
MISSOURI..................................  RURAL.......................               0.227               0.238
MISSOURI..................................  URBAN.......................               0.263               0.253
MISSISSIPPI...............................  RURAL.......................               0.235               0.235
MISSISSIPPI...............................  URBAN.......................               0.168               0.169
MONTANA...................................  RURAL.......................               0.470               0.480
MONTANA...................................  URBAN.......................               0.365               0.403
NORTH CAROLINA............................  RURAL.......................               0.232               0.229
NORTH CAROLINA............................  URBAN.......................               0.228               0.235
NORTH DAKOTA..............................  RURAL.......................               0.411               0.443
NORTH DAKOTA..............................  URBAN.......................               0.333               0.355
NEBRASKA..................................  RURAL.......................               0.284               0.283
NEBRASKA..................................  URBAN.......................               0.239               0.238
NEW HAMPSHIRE.............................  RURAL.......................               0.309               0.306
NEW HAMPSHIRE.............................  URBAN.......................               0.279               0.306
NEW JERSEY................................  URBAN.......................               0.193               0.194
NEW MEXICO................................  RURAL.......................               0.240               0.280
NEW MEXICO................................  URBAN.......................               0.286               0.290
NEVADA....................................  RURAL.......................               0.199               0.219
NEVADA....................................  URBAN.......................               0.129               0.146
NEW YORK..................................  RURAL.......................               0.303               0.311

[[Page 45635]]

 
NEW YORK..................................  URBAN.......................               0.304               0.298
OHIO......................................  RURAL.......................               0.296               0.295
OHIO......................................  URBAN.......................               0.207               0.212
OKLAHOMA..................................  RURAL.......................               0.229               0.255
OKLAHOMA..................................  URBAN.......................               0.185               0.192
OREGON....................................  RURAL.......................               0.264               0.265
OREGON....................................  URBAN.......................               0.332               0.341
PENNSYLVANIA..............................  RURAL.......................               0.283               0.277
PENNSYLVANIA..............................  URBAN.......................               0.186               0.195
PUERTO RICO...............................  URBAN.......................               0.585               0.590
RHODE ISLAND..............................  URBAN.......................               0.292               0.290
SOUTH CAROLINA............................  RURAL.......................               0.189               0.188
SOUTH CAROLINA............................  URBAN.......................               0.194               0.197
SOUTH DAKOTA..............................  RURAL.......................               0.376               0.367
SOUTH DAKOTA..............................  URBAN.......................               0.228               0.224
TENNESSEE.................................  RURAL.......................               0.182               0.198
TENNESSEE.................................  URBAN.......................               0.179               0.177
TEXAS.....................................  RURAL.......................               0.223               0.238
TEXAS.....................................  URBAN.......................               0.175               0.179
UTAH......................................  RURAL.......................               0.368               0.493
UTAH......................................  URBAN.......................               0.310               0.325
VIRGINIA..................................  RURAL.......................               0.188               0.195
VIRGINIA..................................  URBAN.......................               0.231               0.233
VERMONT...................................  RURAL.......................               0.435               0.434
VERMONT...................................  URBAN.......................               0.336               0.336
WASHINGTON................................  RURAL.......................               0.279               0.349
WASHINGTON................................  URBAN.......................               0.301               0.308
WISCONSIN.................................  RURAL.......................               0.367               0.317
WISCONSIN.................................  URBAN.......................               0.291               0.296
WEST VIRGINIA.............................  RURAL.......................               0.272               0.276
WEST VIRGINIA.............................  URBAN.......................               0.285               0.294
WYOMING...................................  RURAL.......................               0.445               0.433
WYOMING...................................  URBAN.......................               0.320               0.311
----------------------------------------------------------------------------------------------------------------

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

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding drugs, 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the 
Act, as added by section 411 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
Section 1833(t)(13) of the Act provided the Secretary the authority to 
make an adjustment to OPPS payments for rural hospitals, effective 
January 1, 2006, if justified by a study of the difference in costs by 
APC between hospitals in rural areas and hospitals in urban areas. Our 
analysis showed a difference in costs for rural SCHs. Therefore, for 
the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 
7.1 percent for all services and procedures paid under the OPPS, 
excluding separately payable drugs and biologicals, brachytherapy 
sources, and devices paid under the pass-through payment policy, in 
accordance with section 1833(t)(13)(B) of the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
Sec.  419.43(g) of the regulations to clarify that EACHs also are 
eligible to receive the rural SCH adjustment, assuming these entities 
otherwise meet the rural adjustment criteria. Currently, two hospitals 
are classified as EACHs, and as of CY 1998, under section 4201(c) of 
Public Law 105-33, a hospital can no longer become newly classified as 
an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2016. Further, in the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated 
the regulations at Sec.  419.43(g)(4) to specify, in general terms, 
that items paid at charges adjusted to costs by application of a 
hospital-specific CCR are excluded from the 7.1 percent payment 
adjustment.
    For the CY 2017 OPPS, we are proposing to continue our policy of a 
7.1 percent payment adjustment that is done in a budget neutral manner 
for rural SCHs, including EACHs, for all services and procedures paid 
under the OPPS, excluding separately payable drugs and biologicals, 
devices paid under the pass-through payment policy, and items paid at 
charges reduced to costs (80 FR 39244).

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

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals

[[Page 45636]]

that meet the criteria for cancer hospitals identified in section 
1886(d)(1)(B)(v) of the Act under the OPPS for covered outpatient 
hospital services. These cancer hospitals are exempted from payment 
under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget 
Refinement Act of 1999 (Pub. L. 106-113), Congress established section 
1833(t)(7) of the Act, ``Transitional Adjustment to Limit Decline in 
Payment,'' to determine OPPS payments to cancer and children's 
hospitals based on their pre-BBA payment amount (often referred to as 
``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower in amount under the OPPS than the 
payment amount they would have received before implementation of the 
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA 
amount'' is the product of the hospital's reasonable costs for covered 
outpatient services occurring in the current year and the base payment-
to-cost ratio (PCR) for the hospital defined in section 
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the 
determination of the base PCR are defined at 42 CFR 419.70(f). TOPs are 
calculated on Worksheet E, Part B, of the Hospital Cost Report or the 
Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-
2552-10, respectively) as applicable each year. Section 1833(t)(7)(I) 
of the Act exempts TOPs from budget neutrality calculations.
    Section 3138 of the Affordable Care Act amended section 1833(t) of 
the Act by adding a new paragraph (18), which instructs the Secretary 
to conduct a study to determine if, under the OPPS, outpatient costs 
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of 
the Act with respect to APC groups exceed outpatient costs incurred by 
other hospitals furnishing services under section 1833(t) of the Act, 
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of 
the Act requires the Secretary to take into consideration the cost of 
drugs and biologicals incurred by cancer hospitals and other hospitals. 
Section 1833(t)(18)(B) of the Act provides that, if the Secretary 
determines that cancer hospitals' costs are greater than other 
hospitals' costs, the Secretary shall provide an appropriate adjustment 
under section 1833(t)(2)(E) of the Act to reflect these higher costs. 
In 2011, after conducting the study required by section 1833(t)(18)(A) 
of the Act, we determined that outpatient costs incurred by the 11 
specified cancer hospitals were greater than the costs incurred by 
other OPPS hospitals. For a complete discussion regarding the cancer 
hospital cost study, we refer readers to the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74200 through 74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recent submitted or settled cost report data 
that are available at the time of final rulemaking for the calendar 
year. The amount of the payment adjustment is made on an aggregate 
basis at cost report settlement. We note that the changes made by 
section 1833(t)(18) of the Act do not affect the existing statutory 
provisions that provide for TOPs for cancer hospitals. The TOPs are 
assessed as usual after all payments, including the cancer hospital 
payment adjustment, have been made for a cost reporting period. For CYs 
2012 and 2013, the target PCR for purposes of the cancer hospital 
payment adjustment was 0.91. For CY 2014, the target PCR for purposes 
of the cancer hospital payment adjustment was 0.89. For CY 2015 the 
target PCR was 0.90. For CY 2016, the target PCR was 0.92, as discussed 
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70362 
through 70363).
2. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2017
    For CY 2017, we are proposing to continue our policy to provide 
additional payments to the 11 specified cancer hospitals so that each 
cancer hospital's final PCR is equal to the weighted average PCR (or 
``target PCR'') for the other OPPS hospitals using the most recent 
submitted or settled cost report data that are available at the time of 
the development of this proposed rule. To calculate the proposed CY 
2017 target PCR, we used the same extract of cost report data from 
HCRIS, as discussed in section II.A. of this proposed rule, used to 
estimate costs for the CY 2017 OPPS. Using these cost report data, we 
included data from Worksheet E, Part B, for each hospital, using data 
from each hospital's most recent cost report, whether as submitted or 
settled.
    We then limited the dataset to the hospitals with CY 2015 claims 
data that we used to model the impact of the proposed CY 2017 APC 
relative payment weights (3,716 hospitals) because it is appropriate to 
use the same set of hospitals that we are using to calibrate the 
modeled CY 2017 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging 
from 2014 to 2015. We then removed the cost report data of the 50 
hospitals located in Puerto Rico from our dataset because we do not 
believe that their cost structure reflects the costs of most hospitals 
paid under the OPPS and, therefore, their inclusion may bias the 
calculation of hospital-weighted statistics. We also removed the cost 
report data of 14 hospitals because these hospitals had cost report 
data that were not complete (missing aggregate OPPS payments, missing 
aggregate cost data, or missing both), so that all cost reports in the 
study would have both the payment and cost data necessary to calculate 
a PCR for each hospital, leading to a proposed analytic file of 3,652 
hospitals with cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS are approximately 92 percent of reasonable cost 
(weighted average PCR of 0.92). Therefore, we are proposing that the 
payment amount associated with the cancer hospital payment adjustment 
to be determined at cost report settlement would be the additional 
payment needed to result in a proposed target PCR equal to 0.92 for 
each cancer hospital. Table 5 below indicates the proposed estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2017 due to the cancer hospital payment adjustment policy.
    The actual amount of the CY 2017 cancer hospital payment adjustment 
for each cancer hospital will be determined at cost report settlement 
and will depend on each hospital's CY 2017 payments and costs. We note 
that the requirements contained in section 1833(t)(18) of the Act do 
not affect the existing statutory provisions that

[[Page 45637]]

provide for TOPs for cancer hospitals. The TOPs will be assessed as 
usual after all payments, including the cancer hospital payment 
adjustment, have been made for a cost reporting period.

Table 5--Proposed Estimated CY 2017 Hospital-Specific Payment Adjustment
      for Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                            Proposed
                                                           estimated
                                                           percentage
         Provider No.               Hospital name       increase in OPPS
                                                        payments for  CY
                                                              2017
------------------------------------------------------------------------
050146........................  City of Hope                        27.2
                                 Comprehensive Cancer
                                 Center.
050660........................  USC Norris Cancer                   15.3
                                 Hospital.
100079........................  Sylvester                           33.8
                                 Comprehensive Cancer
                                 Center.
100271........................  H. Lee Moffitt Cancer               28.7
                                 Center & Research
                                 Institute.
220162........................  Dana-Farber Cancer                  51.4
                                 Institute.
330154........................  Memorial Sloan-                     46.9
                                 Kettering Cancer
                                 Center.
330354........................  Roswell Park Cancer                 31.4
                                 Institute.
360242........................  James Cancer Hospital               39.4
                                 & Solove Research
                                 Institute.
390196........................  Fox Chase Cancer                    17.9
                                 Center.
450076........................  M.D. Anderson Cancer                54.0
                                 Center.
500138........................  Seattle Cancer Care                 60.4
                                 Alliance.
------------------------------------------------------------------------

G. Proposed Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain amount of dollars). In CY 2016, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times (the multiplier threshold) the APC payment amount 
and exceeded the APC payment amount plus $3,250 (the fixed-dollar 
amount threshold) (80 FR 70365). If the cost of a service exceeds both 
the multiplier threshold and the fixed-dollar threshold, the outlier 
payment is calculated as 50 percent of the amount by which the cost of 
furnishing the service exceeds 1.75 times the APC payment amount. 
Beginning with CY 2009 payments, outlier payments are subject to a 
reconciliation process similar to the IPPS outlier reconciliation 
process for cost reports, as discussed in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599).
    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the proposed OPPS. Our estimate of total outlier payments as a 
percent of total CY 2015 OPPS payment, using CY 2015 claims available 
for this proposed rule and the revised OPPS expenditure estimate for 
the FY 2016 President's Budget, is approximately 1.0 percent of the 
total aggregated OPPS payments. Therefore, for CY 2015, we estimate 
that we paid the outlier target of 1.0 percent of total aggregated OPPS 
payments.
    Using CY 2015 claims data and CY 2016 payment rates, we currently 
estimate that the aggregate outlier payments for CY 2016 will be 
approximately 1.0 percent of the total CY 2016 OPPS payments. We 
provide estimated CY 2017 outlier payments for hospitals and CMHCs with 
claims included in the claims data that we used to model impacts in the 
Hospital-Specific Impacts--Provider-Specific Data file on the CMS Web 
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Proposed Outlier Calculation
    For CY 2017, we are proposing to continue our policy of estimating 
outlier payments to be 1.0 percent of the estimated aggregate total 
payments under the OPPS. We are proposing that a portion of that 1.0 
percent, an amount equal to less than 0.01 percent of outlier payments 
(or 0.0001 percent of total OPPS payments) would be allocated to CMHCs 
for PHP outlier payments. This is the amount of estimated outlier 
payments that would result from the proposed CMHC outlier threshold as 
a proportion of total estimated OPPS outlier payments. As discussed in 
section VIII.D. of this proposed rule, we are proposing to continue our 
longstanding policy that if a CMHC's cost for partial hospitalization 
services, paid under proposed APC 5853 (Partial Hospitalization for 
CMHCs), exceeds 3.40 times the payment rate for proposed APC 5853, the 
outlier payment would be calculated as 50 percent of the amount by 
which the cost exceeds 3.40 times the proposed APC 5853 payment rate. 
For further discussion of CMHC outlier payments, we refer readers to 
section VIII.D. of this proposed rule.
    To ensure that the estimated CY 2017 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we are proposing that the hospital outlier threshold be set so 
that outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus $3,825.
    We calculated the proposed fixed-dollar threshold of $3,825 using 
the standard methodology most recently used for CY 2016 (80 FR 70364 
through 70365). For purposes of estimating outlier payments for this 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2016 update to the Outpatient Provider-Specific 
File (OPSF). The OPSF

[[Page 45638]]

contains provider-specific data, such as the most current CCRs, which 
are maintained by the MACs and used by the OPPS Pricer to pay claims. 
The claims that we use to model each OPPS update lag by 2 years.
    In order to estimate the CY 2017 hospital outlier payments for this 
proposed rule, we inflated the charges on the CY 2015 claims using the 
same inflation factor of 1.0898 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2017 IPPS/LTCH PPS proposed 
rule (81 FR 25270 through 25273). We used an inflation factor of 1.0440 
to estimate CY 2016 charges from the CY 2015 charges reported on CY 
2015 claims. The methodology for determining this charge inflation 
factor is discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 
25271). As we stated in the CY 2005 OPPS final rule with comment period 
(69 FR 65845), we believe that the use of these charge inflation 
factors are appropriate for the OPPS because, with the exception of the 
inpatient routine service cost centers, hospitals use the same 
ancillary and outpatient cost centers to capture costs and charges for 
inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we are proposing to apply the same CCR 
inflation adjustment factor that we are proposing to apply for the FY 
2017 IPPS outlier calculation to the CCRs used to simulate the proposed 
CY 2017 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2017, we are proposing to apply an adjustment 
factor of 0.9696 to the CCRs that were in the April 2016 OPSF to trend 
them forward from CY 2016 to CY 2017. The methodology for calculating 
this proposed adjustment is discussed in the FY 2017 IPPS/LTCH PPS 
proposed rule (81 FR 25272).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2016 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 0.9696 to 
approximate CY 2017 CCRs) to charges on CY 2015 claims that were 
adjusted (using the proposed charge inflation factor of 1.0898 to 
approximate CY 2017 charges). We simulated aggregated CY 2017 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiple threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2017 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $3,825, combined 
with the proposed multiple threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we are proposing that, if a CMHC's cost 
for partial hospitalization services, paid under APC 5853, exceeds 3.40 
times the payment rate for APC 5853, the outlier payment would be 
calculated as 50 percent of the amount by which the cost exceeds 3.40 
times the APC 5853 payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point 
reduction to their OPD fee schedule increase factor; that is, the 
annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that will apply to certain outpatient items and services 
furnished by hospitals that are required to report outpatient quality 
data and that fail to meet the Hospital OQR Program requirements. For 
hospitals that fail to meet the Hospital OQR Program requirements, we 
are proposing to continue the policy that we implemented in CY 2010 
that the hospitals' costs will be compared to the reduced payments for 
purposes of outlier eligibility and payment calculation. For more 
information on the Hospital OQR Program, we refer readers to section 
XIII. of this proposed rule.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR part 419, subparts C and D. For this CY 2017 OPPS/ASC proposed 
rule, the proposed payment rate for most services and procedures for 
which payment is made under the OPPS is the product of the proposed 
conversion factor calculated in accordance with section II.B. of this 
proposed rule and the proposed relative payment weight determined under 
section II.A. of this proposed rule. Therefore, the proposed national 
unadjusted payment rate for most APCs contained in Addendum A to this 
proposed rule (which is available via the Internet on the CMS Web site) 
and for most HCPCS codes to which separate payment under the OPPS has 
been assigned in Addendum B to this proposed rule (which is available 
via the Internet on the CMS Web site) was calculated by multiplying the 
proposed CY 2017 scaled weight for the APC by the proposed CY 2017 
conversion factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program (formerly referred to as the 
Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) 
requirements. For further discussion of the payment reduction for 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we refer readers to section XIII. of this proposed rule.
    We demonstrate below the steps on how to determine the APC payments 
that will be made in a calendar year under the OPPS to a hospital that 
fulfills the Hospital OQR Program requirements and to a hospital that 
fails to meet the Hospital OQR Program requirements for a service that 
has any of the following status indicator assignments: ``J1,'' ``J2,'' 
``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or 
``V'' (as defined in Addendum D1 to this proposed rule, which is 
available via the Internet on the CMS Web site), in a circumstance in 
which the multiple procedure discount does not apply, the procedure is 
not bilateral, and conditionally packaged services (status indicator of 
``Q1'' and ``Q2'') qualify for separate payment. We note that, although 
blood and blood products with status indicator ``R'' and brachytherapy 
sources with status indicator ``U'' are not subject to wage adjustment, 
they are subject to reduced payments when a hospital fails to meet the 
Hospital OQR Program requirements.

[[Page 45639]]

    Individual providers interested in calculating the payment amount 
that they would receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this proposed 
rule (which are available via the Internet on the CMS Web site) should 
follow the formulas presented in the following steps. For purposes of 
the payment calculations below, we refer to the proposed national 
unadjusted payment rate for hospitals that meet the requirements of the 
Hospital OQR Program as the ``full'' national unadjusted payment rate. 
We refer to the proposed national unadjusted payment rate for hospitals 
that fail to meet the requirements of the Hospital OQR Program as the 
``reduced'' national unadjusted payment rate. The reduced national 
unadjusted payment rate is calculated by multiplying the reporting 
ratio of 0.980 times the ``full'' national unadjusted payment rate. The 
proposed national unadjusted payment rate used in the calculations 
below is either the full national unadjusted payment rate or the 
reduced national unadjusted payment rate, depending on whether the 
hospital met its Hospital OQR Program requirements in order to receive 
the proposed full CY 2017 OPPS fee schedule increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 
through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

X is the labor-related portion of the national unadjusted payment rate.

X = .60 * (national unadjusted payment rate).

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that, under the proposed CY 2017 OPPS policy for 
continuing to use the OMB labor market area delineations based on the 
2010 Decennial Census data for the wage indexes used under the IPPS, a 
hold harmless policy for the wage index may apply, as discussed in 
section II.C. of this proposed rule. The proposed wage index values 
assigned to each area reflect the geographic statistical areas (which 
are based upon OMB standards) to which hospitals are proposed to be 
assigned for FY 2017 under the IPPS, reclassifications through the 
MGCRB, section 1886(d)(8)(B) ``Lugar'' hospitals, reclassifications 
under section 1886(d)(8)(E) of the Act, as defined in Sec.  412.103 of 
the regulations, and hospitals designated as urban under section 601(g) 
of Public Law 98-21. (For further discussion of the proposed changes to 
the FY 2017 IPPS wage indexes, as applied to the CY 2017 OPPS, we refer 
readers to section II.C. of this proposed rule. We are proposing to 
continue to apply a wage index floor of 1.00 to frontier States, in 
accordance with section 10324 of the Affordable Care Act of 2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this proposed rule (which is available via the 
Internet on the CMS Web site) contains the qualifying counties and the 
proposed associated wage index increase developed for the FY 2017 IPPS, 
which are listed in Table 2 in the FY 2017 IPPS/LTCH PPS proposed rule 
and available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. This step is to be followed only if the 
hospital is not reclassified or redesignated under section 1886(d)(8) 
or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.

Xa is the labor-related portion of the national unadjusted payment rate 
(wage adjusted).

Xa = .60 * (national unadjusted payment rate) * applicable wage 
index.

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

Y is the nonlabor-related portion of the national unadjusted payment 
rate.

Y = .40 * (national unadjusted payment rate).
Adjusted Medicare Payment = Y + Xa.

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

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

    We are providing examples below of the calculation of both the 
proposed full and reduced national unadjusted payment rates that will 
apply to certain outpatient items and services performed by hospitals 
that meet and that fail to meet the Hospital OQR Program requirements, 
using the steps outlined above. For purposes of this example, we used a 
provider that is located in Brooklyn, New York that is assigned to CBSA 
35614. This provider bills one service that is assigned to APC 5071 
(Level 1 Excision/Biopsy/Incision and Drainage). The proposed CY 2017 
full national unadjusted payment rate for APC 5071 is approximately 
$531.31. The proposed reduced national unadjusted payment rate for APC 
5071 for a hospital that fails to meet the Hospital OQR Program 
requirements is approximately $520.68. This proposed reduced rate is 
calculated by multiplying the proposed reporting ratio of 0.980 by the 
proposed full unadjusted payment rate for APC 5071.
    The proposed FY 2017 wage index for a provider located in CBSA 
35614 in New York is 1.2775. The labor-related portion of the proposed 
full national unadjusted payment is approximately $407.25 (.60 * 
$531.31 * 1.2775). The labor-related portion of the proposed reduced 
national unadjusted payment is approximately $399.10 (.60 * $520.68 * 
1.2775). The nonlabor-related portion of the proposed full national 
unadjusted payment is approximately $212.52 (.40 * $531.31). The 
nonlabor-related portion of the proposed reduced national unadjusted 
payment is approximately

[[Page 45640]]

$208.27 (.40 * $520.68). The sum of the labor-related and nonlabor-
related portions of the proposed full national adjusted payment is 
approximately $619.77 ($407.25 + $212.52). The sum of the portions of 
the proposed reduced national adjusted payment is approximately $607.37 
($399.10 + $208.27).

I. Proposed Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in calendar years thereafter, shall not exceed 40 percent of 
the APC payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure performed in a year to the amount of the inpatient 
hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Part B 
coinsurance for preventive services furnished on and after January 1, 
2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. Proposed OPPS Copayment Policy
    For CY 2017, we are proposing to determine copayment amounts for 
new and revised APCs using the same methodology that we implemented 
beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS 
final rule with comment period (68 FR 63458).) In addition, we are 
proposing to use the same standard rounding principles that we have 
historically used in instances where the application of our standard 
copayment methodology would result in a copayment amount that is less 
than 20 percent and cannot be rounded, under standard rounding 
principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66687) in which we discuss our 
rationale for applying these rounding principles.) The proposed 
national unadjusted copayment amounts for services payable under the 
OPPS that would be effective January 1, 2017, are shown in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS Web site). As discussed in section XIII.E. of this proposed 
rule, for CY 2017, the proposed Medicare beneficiary's minimum 
unadjusted copayment and national unadjusted copayment for a service to 
which a reduced national unadjusted payment rate applies will equal the 
product of the reporting ratio and the national unadjusted copayment, 
or the product of the reporting ratio and the minimum unadjusted 
copayment, respectively, for the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs, and we finalized the 
following rules to determine copayment amounts in CY 2004 and 
subsequent years.
     When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
     If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than the prior year's rate, the copayment amount 
remains constant (unless the resulting coinsurance percentage is less 
than 20 percent).
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
     If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
     If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in that CY 2004 OPPS final rule with comment period that 
we would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment applies, and with section 1833(t)(3)(B) 
of the Act, which is consistent with the Congressional goal of 
achieving a 20-percent copayment percentage when fully phased in and 
gives the Secretary the authority to set rules for determining 
copayment amounts for new services. We further noted that the use of 
this methodology would, in general, reduce the beneficiary coinsurance 
rate and copayment amount for APCs for which the payment rate changes 
as the result of the reconfiguration of APCs and/or

[[Page 45641]]

recalibration of relative payment weights (68 FR 63459).
3. Proposed Calculation of an Adjusted Copayment Amount for an APC 
Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 5071, $106.26 is approximately 20 percent of the 
proposed full national unadjusted payment rate of $531.31. For APCs 
with only a minimum unadjusted copayment in Addenda A and B to this 
proposed rule (which are available via the Internet on the CMS Web 
site), the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

B is the beneficiary payment percentage.

B = National unadjusted copayment for APC/national unadjusted 
payment rate for APC.

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

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

    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.980.
    The proposed unadjusted copayments for services payable under the 
OPPS that would be effective January 1, 2017, are shown in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS Web site). We note that the proposed national unadjusted 
payment rates and copayment rates shown in Addenda A and B to this 
proposed rule reflect the proposed full CY 2017 OPD fee schedule 
increase factor discussed in section II.B. of this proposed rule.
    In addition, as noted above, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.

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

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

    CPT and Level II HCPCS codes are used to report procedures, 
services, items, and supplies under the hospital OPPS. Specifically, 
CMS recognizes the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures 
and medical services;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes, which are used primarily to identify 
products, supplies, temporary procedures, and services not described by 
CPT codes.
    CPT codes are established by the American Medical Association (AMA) 
and the Level II HCPCS codes are established by the CMS HCPCS 
Workgroup. These codes are updated and changed throughout the year. CPT 
and HCPCS code changes that affect the OPPS are published both through 
the annual rulemaking cycle and through the OPPS quarterly update 
Change Requests (CRs). CMS releases new Level II HCPCS codes to the 
public or recognizes the release of new CPT codes by the AMA and makes 
these codes effective (that is, the codes can be reported on Medicare 
claims) outside of the formal rulemaking process via OPPS quarterly 
update CRs. Based on our review, we assign the new CPT and Level II 
HCPCS codes to interim status indicator (SI) and APC assignments. These 
interim assignments are finalized in the OPPS/ASC final rules. This 
quarterly process offers hospitals access to codes that may more 
accurately describe items or services furnished and provides payment or 
more accurate payment for these items or services in a timelier manner 
than if we waited for the annual rulemaking process. We solicit public 
comments on these new codes and finalize our proposals related to these 
codes through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. For those items, 
procedures, or services not paid separately under the hospital OPPS, 
they are assigned to appropriate status indicators. Section XI. of this 
proposed rule provides a discussion of the various status indicators 
used under the OPPS. Certain payment status indicators provide separate 
payment while other payment status indicators do not.
    In Table 6 below, we summarize our current process for updating 
codes through our OPPS quarterly update CRs, seeking public comments, 
and finalizing the treatment of these new codes under the OPPS.

                            Table 6--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
  OPPS quarterly  update CR      Type of code           Effective date         Comments sought   When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2016...............  Level II HCPCS     April 1, 2016..............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               Codes.                                          proposed rule.    final rule with
                                                                                                 comment period.
July 1, 2016................  Level II HCPCS     July 1, 2016...............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               Codes.                                          proposed rule.    final rule with
                                                                                                 comment period.
                              Category I         July 1, 2016...............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               (certain vaccine                                proposed rule.    final rule with
                               codes) and III                                                    comment period.
                               CPT codes.
October 1, 2016.............  Level II HCPCS     October 1, 2016............  CY 2017 OPPS/ASC  CY 2018 OPPS/ASC
                               Codes.                                          final rule with   final rule with
                                                                               comment period.   comment period.

[[Page 45642]]

 
January 1, 2017.............  Level II HCPCS     January 1, 2017............  CY 2017 OPPS/ASC  CY 2018 OPPS/ASC
                               Codes.                                          final rule with   final rule with
                                                                               comment period.   comment period.
                              Category I and     January 1, 2017............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               III CPT Codes.*                                 proposed rule.    final rule with
                                                                                                 comment period.
----------------------------------------------------------------------------------------------------------------
* In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised
  process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be
  effective January 1. We refer readers to section III.A.3. of this CY 2017 OPPS/ASC proposed rule for further
  discussion of this issue.

1. Proposed Treatment of New CY 2016 Level II HCPCS and CPT Codes 
Effective April 1, 2016 and July 1, 2016 for Which We Are Soliciting 
Public Comments in This CY 2017 OPPS/ASC Proposed Rule
    Through the April 2016 OPPS quarterly update CR (Transmittal 3471, 
Change Request 9549, dated February 26, 2016), and the July 2016 OPPS 
quarterly update CR (Transmittal 3523, Change Request 9658, dated May 
13, 2016), we recognized several new HCPCS codes for separate payment 
under the OPPS.
    Effective April 1, 2016, we made effective 10 new Level II HCPCS 
codes and also assigned them to appropriate interim OPPS status 
indicators and APCs. Through the April 2016 OPPS quarterly update CR, 
we allowed separate payment for 10 new Level II HCPCS codes. Table 7 
below lists the 10 Level II HCPCS codes that were allowed for separate 
payment effective April 1, 2016.
    In this CY 2017 OPPS/ASC proposed rule, we are soliciting public 
comments on the proposed APC and status indicator assignments for the 
Level II HCPCS codes implemented on April 1, 2016 and listed in Table 7 
of this proposed rule. The proposed payment rates for these codes, 
where applicable, can be found in Addendum B to this proposed rule 
(which is available via the Internet on the CMS Web site).

       Table 7--New Level II HCPCS Codes Implemented in April 2016
------------------------------------------------------------------------
                                           Proposed CY
  CY 2016 HCPCS Code     CY 2016 Long      2017 status      Proposed CY
                          descriptor        indicator        2017 APC
------------------------------------------------------------------------
C9137................  Injection,                     G             1844
                        Factor VIII
                        (antihemophilic
                        factor,
                        recombinant)
                        PEGylated, 1
                        I.U.
C9138................  Injection,                     G             1846
                        Factor VIII
                        (antihemophilic
                        factor,
                        recombinant)
                        (Nuwiq), 1 I.U.
C9461................  Choline C 11,                  G             9461
                        diagnostic, per
                        study dose.
C9470................  Injection,                     G             9470
                        aripiprazole
                        lauroxil, 1 mg.
C9471................  Hyaluronan or                  G             9471
                        derivative,
                        Hymovis, for
                        intra-articular
                        injection, 1 mg.
C9472................  Injection,                     G             9472
                        talimogene
                        laherparepvec,
                        1 million
                        plaque forming
                        units (PFU).
C9473................  Injection,                     G             9473
                        mepolizumab, 1
                        mg.
C9474................  Injection,                     G             9474
                        irinotecan
                        liposome, 1 mg.
C9475................  Injection,                     G             9475
                        necitumumab, 1
                        mg.
J7503................  Tacrolimus,                    G             1845
                        extended
                        release,
                        (Envarsus XR),
                        oral, 0.25 mg.
------------------------------------------------------------------------

    Effective July 1, 2016, we made effective several new CPT and Level 
II HCPCS codes and also assigned them to appropriate interim OPPS 
status indicators and APCs. Through the July 2016 OPPS quarterly update 
CR (Transmittal 3523, Change Request 9658, dated May 13, 2016), we 
assigned interim OPPS status indicators and APCs for nine new Category 
III CPT codes and nine Level II HCPCS codes that were made effective 
July 1, 2016. Specifically, as displayed in Table 8 below, we made 
interim OPPS status indicators and APC assignments for Category III CPT 
codes 0438T, 0440T, 0441T, 0442T, and 0443T, and Level II HCPCS codes 
C9476, C9477, C9478, C9479, C9480, Q5102, Q9981, Q9982, and Q9983. We 
note that Category III CPT codes 0437T, 0439T, 0444T, and 0445T are 
assigned to OPPS status indicator ``N'' to indicate that the services 
described by the codes are packaged and their payment is included in 
the primary procedure codes reported with these codes.
    In addition, we note that HCPCS code Q9982 replaced HCPCS code 
C9459 (Flutemetamol f18, diagnostic, per study dose, up to 5 
millicuries), effective July 1, 2016. Similarly, HCPCS code Q9983 
replaced HCPCS code C9458 (Florbetaben f18, diagnostic, per study dose, 
up to 8.1 millicuries), effective July 1, 2016. Because HCPCS code 
Q9982 and Q9983 describe the same drugs as HCPCS code C9459 and C9458, 
respectively, we are proposing to continue their pass-through payment 
status, and assign the HCPCS Q-codes to the same APC and status 
indicators as their predecessor HCPCS C-codes, as shown in Table 8.
    In addition, the CPT Editorial Panel established CPT code 0438T, 
effective July 1, 2016. We note that CPT code 0438T replaced HCPCS code 
C9743 (Injection/implantation of bulking or spacer material (any 
type)), effective July 1, 2016. Because CPT code 0438T describes the 
same procedure as HCPCS code C9743, we are proposing to assign the CPT 
code to the same APC and status indicator as its predecessor HCPCS C-
code, as shown in Table 8.
    In this CY 2017 OPPS/ASC proposed rule, we are soliciting public 
comments on the proposed APC and status indicator assignments for the 
CPT and Level II HCPCS codes implemented on July 1, 2016. Table 8 below 
lists the CPT and Level II HCPCS codes that were implemented on July 1, 
2016, along with the proposed status indicators and proposed APC 
assignments for CY 2017.

[[Page 45643]]



  Table 8--New Category III CPT and Level II HCPCS Codes Implemented in
                                July 2016
------------------------------------------------------------------------
                                           Proposed CY
  CY 2016 CPT/HCPCS      CY 2016 Long      2017 status      Proposed CY
         Code             descriptor        indicator        2017 APC
------------------------------------------------------------------------
C9476................  Injection,                     G             9476
                        daratumumab, 10
                        mg.
C9477................  Injection,                     G             9477
                        elotuzumab, 1
                        mg.
C9478................  Injection,                     G             9478
                        sebelipase
                        alfa, 1 mg.
C9479................  Injection,                     G             9479
                        ciprofloxacin
                        otic
                        suspension, per
                        vial.
C9480................  Injection,                     G             9480
                        trabectedin,
                        0.1 mg.
Q5102................  Injection,                     K             1847
                        Infliximab,
                        Biosimilar, 10
                        mg.
Q9981................  Rolapitant,                    K             1761
                        oral, 1 mg.
Q9982 *..............  Flutemetamol                   G             9459
                        F18,
                        diagnostic, per
                        study dose, up
                        to 5
                        millicuries.
Q9983 **.............  Florbetaben f18,               G             9458
                        diagnostic, per
                        study dose, up
                        to 8.1
                        millicuries.
0437T................  Implantation of                N              N/A
                        non-biologic or
                        synthetic
                        implant (eg,
                        polypropylene)
                        for fascial
                        reinforcement
                        of the
                        abdominal wall
                        (List
                        separately in
                        addition to
                        primary
                        procedure).
0438T ***............  Transperineal                  T             5374
                        placement of
                        biodegradable
                        material, peri-
                        prostatic (via
                        needle), single
                        or multiple,
                        includes image
                        guidance.
0439T................  Myocardial                     N              N/A
                        contrast
                        perfusion
                        echocardiograph
                        y; at rest or
                        with stress,
                        for assessment
                        of myocardial
                        ischemia or
                        viability (List
                        separately in
                        addition to
                        primary
                        procedure).
0440T................  Ablation,                     J1             5361
                        percutaneous,
                        cryoablation,
                        includes
                        imaging
                        guidance; upper
                        extremity
                        distal/
                        peripheral
                        nerve.
0441T................  Ablation,                     J1             5361
                        percutaneous,
                        cryoablation,
                        includes
                        imaging
                        guidance; lower
                        extremity
                        distal/
                        peripheral
                        nerve.
0442T................  Ablation,                     J1             5361
                        percutaneous,
                        cryoablation,
                        includes
                        imaging
                        guidance; nerve
                        plexus or other
                        truncal nerve
                        (eg, brachial
                        plexus,
                        pudendal nerve).
0443T................  Real time                      T             5373
                        spectral
                        analysis of
                        prostate tissue
                        by fluorescence
                        spectroscopy.
0444T................  Initial                        N              N/A
                        placement of a
                        drug-eluting
                        ocular insert
                        under one or
                        more eyelids,
                        including
                        fitting,
                        training, and
                        insertion,
                        unilateral or
                        bilateral.
0445T................  Subsequent                     N              N/A
                        placement of a
                        drug-eluting
                        ocular insert
                        under one or
                        more eyelids,
                        including re-
                        training, and
                        removal of
                        existing
                        insert,
                        unilateral or
                        bilateral.
------------------------------------------------------------------------
* HCPCS code C9459 (Flutemetamol f18, diagnostic, per study dose, up to
  5 millicuries) was deleted June 30, 2016, and replaced with HCPCS code
  Q9982 effective July 1, 2016.
** HCPCS code C9458 (Florbetaben f18, diagnostic, per study dose, up to
  8.1 millicuries) was deleted June 30, 2016, and replaced with HCPCS
  code Q9983 effective July 1, 2016.
*** HCPCS code C9743 (Injection/implantation of bulking or spacer
  material (any type) with or without image guidance (not to be used if
  a more specific code applies) was deleted June 30, 2016 and replaced
  with CPT code 0438T effective July 1, 2016.

    In summary, we are soliciting public comments on the proposed CY 
2017 status indicators and APC assignments for the Level II HCPCS codes 
and the Category III CPT codes that were made effective April 1, 2016, 
and July 1, 2016. These codes are listed in Tables 7 and 8 of this 
proposed rule. We also are proposing to finalize the status indicator 
and APC assignments and payment rates for these codes in the CY 2017 
OPPS/ASC final rule with comment period. The proposed payment rates for 
these codes can be found in Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site).
2. Proposed Process for New Level II HCPCS Codes That Will Be Effective 
October 1, 2016 and January 1, 2017 for Which We Will Be Soliciting 
Public Comments in the CY 2017 OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new 
Level II HCPCS codes that are effective January 1 in the final rule 
with comment period, thereby updating the OPPS for the following 
calendar year. These codes are released to the public via the CMS HCPCS 
Web site, and also through the January OPPS quarterly update CRs. In 
the past, we also released new Level II HCPCS codes that are effective 
October 1 through the October OPPS quarterly update CRs and 
incorporated these new codes in the final rule with comment period, 
thereby updating the OPPS for the following calendar year.
    For CY 2017, we are proposing to continue our established policy of 
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final 
rule with comment period to those new Level II HCPCS codes that are 
effective October 1 and January 1 to indicate that we are assigning 
them an interim payment status which is subject to public comment. 
Specifically, the Level II HCPCS codes that will be effective October 
1, 2016 and January 1, 2017 would be flagged with comment indicator 
``NI'' in Addendum B to the CY 2017 OPPS/ASC final rule with comment 
period to indicate that we have assigned the codes an interim OPPS 
payment status for CY 2017. We will be inviting public comments in the 
CY 2017 OPPS/ASC final rule with comment period on the status 
indicator, APC assignments, and payment rates for these codes that 
would be finalized in the CY 2018 OPPS/ASC final rule with comment 
period.
3. Proposed Treatment of New and Revised CY 2017 Category I and III CPT 
Codes That Will Be Effective January 1, 2017, for Which We Are 
Soliciting Public Comments in This CY 2017 OPPS/ASC Proposed Rule
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APC and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the codes that would be 
effective January 1 in the OPPS/ASC proposed rules, along with proposed 
APC and status indicator assignments for them, and to finalize the APC 
and status indicator assignments in the OPPS/ASC final rules beginning 
with the CY 2016 OPPS update. For those new/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish and use HCPCS G-codes that mirror 
the predecessor CPT codes and retain the current APC and status 
indicator assignments for a year until we can

[[Page 45644]]

propose APC and status indicator assignments in the following year's 
rulemaking cycle. We note that even if we find that we need to create 
HCPCS G-codes in place of certain CPT codes for the MPFS proposed rule, 
we do not anticipate that these HCPCS G-codes will always be necessary 
for OPPS purposes. We will make every effort to include proposed APC 
and status indicator assignments for all new and revised CPT codes that 
the AMA makes publicly available in time for us to include them in the 
proposed rule, and to avoid the resort to HCPCS G-codes and the 
resulting delay in utilization of the most current CPT codes. Also, we 
finalized our proposal to make interim APC and status indicator 
assignments for CPT codes that are not available in time for the 
proposed rule and that describe wholly new services (such as new 
technologies or new surgical procedures), solicit public comments, and 
finalize the specific APC and status indicator assignments for those 
codes in the following year's final rule.
    For the CY 2017 OPPS update, we received the CY 2017 CPT codes from 
AMA in time for inclusion in this CY 2017 OPPS/ASC proposed rule. The 
new and revised CY 2017 Category I and III CPT codes can be found in 
Addendum B to this proposed rule (which is available via the Internet 
on the CMS Web site) and are assigned to new comment indicator ``NP'' 
to indicate that the code is new for the next calendar year or the code 
is an existing code with substantial revision to its code descriptor in 
the next calendar year as compared to current calendar year with a 
proposed APC assignment and that comments will be accepted on the 
proposed APC assignment and status indicator.
    Further, we remind readers that the CPT code descriptors that 
appear in Addendum B are short descriptors and do not accurately 
describe the complete procedure, service, or item described by the CPT 
code. Therefore, we are including the 5-digit placeholder codes and 
their long descriptors for the new and revised CY 2017 CPT codes in 
Addendum O to this proposed rule (which is available via the Internet 
on the CMS Web site) so that the public can adequately comment on our 
proposed APCs and status indicator assignments. The 5-digit placeholder 
codes can be found in Addendum O, specifically under the column labeled 
``CY 2017 OPPS/ASC Proposed Rule 5-Digit Placeholder Code,'' to this 
proposed rule. The final CPT code numbers will be included in the CY 
2017 OPPS/ASC final rule with comment period. We note that not every 
code listed in Addendum O is subject to comment. For the new/revised 
Category I and III CPT codes, we are requesting comments on only those 
codes that are assigned to comment indicator ``NP.''
    In summary, we are soliciting public comments on the proposed CY 
2017 status indicators and APC assignments for the new and revised 
Category I and III CPT codes that will be effective January 1, 2017. 
The CPT codes are listed in Addendum B to this proposed rule with short 
descriptors only. We list them again in Addendum O to this proposed 
rule with long descriptors. We also are proposing to finalize the 
status indicator and APC assignments for these codes (with their final 
CPT code numbers) in the CY 2017 OPPS/ASC final rule with comment 
period. The proposed status indicator and APC assignment for these 
codes can be found in Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site).

B. Proposed OPPS Changes--Variations Within APCs

1. Background
    Section 1833(t)(2)(A) of the Act requires the Secretary to develop 
a classification system for covered hospital outpatient department 
services. Section 1833(t)(2)(B) of the Act provides that the Secretary 
may establish groups of covered OPD services within this classification 
system, so that services classified within each group are comparable 
clinically and with respect to the use of resources. In accordance with 
these provisions, we developed a grouping classification system, 
referred to as Ambulatory Payment Classifications (APCs), as set forth 
in Sec.  419.31 of the regulations. We use Level I and Level II HCPCS 
codes to identify and group the services within each APC. The APCs are 
organized such that each group is homogeneous both clinically and in 
terms of resource use. Using this classification system, we have 
established distinct groups of similar services. We also have developed 
separate APC groups for certain medical devices, drugs, biologicals, 
therapeutic radiopharmaceuticals, and brachytherapy devices that are 
not packaged into the payment for the procedure.
    We have packaged into the payment for each procedure or service 
within an APC group the costs associated with those items and services 
that are typically ancillary and supportive to a primary diagnostic or 
therapeutic modality and, in those cases, are an integral part of the 
primary service they support. Therefore, we do not make separate 
payment for these packaged items or services. In general, packaged 
items and services include, but are not limited to, the items and 
services listed in Sec.  419.2(b) of the regulations. A further 
discussion of packaged services is included in section II.A.3. of this 
proposed rule.
    Under the OPPS, we generally pay for covered hospital outpatient 
services on a rate-per-service basis, where the service may be reported 
with one or more HCPCS codes. Payment varies according to the APC group 
to which the independent service or combination of services is 
assigned. For CY 2017, we are proposing that each APC relative payment 
weight represents the hospital cost of the services included in that 
APC, relative to the hospital cost of the services included in APC 5012 
(Clinic Visits and Related Services). The APC relative payment weights 
are scaled to APC 5012 because it is the hospital clinic visit APC and 
clinic visits are among the most frequently furnished services in the 
hospital outpatient setting.
2. Application of the 2 Times Rule
    In accordance with section 1833(t)(2) of the Act and Sec.  419.31 
of the regulations, we annually review the items and services within an 
APC group to determine, with respect to comparability of the use of 
resources, if the highest cost for an item or service in the APC group 
is more than 2 times greater than the lowest cost for an item or 
service within the same APC group (referred to as the ``2 times 
rule''). The statute authorizes the Secretary to make exceptions to the 
2 times rule in unusual cases, such as low-volume items and services 
(but the Secretary may not make such an exception in the case of a drug 
or biological that has been designated as an orphan drug under section 
526 of the Federal Food, Drug, and Cosmetic Act). In determining the 
APCs with a 2 times rule violation, we consider only those HCPCS codes 
that are significant based on the number of claims. We note that, for 
purposes of identifying significant procedure codes for examination 
under the 2 times rule, we consider procedure codes that have more than 
1,000 single major claims or procedure codes that have both greater 
than 99 single major claims and contribute at least 2 percent of the 
single major claims used to establish the APC cost to be significant 
(75 FR 71832). This longstanding definition of when a procedure code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 claims (or less than

[[Page 45645]]

1,000 claims) is negligible within the set of approximately 100 million 
single procedure or single session claims we use for establishing 
costs. Similarly, a procedure code for which there are fewer than 99 
single claims and which comprises less than 2 percent of the single 
major claims within an APC will have a negligible impact on the APC 
cost. In this section of this proposed rule, for CY 2017, we are 
proposing to make exceptions to this limit on the variation of costs 
within each APC group in unusual cases, such as low-volume items and 
services.
    For the CY 2017 OPPS, we have identified the APCs with violations 
of the 2 times rule. Therefore, we are proposing changes to the 
procedure codes assigned to these APCs in Addendum B to this proposed 
rule. We note that Addendum B does not appear in the printed version of 
the Federal Register as part of this CY 2017 OPPS/ASC proposed rule. 
Rather, it is published and made available via the Internet on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate 
a violation of the 2 times rule or to improve clinical and resource 
homogeneity, we are proposing to reassign these procedure codes to new 
APCs that contain services that are similar with regard to both their 
clinical and resource characteristics. In many cases, the proposed 
procedure code reassignments and associated APC reconfigurations for CY 
2017 included in this proposed rule are related to changes in costs of 
services that were observed in the CY 2015 claims data newly available 
for CY 2017 ratesetting. We also are proposing changes to the status 
indicators for some procedure codes that are not specifically and 
separately discussed in this proposed rule. In these cases, we are 
proposing to change the status indicators for these procedure codes 
because we believe that another status indicator would more accurately 
describe their payment status from an OPPS perspective based on the 
policies that we are proposing for CY 2017. Addendum B to this CY 2017 
OPPS/ASC proposed rule identifies with a comment indicator ``CH'' those 
procedure codes for which we are proposing a change to the APC 
assignment or status indicator, or both, that were initially assigned 
in the April 1, 2016 OPPS Addendum B Update (available via the Internet 
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html).
3. Proposed APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we are proposing for CY 
2017, we reviewed all of the APCs to determine which APCs would not 
meet the requirements of the 2 times rule. We used the following 
criteria to evaluate whether to propose exceptions to the 2 times rule 
for affected APCs:
     Resource homogeneity;
     Clinical homogeneity;
     Hospital outpatient setting utilization;
     Frequency of service (volume); and
     Opportunity for upcoding and code fragments.
    Based on the CY 2015 claims data available for this CY 2017 
proposed rule, we found 4 APCs with violations of the 2 times rule. We 
applied the criteria as described above to identify the APCs that we 
are proposing to make exceptions for under the 2 times rule for CY 
2017, and identified 4 APCs that met the criteria for an exception to 
the 2 times rule based on the CY 2015 claims data available for this 
proposed rule. We did not include in that determination those APCs 
where a 2 times rule violation was not a relevant concept, such as APC 
5401 (Dialysis), which has a proposed APC geometric mean cost of 
approximately $585. Therefore, we have only identified those APCs, 
including those with criteria-based costs, such as device-dependent 
CPT/HCPCS codes, with 2 times rule violations.
    For a detailed discussion of these criteria, we refer readers to 
the April 7, 2000 OPPS final rule with comment period (65 FR 18457 and 
18458).
    We note that, for cases in which a recommendation by the Panel 
appears to result in or allow a violation of the 2 times rule, we may 
accept the Panel's recommendation because those recommendations are 
based on explicit consideration (that is, a review of the latest OPPS 
claims data and group discussion of the issue) of resource use, 
clinical homogeneity, site of service, and the quality of the claims 
data used to determine the APC payment rates.
    Table 9 of this proposed rule lists the 4 APCs that we are 
proposing to make exceptions for under the 2 times rule for CY 2017 
based on the criteria cited above and claims data submitted between 
January 1, 2015, and December 31, 2015, and processed on or before 
December 31, 2015. For the final rule with comment period, we intend to 
use claims data for dates of service between January 1, 2015, and 
December 31, 2015, that were processed on or before June 30, 2016, and 
updated CCRs, if available.
    The geometric mean costs for covered hospital outpatient services 
for these and all other APCs that were used in the development of this 
proposed rule can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

    Table 9--Proposed APC Exceptions to the 2 Times Rule for CY 2017
------------------------------------------------------------------------
       Proposed CY 2017 APC              Proposed CY 2017 APC title
------------------------------------------------------------------------
5521..............................  Level 1 Diagnostic Radiology without
                                     Contrast.
5735..............................  Level 5 Minor Procedures.
5771..............................  Cardiac Rehabilitation.
5841..............................  Psychotherapy.
------------------------------------------------------------------------

C. Proposed New Technology APCs

1. Background
    In the November 30, 2001 final rule (66 FR 59903), we finalized 
changes to the time period a service was eligible for payment under a 
New Technology APC. Beginning in CY 2002, we retain services within New 
Technology APC groups until we gather sufficient claims data to enable 
us to assign the service to an appropriate clinical APC. This policy 
allows us to move a service from a New Technology APC in less than 2 
years if sufficient data are available. It also allows us to retain a 
service in a New Technology APC for more than 2 years if sufficient 
data upon which to base a decision for reassignment have not been 
collected.
    For CY 2016, there are 48 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology--Level 1A 
($0-$10)) through the highest cost band assigned to APC 1599 (New 
Technology--Level 48 ($90,001-$100,000)). In the CY 2004 OPPS final 
rule with comment period (68 FR 63416), we restructured the New 
Technology APCs to make the cost intervals more consistent across 
payment levels and refined the cost bands for these APCs to retain two 
parallel sets of New Technology APCs, one set with a status indicator 
of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid 
under OPPS; separate APC payment) and the other set with a status 
indicator of ``T'' (Significant Procedure, Multiple Reduction Applies. 
Paid under OPPS; separate APC payment). These current

[[Page 45646]]

New Technology APC configurations allow us to price new technology 
services more appropriately and consistently.
    We note that the cost bands for the New Technology APCs, 
specifically, APCs 1491 through 1599, vary with increments ranging from 
$10 to $10,000. These cost bands identify the APCs to which new 
technology procedures and services with estimated service costs that 
fall within those cost bands are assigned under the OPPS. Payment for 
each APC is made at the mid-point of the APC's assigned cost band. For 
example, payment for New Technology APC 1507 (New Technology Level 7 
($500-$600)) is made at approximately $550.
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
parties request that Medicare make higher payment amounts under the New 
Technology APCs for new procedures during that transitional phase. 
These requests, and their accompanying estimates for expected total 
patient utilization, often reflect very low rates of patient use of 
expensive equipment, resulting in high per use costs for which 
requesters believe that Medicare should make full payment. However, we 
believe that it is most appropriate to set payment rates based on costs 
that are associated with providing care to Medicare beneficiaries. As 
claims data for new services become available, we use these data to 
establish payment rates for new technology APCs.
2. Proposed Additional New Technology APC Groups
    As stated above, for the CY 2016 update, there are 48 levels of New 
Technology APC groups with two parallel status indicators; one set with 
a status indicator of ``S'' and the other set with a status indicator 
of ``T.'' To improve our ability to pay appropriately for new 
technology services and procedures, we are proposing to expand the New 
Technology APC groups by adding 3 more levels, specifically, adding New 
Technology Levels 49 through 51. We are proposing this expansion to 
accommodate the assignment of retinal prosthesis implantation 
procedures to a New Technology APC, which is discussed in section 
III.C.3. of this proposed rule. Therefore, for the CY 2017 OPPS update, 
we are proposing to establish six new groups of New Technology APCs--
APCs 1901 through 1906 (for New Technology APC Levels 49 through 51) 
with procedures assigned to both OPPS status indicators ``S'' and 
``T.'' These new groups of APCs have the same payment levels with one 
set subject to the multiple procedure payment reduction (procedures 
assigned to status indicator ``T'') and the other set not subject to 
the multiple procedure payment reduction (procedures assigned to status 
indicator ``S''). Each proposed set of New Technology APC groups has 
identical group titles, payment rates, and minimum unadjusted 
copayments, but a different status indicator assignment. Table 10 below 
includes the complete list of the proposed additional six New 
Technology APC groups for CY 2017.

   Table 10--Proposed Additional New Technology APC Groups for CY 2017
------------------------------------------------------------------------
                                  Proposed CY 2017 APC   Proposed status
    Proposed New CY 2017 APC           group title           indicator
------------------------------------------------------------------------
1901...........................  New Technology--Level                S
                                  49 ($100,001-
                                  $120,000).
1902...........................  New Technology--Level                T
                                  49 ($100,001-
                                  $120,000).
1903...........................  New Technology--Level                S
                                  50 ($120,001-
                                  $140,000).
1904...........................  New Technology--Level                T
                                  50 ($120,001-140,000).
1905...........................  New Technology--Level                S
                                  51 ($140,001-
                                  $160,000).
1906...........................  New Technology--Level                T
                                  51 ($140,001-160,000).
------------------------------------------------------------------------

    The proposed payment rates for New Technology APC 1901 through 1906 
can be found in Addendum A to this proposed rule (which is available 
via the Internet on the CMS Web site).
3. Proposed Procedures Assigned to New Technology APC Groups for CY 
2017
a. Overall Proposal
    As we explained in the CY 2002 OPPS final rule with comment period 
(66 FR 59902), we generally retain a procedure in the New Technology 
APC to which it is initially assigned until we have obtained sufficient 
claims data to justify reassignment of the procedure to a clinically 
appropriate APC. However, in cases where we find that our initial New 
Technology APC assignment was based on inaccurate or inadequate 
information (although it was the best information available at the 
time), or where the New Technology APCs are restructured, we may, based 
on more recent resource utilization information (including claims data) 
or the availability of refined New Technology APC cost bands, reassign 
the procedure or service to a different New Technology APC that more 
appropriately reflects its cost (66 FR 59903).
    Consistent with our current policy, for CY 2017, we are proposing 
to retain services within New Technology APC groups until we obtain 
sufficient claims data to justify reassignment of the service to a 
clinically appropriate APC. The flexibility associated with this policy 
allows us to reassign a service from a New Technology APC in less than 
2 years if sufficient claims data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient claims data upon which to base a decision for reassignment 
have not been obtained (66 FR 59902).
b. Retinal Prosthesis Implant Procedure
    CPT code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intra-ocular retinal 
electrode array, with vitrectomy) describes the implantation of a 
retinal prosthesis, specifically, a procedure involving use of the 
Argus[supreg] II Retinal Prosthesis System. This first retinal 
prosthesis was approved by the FDA in 2013 for adult patients diagnosed 
with advanced retinitis pigmentosa. Pass-through payment status was 
granted for the Argus[supreg] II device under HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components) beginning 
October 1, 2013, and expired on December 31, 2015. We note that after 
pass-through payment status expires for a medical device, the payment 
for the device is packaged into the payment for the associated surgical 
procedure. Consequently, for CY 2016, the procedure described by HCPCS 
code

[[Page 45647]]

C1841 was assigned to OPPS status indicator ``N'' to indicate that 
payment for the procedure is packaged and included in the payment rate 
for the surgical procedure described by CPT code 0100T. For CY 2016, 
CPT code 0100T is assigned to APC 1599 (New Technology--Level 48 
($90,001-$100,000)), which has a CY 2016 payment rate of $95,000. This 
payment includes both the surgical procedure (CPT code 0100T) and the 
use of the Argus[supreg] II device (HCPCS code C1841). However, 
stakeholders (including the device manufacturer and hospitals) believe 
that the CY 2016 payment rate for procedures involving the 
Argus[supreg] II System is insufficient to cover the hospital cost of 
performing the procedure, which includes the cost of the retinal 
prosthesis, which has a retail price of approximately $145,000.
    For the CY 2017 update, analysis of the CY 2015 OPPS claims data 
used for this CY 2017 proposed rule shows 5 single claims (out of 7 
total claims) for CPT code 0100T, with a geometric mean cost of 
approximately $141,900 based on claims submitted between January 1, 
2015, through December 31, 2015, and processed through December 31, 
2015. We note that the final payment rate in the CY 2017 OPPS/ASC final 
rule with comment period will be based on claims submitted between 
January 1, 2015, through December 31, 2015, and processed through June 
30, 2016. Based on the latest OPPS claims data available for this 
proposed rule and our further understanding of the Argus[supreg] II 
procedure, we are proposing to reassign the procedure described by CPT 
code 0100T from APC 1599 to APC 1906 (New Technology--Level 51 
($140,001-$160,000)), which has a proposed payment rate of 
approximately $150,000 for CY 2017. We believe that APC 1906 is the 
most appropriate APC assignment for the Argus[supreg] II procedure 
described by CPT code 0100T. We note that this payment rate includes 
the cost of both the surgical procedure, including the cost of the 
retinal prosthesis (noted above) (CPT code 0100T), and the cost of the 
Argus[supreg] II device (HCPCS code C1841). We are inviting public 
comments on this proposal.

D. Proposed OPPS APC-Specific Policies

1. Imaging
    As a part of our CY 2016 comprehensive review of the structure of 
the APCs and procedure code assignments, we restructured the APCs that 
contain imaging services (80 FR 70392). The purpose of this 
restructuring of the OPPS APC groupings for imaging services was to 
improve the clinical and resource homogeneity of the services 
classified within the imaging APCs. Recently some stakeholders that 
provide imaging services in hospitals recommended some further 
restructuring of the OPPS imaging APCs, again for the purpose of 
improving the clinical and resource homogeneity of the services 
classified within these APCs. After reviewing the stakeholder 
recommendations, we agree that further improvements can be achieved by 
making further changes to the structure of the APC groupings of the 
imaging procedures classified within the imaging APCs. Therefore, for 
CY 2017, we are proposing to make further changes to the structure of 
the imaging APCs. Below in Table 11 we list the CY 2016 imaging APCs, 
and in Table 12 we list our proposed CY 2017 changes to the imaging 
APCs. This proposal would consolidate the imaging APCs from 17 APCs in 
CY 2016 to 8 in CY 2017. The specific APC assignments for each service 
grouping are listed in Addendum B to this proposed rule, which is 
available via the Internet on the CMS Web site. We note that some of 
the imaging procedures are assigned to APCs that are not listed in the 
tables below (for example, the vascular procedures APCs). Also, the 
nuclear medicine services APCs are not included in this proposal. We 
are inviting public comments on our proposal to consolidate the imaging 
APCs from 17 APCs in CY 2016 to 8 in CY 2017.

                     Table 11--CY 2016 Imaging APCs
------------------------------------------------------------------------
                                    CY 2016 APC Group     CY 2016 status
          CY 2016 APC                     title             indicator
------------------------------------------------------------------------
5521...........................  Level 1 X-Ray and                    S
                                  Related Services.
5522...........................  Level 2 X-Ray and                    S
                                  Related Services.
5523...........................  Level 3 X-Ray and                    S
                                  Related Services.
5524...........................  Level 4 X-Ray and                    S
                                  Related Services.
5525...........................  Level 5 X-Ray and                    S
                                  Related Services.
5526...........................  Level 6 X-Ray and                    S
                                  Related Services.
5531...........................  Level 1 Ultrasound and               S
                                  Related Services.
5532...........................  Level 2 Ultrasound and               S
                                  Related Services.
5533...........................  Level 3 Ultrasound and               S
                                  Related Services.
5534...........................  Level 4 Ultrasound and               S
                                  Related Services.
5561...........................  Level 1 Echocardiogram               S
                                  with Contrast.
5562...........................  Level 1 Echocardiogram               S
                                  with Contrast.
5570...........................  Computed Tomography                  S
                                  without Contrast.
5571...........................  Level 1 Computed                     S
                                  Tomography with
                                  Contrast and Computed
                                  Tomography
                                  Angiography.
5572...........................  Level 2 Computed                     S
                                  Tomography with
                                  Contrast and Computed
                                  Tomography
                                  Angiography.
5581...........................  Magnetic Resonance                   S
                                  Imaging and Magnetic
                                  Resonance Angiography
                                  without Contrast.
5582...........................  Magnetic Resonance                   S
                                  Imaging and Magnetic
                                  Resonance Angiography
                                  with Contrast.
------------------------------------------------------------------------


                 Table 12--Proposed CY 2017 Imaging APCs
------------------------------------------------------------------------
                                                           Proposed CY
      Proposed CY 2017 APC        Proposed CY 2017 APC     2017 status
                                       group title          indicator
------------------------------------------------------------------------
5521...........................  Level 1 Diagnostic                   S
                                  Radiology without
                                  Contrast.
5522...........................  Level 2 Diagnostic                   S
                                  Radiology without
                                  Contrast.
5523...........................  Level 3 Diagnostic                   S
                                  Radiology without
                                  Contrast.

[[Page 45648]]

 
5524...........................  Level 4 Diagnostic                   S
                                  Radiology without
                                  Contrast.
5525...........................  Level 5 Diagnostic                   S
                                  Radiology without
                                  Contrast.
5571...........................  Level 1 Diagnostic                   S
                                  Radiology with
                                  Contrast.
5572...........................  Level 2 Diagnostic                   S
                                  Radiology with
                                  Contrast.
5573...........................  Level 3 Diagnostic                   S
                                  Radiology with
                                  Contrast.
------------------------------------------------------------------------

2. Strapping and Cast Application (APCs 5101 and 5102)
    For the CY 2016 update, APCs 5101 (Level 1 Strapping and Cast 
Application) and 5102 (Level 2 Strapping and Cast Application) are 
assigned to OPPS status indicator ``S'' (Procedure or Service, Not 
Discounted When Multiple; Paid under OPPS; separate APC payment) to 
indicate that the procedures and/or services assigned to these APCs are 
not discounted when two or more services are billed on the same date of 
service.
    For the CY 2017 update, based on our review of the procedures 
assigned to APCs 5101 and 5102, we are proposing to revise the status 
indicator assignment for these procedures from ``S'' to ``T'' 
(Procedure or Service, Multiple Procedure Reduction Applies; Paid under 
OPPS; separate APC payment) to indicate that the services are paid 
separately under OPPS, but a multiple procedure payment reduction 
applies when two or more services assigned to status indicator ``T'' 
are billed on the same date of service. Because the procedures assigned 
to APCs 5101 and 5102 are primarily associated with surgical 
treatments, we believe that the proposed reassignment of these 
procedures to status indicator ``T'' is appropriate and ensures 
adequate payment for the procedures, even when the multiple procedure 
discounting policy applies. Consequently, we also are proposing to 
revise the status indicator assignment for APCs 5101 and 5102 from 
``S'' to ``T'' for the CY 2017 OPPS update to appropriately categorize 
the procedures assigned to these two APCs.
3. Transprostatic Urethral Implant Procedure
    The procedure described by HCPCS code C9740 (Cystourethroscopy, 
with insertion of transprostatic implant; 4 or more implants) is one of 
two procedure codes associated with the UroLift System, which is used 
to treat patients diagnosed with benign prostatic hyperplasia (BPH). 
This procedure code was assigned to New Technology APC 1564 (New 
Technology--Level 27 ($4500-$5000) with a payment rate of $4,750 on 
April 1, 2014, when the HCPCS C-code was established. We continued this 
APC assignment for CY 2015. For the CY 2016 update, we revised the APC 
assignment for the procedure described by HCPCS code C9740 from APC 
1564 to APC 1565 (New Technology--Level 28 ($5000-$5500), with a 
payment rate of $5,250 based on the OPPS claims data used for the CY 
2016 OPPS ratesetting. We further discussed the APC reassignment for 
the procedure described by HCPCS code C9740 in the CY 2016 OPPS/ASC 
final rule (80 FR 70376 through 70377).
    For the CY 2017 update, review of our claims data for the procedure 
described by HCPCS code C9740 shows a geometric mean cost of 
approximately $6,312 based on 585 single claims (out of 606 total 
claims), which is based on claims submitted between January 1, 2015 
through December 31, 2015 and processed through December 31, 2015. We 
note that the final CY 2017 payment rates that will be included in the 
CY 2017 OPPS/ASC final rule with comment period will be based on claims 
submitted between January 1, 2015, through December 31, 2015, and 
processed through June 30, 2016. Based on the latest OPPS claims data 
available for this proposed rule, we are proposing to reassign the 
procedure described by HCPCS code C9740 from APC 1565 to APC 5376 
(Level 6 Urology and Related Services), which has a geometric mean cost 
of approximately $7,723. We believe that the proposed reassignment is 
appropriate because the geometric mean cost of approximately $6,312 for 
the procedure described by HCPCS code C9740 is similar to the geometric 
mean cost of $7,723 for APC 5376. Therefore, we are proposing to 
reassign the procedure described by HCPCS code C9740 from APC 1565 to 
APC 5376 for the CY 2017 update. The proposed CY 2017 payment rate for 
the procedure described by HCPCS code C9740 is included in Addendum B 
to this proposed rule (which is available via the Internet on the CMS 
Web site).

IV. Proposed OPPS Payment for Devices

A. Proposed Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
    Section 1833(t)(6)(B)(iii) of the Act sets forth the period for 
which a device category eligible for transitional pass-through payments 
under the OPPS may be in effect. The implementing regulation at 42 CFR 
419.66(g) provides that this pass-through payment eligibility period 
begins on the date CMS establishes a particular transitional pass-
through category of devices. The eligibility period is for at least 2 
years but no more than 3 years. We may establish a new device category 
for pass-through payment in any quarter. Under our current policy, we 
base the pass-through status expiration date for a device category on 
the date on which pass-through payment is effective for the category; 
that is, the date CMS establishes a particular category of devices 
eligible for transitional pass-through payments. We propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update.
    We also have an established policy to package the costs of the 
devices that are no longer eligible for pass-through payments into the 
costs of the procedures with which the devices are reported in the 
claims data used to set the payment rates (67 FR 66763).
b. Proposed CY 2017 Pass-Through Devices
    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires 
that, under the OPPS, a category of devices be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. There currently are four device categories eligible for 
pass-through payment: (1) HCPCS code C2624 (Implantable wireless 
pulmonary artery pressure sensor with delivery catheter, including all 
system components), which was established effective January 1, 2015; 
(2) HCPCS

[[Page 45649]]

code C2623 (Catheter, transluminal angioplasty, drug-coated, non-
laser), which was established effective April 1, 2015; (3) HCPCS code 
C2613 (Lung biopsy plug with delivery system), which was established 
effective July 1, 2015; and (4) HCPCS code C1822 (Generator, 
neurostimulator (implantable), high frequency, with rechargeable 
battery and charging system), which was established effective January 
1, 2016. The pass-through payment status of the device category for 
HCPCS code C2624 will end on December 31, 2016. Therefore, in 
accordance with our current policy, we are proposing, beginning in CY 
2017, to package the costs of the device described by HCPCS code C2624 
into the costs related to the procedure with which the device is 
reported in the hospital claims data. The other three codes listed will 
continue with pass-through status in CY 2017.
2. New Device Pass-Through Applications
a. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments, referred to as ``transitional pass-through payments,'' for 
devices and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for transitional 
pass-through payments. As part of implementing the statute through 
regulations, we have continued to believe that it is important for 
hospitals to receive pass-through payments for devices that offer 
substantial clinical improvement in the treatment of Medicare 
beneficiaries to facilitate access by beneficiaries to the advantages 
of the new technology. Conversely, we have noted that the need for 
additional payments for devices that offer little or no clinical 
improvement over previously existing devices is less apparent. In such 
cases, these devices can still be used by hospitals, and hospitals will 
be paid for them through appropriate APC payment. Moreover, a goal is 
to target pass-through payments for those devices where cost 
considerations might be most likely to interfere with patient access 
(66 FR 55852; 67 FR 66782; and 70 FR 68629).
    As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), 
to be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria: (1) If required by FDA, the 
device must have received FDA approval or clearance (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by the FDA), or another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
approval or clearance, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA approval or 
clearance is granted, in which case CMS will consider the pass-through 
payment application if it is submitted within 3 years from the date of 
market availability; (2) the device is determined to be reasonable and 
necessary for the diagnosis or treatment of an illness or injury or to 
improve the functioning of a malformed body part, as required by 
section 1862(a)(1)(A) of the Act; and (3) the device is an integral 
part of the service furnished, is used for one patient only, comes in 
contact with human tissue, and is surgically implanted or inserted 
(either permanently or temporarily), or applied in or on a wound or 
other skin lesion. In addition, according to 42 CFR 419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) Equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through devices 
should be established. The device to be included in the new category 
must--
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) The estimated average reasonable costs of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average reasonable cost of the devices in the category exceeds the cost 
of the device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoblation, which are 
exempt from the cost requirements as noted at Sec. Sec.  419.66.(c)(3) 
and (e); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to us through the quarterly subregulatory process, but the 
applications will be subject to notice-and-comment rulemaking in the 
next applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being included in the next 
applicable OPPS annual rulemaking cycle or withdrawing their 
application from consideration. Under this notice-and-comment process, 
applicants may submit new evidence, such as clinical trial results 
published in a peer-reviewed journal, or other materials for 
consideration during the public comment process for the proposed rule. 
This process allows those applications that we are able to determine 
meets all the criteria for device pass-through payment under the 
quarterly review process to receive timely pass-through payment status, 
while still allowing for a transparent, public review process for all 
applications (80 FR 70417).
    More details on the requirements for device pass-through payment 
applications are included on the CMS Web site in the application form 
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to discuss research trial design in 
advance of any device pass-through application, so that the criterion 
of substantial clinical improvement is fully understood and can be met.

[[Page 45650]]

b. Applications Received for Device Pass-Through Payment for CY 2017
    We received three applications by the March 1, 2016 quarterly 
deadline, which is the last quarterly deadline in time for this CY 2017 
OPPS/ASC proposed rule. None of these three applications was approved 
for device pass-through payment during the quarterly review process. 
Applications received for the later deadlines for the remaining 2016 
quarters (June 1, September 1, and December 1) will be presented in the 
CY 2018 OPPS/ASC proposed rule. We note that the quarterly application 
process and requirements have not changed in light of the addition of 
rulemaking review. Detailed instructions on submission of a quarterly 
device pass-through application are included on the CMS Web site at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A discussion of the three 
applications received by the March 1, 2016 deadline is presented below.
(1) BioBag[supreg] (Larval Debridement Therapy in a Contained Dressing)
    BioMonde US, LLC submitted an application for a new device pass-
through category for the BioBag[supreg] (larval debridement therapy in 
a contained dressing) (hereinafter referred to as the BioBag[supreg]). 
According to the applicant, BioBag[supreg] is a biosurgical wound 
treatment (``maggot therapy'') consisting of disinfected, living larvae 
(Lucilia sericata) in a polyester net bag; the larvae remove dead 
tissue from wounds. The BioBag[supreg] is indicated for debridement of 
nonhealing necrotic skin and soft tissue wounds, including pressure 
ulcers, venous stasis ulcers, neuropathic foot ulcers, and nonhealing 
traumatic or postsurgical wounds. Debridement, which is the action of 
removing devitalized tissue and bacteria from a wound, is required to 
treat or prevent infection and to allow the wound to progress through 
the healing process. This system contains disinfected, living larvae 
that remove the dead tissue from wounds and leave healthy tissue 
undisturbed. The larvae are provided in a sterile polyester net bag, 
available in different sizes. The only other similar product is free-
range (that is, uncontained) larvae. Free-range larvae are not widely 
used in the United States because application is time consuming, there 
is a fear of larvae escaping from the wound, and there are concerns 
about proper and safe handling of the larvae. The total number of 
treatment cycles depends on the characteristics of the wound, the 
response of the wound, and the aim of the therapy. Most ulcers are 
completely debrided within 1 to 6 treatment cycles.
    With respect to newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for BioBag[supreg] through the 
premarket notification section 510(k) process on August 28, 2013, and 
its March 1, 2016 application was within 3 years of FDA clearance. The 
applicant claims that BioBag[supreg] is an integral part of the wound 
debridement, is used for one patient only, comes in contact with human 
skin, and is applied in or on a wound. In addition, the applicant 
stated that BioBag[supreg] is not an instrument, apparatus, or item for 
which depreciation and financing expenses are recovered. We believe 
that BioBag could be considered to be a surgical supply similar to a 
surgical dressing that facilitates either mechanical or autolytic 
debridement (for example, hydrogel dressings), and therefore ineligible 
for device pass-through payments under the provisions of Sec.  
419.66(b)(4)(ii). We are inviting public comment on whether 
BioBag[supreg] should be eligible under Sec.  419.66(b) to be 
considered for device pass-through payment.
    With respect to the existence of a previous pass-through device 
category that describes the BioBag[supreg], the applicant proposed a 
category descriptor of ``Larval therapy for the debridement of necrotic 
non-healing skin and soft tissue wounds.'' We have not identified an 
existing pass-through category that describes the BioBag[supreg], but 
we welcome public comments on this issue.
    With respect to the cost criterion, the applicant stated that 
BioBag[supreg] would be reported with CPT code 97602 (Removal of 
devitalized tissue from wound(s), non-selective debridement, without 
anesthesia (e.g., wet-to-moist dressings, enzymatic, abrasion), 
including topical application(s), wound assessment, and instruction(s) 
for ongoing care, per session). CPT code 97602 is assigned to APC 5051 
(Level 1 Skin Procedures), with a CY 2016 payment rate of $117.83, and 
the device offset is $1.18. The price of BioBag[supreg] varies with the 
size of the bag ($375 to $435 per bag), and bag size selection is based 
on the size of the wound. To meet the cost significance criterion, 
there are three cost significance subtests that must be met and 
calculations are noted below. The first cost significance is that the 
device cost needs to be at least 25 percent of the applicable APC 
payment rate to reach cost significance, as follows for the highest-
priced BioBag[supreg]: $435/117.83 x 100 = 369 percent. Thus, 
BioBag[supreg] meets the first cost significance test. The second cost 
significance test is that the device cost needs to be at least 125 
percent of the offset amount (the device-related portion of the APC 
found on the offset list): $435/1.18 x 100 = 36864 percent. Thus, 
BioBag[supreg] meets the second cost significance test. The third cost 
significance test is that the difference between the estimated average 
reasonable cost of the devices in the category and the portion of the 
APC payment amount determined to be associated with the device in the 
associated APC exceeds 10 percent of the total APC payment: ($435-
1.18)/117.83 x 100 = 368 percent. Thus, BioBag[supreg] meets the third 
cost significance test and satisfies the cost significance criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant cited a total of 18 articles relating to wound debridement, 
and most of these articles discussed the use of larval therapy for the 
treatment of ulcers. One peer-reviewed journal article described a 
randomized controlled trial with 267 subjects who received loose 
larvae, bagged larvae, or hydrogel intervention.\1\ Results of the 
study showed that the time to healing was not significantly different 
between the three groups, but that larval therapy significantly reduced 
the time to debridement (hazard ratio for the combined larvae group 
compared with hydrogel was 2.31 (95 percent confidence interval 1.65 to 
3.24; P < 0.001)); and mean ulcer related pain scores were higher in 
either larvae group compared with hydrogel (mean difference in pain 
score: loose larvae versus hydrogel 46.74 (95 percent confidence 
interval 32.44 to 61.04), P < 0.001; bagged larvae versus hydrogel 
38.58 (23.46 to 53.70), P < 0.001).
---------------------------------------------------------------------------

    \1\ Dumville, et al.: Larval therapy for leg ulcers (VenUS II): 
randomized controlled trial).
---------------------------------------------------------------------------

    Another article described a study of 88 patients (of which 64 
patients completed the study) and patients either received a larval 
therapy dressing (BioFOAM) or hydrogel.\2\ Because the study did not 
use BioBag[supreg] and there was a large drop-out rate that was not 
fully explained, we did not find this article helpful in determining 
whether the BioBag[supreg] provides a substantial clinical improvement 
compared to existing wound debridement modalities.
---------------------------------------------------------------------------

    \2\ Mudge, et al.: A randomized controlled trial of larval 
therapy for the debridement of leg ulcers: Results of a multicenter, 
randomized, controlled, open, observer blind, parallel group study. 
Wound Repair and Regeneration. 2013, 1-9.
---------------------------------------------------------------------------

    Another article that the applicant submitted was a meta-analysis of 
maggot debridement therapy compared to standard therapy for diabetic 
foot

[[Page 45651]]

ulcers.\3\ It compared four studies with a total of 356 participants 
and the authors concluded that maggot debridement therapy ``may be a 
scientific and effective therapy in treatment of diabetic foot ulcers'' 
but ``the evidence is too weak to routinely recommend it for 
treatment.''
---------------------------------------------------------------------------

    \3\ Tian et al.: Maggot debridement therapy for the treatment of 
diabetic foot ulcers: a meta-analysis. Journal of Wound Care. Vol. 
22, No. 9, 2013.
---------------------------------------------------------------------------

    There were some additional articles provided that included a case 
series of maggot therapy with no control group, a retrospective study 
with free-range maggot therapy, maggot therapy as treatment of last 
resort, in vitro studies, economic modeling for wound therapy, an 
informational review of maggot debridement therapy and other 
debridement therapies, and research on other wound therapy options. 
These remaining articles did not assist in assessing substantial 
clinical improvement of BioBag[supreg] compared to existing treatments. 
Based on the evidence submitted with the application, we are not yet 
convinced that the BioBag[supreg] provides a substantial clinical 
improvement over other treatments for wound debridement. We are 
inviting public comments on whether the BioBag[supreg] meets the 
substantial clinical improvement criterion.
(2) EncoreTM Suspension System
    Siesta Medical, Inc. submitted an application for a new device 
pass-through category for the Encore Suspension System (hereinafter 
referred to as the EncoreTM System). According to the 
application, the EncoreTM System is a kit of surgical 
instruments and implants that are used to perform an adjustable hyoid 
suspension. In this procedure, the hyoid bone (the U-shaped bone in the 
neck that supports the tongue) and its muscle attachments to the tongue 
and airway are pulled forward with the aim of increasing airway size 
and improving airway stability in the retrolingual and hypopharyngeal 
airway (airway behind and below the base of tongue). This procedure is 
indicated for the treatment of mild or moderate obstructive sleep apnea 
(OSA) and/or snoring, when the patient is unable to tolerate continuous 
positive airway pressure (CPAP). The current alternative to the hyoid 
suspension is the hyo-thyroid suspension technique (hyothyroidpexy). 
The EncoreTM System is designed for hyoid bone suspension to 
the mandible bone using bone screws and suspension lines. The 
EncoreTM System kit contains the following items:
     Integrated suture passer pre-loaded with polyester suture;
     Three bone screws and two bone screw inserters;
     Suspension line lock tool;
     Threading tool for suspension lines; and
     Four polyester suspension lines.
    With regard to the newness criterion, the EncoreTM 
System received FDA clearance through the section 510(k) process on 
March 26, 2014. Accordingly, it appears that the EncoreTM 
System is new for purposes of evaluation for device pass-through 
payments.
    Several components of the EncoreTM System appear to be 
either instruments or supplies, which are not eligible for pass-through 
according to Sec.  419.66(b)(4)(i) and (ii). For instance, the suture 
passer is an instrument and the suture is a supply, the bone screw 
inserters are instruments, the suspension line lock tool is an 
instrument, the threading tool for suspension lines is an instrument, 
and the polyester suspension lines are similar to sutures and therefore 
are supplies. With respect to the presence of a previously established 
code, the only implantable devices in the kit are the bone screws, and 
by the applicant's own admission the bone screws are described by the 
existing pass-through category HCPCS code C1713 (Anchor/screw for 
opposing bone-to-bone or soft tissue-to-bone (implantable)). We are 
inviting public comments on whether the EncoreTM System bone 
screws are described by a previously existing category and also whether 
the remaining kit components are supplies or instruments.
    With regard to the cost criterion, the applicant stated that the 
EncoreTM System would be used in the procedure described by 
CPT code 21685 (Hyoid myotomy and suspension). CPT code 21685 is 
assigned to APC 5164 (Level 4 ENT Procedures) with a CY 2016 payment 
rate of $1616.90, and the device offset is $15.85. The price of the 
EncoreTM System as stated in the application is $2,200. To 
meet the cost criterion, there are three cost significance subtests 
that must be met and the calculations are noted below. The first cost 
significance is that the device cost needs to be at least 25 percent of 
the applicable APC payment rate to reach cost significance: $2,200/
$1,616.90 x 100 percent = 136 percent. Thus, the EncoreTM 
System meets the first cost significance test. The second cost 
significance test is that the device cost needs to be at least 125 
percent of the offset amount (the device-related portion of the APC 
found on the offset list): $2,200/$15.85 x 100 percent = 13880 percent. 
Thus, the EncoreTM System meets the second cost significance 
test. The third cost significance test is that the difference between 
the estimated average reasonable cost of the devices in the category 
and the portion of the APC payment amount determined to be associated 
with the device in the associated APC exceeds 10 percent of the total 
APC payment: ($2,200 - $15.85)/$1,616.90 x 100 percent = 135 percent. 
Thus, the EncoreTM System meets the third cost significance 
test. Based on the costs submitted by the applicant and the 
calculations noted earlier, the EncoreTM System meets the 
cost criterion. However, we have concerns about whether the cost 
criterion would be met if based only on the kit components that are not 
supplies, not instruments, and not described by an existing category 
(if any).
    With regard to the substantial clinical improvement criterion, the 
applicant provided a thorough review of the hyoid myotomy with 
suspension and other surgical procedures that treat mild or moderate 
obstructive sleep apnea. However, specific data addressing substantial 
clinical improvement with the EncoreTM System was lacking.
    The application included information on a case series of 17 
obstructive apnea patients who received an Encore hyo-mandibular 
suspension as well as a previous or concurrent 
uvulopalatopharyngoplasty (UPPP). According to the application, the 17 
patients studied demonstrated a 76 percent surgical success, and 73 
percent median reduction in the Respiratory Disturbance Index (RDI) at 
3 months, significantly reduced surgical time, and one infection 
requiring device removal. This study was a retrospective, single center 
study with no comparator.
    In addition, the American Academy of Otolaryngology Head and Neck 
Surgery (AAOHNS) ``Position Statement: Tongue Based Procedures'' 
(accessed on 3.30.2016 and located at: http://www.entnet.org/node/215) 
considers the Hyoid myotomy and suspension ``effective and non-
investigational with proven clinical results when considered as part of 
the comprehensive surgical management of symptomatic adult patients 
with mild obstructive sleep apnea (OSA) and adult patients with 
moderate and severe OSA assessed as having tongue base or 
hypopharyngeal obstruction.'' The AMA CPT Editorial Panel created CPT 
code 21685 (Hyoid myotomy and suspension) in 2004. The AAOHNS statement 
and the age of the CPT code indicate that this is an

[[Page 45652]]

established surgical procedure. The EncoreTM System is a new 
kit of surgical instruments and implantable materials that are used to 
perform this procedure. According to the EncoreTM System's 
section 510(k) Summary, ``[t]he fundamental scientific technology and 
technological characteristics of the EncoreTM System are the 
same as the predicate devices,'' which includes the Medtronic AirVance 
System (another surgical kit used on CPT code 21685). The applicant 
claimed several advantages of the EncoreTM System over the 
AirVance System that relate to greater ease of use for the surgeon and 
better long-term stability. However, there are no studies comparing the 
EncoreTM System to the AirVance System. There is no clinical 
data provided by the applicant to suggest that the EncoreTM 
System kit provides a substantial clinical improvement over other 
instruments/implants that are used to perform Hyoid myotomy and 
suspension. We are inviting public comments on whether the 
EncoreTM System meets the substantial clinical improvement 
criterion.
(3) Endophys Pressure Sensing System (Endophys PSS) or Endophys 
Pressure Sensing Kit
    Endophys Holdings, LLC. Submitted an application for a new device 
pass-through category for the Endophys Pressure Sensing System or 
Endophys Pressure Sensing Kit (hereinafter referred to as the Endophys 
PSS). The applicant proposed a category descriptor within either the 
HCPCS code C18XX series or the HCPCS code C26XX series and described by 
the applicant as a stand-alone catheterization sheath that is inserted 
percutaneously during intravascular diagnostic or interventional 
procedures. When applied intravascularly, the two separate functions 
delivering an improved patient outcome include: (1) Continuous intra-
arterial blood pressure monitoring using a high-precision Fabry-Perot 
pressure sensor located within the device anterior approaching the 
distal tip of the system; and (2) a conduit that allows the 
introduction of other devices for cardiovascular or percutaneous 
interventional procedures.
    The Endophys PSS is an introducer sheath (including a dilator and 
guidewire) with an integrated fiber optic pressure transducer for blood 
pressure monitoring. The Endophys PSS is used with the Endophys Blood 
Pressure Monitor to display blood pressure measurements. The sheath is 
inserted percutaneously during intravascular diagnostic or 
interventional procedures, typically at the site of the patient's 
femoral artery. This device facilitates the introduction of diagnostic 
and interventional devices into the coronary and peripheral vessels 
while continuously sensing and reporting blood pressure during the 
interventional procedure. Physicians would use this device to pass 
guidewires, catheters, stents, and coils, to perform the diagnostic or 
therapeutic treatment on the coronary or other vasculature. The 
Endophys PSS provides continuous blood pressure monitor information to 
the treating physician so that there is no need for an additional 
arterial access site for blood pressure monitoring.
    With respect to the newness criterion, the Endophys PSS received 
FDA clearance through the section 510(k) process on January 7, 2015, 
and therefore is new. According to the applicant, the Endophys PSS is 
an integral part of various endovascular procedures, is used for one 
patient only, comes in contact with human skin, and is surgically 
implanted. Endophys PSS is not an instrument, apparatus, implement or 
item for which depreciation and financing expenses are recovered, and 
it is not a supply or material.
    With respect to the presence of a previously established category, 
based on our review of the application, we believe that Endophys PSS 
may be described by HCPCS code C1894 (Introducer/sheath, other than 
guiding, other than intracardiac electrophysiological, non-laser). The 
FDA section 510(k) Summary Product Description Section in the 
application describes the Endophys PSS as an introducer sheath with an 
integrated fiber optic pressure transducer. Because the Endophys PSS is 
an introducer sheath that is not guiding, not intracardiac 
electrophysiological, and not a laser, we believe that it is described 
by the previously existing category of HCPCS code C1894 established for 
transitional pass-through payments. We are inviting public comment on 
whether Endophys PSS is described by a previously existing category.
    With respect to the cost criterion, according to the applicant, the 
Endophys PSS would be reported with CPT code 36620 (Arterial 
catheterization or cannulation for sampling, monitoring or transfusion 
(separate procedure); percutaneous). CPT code 36620 is assigned status 
indicator ``N'', which means its payment is packaged under the OPPS. 
The applicant stated that its device can be used in many endovascular 
procedures that are assigned to the APCs listed below:

------------------------------------------------------------------------
               APC                              Description
------------------------------------------------------------------------
5188.............................  Diagnostic Cardiac Catheterization.
5191.............................  Level 1 Endovascular Procedures.
5526.............................  Level 6 X-Ray and Related Services.
5183.............................  Level 3 Vascular Procedures.
5181.............................  Level 1 Vascular Procedures.
5182.............................  Level 2 Vascular Procedures.
5291.............................  Thrombolysis and Other Device
                                    Revisions.
------------------------------------------------------------------------

    To meet the cost criterion for device pass-through payment, a 
device must pass all three tests for cost threshold for at least one 
APC. For our calculations, we used APC 5291 (Thrombolysis and Other 
Device Revisions), which has a CY 2016 payment rate of $199.80 and the 
device offset of $3.38. According to the applicant, the cost of the 
Endophys PSS is $2,500. The first cost significance test is that the 
device cost needs to be at least 25 percent of the applicable APC 
payment rate to reach cost significance: $2,500/199.80 x 100 percent = 
1251 percent. Thus, the Endophys PSS meets the first cost significance 
test. The second cost significance test is that the device cost needs 
to be at least 125 percent of the offset amount (the device-related 
portion of the APC found on the offset list): $2,500/3.38 x 100 percent 
= 73964 percent. Thus, the Endophys PSS meets the second cost 
significance test. The third cost significance test is that the 
difference between the estimated average reasonable cost of the devices 
in the category and the portion of the APC payment amount determined to 
be associated with the device in the associated APC exceeds 10 percent 
of the total APC payment: ($2,500-3.38)/199.80 x 100 percent = 1250 
percent. Thus, the Endophys PSS meets the third cost significance test. 
Based on the costs submitted by the applicant and the above 
calculations, the Endophys PSS meets the cost criterion. We are 
inviting public comments on this issue.
    With respect to the substantial clinical improvement criterion, the 
applicant stated that the Endophys PSS represents a substantial 
clinical improvement over existing medical therapies because the 
Endophys PSS includes a built-in pressure sensor, which eliminates the 
need for a second arterial line to monitor the blood pressure. The 
applicant stated that the Endophys PSS reduces the time to treatment 
for the patient (because there is no time needed to establish the 
second arterial line) and reduces potential complications associated 
with the second arterial line. While several references were provided 
in support of this application, there were minimal direct clinical data 
provided on the

[[Page 45653]]

Endophys PSS to support substantial clinical improvement. The 
application included slides with statements pertaining to cost savings, 
reduced morbidity and life saving for a study of 36 patients, but a 
published study was not submitted and additional information on study 
design and other details of the study were not provided. Also, the 
applicant provided six physician testimonials citing support for the 
Endophys PSS based on between one and six patient experiences with the 
device.
    The published articles provided with the application did not 
provide any information based on usage of the Endophys PSS. Topics 
addressed in the references included: articles on intraarterial 
treatment for acute ischemic stroke; references providing education on 
blood pressure measurement and monitoring; articles on complications 
during percutaneous coronary intervention; and a reference on 
ultrasound guided placement of arterial cannulas in the critically ill. 
Given the paucity of studies using the Endophys PSS, we have not been 
persuaded that the threshold for substantial clinical improvement has 
been met. We are inviting public comments on whether the Endophys PSS 
meets the substantial clinical improvement criterion.
3. Proposal To Change the Beginning Eligibility Date for Device Pass-
Through Payment Status
    The regulation at 42 CFR 419.66(g) currently provides that the 
pass-through payment eligibility period begins on the date CMS 
establishes a category of devices. We are proposing to amend Sec.  
419.66(g) such that it more accurately comports with section 
1833(t)(6)(B)(iii)(II)) of the Act, which provides that the pass-
through eligibility period begins on the first date on which pass-
through payment is made. We recognize that there may be a difference 
between the establishment of a pass-through category and the date of 
first pass-through payment for a new pass-through device for various 
reasons. In most cases, we would not expect this proposed change in the 
beginning pass-through eligibility date to make any difference in the 
anticipated pass-through expiration date. However, in cases of 
significant delay from the date of establishment of a pass-through 
category to the date of the first pass-through payment, by using the 
date that the first pass-through payment was made rather than the date 
on which a device category was established could result in an 
expiration date of device pass-through eligibility that is later than 
it otherwise would have been had the clock began on the date the 
category was first established. We are inviting public comments on our 
proposal.
4. Proposal To Make the Transitional Pass-Through Payment Period 3 
Years for All Pass-Through Devices and Expire Pass-Through Status on a 
Quarterly Rather Than Annual Basis
a. Background
    As required by statute, transitional pass-through payments for a 
device described in section 1833(t)(6)(B)(iii) of the Act can be made 
for a period of at least 2 years, but not more than 3 years, beginning 
on the first date on which pass-through payment was made for the 
product. Our current policy is to accept pass-through applications on a 
quarterly basis and to begin pass-through payments for new pass-through 
devices on a quarterly basis through the next available OPPS quarterly 
update after the approval of a device's pass-through status. However, 
we expire pass-through status for devices on a calendar-year basis 
through notice-and-comment rulemaking rather than on a quarterly basis. 
Device pass-through status currently expires at the end of a calendar 
year when at least 2 years of pass-through payments have been made, 
regardless of the quarter in which it was initially approved. This 
means that the duration of the pass-through eligibility for a 
particular device will depend upon when during a year the applicant 
applies and is approved for pass-through payment. For example, a new 
pass-through device with pass-through status effective on April 1 would 
receive 2 years and 3 quarters of pass-through status while a pass-
through device with pass-through status effective on October 1 would 
receive 2 years and 1 quarter of pass-through status.
b. Proposed CY 2017 Policy
    We are proposing, beginning with pass-through devices newly 
approved in CY 2017 and subsequent calendar years, to allow for a 
quarterly expiration of pass-through status for devices to afford a 
pass-through period that is as close to a full 3 years as possible for 
all pass-through payment devices. This proposed change would eliminate 
the variability of the pass-through eligibility period, which currently 
varies based on the timing of the particular application. For example, 
under this proposal, for a device with pass-through first effective on 
October 1, 2017, pass-through status would expire on September 30, 
2020. We believe that the payment adjustment for transitional pass-
through payments for devices under the OPPS is intended to provide 
adequate payment for new innovative technology while we collect the 
necessary data to incorporate the costs for these devices into the 
calculation of the associated procedure payment rate (66 FR 55861). We 
believe that the 3-year maximum pass-through period for all pass-
through devices will better insure robust data collection and more 
representative procedure payments once the pass-through devices are 
packaged. We are inviting public comments on this proposal.
5. Proposed Changes to Cost-to-Charge Ratios (CCRs) That Are Used To 
Determine Device Pass-Through Payments
a. Background
    Section 1833(t)(6)(D)(ii) of the Act and 42 CFR 419.66(h) describe 
how payment will be determined for device pass-through devices. 
Currently, transitional pass-through payments for devices are 
calculated by taking the hospital charges for each billed device, 
reducing them to cost by use of the hospital's average CCR across all 
outpatient departments, and subtracting an amount representing the 
device cost contained in the APC payments for procedures involving that 
device (65 FR 18481 and 65 FR 67809). In the original CY 2000 OPPS 
final rule, we stated that we would examine claims in order to 
determine if a revenue center-specific set of CCRs should be used 
instead of the average CCR across all outpatient departments (65 FR 
18481).
    In the FY 2009 IPPS final rule (73 FR 48458 through 48467), CMS 
created a cost center for ``Medical Supplies Charged to Patients,'' 
which are generally low cost supplies, and another cost center for 
``Implantable Devices Charged to Patients,'' which are generally high-
cost implantable devices. This change was in response to a Research 
Triangle Institute, International (RTI) study that was discussed in the 
FY 2009 IPPS final rule and which determined that there was charge 
compression in both the IPPS and the OPPS cost estimation of expensive 
and inexpensive medical supplies. Charge compression can result in 
undervaluing high-cost items and overvaluing low-cost items when an 
estimate of average markup, embodied in a single CCR (such as the 
hospital wide CCR) is applied to items of widely varying costs in the 
same cost center. By splitting medical supplies and implantable devices 
into two cost centers, some of the effects of charge compression were 
mitigated. The cost center for ``Implantable Devices Charged to 
Patients'' has been available for use

[[Page 45654]]

for OPPS cost reporting periods beginning on or after May 1, 2009.
    In CY 2013, we began using data from the ``Implantable Devices 
Charged to Patients'' cost center to create a distinct CCR for use in 
calculating the OPPS relative payment weights for CY 2013 (77 FR 
68225). Hospitals have adapted their cost reporting and coding 
practices in order to report usage to the ``Implantable Devices Charged 
to Patients'' cost center, resulting in sufficient data to perform a 
meaningful analysis. However, we have continued to use the hospital-
wide CCR in our calculation of device pass-through payments. We have 
received a request to consider using the ``Implantable Devices Charged 
to Patients'' CCR in the calculation of device pass-through payment and 
have evaluated this request. An analysis of the CCR data for this 
proposed rule indicates that about two-thirds of providers have an 
``Implantable Devices Charged to Patients'' CCR. For the hospitals that 
have an ``Implantable Devices Charged to Patients'' CCR, the median is 
0.3911, compared with a median hospital-wide CCR of 0.2035.
b. Proposed CY 2017 Policy
    We are proposing to use the more specific ``Implantable Devices 
Charged to Patients'' CCR instead of the less specific average 
hospital-wide CCR to calculate transitional pass-through payments for 
devices, beginning with device pass-through payments in CY 2017. When 
the CCR for the ``Implantable Devices Charged to Patients'' CCR is not 
available for a particular hospital, we would continue to use the 
average CCR across all outpatient departments to calculate pass-through 
payments. We believe using the ``Implantable Devices Charged to 
Patients'' CCR will provide more accurate pass-through payments for 
most device pass-through payment recipients and will further mitigate 
the effects of charge compression. We are inviting public comments on 
this proposal.
6. Proposed Provisions for Reducing Transitional Pass-Through Payments 
to Offset Costs Packaged Into APC Groups
a. Background
    Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional 
pass-through payment for an eligible device as the amount by which the 
hospital's charges for a device, adjusted to cost (the cost of the 
device), exceeds the portion of the otherwise applicable Medicare 
outpatient department fee schedule amount (the APC payment amount) 
associated with the device. We have an established policy to estimate 
the portion of each APC payment rate that could reasonably be 
attributed to the cost of the associated devices that are eligible for 
pass-through payments (66 FR 59904) for purposes of estimating the 
portion of the otherwise applicable APC payment amount associated with 
pass-through devices. For eligible device categories, we deduct an 
amount that reflects the portion of the APC payment amount that we 
determine is associated with the cost of the device, defined as the 
device APC offset amount, from the charges adjusted to cost for the 
device, as provided by section 1833(t)(6)(D)(ii) of the Act, to 
determine the pass-through payment amount for the eligible device. We 
have an established methodology to estimate the portion of each APC 
payment rate that could reasonably be attributed to the cost of an 
associated device eligible for pass-through payment, using claims data 
from the period used for the most recent recalibration of the APC rates 
(72 FR 66751 through 66752). In the unusual case where the device 
offset amount exceeds the device pass-through payment amount, the 
regular APC rate would be paid and the pass-through payment would be 
$0.
b. Proposed CY 2017 Policy
    For CY 2017, we are proposing to calculate the portion of the 
otherwise applicable Medicare OPD fee schedule amount, for each device-
intensive procedure payment rate that can reasonably be attributed to 
(that is, reflect) the cost of an associated device (the device offset 
amount) at the HCPCS code level rather than at the APC level (which is 
an average of all codes assigned to an APC). We refer readers to 
section IV.B. of this proposed rule for a discussion of this proposal. 
Otherwise, we will continue our established practice of reviewing each 
new pass-through device category to determine whether device costs 
associated with the new category replace device costs that are already 
packaged into the device implantation procedure. If device costs that 
are packaged into the procedure are related to the new category, then 
according to our established practice we will deduct the device offset 
amount from the pass-through payment for the device category. The list 
of device offsets for all device procedures will be posted on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

B. Proposed Device-Intensive Procedures

1. Background
    Under the OPPS, device-intensive APCs are defined as those APCs 
with a device offset greater than 40 percent (79 FR 66795). In 
assigning device-intensive status to an APC, the device costs of all of 
the procedures within the APC are calculated and the geometric mean 
device offset of all of the procedures must exceed 40 percent. Almost 
all of the procedures assigned to device-intensive APCs utilize 
devices, and the device costs for the associated HCPCS codes exceed the 
40-percent threshold. The no cost/full credit and partial credit device 
policy (79 FR 66872 through 66873) applies to device-intensive APCs and 
is discussed in detail in section IV.B.4. of this proposed rule. A 
related device policy is the requirement that certain procedures 
assigned to device-intensive APCs require the reporting of a device 
code on the claim (80 FR 70422). For further background information on 
the device-intensive APC policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70421 through 70426).
2. Proposed HCPCS Code-Level Device-Intensive Determination
    As stated above, currently the device-intensive methodology assigns 
device-intensive status to all procedures requiring the implantation of 
a device, which are assigned to an APC with a device offset greater 
than 40 percent. Historically, the device-intensive designation has 
been at the APC level and applied to the applicable procedures within 
that given APC. For CY 2017, we are proposing to modify the methodology 
for assigning device-intensive status. Specifically, for CY 2017, we 
are proposing to assign device-intensive status to all procedures that 
require the implantation of a device and have an individual HCPCS code-
level device offset of greater than 40 percent, regardless of the APC 
assignment, as we no longer believe that device-intensive status should 
be based on APC assignment because APC groupings of clinically similar 
procedures do not necessarily factor in device cost similarity. In 
2016, we restructured many of the APCs, and this resulted in some 
procedures with significant device costs not being assigned device-
intensive status because they were not assigned to a device-intensive 
APC. Under our proposal, all procedures with significant device costs 
(defined as a device offset of more than 40 percent) would be assigned 
device-intensive

[[Page 45655]]

status, regardless of their APC placement. Also, we believe that a 
HCPCS code-level device offset would, in most cases, be a better 
representation of a procedure's device cost than an APC-wide average 
device offset based on the average device offset of all of the 
procedures assigned to an APC. Unlike a device offset calculated at the 
APC level, which is a weighted average offset for all devices used in 
all of the procedures assigned to an APC, a HCPCS code-level device 
offset is calculated using only claims for a single HCPCS code. We 
believe that such a methodological change would result in a more 
accurate representation of the cost attributable to implantation of a 
high-cost device, which would ensure consistent device-intensive 
designation of procedures with a significant device cost. Further, we 
believe a HCPCS code-level device offset would remove inappropriate 
device-intensive status to procedures without a significant device cost 
but which are granted such status because of APC assignment.
    Under our proposal, procedures that have an individual HCPCS code-
level device offset of greater than 40 percent would be identified as 
device-intensive procedures and would be subject to all the CY 2016 
policies applicable to procedures assigned device-intensive status 
under our established methodology, including our policies on device 
edits and device credits. Therefore, under our proposal, all procedures 
requiring the implantation of a medical device and that have an 
individual HCPCS code-level device offset of greater than 40 percent 
would be subject to the device edit and no cost/full credit and partial 
credit device policies, discussed in sections IV.B.3. and IV.B.4. of 
this proposed rule, respectively. We are proposing to amend the 
regulation at Sec.  419.44(b)(2) to reflect that we would no longer be 
designating APCs as device-intensive, and instead would be designating 
procedures as device-intensive.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, we are proposing to apply device-intensive status with a 
default device offset set at 41 percent until claims data are available 
to establish the HCPCS code-level device offset for the procedures. 
This default device offset amount of 41 percent would not be calculated 
from claims data; instead it would be applied as a default until claims 
data are available upon which to calculate an actual device offset for 
the new code. The purpose of applying the 41 percent default device 
offset to new codes that describe procedures that implant medical 
devices would be to ensure ASC access for new procedures until claims 
data become available. However, in certain rare instances, for example, 
in the case of a very expensive implantable device, we may temporarily 
assign a higher offset percentage if warranted by additional 
information such as pricing data from a device manufacturer. Once 
claims data are available for a new procedure requiring the 
implantation of a medical device, device-intensive status would be 
applied to the code if the HCPCS code-level device offset is greater 
than 40 percent, according to our proposed policy of determining 
device-intensive status by calculating the HCPCS code-level device 
offset. The full listing of proposed device-intensive procedures is 
included in a new Addendum P to this proposed rule (which is available 
via the Internet on the CMS Web site).
3. Proposed Changes to the Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we finalized a policy and implemented claims processing edits 
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code 
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC 
final rule with comment period (the CY 2015 device-dependent APCs) is 
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70422), we modified our previously existing 
policy and applied the device coding requirements exclusively to 
procedures that require the implantation of a device that are assigned 
to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with 
comment period, we also finalized our policy that the claims processing 
edits are such that any device code, when reported on a claim with a 
procedure assigned to a device-intensive APC (listed in Table 42 of the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will 
satisfy the edit.
    As part of our proposal described in section IV.B.2. of this 
proposed rule to no longer recognize device-intensive APCs and instead 
recognize device-intensive procedures based on their individual HCPCS 
code-level device offset being greater than 40 percent, for CY 2017, we 
are proposing to modify our existing device edit policy. Specifically, 
for CY 2017 and subsequent years, we are proposing to apply the CY 2016 
device coding requirements to the newly defined (individual HCPCS code-
level device offset greater than 40 percent) device-intensive 
procedures. In addition, we are proposing that any device code, when 
reported on a claim with a device-intensive procedure, would satisfy 
the edit.
4. Proposed Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
a. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified device-dependent APCs by the 
estimated portion of the APC payment attributable to device costs (that 
is, the device offset) when the hospital receives a specified device at 
no cost or with full credit (71 FR 68071 through 68077). Hospitals were 
instructed to report no cost/full credit device cases on the claim 
using the ``FB'' modifier on the line with the procedure code in which 
the no cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, hospitals were instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's usual charge for the 
device for which it received full credit. In CY 2008, we expanded this 
payment adjustment policy to include cases in which hospitals receive 
partial credit of 50 percent or more of the cost of a specified device. 
Hospitals were instructed to append the ``FC'' modifier to the 
procedure code that reports the service provided to furnish the device 
when they receive a partial credit of 50 percent or more of the cost of 
the new device. We refer readers to the CY 2008 OPPS/ASC final rule 
with comment period for more background information on the ``FB'' and 
``FC'' modifiers payment adjustment policies (72 FR 66743 through 
66749).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device

[[Page 45656]]

offset amount when a hospital furnishes a specified device without cost 
or with a full credit and by 50 percent of the device offset amount 
when the hospital receives partial credit in the amount of 50 percent 
or more of the cost for the specified device. For CY 2014, we reduced 
OPPS payment, for the applicable APCs, by the full or partial credit a 
hospital receives for a replaced device. Specifically, under this 
modified policy, hospitals are required to report on the claim the 
amount of the credit in the amount portion for value code ``FD'' 
(Credit Received from the Manufacturer for a Replaced Medical Device) 
when the hospital receives a credit for a replaced device that is 50 
percent or greater than the cost of the device. For CY 2014, we also 
limited the OPPS payment deduction for the applicable APCs to the total 
amount of the device offset when the ``FD'' value code appears on a 
claim. For CY 2015, we continued our existing policy of reducing OPPS 
payment for specified APCs when a hospital furnishes a specified device 
without cost or with a full or partial credit and to use the three 
criteria established in the CY 2007 OPPS/ASC final rule with comment 
period (71 FR 68072 through 68077) for determining the APCs to which 
our CY 2015 policy will apply (79 FR 66872 through 66873). In the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70424), we 
finalized our policy to no longer specify a list of devices to which 
the OPPS payment adjustment for no cost/full credit and partial credit 
devices would apply and instead apply this APC payment adjustment to 
all replaced devices furnished in conjunction with a procedure assigned 
to a device-intensive APC when the hospital receives a credit for a 
replaced specified device that is 50 percent or greater than the cost 
of the device.
b. Proposed Policy for CY 2017
    For CY 2017, we are proposing modifications to our current policy 
for reducing OPPS payment by the full or partial credit a provider 
receives for a replaced device, in conjunction with our proposal above 
to recognize the newly defined (individual HCPCS level device offset 
greater than 40 percent) device-intensive procedures. For CY 2017 and 
subsequent years, we are proposing to reduce OPPS payment for specified 
procedures when a hospital furnishes a specified device without cost or 
with a full or partial credit. Specifically, for CY 2017, we are 
proposing to continue to reduce the OPPS payment, for the device-
intensive procedures, by the full or partial credit a provider receives 
for a replaced device. Under this proposed policy, hospitals would 
continue to be required to report on the claim the amount of the credit 
in the amount portion for value code ``FD'' when the hospital receives 
a credit for a replaced device that is 50 percent or greater than the 
cost of the device.
    For CY 2017 and subsequent years, we also are proposing to 
determine which procedures our proposed policy would apply to using 
three criteria analogous to the three criteria established in the CY 
2007 OPPS/ASC final rule with comment period for determining the APCs 
to which our existing policy applies (71 FR 68072 through 68077). 
Specifically, for CY 2017 and subsequent years, we are proposing to use 
the following three criteria for determining the procedures to which 
our proposed policy would apply: (1) All procedures must involve 
implantable devices that would be reported if device insertion 
procedures were performed; (2) the required devices must be surgically 
inserted or implanted devices that remain in the patient's body after 
the conclusion of the procedure (at least temporarily); and (3) the 
procedure must be device-intensive; that is, the device offset amount 
must be significant, which is defined as exceeding 40 percent of the 
procedure's mean cost. We continue to believe these criteria are 
appropriate because no-cost devices and device credits are likely to be 
associated with particular cases only when the device must be reported 
on the claim and is of a type that is implanted and remains in the body 
when the beneficiary leaves the hospital. We believe that the reduction 
in payment is appropriate only when the cost of the device is a 
significant part of the total cost of the procedure into which the 
device cost is packaged, and that the 40-percent threshold is a 
reasonable definition of a significant cost. As noted earlier in this 
section, procedures with a device offset that exceed the 40-percent 
threshold are called device-intensive procedures.
5. Proposed Payment Policy for Low-Volume Device-Intensive Procedures
    For CY 2016, we used our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act and used the median cost (instead of 
the geometric mean cost per our standard methodology) to calculate the 
payment rate for the implantable miniature telescope procedure 
described by CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens or intraocular lens prosthesis), 
which is the only code assigned to APC 5494 (Level 4 Intraocular 
Procedures) (80 FR 70388). We note that we are proposing to reassign 
the procedure described by CPT code 0308T to APC 5495 (Level 5 
Intraocular Procedures) for CY 2017, but it would be the only procedure 
code assigned to APC 5495. The payment rates for a procedure described 
by CPT code 0308T (including the predecessor HCPCS code C9732) were 
$15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The 
procedure described by CPT code 0308T is a high-cost device-intensive 
surgical procedure that has a very low volume of claims (in part 
because most of the procedures described by CPT code 0308T are 
performed in ASCs), and we believe that the median cost is a more 
appropriate measure of the central tendency for purposes of calculating 
the cost and the payment rate for this procedure because the median 
cost is impacted to a lesser degree than the geometric mean cost by 
more extreme observations. We stated that, in future rulemaking, we 
would consider proposing a general policy for the payment rate 
calculation for very low-volume device-intensive APCs (80 FR 70389).
    For CY 2017, we are proposing a payment policy for low-volume 
device-intensive procedures that is similar to the policy applied to 
the procedure described by CPT code 0308T in CY 2016. In particular, we 
are proposing that the payment rate for any device-intensive procedure 
that is assigned to a clinical APC with fewer than 100 total claims for 
all procedures in the APC be calculated using the median cost instead 
of the geometric mean cost, for the reasons described above for the 
policy applied to the procedure described by CPT code 0308T in CY 2016. 
We believe that this approach will help to mitigate to some extent 
significant year-to-year payment rate fluctuations while preserving 
accurate claims data-based payment rates for low-volume device-
intensive procedures. For CY 2017, this policy would only apply to a 
procedure described by CPT code 0308T in APC 5495 because this APC is 
the only APC containing a device-intensive procedure with less than 100 
total claims in the APC. The CY 2017 proposed rule geometric mean cost 
for the procedure described by CPT code 0308T (based on 30 claims) is 
approximately $7,762, and the median cost is approximately $15,567. The 
proposed CY 2017 payment rate (calculated using the median cost) is 
approximately $17,188.90. We are inviting public comments on this 
proposal.

[[Page 45657]]

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this proposed rule, the term ``biological'' 
is used because this is the term that appears in section 1861(t) of the 
Act. ``Biological'' as used in this proposed rule includes (but is not 
necessarily limited to) ``biological product'' or ``biologic'' as 
defined in the Public Health Service Act. As enacted by the Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. 
L. 106-113), this pass-through payment provision requires the Secretary 
to make additional payments to hospitals for: Current orphan drugs, as 
designated under section 526 of the Federal Food, Drug, and Cosmetic 
Act; current drugs and biologicals and brachytherapy sources used in 
cancer therapy; and current radiopharmaceutical drugs and biologicals. 
``Current'' refers to drugs or biologicals that are outpatient hospital 
services under Medicare Part B for which payment was made on the first 
date the hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996 and whose cost is ``not insignificant'' 
in relation to the OPPS payments for the procedures or services 
associated with the new drug or biological. For pass-through payment 
purposes, radiopharmaceuticals are included as ``drugs.'' As required 
by statute, transitional pass-through payments for a drug or biological 
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a 
period of at least 2 years, but not more than 3 years, after the 
payment was first made for the product as a hospital outpatient service 
under Medicare Part B. Proposed CY 2017 pass-through drugs and 
biologicals and their designated APCs are assigned status indicator 
``G'' in Addenda A and B to this proposed rule (which are available via 
the Internet on the CMS Web site).
    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64. 
These regulations specify that the pass-through payment equals the 
amount determined under section 1842(o) of the Act minus the portion of 
the APC payment that CMS determines is associated with the drug or 
biological. Section 1847A of the Act establishes the average sales 
price (ASP) methodology, which is used for payment for drugs and 
biologicals described in section 1842(o)(1)(C) of the Act furnished on 
or after January 1, 2005. The ASP methodology, as applied under the 
OPPS, uses several sources of data as a basis for payment, including 
the ASP, the wholesale acquisition cost (WAC), and the average 
wholesale price (AWP). In this proposed rule, the term ``ASP 
methodology'' and ``ASP-based'' are inclusive of all data sources and 
methodologies described therein. Additional information on the ASP 
methodology can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Proposal To Make the Transitional Pass-Through Payment Period 3 
Years for All Pass-Through Drugs, Biologicals, and Radiopharmaceuticals 
and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis
    As required by statute, transitional pass-through payments for a 
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act 
can be made for a period of at least 2 years, but not more than 3 
years, after the payment was first made for the product as a hospital 
outpatient service under Medicare Part B. Our current policy is to 
accept pass-through applications on a quarterly basis and to begin 
pass-through payments for new pass-through drugs and biologicals on a 
quarterly basis through the next available OPPS quarterly update after 
the approval of a product's pass-through status. However, we expire 
pass-through status for drugs and biologicals on an annual basis 
through notice-and-comment rulemaking (74 FR 60480). This means that 
because the 2-year to 3-year pass-through payment eligibility period 
starts on the date of first pass-through payment under 42 CFR 
419.64(c)(2), the duration of pass-through eligibility for a particular 
drug or biological will depend upon when during a year the applicant 
applies for pass-through status. Under the current policy, a new pass-
through drug or biological with pass-through status effective on 
January 1 would receive 3 years of pass-through status; a pass-through 
drug with pass-through status effective on April 1 would receive 2 
years and 3 quarters of pass-through status; a pass-through drug with 
pass-through status effective on July 1 would receive 2 and 1/2 years 
of pass-through status; and a pass-through drug with pass-through 
status effective on October 1 would receive 2 years and 3 months (a 
quarter) of pass-through status.
    We are proposing, beginning with pass-through drugs and biologicals 
newly approved in CY 2017 and subsequent calendar years, to allow for a 
quarterly expiration of pass-through payment status for drugs and 
biologicals to afford a pass-through period that is as close to a full 
3 years as possible for all pass-through payment drugs, biologicals, 
and radiopharmaceuticals. This proposed change would eliminate the 
variability of the pass-through payment eligibility period, which 
currently varies based on the timing of the particular application, as 
we now believe that the timing of a pass-through payment application 
should not determine the duration of pass-through payment status. For 
example, for a drug with pass-through status first effective on April 
1, 2017, pass-through status would expire on March 31, 2020. This 
approach would allow for the maximum pass-through period for each pass-
through drug without exceeding the statutory limit of 3 years. We are 
inviting public comments on this proposal.
3. Proposed Drugs and Biologicals With Expiring Pass-Through Payment 
Status in CY 2016
    We are proposing that the pass-through status of 15 drugs and 
biologicals would expire on December 31, 2016, as listed in Table 13 
below. All of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by 
December 31, 2016. These drugs and biologicals were approved for pass-
through status on or before January 1, 2015. With the exception of 
those groups of drugs and biologicals that are always packaged

[[Page 45658]]

when they do not have pass-through status (specifically, anesthesia 
drugs; drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure (including 
diagnostic radiopharmaceuticals, contrast agents, and stress agents); 
and drugs and biologicals that function as supplies when used in a 
surgical procedure), our standard methodology for providing payment for 
drugs and biologicals with expiring pass-through status in an upcoming 
calendar year is to determine the product's estimated per day cost and 
compare it with the OPPS drug packaging threshold for that calendar 
year (which is proposed at $110 for CY 2017), as discussed further in 
section V.B.2. of this proposed rule. If the estimated per day cost for 
the drug or biological is less than or equal to the applicable OPPS 
drug packaging threshold, we are proposing to package payment for the 
drug or biological into the payment for the associated procedure in the 
upcoming calendar year. If the estimated per day cost of the drug or 
biological is greater than the OPPS drug packaging threshold, we are 
proposing to provide separate payment at the applicable relative ASP-
based payment amount (which is proposed at ASP+6 percent for CY 2017, 
as discussed further in section V.B.3. of this proposed rule).

 Table 13--Proposed Drugs and Biologicals for Which Pass-Through Payment
                    Status Expires December 31, 2016
------------------------------------------------------------------------
                         CY 2016 Long     CY 2016 Status
  CY 2016 HCPCS Code      descriptor        indicator       CY 2016 APC
------------------------------------------------------------------------
C9497................  Loxapine,                      G             9497
                        inhalation
                        powder, 10 mg.
J1322................  Injection,                     G             1480
                        elosulfase
                        alfa, 1mg.
J1439................  Injection,                     G             9441
                        ferric
                        carboxymaltose,
                        1 mg.
J1447................  Injection, TBO-                G             1748
                        Filgrastim, 1
                        microgram.
J3145................  Injection,                     G             1487
                        testosterone
                        undecanoate, 1
                        mg.
J3380................  Injection,                     G             1489
                        vedolizumab, 1
                        mg.
J7181................  Injection,                     G             1746
                        factor xiii a-
                        subunit,
                        (recombinant),
                        per iu.
J7200................  Factor ix                      G             1467
                        (antihemophilic
                        factor,
                        recombinant),
                        Rixubus, per
                        i.u..
J7201................  Injection,                     G             1486
                        factor ix, fc
                        fusion protein
                        (recombinant),
                        per iu.
J7205................  Injection,                     G             1656
                        factor viii fc
                        fusion
                        (recombinant),
                        per iu.
J7508................  Tacrolimus,                    G             1465
                        extended
                        release,
                        (astagraf xl),
                        oral, 0.1 mg.
J9301................  Injection,                     G             1476
                        obinutuzumab,
                        10 mg.
J9308................  Injection,                     G             1488
                        ramucirumab, 5
                        mg.
J9371................  Injection,                     G             1466
                        Vincristine
                        Sulfate
                        Liposome, 1 mg.
Q4121................  Theraskin, per                 G             1479
                        square
                        centimeter.
------------------------------------------------------------------------

    The proposed packaged or separately payable status of each of these 
drugs or biologicals is listed in Addendum B to this proposed rule 
(which is available via the Internet on the CMS Web site).
4. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Payment Status in CY 2017
    We are proposing to continue pass-through payment status in CY 2017 
for 38 drugs and biologicals. None of these drugs and biologicals will 
have received OPPS pass-through payment for at least 2 years and no 
more than 3 years by December 31, 2016. These drugs and biologicals, 
which were approved for pass-through status between January 1, 2014, 
and July 1, 2016, are listed in Table 14 below. The APCs and HCPCS 
codes for these drugs and biologicals approved for pass-through status 
through July 1, 2016 are assigned status indicator ``G'' in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS Web site).
    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. For CY 2017, we are proposing to continue to pay 
for pass-through drugs and biologicals at ASP+6 percent, equivalent to 
the rate these drugs and biologicals would receive in the physician's 
office setting in CY 2017. We are proposing that a $0 pass-through 
payment amount would be paid for pass-through drugs and biologicals 
under the CY 2017 OPPS because the difference between the amount 
authorized under section 1842(o) of the Act, which is proposed at ASP+6 
percent, and the portion of the otherwise applicable OPD fee schedule 
that the Secretary determines is appropriate, which is proposed at 
ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Contrast agents; diagnostic radiopharmaceuticals; anesthesia drugs; 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
when used in a diagnostic test or procedure; and drugs and biologicals 
that function as supplies when used in a surgical procedure), we are 
proposing that their pass-through payment amount would be equal to 
ASP+6 percent for CY 2017 because, if not for their pass-through 
status, payment for these products would be packaged into the 
associated procedure.
    In addition, we are proposing to continue to update pass-through 
payment rates on a quarterly basis on the CMS Web site during CY 2017 
if later quarter ASP submissions (or more recent WAC or AWP 
information, as applicable) indicate that adjustments to the payment 
rates for these pass-through drugs or biologicals are necessary. For a 
full description of this policy, we refer readers to the CY 2006 OPPS/
ASC final rule with comment period (70 FR 68632 through 68635).
    In CY 2017, as is consistent with our CY 2016 policy for diagnostic 
and therapeutic radiopharmaceuticals, we are proposing to provide 
payment for both diagnostic and therapeutic radiopharmaceuticals that 
are granted pass-through payment status based on the ASP methodology. 
As stated earlier, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2017, we are proposing to follow the standard 
ASP methodology to determine the pass-through payment rate that drugs

[[Page 45659]]

receive under section 1842(o) of the Act, which is proposed at ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
are proposing to provide pass-through payment at WAC+6 percent, the 
equivalent payment provided to pass-through drugs and biologicals 
without ASP information. If WAC information also is not available, we 
are proposing to provide payment for the pass-through 
radiopharmaceutical at 95 percent of its most recent AWP.
    The 38 drugs and biologicals that we are proposing to continue to 
have pass-through payment status for CY 2017 or have been granted pass-
through payment status as of July 2016 are shown in Table 14 below.

              Table 14--Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2017
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY
     CY 2016 HCPCS Code           CY 2017 HCPCS Code           CY 2017 Long        2017 status      Proposed CY
                                                                descriptor          indicator        2017 APC
----------------------------------------------------------------------------------------------------------------
A9586......................  A9586......................  Florbetapir f18,                    G             1664
                                                           diagnostic, per
                                                           study dose, up to 10
                                                           millicuries.
C9137......................  C9137......................  Injection, Factor                   G             1844
                                                           VIII (antihemophilic
                                                           factor, recombinant)
                                                           PEGylated, 1 I.U..
C9138......................  C9138......................  Injection, Factor                   G             1846
                                                           VIII (antihemophilic
                                                           factor, recombinant)
                                                           (Nuwiq), 1 I.U..
C9349......................  C9349......................  PuraPly, and PuraPly                G             1657
                                                           Antimicrobial, any
                                                           type, per square
                                                           centimeter.
C9447......................  C9447......................  Injection,                          G             1663
                                                           phenylephrine and
                                                           ketorolac, 4 ml vial.
C9460......................  C9460......................  Injection, cangrelor,               G             9460
                                                           1 mg.
C9461......................  C9461......................  Choline C 11,                       G             9461
                                                           diagnostic, per
                                                           study dose.
C9470......................  C9470......................  Injection,                          G             9470
                                                           aripiprazole
                                                           lauroxil, 1 mg.
C9471......................  C9471......................  Hyaluronan or                       G             9471
                                                           derivative, Hymovis,
                                                           for intra-articular
                                                           injection, 1 mg.
C9472......................  C9472......................  Injection, talimogene               G             9472
                                                           laherparepvec, 1
                                                           million plaque
                                                           forming units (PFU).
C9473......................  C9473......................  Injection,                          G             9473
                                                           mepolizumab, 1 mg.
C9474......................  C9474......................  Injection, irinotecan               G             9474
                                                           liposome, 1 mg.
C9475......................  C9475......................  Injection,                          G             9475
                                                           necitumumab, 1 mg.
C9476......................  C9476......................  Injection,                          G             9476
                                                           daratumumab, 10 mg.
C9477......................  C9477......................  Injection,                          G             9477
                                                           elotuzumab, 1 mg.
C9478......................  C9478......................  Injection, sebelipase               G             9478
                                                           alfa, 1 mg.
C9479......................  C9479......................  Instillation,                       G             9479
                                                           ciprofloxacin otic
                                                           suspension, 6 mg.
C9480......................  C9480......................  Injection,                          G             9480
                                                           trabectedin, 0.1 mg.
J0596......................  J0596......................  Injection, c1                       G             9445
                                                           esterase inhibitor
                                                           (recombinant),
                                                           Ruconest, 10 units.
J0695......................  J0695......................  Injection,                          G             9452
                                                           ceftolozane 50 mg
                                                           and tazobactam 25 mg.
J0875......................  J0875......................  Injection,                          G             1823
                                                           dalbavancin, 5 mg.
J1833......................  J1833......................  Injection,                          G             9456
                                                           isavuconazonium
                                                           sulfate, 1 mg.
J2407......................  J2407......................  Injection,                          G             1660
                                                           oritavancin, 10 mg.
J2502......................  J2502......................  Injection,                          G             9454
                                                           pasireotide long
                                                           acting, 1 mg.
J2547......................  J2547......................  Injection, peramivir,               G             9451
                                                           1 mg.
J2860......................  J2860......................  Injection,                          G             9455
                                                           siltuximab, 10 mg.
J3090......................  J3090......................  Injection, tedizolid                G             1662
                                                           phosphate, 1 mg.
J7313......................  J7313......................  Injection,                          G             9450
                                                           fluocinolone
                                                           acetonide
                                                           intravitreal
                                                           implant, 0.01 mg.
J7503......................  J7503......................  Tacrolimus, extended                G             1845
                                                           release, (envarsus
                                                           xr), oral, 0.25 mg.
J8655......................  J8655......................  Netupitant 300 mg and               G             9448
                                                           palonosetron 0.5 mg.
J9032......................  J9032......................  Injection,                          G             1658
                                                           belinostat, 10 mg.
J9039......................  J9039......................  Injection,                          G             9449
                                                           blinatumomab, 1
                                                           microgram.
J9271......................  J9271......................  Injection,                          G             1490
                                                           pembrolizumab, 1 mg.
J9299......................  J9299......................  Injection, nivolumab,               G             9453
                                                           1 mg.
Q5101......................  Q5101......................  Injection, Filgrastim               G             1822
                                                           (G-CSF), Biosimilar,
                                                           1 microgram.
Q9950......................  Q9950......................  Injection, sulfur                   G             9457
                                                           hexafluoride lipid
                                                           microsphere, per ml.
Q9982......................  Q9982......................  Flutemetamol F18,                   G             9459
                                                           diagnostic, per
                                                           study dose, up to 5
                                                           millicuries.
Q9983......................  Q9983......................  Florbetaben F18,                    G             9458
                                                           diagnostic, per
                                                           study dose, up to
                                                           8.1 millicuries.
----------------------------------------------------------------------------------------------------------------

5. Proposed Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals to 
Offset Costs Packaged Into APC Groups
    Under 42 CFR 419.2(b), nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure are packaged in the OPPS. This category 
includes diagnostic radiopharmaceuticals, contrast agents, stress 
agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), 
nonpass-through drugs and biologicals that function as supplies in a 
surgical procedure are packaged in the OPPS. This category includes 
skin substitutes and other surgical-supply drugs and biologicals. As 
described earlier, section 1833(t)(6)(D)(i) of the Act specifies that 
the transitional pass-through payment amount for pass-through drugs and 
biologicals is the difference between the amount paid under section 
1842(o) of the Act and the otherwise applicable OPD fee schedule 
amount. Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we deduct from the pass-
through payment for policy packaged drugs, biologicals, and 
radiopharmaceuticals an amount reflecting the portion of the APC 
payment associated with predecessor products in order to ensure no 
duplicate payment is made. This amount reflecting the portion of the 
APC payment associated with predecessor products is called the payment 
offset.
    The payment offset policy applies to all policy packaged drugs, 
biologicals, and radiopharmaceuticals. For a full description of the 
payment offset policy as applied to diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and skin substitutes, we refer readers 
to the discussion in the CY 2016 OPPS/ASC final rule with

[[Page 45660]]

comment period (80 FR 70430 through 70432). For CY 2017, as we did in 
CY 2016, we are proposing to continue to apply the same policy packaged 
offset policy to payment for pass-through diagnostic 
radiopharmaceuticals, pass-through contrast agents, pass-through stress 
agents, and pass-through skin substitutes. The proposed APCs to which a 
diagnostic radiopharmaceutical payment offset may be applicable are the 
same as for CY 2016 (80 FR 70430). Also, the proposed APCs to which a 
contrast agent payment offset may be applicable, a stress agent payment 
offset, or a skin substitute payment offset are also the same as for CY 
2016 (80 FR 70431 through 70432).
    We are proposing to continue to post annually on the CMS Web site 
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html a file that contains the APC offset 
amounts that will be used for that year for purposes of both evaluating 
cost significance for candidate pass-through device categories and 
drugs and biologicals and establishing any appropriate APC offset 
amounts. Specifically, the file will continue to provide the amounts 
and percentages of APC payment associated with packaged implantable 
devices, policy-packaged drugs, and threshold packaged drugs and 
biologicals for every OPPS clinical APC.

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

1. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Proposed Packaging Threshold
    In accordance with section 1833(t)(16)(B) of the Act, the threshold 
for establishing separate APCs for payment of drugs and biologicals was 
set to $50 per administration during CYs 2005 and 2006. In CY 2007, we 
used the four quarter moving average Producer Price Index (PPI) levels 
for Pharmaceutical Preparations (Prescription) to trend the $50 
threshold forward from the third quarter of CY 2005 (when the Pub. L. 
108-173 mandated threshold became effective) to the third quarter of CY 
2007. We then rounded the resulting dollar amount to the nearest $5 
increment in order to determine the CY 2007 threshold amount of $55. 
Using the same methodology as that used in CY 2007 (which is discussed 
in more detail in the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 68085 through 68086)), we set the packaging threshold for 
establishing separate APCs for drugs and biologicals at $100 for CY 
2016 (80 FR 70433).
    Following the CY 2007 methodology, for this CY 2017 OPPS/ASC 
proposed rule, we used the most recently available four quarter moving 
average PPI levels to trend the $50 threshold forward from the third 
quarter of CY 2005 to the third quarter of CY 2017 and rounded the 
resulting dollar amount ($109.03) to the nearest $5 increment, which 
yielded a figure of $110. In performing this calculation, we used the 
most recent forecast of the quarterly index levels for the PPI for 
Pharmaceuticals for Human Use (Prescription) (Bureau of Labor 
Statistics (BLS) series code WPUSI07003) from CMS' Office of the 
Actuary (OACT). We refer below to this series generally as the PPI for 
Prescription Drugs. Based on these calculations, we are proposing a 
packaging threshold for CY 2017 of $110.
b. Proposed Packaging of Payment for HCPCS Codes That Describe Certain 
Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals Under 
the Cost Threshold (``Threshold-Packaged Drugs'')
    To determine the proposed CY 2017 packaging status for all nonpass-
through drugs and biologicals that are not policy packaged, we 
calculated, on a HCPCS code-specific basis, the per day cost of all 
drugs, biologicals, and therapeutic radiopharmaceuticals (collectively 
called ``threshold-packaged'' drugs) that had a HCPCS code in CY 2015 
and were paid (via packaged or separate payment) under the OPPS. We 
used data from CY 2015 claims processed before January 1, 2016 for this 
calculation. However, we did not perform this calculation for those 
drugs and biologicals with multiple HCPCS codes that include different 
dosages, as described in section V.B.1.d. of this proposed rule, or for 
the following policy-packaged items that we are proposing to continue 
to package in CY 2017: Anesthesia drugs; drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure; and drugs and biologicals that function 
as supplies when used in a surgical procedure.
    In order to calculate the per day costs for drugs, biologicals, and 
therapeutic radiopharmaceuticals to determine their proposed packaging 
status in CY 2017, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and 
finalized in the CY 2006 OPPS final rule with comment period (70 FR 
68636 through 68638). For each drug and biological HCPCS code, we used 
an estimated payment rate of ASP+6 percent (which is the payment rate 
we are proposing for separately payable drugs and biologicals for CY 
2017, as discussed in more detail in section V.B.2.b. of this proposed 
rule) to calculate the CY 2017 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2015 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2016) to determine the proposed rule per 
day cost.
    As is our standard methodology, for CY 2017, we are proposing to 
use payment rates based on the ASP data from the first quarter of CY 
2016 for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to this proposed rule 
(which are available via the Internet on the CMS Web site) because 
these are the most recent data available for use at the time of 
development of this proposed rule. These data also were the basis for 
drug payments in the physician's office setting, effective April 1, 
2016. For items that did not have an ASP-based payment rate, such as 
some therapeutic radiopharmaceuticals, we used their mean unit cost 
derived from the CY 2015 hospital claims data to determine their per 
day cost.
    We are proposing to package items with a per day cost less than or 
equal to $110, and identify items with a per day cost greater than $110 
as separately payable. Consistent with our past practice, we cross-
walked historical OPPS claims data from the CY 2015 HCPCS codes that 
were reported to the CY 2016 HCPCS codes that we display in Addendum B 
to this proposed rule (which is available via the Internet on the CMS 
Web site) for proposed payment in CY 2017.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs and biologicals in this CY 2017 OPPS/ASC 
proposed rule, we are proposing to use ASP data from the

[[Page 45661]]

first quarter of CY 2016, which is the basis for calculating payment 
rates for drugs and biologicals in the physician's office setting using 
the ASP methodology, effective July 1, 2016, along with updated 
hospital claims data from CY 2015. We note that we also are proposing 
to use these data for budget neutrality estimates and impact analyses 
for this CY 2017 OPPS/ASC proposed rule.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B for the final rule will be 
based on ASP data from the second quarter of CY 2016. These data will 
be the basis for calculating payment rates for drugs and biologicals in 
the physician's office setting using the ASP methodology, effective 
October 1, 2016. These payment rates would then be updated in the 
January 2017 OPPS update, based on the most recent ASP data to be used 
for physician's office and OPPS payment as of January 1, 2017. For 
items that do not currently have an ASP-based payment rate, we are 
proposing to recalculate their mean unit cost from all of the CY 2015 
claims data and updated cost report information available for the CY 
2017 final rule with comment period to determine their final per day 
cost.
    Consequently, the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in this CY 2017 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's 
packaging status determined based on the data used for the CY 2017 
OPPS/ASC final rule with comment period. Under such circumstances, we 
are proposing to continue to follow the established policies initially 
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably 
pay for those drugs whose cost fluctuates relative to the proposed CY 
2017 OPPS drug packaging threshold and the drug's payment status 
(packaged or separately payable) in CY 2016. These established policies 
have not changed for many years and are the same as described in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70434).
c. Proposed High Cost/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. As part of the policy to finalize the packaging of 
skin substitutes, we also finalized a methodology that divides the skin 
substitutes into a high cost group and a low cost group, in order to 
ensure adequate resource homogeneity among APC assignments for the skin 
substitute application procedures (78 FR 74933). We continued the high 
cost/low cost categories policy in CY 2015 and CY 2016, and are 
proposing to continue it for CY 2017. Under this current policy, skin 
substitutes in the high cost category are reported with the skin 
substitute application CPT codes and skin substitutes in the low cost 
category are reported with the analogous skin substitute HCPCS C-codes. 
For a discussion of the CY 2014 and CY 2015 methodologies for assigning 
skin substitutes to either the high cost group or the low cost group, 
we refer readers to the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66882 through 66885).
    For CY 2017, as in CY 2016, we are proposing to determine the high/
low cost status for each skin substitute product based on either a 
product's geometric mean unit cost (MUC) exceeding the geometric MUC 
threshold or the product's per day cost (PDC) (the total units of a 
skin substitute multiplied by the mean unit cost and divided by the 
total number of days) exceeding the PDC threshold. For a discussion of 
the CY 2016 high cost/low cost methodology, we refer readers to the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70434 through 
70435). We are proposing to assign skin substitutes that exceed either 
the MUC or PDC threshold to the high cost group. We are proposing to 
assign skin substitutes with an MUC or a PDC that does not exceed 
either the MUC threshold or the PDC threshold to the low cost group. 
For CY 2017, we analyzed CY 2015 claims data to calculate the MUC 
threshold (a weighted average of all skin substitutes' MUCs) and PDC 
threshold (a weighted average of all skin substitutes' PDCs). The 
proposed CY 2017 MUC threshold is $25 per cm\2\ (rounded to the nearest 
$1) and the proposed CY 2017 PDC threshold is $729 (rounded to the 
nearest $1).
    For CY 2017, as in CY 2016, we are proposing to continue to assign 
skin substitutes with pass-through payment status to the high cost 
category, and to assign skin substitutes with pricing information but 
without claims data to calculate a geometric MUC or PDC to either the 
high cost or low cost category based on the product's ASP+6 percent 
payment rate as compared to the MUC threshold. If ASP is not available, 
we would use WAC+6 percent or 95 percent of AWP to assign a product to 
either the high cost or low cost category. New skin substitutes without 
pricing information would be assigned to the low cost category until 
pricing information is available to compare to the CY 2017 MUC 
threshold. For a discussion of our existing policy under which we 
assign skin substitutes without pricing information to the low cost 
category until pricing information is available, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436). In 
addition, as in CY 2016, we are proposing for CY 2017 that a skin 
substitute that is both assigned to the high cost group in CY 2016 and 
also exceeds either the MUC or PDC in this proposed rule for CY 2017 
would be assigned to the high cost group for CY 2017, even if it no 
longer exceeds the MUC or PDC CY 2017 thresholds based on updated 
claims data and pricing information used in the CY 2017 final rule with 
comment period. Table 15 below displays the proposed CY 2017 high cost 
or low cost category assignment for each skin substitute product.

Table 15--Proposed Skin Substitute Assignments to High Cost and Low Cost
                           Groups for CY 2017
------------------------------------------------------------------------
                                                       Proposed CY 2017
      CY 2017 HCPCS Code           CY 2017 Short           high/low
                                     descriptor           assignment
------------------------------------------------------------------------
C9349*.......................  PuraPly, PuraPly       High.
                                antimic.
C9363........................  Integra Meshed Bil     High.
                                Wound Mat.
Q4100........................  Skin Substitute, NOS.  Low.
Q4101........................  Apligraf.............  High.
Q4102........................  Oasis Wound Matrix...  Low.

[[Page 45662]]

 
Q4103........................  Oasis Burn Matrix....  High.
Q4104........................  Integra BMWD.........  High.
Q4105........................  Integra DRT..........  High.
Q4106........................  Dermagraft...........  High.
Q4107........................  GraftJacket..........  High.
Q4108........................  Integra Matrix.......  High.
Q4110........................  Primatrix............  High.
Q4111........................  Gammagraft...........  Low.
Q4115........................  Alloskin.............  Low.
Q4116........................  Alloderm.............  High.
Q4117........................  Hyalomatrix..........  Low.
Q4119........................  Matristem Wound        Low.
                                Matrix.
Q4120........................  Matristem Burn Matrix  High.
Q4121........................  Theraskin............  High.
Q4122........................  Dermacell............  High.
Q4123........................  Alloskin.............  High.
Q4124........................  Oasis Tri-layer Wound  Low.
                                Matrix.
Q4126........................  Memoderm/derma/tranz/  High.
                                integup.
Q4127........................  Talymed..............  High.
Q4128........................  Flexhd/Allopatchhd/    High.
                                Matrixhd.
Q4129........................  Unite Biomatrix......  High.
Q4131........................  Epifix...............  High.
Q4132........................  Grafix Core..........  High.
Q4133........................  Grafix Prime.........  High.
Q4134........................  hMatrix..............  Low.
Q4135........................  Mediskin.............  Low.
Q4136........................  Ezderm...............  Low.
Q4137........................  Amnioexcel or          High.
                                Biodexcel, 1cm.
Q4138........................  Biodfence DryFlex,     High.
                                1cm.
Q4140........................  Biodfence 1cm........  High.
Q4141........................  Alloskin ac, 1cm.....  High.
Q4143........................  Repriza, 1cm.........  High.
Q4146........................  Tensix, 1cm..........  High.
Q4147........................  Architect ecm, 1cm...  High.
Q4148........................  Neox 1k, 1cm.........  High.
Q4150........................  Allowrap DS or Dry 1   High.
                                sq cm.
Q4151........................  AmnioBand, Guardian 1  High.
                                sq cm.
Q4152........................  Dermapure 1 square cm  High.
Q4153........................  Dermavest 1 square cm  High.
Q4154........................  Biovance 1 square cm.  High.
Q4156........................  Neox 100 1 square cm.  High.
Q4157........................  Revitalon 1 square cm  High.
Q4158........................  MariGen 1 square cm..  High.
Q4159........................  Affinity 1 square cm.  High.
Q4160........................  NuShield 1 square cm.  High.
Q4161........................  Bio-Connekt per        Low.
                                square cm.
Q4162........................  Amnio bio and woundex  Low.
                                flow.
Q4163........................  Amnion bio and         Low.
                                woundex sq cm.
Q4164........................  Helicoll, per square   High.
                                cm.
Q4165........................  Keramatrix, per        Low.
                                square cm.
------------------------------------------------------------------------
* Pass-through payment status in CY 2017.

d. Proposed Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believed that adopting the standard HCPCS code-specific packaging 
determinations for these codes could lead to inappropriate payment 
incentives for hospitals to report certain HCPCS codes instead of 
others. We continue to believe that making packaging determinations on 
a drug-specific basis eliminates payment incentives for hospitals to 
report certain HCPCS codes for drugs and allows hospitals flexibility 
in choosing to report all HCPCS codes for different dosages of the same 
drug or only the lowest dosage HCPCS code. Therefore, we are proposing 
to continue our policy to make packaging determinations on a drug-
specific basis, rather than a HCPCS code-specific basis, for those 
HCPCS codes that describe the same drug or biological but different 
dosages in CY 2017.
    For CY 2017, in order to propose a packaging determination that is 
consistent across all HCPCS codes that

[[Page 45663]]

describe different dosages of the same drug or biological, we 
aggregated both our CY 2015 claims data and our pricing information at 
ASP+6 percent across all of the HCPCS codes that describe each distinct 
drug or biological in order to determine the mean units per day of the 
drug or biological in terms of the HCPCS code with the lowest dosage 
descriptor. The following drugs did not have pricing information 
available for the ASP methodology for this CY 2017 OPPS/ASC proposed 
rule, and as is our current policy for determining the packaging status 
of other drugs, we used the mean unit cost available from the CY 2015 
claims data to make the proposed packaging determinations for these 
drugs: HCPCS code J1840 (Injection, kanamycin sulfate, up to 500 mg), 
J1850 (Injection, kanamycin sulfate, up to 75 mg) and HCPCS code J3472 
(Injection, hyaluronidase, ovine, preservative free, per 1000 usp 
units).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed weighted 
average ASP+6 percent per unit payment amount across all dosage levels 
of a specific drug or biological by the estimated units per day for all 
HCPCS codes that describe each drug or biological from our claims data 
to determine the estimated per day cost of each drug or biological at 
less than or equal to the proposed CY 2017 drug packaging threshold of 
$110 (so that all HCPCS codes for the same drug or biological would be 
packaged) or greater than the proposed CY 2017 drug packaging threshold 
of $110 (so that all HCPCS codes for the same drug or biological would 
be separately payable). The proposed packaging status of each drug and 
biological HCPCS code to which this methodology would apply in CY 2017 
is displayed in Table 16 below.

    Table 16--Proposed HCPCS Codes to Which the CY 2017 Drug-Specific
               Packaging Determination Methodology Applies
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2017 HCPCS Code        CY 2017 Long descriptor       2017 SI
------------------------------------------------------------------------
C9257......................  Injection, bevacizumab,                  K
                              0.25 mg.
J9035......................  Injection, bevacizumab, 10               K
                              mg.
J1020......................  Injection,                               N
                              methylprednisolone
                              acetate, 20 mg.
J1030......................  Injection,                               N
                              methylprednisolone
                              acetate, 40 mg.
J1040......................  Injection,                               N
                              methylprednisolone
                              acetate, 80 mg.
J1460......................  Injection, gamma globulin,               K
                              intramuscular, 1 cc.
J1560......................  Injection, gamma globulin,               K
                              intramuscular, over 10 cc.
J1642......................  Injection, heparin sodium,               N
                              (heparin lock flush), per
                              10 units.
J1644......................  Injection, heparin sodium,               N
                              per 1000 units.
J1850......................  Injection, kanamycin                     N
                              sulfate, up to 75 mg.
J1840......................  Injection, kanamycin                     N
                              sulfate, up to 500 mg.
J2788......................  Injection, rho d immune                  N
                              globulin, human,
                              minidose, 50 micrograms
                              (250 i.u.).
J2790......................  Injection, rho d immune                  N
                              globulin, human, full
                              dose, 300 micrograms
                              (1500 i.u.).
J2920......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 40 mg.
J2930......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 125 mg.
J3471......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1 usp unit (up to 999
                              usp units).
J3472......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1000 usp units.
J7050......................  Infusion, normal saline                  N
                              solution, 250 cc.
J7040......................  Infusion, normal saline                  N
                              solution, sterile (500 ml
                              = 1 unit).
J7030......................  Infusion, normal saline                  N
                              solution, 1000 cc.
J7515......................  Cyclosporine, oral, 25 mg.               N
J7502......................  Cyclosporine, oral, 100 mg               N
J8520......................  Capecitabine, oral, 150 mg               N
J8521......................  Capecitabine, oral, 500 mg               N
J9250......................  Methotrexate sodium, 5 mg.               N
J9260......................  Methotrexate sodium, 50 mg               N
------------------------------------------------------------------------

2. Proposed Payment for Drugs and Biologicals Without Pass-Through 
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable and Packaged Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or is a drug or biological for which payment 
was made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY 2006 and subsequent years be equal to the average 
acquisition cost for the drug for that year as determined by the 
Secretary, subject to any adjustment for overhead costs and taking into 
account the hospital acquisition cost survey data collected by the 
Government Accountability Office (GAO) in CYs 2004 and 2005, and later 
periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary.

[[Page 45664]]

We refer to this alternative methodology as the ``statutory default.'' 
Most physician Part B drugs are paid at ASP+6 percent in accordance 
with section 1842(o) and section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to take into account overhead and related 
expenses, such as pharmacy services and handling costs. Section 
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead 
and related expenses and to make recommendations to the Secretary 
regarding whether, and if so how, a payment adjustment should be made 
to compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to take into 
account the findings of the MedPAC study.
    It has been our longstanding policy to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. In this CY 2017 
OPPS/ASC proposed rule, we are proposing to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    For a detailed discussion of our OPPS drug payment policies from CY 
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying 
for separately payable drugs and biologicals at the statutory default 
for CY 2014, CY 2015, and CY 2016 (80 FR 70440).
b. Proposed CY 2017 Payment Policy
    For CY 2017 and subsequent years, we are proposing to continue our 
payment policy that has been in effect from CY 2013 to present and pay 
for separately payable drugs and biologicals at ASP+6 percent in 
accordance with section 1833(t)(14)(A)(iii)(II) of the Act (the 
statutory default). We are proposing that the ASP+6 percent payment 
amount for separately payable drugs and biologicals requires no further 
adjustment and represents the combined acquisition and pharmacy 
overhead payment for drugs and biologicals. We also are proposing that 
payments for separately payable drugs and biologicals are included in 
the budget neutrality adjustments, under the requirements in section 
1833(t)(9)(B) of the Act, and that the budget neutral weight scaler is 
not applied in determining payments for these separately paid drugs and 
biologicals.
    We note that separately payable drug and biological payment rates 
listed in Addenda A and B to this proposed rule (available via the 
Internet on the CMS Web site), which illustrate the proposed CY 2017 
payment of ASP+6 percent for separately payable nonpass-through drugs 
and biologicals and ASP+6 percent for pass-through drugs and 
biologicals, reflect either ASP information that is the basis for 
calculating payment rates for drugs and biologicals in the physician's 
office setting effective April 1, 2016, or WAC, AWP, or mean unit cost 
from CY 2015 claims data and updated cost report information available 
for this proposed rule. In general, these published payment rates are 
not the same as the actual January 2017 payment rates. This is because 
payment rates for drugs and biologicals with ASP information for 
January 2017 will be determined through the standard quarterly process 
where ASP data submitted by manufacturers for the third quarter of 2016 
(July 1, 2016 through September 30, 2016) will be used to set the 
payment rates that are released for the quarter beginning in January 
2017 near the end of December 2016. In addition, payment rates for 
drugs and biologicals in Addenda A and B to this proposed rule for 
which there was no ASP information available for April 2016 are based 
on mean unit cost in the available CY 2015 claims data. If ASP 
information becomes available for payment for the quarter beginning in 
January 2017, we will price payment for these drugs and biologicals 
based on their newly available ASP information. Finally, there may be 
drugs and biologicals that have ASP information available for this 
proposed rule (reflecting April 2016 ASP data) that do not have ASP 
information available for the quarter beginning in January 2017. These 
drugs and biologicals would then be paid based on mean unit cost data 
derived from CY 2015 hospital claims. Therefore, the proposed payment 
rates listed in Addenda A and B to this proposed rule are not for 
January 2017 payment purposes and are only illustrative of the proposed 
CY 2017 OPPS payment methodology using the most recently available 
information at the time of issuance of this proposed rule.
c. Biosimilar Biological Products
    For CY 2016, we finalized a policy to pay for biosimilar biological 
products based on the payment allowance of the product as determined 
under section 1847A of the Act and to subject nonpass-through 
biosimilar biological products to our annual threshold-packaged policy 
(80 FR 70445 through 70446). For CY 2017, we are proposing to continue 
this same payment policy for biosimilar biological products.
3. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
    For CY 2017, we are proposing to continue the payment policy for 
therapeutic radiopharmaceuticals that began in CY 2010. We pay for 
separately paid therapeutic radiopharmaceuticals under the ASP 
methodology adopted for separately payable drugs and biologicals. If 
ASP information is unavailable for a therapeutic radiopharmaceutical, 
we base therapeutic radiopharmaceutical payment on mean unit cost data 
derived from hospital claims. We believe that the rationale outlined in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 
through 60525) for applying the principles of separately payable drug 
pricing to therapeutic radiopharmaceuticals continues to be appropriate 
for nonpass-through, separately payable therapeutic 
radiopharmaceuticals in CY 2017. Therefore, we are proposing for CY 
2017 to pay all nonpass-through, separately payable therapeutic 
radiopharmaceuticals at ASP+6 percent, based on the statutory default 
described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full 
discussion of ASP-based payment for therapeutic radiopharmaceuticals, 
we refer readers to the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520 through 60521). We also are proposing to rely on CY 2015 
mean unit cost data derived from hospital claims data for payment rates 
for therapeutic

[[Page 45665]]

radiopharmaceuticals for which ASP data are unavailable and to update 
the payment rates for separately payable therapeutic 
radiopharmaceuticals according to our usual process for updating the 
payment rates for separately payable drugs and biologicals on a 
quarterly basis if updated ASP information is available. For a complete 
history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65811), the CY 2006 OPPS final rule with 
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60524). The proposed CY 2017 payment rates for 
nonpass-through, separately payable therapeutic radiopharmaceuticals 
are in Addenda A and B to this proposed rule (which are available via 
the Internet on the CMS Web site).
4. Proposed Payment Adjustment Policy for Radioisotopes Derived From 
Non-Highly Enriched Uranium Sources
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Some of the Technetium-99 (Tc-99m), the radioisotope used 
in the majority of such diagnostic imaging services, is produced in 
legacy reactors outside of the United States using highly enriched 
uranium (HEU).
    The United States would like to eliminate domestic reliance on 
these reactors, and is promoting the conversion of all medical 
radioisotope production to non-HEU sources. Alternative methods for 
producing Tc-99m without HEU are technologically and economically 
viable, and conversion to such production has begun. We expect that 
this change in the supply source for the radioisotope used for modern 
medical imaging will introduce new costs into the payment system that 
are not accounted for in the historical claims data.
    Therefore, beginning in CY 2013, we finalized a policy to provide 
an additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals 
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium 
source, full cost recovery add-on per study dose) once per dose along 
with any diagnostic scan or scans furnished using Tc-99m as long as the 
Tc-99m doses used can be certified by the hospital to be at least 95 
percent derived from non-HEU sources (77 FR 68321).
    We stated in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68321) that our expectation is that this additional payment will 
be needed for the duration of the industry's conversion to alternative 
methods to producing Tc-99m without HEU. We also stated that we would 
reassess, and propose if necessary, on an annual basis whether such an 
adjustment continued to be necessary and whether any changes to the 
adjustment were warranted (77 FR 68316). We have reassessed this 
payment for CY 2017 and did not identify any new information that would 
cause us to modify payment. Therefore, for CY 2017, we are proposing to 
continue to provide an additional $10 payment for radioisotopes 
produced by non-HEU sources.
5. Proposed Payment for Blood Clotting Factors
    For CY 2016, we provided payment for blood clotting factors under 
the same methodology as other nonpass-through separately payable drugs 
and biologicals under the OPPS and continued paying an updated 
furnishing fee (80 FR 70441). That is, for CY 2016, we provided payment 
for blood clotting factors under the OPPS at ASP+6 percent, plus an 
additional payment for the furnishing fee. We note that when blood 
clotting factors are provided in physicians' offices under Medicare 
Part B and in other Medicare settings, a furnishing fee is also applied 
to the payment. The CY 2016 updated furnishing fee was $0.202 per unit.
    For CY 2017, we are proposing to pay for blood clotting factors at 
ASP+6 percent, consistent with our proposed payment policy for other 
nonpass-through, separately payable drugs and biologicals, and to 
continue our policy for payment of the furnishing fee using an updated 
amount. Our policy to pay for a furnishing fee for blood clotting 
factors under the OPPS is consistent with the methodology applied in 
the physician's office and in the inpatient hospital setting. These 
methodologies were first articulated in the CY 2006 OPPS final rule 
with comment period (70 FR 68661) and later discussed in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66765). The proposed 
furnishing fee update is based on the percentage increase in the 
Consumer Price Index (CPI) for medical care for the 12-month period 
ending with June of the previous year. Because the Bureau of Labor 
Statistics releases the applicable CPI data after the MPFS and OPPS/ASC 
proposed rules are published, we are not able to include the actual 
updated furnishing fee in the proposed rules. Therefore, in accordance 
with our policy, as finalized in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66765), we are proposing to announce the actual 
figure for the percent change in the applicable CPI and the updated 
furnishing fee calculated based on that figure through applicable 
program instructions and posting on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims 
Data
    For CY 2017, we are proposing to continue to use the same payment 
policy as in CY 2016 for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes but without OPPS hospital claims 
data (80 FR 70443). The proposed CY 2017 payment status of each of the 
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes but without OPPS hospital claims data is listed in Addendum B to 
this proposed rule, which is available via the Internet on the CMS Web 
site.

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

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget

[[Page 45666]]

neutral, as required by section 1833(t)(6)(E) of the Act.
    For devices, developing an estimate of pass-through spending in CY 
2017 entails estimating spending for two groups of items. The first 
group of items consists of device categories that are currently 
eligible for pass-through payment and that will continue to be eligible 
for pass-through payment in CY 2017. The CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66778) describes the methodology we have 
used in previous years to develop the pass-through spending estimate 
for known device categories continuing into the applicable update year. 
The second group of items consists of items that we know are newly 
eligible, or project may be newly eligible, for device pass-through 
payment in the remaining quarters of CY 2016 or beginning in CY 2017. 
The sum of the CY 2017 pass-through spending estimates for these two 
groups of device categories equals the total CY 2017 pass-through 
spending estimate for device categories with pass-through payment 
status. We base the device pass-through estimated payments for each 
device category on the amount of payment as established in section 
1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules, 
including the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75034 through 75036). We note that, beginning in CY 2010, the pass-
through evaluation process and pass-through payment for implantable 
biologicals newly approved for pass-through payment beginning on or 
after January 1, 2010, that are surgically inserted or implanted 
(through a surgical incision or a natural orifice) use the device pass-
through process and payment methodology (74 FR 60476). As has been our 
past practice (76 FR 74335), in this proposed rule for CY 2017, we are 
proposing to include an estimate of any implantable biologicals 
eligible for pass-through payment in our estimate of pass-through 
spending for devices. Similarly, we finalized a policy in CY 2015 that 
applications for pass-through payment for skin substitutes and similar 
products be evaluated using the medical device pass-through process and 
payment methodology (76 FR 66885 through 66888). Therefore, as we did 
beginning in CY 2015, for CY 2017, we also are proposing to include an 
estimate of any skin substitutes and similar products in our estimate 
of pass-through spending for devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. Because we are proposing to pay for most nonpass-through 
separately payable drugs and biologicals under the CY 2017 OPPS at 
ASP+6 percent, and because we are proposing to pay for CY 2017 pass-
through drugs and biologicals at ASP+6 percent, as we discussed in 
section V.A. of this proposed rule, our estimate of drug and biological 
pass-through payment for CY 2017 for this group of items is $0, as 
discussed below.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents without pass-through status, 
is packaged into payment for the associated procedures, and these 
products will not be separately paid. In addition, we policy-package 
all nonpass-through drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure and 
drugs and biologicals that function as supplies when used in a surgical 
procedure, as discussed in section II.A.3. of this proposed rule. We 
are proposing that all of these policy-packaged drugs and biologicals 
with pass-through payment status would be paid at ASP+6 percent, like 
other pass-through drugs and biologicals, for CY 2017. Therefore, our 
estimate of pass-through payment for policy-packaged drugs and 
biologicals with pass-through payment status approved prior to CY 2017 
is not $0, as discussed below. In section V.A.4. of this proposed rule, 
we discuss our policy to determine if the costs of certain policy-
packaged drugs or biologicals are already packaged into the existing 
APC structure. If we determine that a policy-packaged drug or 
biological approved for pass-through payment resembles predecessor 
drugs or biologicals already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment, we are 
proposing to offset the amount of pass-through payment for the policy-
packaged drug or biological. For these drugs or biologicals, the APC 
offset amount is the portion of the APC payment for the specific 
procedure performed with the pass-through drug or biological, which we 
refer to as the policy-packaged drug APC offset amount. If we determine 
that an offset is appropriate for a specific policy-packaged drug or 
biological receiving pass-through payment, we are proposing to reduce 
our estimate of pass-through payments for these drugs or biologicals by 
this amount.
    Similar to pass-through estimates for devices, the first group of 
drugs and biologicals requiring a pass-through payment estimate 
consists of those products that were recently made eligible for pass-
through payment and that will continue to be eligible for pass-through 
payment in CY 2017. The second group contains drugs and biologicals 
that we know are newly eligible, or project will be newly eligible in 
the remaining quarters of CY 2016 or beginning in CY 2017. The sum of 
the CY 2017 pass-through spending estimates for these two groups of 
drugs and biologicals equals the total CY 2017 pass-through spending 
estimate for drugs and biologicals with pass-through payment status.

B. Proposed Estimate of Pass-Through Spending

    We are proposing to set the applicable pass-through payment 
percentage limit at 2.0 percent of the total projected OPPS payments 
for CY 2017, consistent with section 1833(t)(6)(E)(ii)(II) of the Act 
and our OPPS policy from CY 2004 through CY 2016 (80 FR 70446 through 
70448).
    For the first group, consisting of device categories that are 
currently eligible for pass-through payment and will continue to be 
eligible for pass-through payment in CY 2017, there are three active 
categories for CY 2017. For CY 2016, we established one new device 
category subsequent to the publication of the CY 2016 OPPS/ASC proposed 
rule, HCPCS code C1822 (Generator, neurostimulator (implantable), high 
frequency, with rechargeable battery and charging system), that was 
effective January 1, 2016. We estimate that the device described by 
HCPCS code C1822 will cost $1 million in pass-through expenditures in 
CY 2017. Effective April 1, 2015, we established that the device 
described by HCPCS code C2623 (Catheter, transluminal angioplasty, 
drug-coated, non-laser) will be eligible for pass-through payment. We 
estimate that the device described by HCPCS code C2623 will cost $97 
million in pass-through expenditures in CY 2017. Effective July 1, 
2015, we established that the device described by HCPCS code C2613 
(Lung biopsy plug with delivery system) will be eligible for pass-
through payment. We estimate that the device described by HCPCS code

[[Page 45667]]

C2613 will cost $4.7 million in pass-through expenditures in CY 2017. 
Based on the three device categories of HCPCS codes C1822, C2623, and 
C2613, we are proposing an estimate for the first group of devices of 
$102.7 million.
    In estimating our proposed CY 2017 pass-through spending for device 
categories in the second group, we include: Device categories that we 
knew at the time of the development of this proposed rule will be newly 
eligible for pass-through payment in CY 2017; additional device 
categories that we estimate could be approved for pass-through status 
subsequent to the development of the proposed rule and before January 
1, 2017; and contingent projections for new device categories 
established in the second through fourth quarters of CY 2017. We are 
proposing to use the general methodology described in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66778), while also taking 
into account recent OPPS experience in approving new pass-through 
device categories. For this proposed rule, the estimate of CY 2017 
pass-through spending for this second group of device categories is $10 
million.
    To estimate proposed CY 2017 pass-through spending for drugs and 
biologicals in the first group, specifically those drugs and 
biologicals recently made eligible for pass-through payment and 
continuing on pass-through payment status for CY 2017, we proposed to 
use the most recent Medicare physician claims data regarding their 
utilization, information provided in the respective pass-through 
applications, historical hospital claims data, pharmaceutical industry 
information, and clinical information regarding those drugs or 
biologicals to project the CY 2017 OPPS utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2017, we estimate the pass-through 
payment amount as the difference between ASP+6 percent and the payment 
rate for nonpass-through drugs and biologicals that will be separately 
paid at ASP+6 percent, which is zero for this group of drugs. Because 
payment for policy-packaged drugs and biologicals is packaged if the 
product was not paid separately due to its pass-through payment status, 
we are proposing to include in the CY 2017 pass-through estimate the 
difference between payment for the policy-packaged drug or biological 
at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC 
information is not available) and the policy-packaged drug APC offset 
amount, if we determine that the policy-packaged drug or biological 
approved for pass-through payment resembles a predecessor drug or 
biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment. For this 
proposed rule, using the proposed methodology described above, we 
calculated a CY 2017 proposed spending estimate for this first group of 
drugs and biologicals of approximately $19.0 million.
    To estimate proposed CY 2017 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
knew at the time of development of the proposed rule were newly 
eligible for pass-through payment in CY 2017, additional drugs and 
biologicals that we estimated could be approved for pass-through status 
subsequent to the development of the proposed rule and before January 
1, 2016, and projections for new drugs and biologicals that could be 
initially eligible for pass-through payment in the second through 
fourth quarters of CY 2017), we are proposing to use utilization 
estimates from pass-through applicants, pharmaceutical industry data, 
clinical information, recent trends in the per unit ASPs of hospital 
outpatient drugs, and projected annual changes in service volume and 
intensity as our basis for making the CY 2017 pass-through payment 
estimate. We also are proposing to consider the most recent OPPS 
experience in approving new pass-through drugs and biologicals. Using 
our proposed methodology for estimating CY 2017 pass-through payments 
for this second group of drugs, we calculated a proposed spending 
estimate for this second group of drugs and biologicals of 
approximately $16.6 million.
    In summary, in accordance with the methodology described earlier in 
this section, for this proposed rule, we estimate that proposed total 
pass-through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2017 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2017 would be 
approximately $148.3 million (approximately $112.7 million for device 
categories and approximately $35.6 million for drugs and biologicals), 
which represents 0.24 percent of total projected OPPS payments for CY 
2017. Therefore, we estimate that proposed pass-through spending in CY 
2017 would not amount to 2.0 percent of total projected OPPS CY 2017 
program spending.

VIII. Proposed OPPS Payment for Hospital Outpatient Visits and Critical 
Care Services

    For CY 2017, we are proposing to continue with and are not 
proposing any changes to our current clinic and emergency department 
(ED) hospital outpatient visits payment policies. For a description of 
the current clinic and ED hospital outpatient visits policies, we refer 
readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70448). We also are proposing to continue with and are not proposing 
any change to our payment policy for critical care services for CY 
2017. For a description of the current payment policy for critical care 
services, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70449), and for the history of the payment policy 
for critical care services, we refer readers to the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 75043). We are seeking public 
comments on any changes to these codes that we should consider for 
future rulemaking cycles. We encourage those parties who comment to 
provide the data and analysis necessary to justify any proposed 
changes.

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

    A partial hospitalization program (PHP) is an intensive outpatient 
program of psychiatric services provided as an alternative to inpatient 
psychiatric care for individuals who have an acute mental illness. 
Section 1861(ff)(1) of the Act defines partial hospitalization services 
as the items and services described in paragraph (2) prescribed by a 
physician and provided under a program described in paragraph (3) under 
the supervision of a physician pursuant to an individualized, written 
plan of treatment established and periodically reviewed by a physician 
(in consultation with appropriate staff participating in such program), 
which sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided under the 
plan, and the goals for treatment under the plan. Section 1861(ff)(2) 
of the Act describes the items and services included in partial

[[Page 45668]]

hospitalization services. Section 1861(ff)(3)(A) of the Act specifies 
that a PHP is a program furnished by a hospital to its outpatients or 
by a community mental health center (CMHC) (as defined in subparagraph 
(B)), and which is a distinct and organized intensive ambulatory 
treatment service offering less than 24-hour-daily care other than in 
an individual's home or in an inpatient or residential setting. Section 
1861(ff)(3)(B) of the Act defines a CMHC for purposes of this benefit.
    Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the 
authority to designate the OPD services to be covered under the OPPS. 
The Medicare regulations that implement this provision specify, under 
42 CFR 419.21, that payments under the OPPS will be made for partial 
hospitalization services furnished by CMHCs as well as Medicare Part B 
services furnished to hospital outpatients designated by the Secretary, 
which include partial hospitalization services (65 FR 18444 through 
18445).
    Section 1833(t)(2)(C) of the Act requires the Secretary to 
establish relative payment weights for covered OPD services (and any 
groups of such services described in section 1833(t)(2)(B) of the Act) 
based on median (or, at the election of the Secretary, mean) hospital 
costs using data on claims from 1996 and data from the most recent 
available cost reports. In pertinent part, section 1833(t)(2)(B) of the 
Act provides that the Secretary may establish groups of covered OPD 
services, within a classification system developed by the Secretary for 
covered OPD services, so that services classified within each group are 
comparable clinically and with respect to the use of resources. In 
accordance with these provisions, we have developed the PHP APCs. 
Because a day of care is the unit that defines the structure and 
scheduling of partial hospitalization services, we established a per 
diem payment methodology for the PHP APCs, effective for services 
furnished on or after July 1, 2000 (65 FR 18452 through 18455). Under 
this methodology, the median per diem costs were used to calculate the 
relative payment weights for the PHP APCs. Section 1833(t)(9)(A) of the 
Act requires the Secretary to review, not less often than annually, and 
revise the groups, the relative payment weights, and the wage and other 
adjustments described in section 1833(t)(2) of the Act to take into 
account changes in medical practice, changes in technology, the 
addition of new services, new cost data, and other relevant information 
and factors.
    We began efforts to strengthen the PHP benefit through extensive 
data analysis and policy and payment changes finalized in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66670 through 66676). In 
that final rule, we made two refinements to the methodology for 
computing the PHP median: The first remapped 10 revenue codes that are 
common among hospital-based PHP claims to the most appropriate cost 
centers; and the second refined our methodology for computing the PHP 
median per diem cost by computing a separate per diem cost for each day 
rather than for each bill.
    In CY 2009, we implemented several regulatory, policy, and payment 
changes, including a two-tiered payment approach for partial 
hospitalization services under which we paid one amount for days with 3 
services under PHP APC 0172 (Level 1 Partial Hospitalization) and a 
higher amount for days with 4 or more services under PHP APC 0173 
(Level 2 Partial Hospitalization) (73 FR 68688 through 68693). We also 
finalized our policy to deny payment for any PHP claims submitted for 
days when fewer than 3 units of therapeutic services are provided (73 
FR 68694). Furthermore, for CY 2009, we revised the regulations at 42 
CFR 410.43 to codify existing basic PHP patient eligibility criteria 
and to add a reference to current physician certification requirements 
under 42 CFR 424.24 to conform our regulations to our longstanding 
policy (73 FR 68694 through 68695). We also revised the partial 
hospitalization benefit to include several coding updates (73 FR 68695 
through 68697). For CY 2010, we retained the two-tiered payment 
approach for partial hospitalization services and used only hospital-
based PHP data in computing the PHP APC per diem costs, upon which PHP 
APC per diem payment rates are based. We used only hospital-based PHP 
data because we were concerned about further reducing both PHP APC per 
diem payment rates without knowing the impact of the policy and payment 
changes we made in CY 2009. Because of the 2-year lag between data 
collection and rulemaking, the changes we made in CY 2009 were 
reflected for the first time in the claims data that we used to 
determine payment rates for the CY 2011 rulemaking (74 FR 60556 through 
60559).
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71994), we established four separate PHP APC per diem payment rates: 
Two for CMHCs (APC 0172 (for Level 1 services) and APC 0173 (for Level 
2 services)) and two for hospital-based PHPs (APC 0175 (for Level 1 
services) and 0176 (for Level 2 services)), based on each provider 
type's own unique data. In addition, in accordance with section 1301(b) 
of the Health Care and Education Reconciliation Act of 2010 (HCERA 
2010), we amended the description of a PHP in our regulations to 
specify that a PHP must be a distinct and organized intensive 
ambulatory treatment program offering less than 24-hour daily care 
other than in an individual's home or in an inpatient or residential 
setting. In accordance with section 1301(a) of HCERA 2010, we revised 
the definition of a CMHC in the regulations to conform to the revised 
definition now set forth under section 1861(ff)(3)(B) of the Act (75 FR 
71990). For CY 2011, we also instituted a 2-year transition period for 
CMHCs to the CMHC APC per diem payment rates based solely on CMHC data. 
Under the transition methodology, CMHC PHP APCs Level 1 and Level 2 per 
diem costs were calculated by taking 50 percent of the difference 
between the CY 2010 final hospital-based PHP median costs and the CY 
2011 final CMHC median costs and then adding that number to the CY 2011 
final CMHC median costs. A 2-year transition under this methodology 
moved us in the direction of our goal, which is to pay appropriately 
for partial hospitalization services based on each provider type's 
data, while at the same time allowing providers time to adjust their 
business operations and protect access to care for Medicare 
beneficiaries. We also stated that we would review and analyze the data 
during the CY 2012 rulemaking cycle and, based on these analyses, we 
might further refine the payment mechanism. We refer readers to section 
X.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71991 through 71994) for a full discussion.
    For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74348 through 74352), we determined the relative 
payment weights for partial hospitalization services provided by CMHCs 
based on data derived solely from CMHCs and the relative payment 
weights for partial hospitalization services provided by hospital-based 
PHPs based exclusively on hospital data.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized our proposal to base the relative payment weights that 
underpin the OPPS APCs, including the four PHP APCs (APCs 0172, 0173, 
0175, and 0176), on geometric mean costs rather than on the median 
costs. We established these four

[[Page 45669]]

PHP APC per diem payment rates based on geometric mean cost levels 
calculated using the most recent claims and cost data for each provider 
type. For a detailed discussion on this policy, we refer readers to the 
CY 2013 OPPS/ASC final rule with comment period (77 FR 68406 through 
68412).
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622), 
we solicited comments on possible future initiatives that may help to 
ensure the long-term stability of PHPs and further improve the accuracy 
of payment for PHP services, but proposed no changes. In the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75050 through 75053), we 
summarized the comments received on those possible future initiatives. 
We also continued to apply our established policies to calculate the 
four PHP APC per diem payment rates based on geometric mean per diem 
costs using the most recent claims data for each provider type. For a 
detailed discussion on this policy, we refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75050 through 75053).
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 
through 66908), we continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on PHP APC 
geometric mean per diem costs, using the most recent claims and cost 
data for each provider type.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 
through 70465), we again continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on PHP APC 
geometric mean per diem costs, using the most recent claims and cost 
data for each provider type. We also implemented a trim to remove 
hospital-based PHP service days that use a CCR that was greater than 5 
(CCR > 5) to calculate costs for at least one of their component 
services, and a trim on CMHCs with an average cost per day that is 
above or below 2 (2) standard deviations from the mean. We 
also renumbered the PHP APCs which were previously 0172, 0173, 0175, 
and 0176, to 5851, 5852, 5861, and 5862, respectively. For a detailed 
discussion of the PHP ratesetting process, we refer readers to the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70462 through 
70467).
    In the effort to increase the accuracy of the PHP per diem costs, 
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 
through 70461), we completed an extensive analysis of the claims and 
cost data, which included provider service usage, coding practices, and 
the ratesetting methodology. This extensive analysis identified 
provider coding errors that were inappropriately removing costs from 
ratesetting, and aberrant data from several providers that were 
affecting the calculation of the proposed PHP geometric mean per diem 
costs. Aberrant data are claims and/or cost data that are so abnormal 
that they skew the resulting geometric mean per diem costs. For 
example, we found claims with excessive CMHC charges resulting in CMHC 
geometric mean costs per day that were approximately the same as or 
more than the daily payment for inpatient psychiatric facility 
services. For an outpatient program like the PHP, which does not incur 
room and board costs such as an inpatient stay would, these costs per 
day were excessive. In addition, we found some CMHCs had very low costs 
per day (less than $25 per day). We stated in the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70456) that, without using a 
trimming process, the data from these providers would inappropriately 
skew the geometric mean per diem cost for Level 2 CMHC PHP services. 
Further analysis of the data confirmed that there were a few providers 
with extreme cost per day values, which led us to propose and finalize 
a 2 standard deviation trim on CMHC costs per day.
    During our claims and cost data analysis, we also found aberrant 
data from some hospital-based PHP providers. The existing OPPS 3 standard deviation trim removed very extreme CCRs by defaulting 
two providers that failed this trim to their overall hospital ancillary 
CCR. However, the calculation of the 3 standard deviations 
used to define the trim was influenced by these two providers, which 
had extreme CCRs greater than 175. Because these two hospital-based PHP 
providers remained in the data when we calculated the boundaries of the 
OPPS 3 standard deviation trim in the CY 2016 ratesetting, 
the upper limit of the trim boundaries was fairly high, at 28.3446. As 
such, some aberrant CCRs were not trimmed out, and still had high 
values ranging from 6.3840 to 19.996. We note that, as stated in CY 
2016 OPPS/ASC proposed rule (80 FR 39242 and 39293) and reiterated in 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70456), OPPS 
defines a biased CCR as one that falls outside the predetermined 
ceiling threshold for a valid CCR; using CY 2014 cost report data, that 
threshold is 1.5.
    In order to reduce or eliminate the impact of aberrant data 
received from a few CMHCs and hospital-based PHP providers in the 
claims data used for ratesetting, we finalized the application of a 
2 standard deviation trim on cost per day for CMHCs and a 
CCR>5 hospital service day trim for hospital-based PHP providers for CY 
2016 and subsequent years (80 FR 70456 through 70459). In addition, in 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70459 
through 70460), a cost inversion occurred in the final rule data with 
respect to hospital-based PHP providers. A cost inversion exists when 
the Level 1 PHP APC geometric mean per diem cost for providing exactly 
3 services per day exceeds the Level 2 PHP APC geometric mean per diem 
cost for providing 4 or more services per day. We corrected the cost 
inversion with an equitable adjustment to the actual geometric mean per 
diem costs by increasing the Level 2 hospital-based PHP APC geometric 
mean per diem costs and decreasing the Level 1 hospital-based PHP APC 
geometric mean per diem costs by the same factor, to result in a 
percentage difference equal to the average percent difference between 
the hospital-based Level 1 PHP APC and the Level 2 PHP APC for partial 
hospitalization services from CY 2013 through CY 2015.
    For a comprehensive description on the background of PHP payment 
policy, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70453 through 70455).

B. Proposed PHP APC Update for CY 2017

1. Proposed PHP APC Changes and Effects on Geometric Mean Per Diem 
Costs
    For CY 2017, we are proposing to continue to apply our established 
policies to calculate the PHP APC per diem payment rates based on 
geometric mean per diem costs using the most recent claims and cost 
data for each provider type. However, as explained in greater detail 
below, we are proposing to combine the Level 1 and Level 2 PHP APCs for 
CMHCs and to combine the Level 1 and Level 2 APCs for hospital-based 
PHPs because we believe this would best reflect actual geometric mean 
per diem costs going forward, provide more predictable per diem costs, 
particularly given the small number of CMHCs, and generate more 
appropriate payments for these services by avoiding the cost inversions 
that hospital-based PHPs experienced in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70459).

[[Page 45670]]

a. Proposed Changes to PHP APCs
    In this CY 2017 OPPS/ASC proposed rule, we are proposing to combine 
the existing two-tiered PHP APCs for CMHCs into a single PHP APC and 
the existing two-tiered hospital-based PHP APCs into a single PHP APC. 
Specifically, we are proposing to replace existing CMHC PHP APCs 5851 
(Level 1 Partial Hospitalization (3 services) for CMHCs) and 5852 
(Level 2 Partial Hospitalization (4 or more services) for CMHCs) with 
proposed new CMHC PHP APC 5853 (Partial Hospitalization (3 or More 
Services Per Day)), and to replace existing hospital-based PHP APCs 
5861 (Level 1 Partial Hospitalization (3 services) for Hospital-based 
PHPs) and 5862 (Level 2 Partial Hospitalization (4 or more services) 
for Hospital-based PHPs) with proposed new hospital-based PHP APC 5863 
(Partial Hospitalization (3 or More Services Per Day)). In conjunction 
with this proposal, we are proposing to combine the geometric mean per 
diem costs for the existing Level 1 and Level 2 PHP APCs for CMHCs (APC 
5851 and APC 5852, respectively) to calculate the proposed geometric 
mean per diem costs for proposed new PHP APC 5853 for CMHCs, and to 
combine the geometric mean per diem costs for the existing Level 1 and 
Level 2 PHP APCs for hospital-based PHPs (APC 5861 and APC 5862, 
respectively) to calculate the proposed geometric mean per diem costs 
for proposed new PHP APC 5863 for hospital-based PHPs, for CY 2017 and 
subsequent years. Further, we are proposing to compute the proposed new 
CMHC PHP APC 5853 proposed geometric mean per diem costs for partial 
hospitalization services provided by CMHCs using only CY 2015 CMHC 
claims data and the most recent cost data, and to compute the proposed 
hospital-based PHP APC 5863 proposed geometric mean per diem costs for 
partial hospitalization services provided by hospital-based PHPs using 
only CY 2015 hospital-based PHP claims data and the most recent cost 
data. We discuss these computations under section VIII.B.2 of this 
preamble. The proposed geometric mean per diem costs are shown in Table 
19 in section VIII.B.2. of this proposed rule.
b. Rationale for Proposed Changes in PHP APCs
    One of the primary reasons for our proposal to replace the existing 
Level 1 and Level 2 PHP APCs with a single PHP APC, by provider type, 
is because the proposed new PHP APCs would avoid any further issues 
with cost inversions, and, therefore, generate more appropriate payment 
for the services provided by specific provider types. As previously 
stated, a cost inversion exists when the Level 1 PHP APC geometric mean 
per diem cost for providing exactly 3 services per day exceeds the 
Level 2 PHP APC geometric mean per diem cost for providing 4 or more 
services per day, and, as we noted in last year's final rule with 
comment period, we do not believe that it would be reasonable or 
appropriate to pay more for fewer services provided per day and to pay 
less for more services provided per day (80 FR 70459 through 70460).
    To determine if the issue with hospital-based cost inversions that 
occurred in the data used for the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70459) would continue, we calculated the CY 2017 
hospital-based PHP APC geometric mean per diem costs separately for 
Level 1 and Level 2 partial hospitalization services provided by 
hospital-based PHPs. After applying our established trims and 
exclusions, we determined that the CY 2017 Level 1 hospital-based PHP 
APC geometric mean per diem cost would be $241.08 and the CY 2017 Level 
2 hospital-based PHP APC geometric mean per diem cost would be $187.06, 
which again demonstrates an inversion.
    We analyzed the CY 2015 hospital-based PHP claims data used for 
this CY 2017 proposed rule to determine the source of the inversion 
between the Level 1 and Level 2 hospital-based PHP APCs geometric mean 
per diem costs, and found that 13 hospital-based PHPs had high 
geometric mean per diem costs per day. Two of those providers account 
for 11.5 percent of Level 1 hospital-based PHP service days, but only 
1.9 percent of Level 2 hospital-based PHP service days. Eleven of those 
13 providers only reported costs for Level 1 hospital-based PHP service 
days, which increased the geometric mean per diem costs for the Level 1 
hospital-based PHP APC. There also were 3 hospital-based PHP providers 
with very low geometric mean costs per day that accounted for 
approximately 28 percent of the Level 2 hospital-based PHP service 
days, which decreased the geometric mean per diem costs for the Level 2 
hospital-based PHP APC. High volume providers heavily influence the 
cost data, and we believe that the high volume providers with very low 
Level 2 hospital-based PHP geometric mean per diem costs per day and 
high volume providers with very high Level 1 hospital-based PHP 
geometric mean per diem costs per day contributed to the inversion 
between the hospital-based PHP APCs Level 1 and Level 2 geometric mean 
per diem costs.
    In developing the proposal to collapse the Level 1 and Level 2 PHP 
APCs into one APC each for CMHCs and hospital-based providers, we 
reviewed the reasons why we structured the existing PHP APCs into a 
two-tiered payment distinguished by Level 1 and Level 2 services for 
both provider types in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68688 through 68693), to determine whether the rationales 
continued to be applicable. In the CY 2009 OPPS/ASC final rule with 
comment period, we referenced the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66672), which noted that a significant portion of 
PHP service days actually provided fewer than three services to 
Medicare beneficiaries. In our CY 2009 OPPS/ASC final rule with comment 
period, we noted that PHP service days that provide exactly three 
services should only occur in limited circumstances. We were concerned 
about paying providers a single per diem payment rate when a 
significant portion of the PHP service days provided 3 services, and 
believed it was appropriate to pay a higher rate for more intensive 
service days.
    We evaluated the frequency of claims reporting Level 1 and Level 2 
PHP service days in Table 17 below to determine if a significant 
portion of PHP service days only provided exactly 3 services. Table 17 
shows that the frequency of claims reporting PHP service days providing 
exactly 3 services (Level 1 services) has decreased greatly from 73 
percent of CMHC PHP service days in the CY 2009 rulemaking to 4 percent 
of CMHC PHP service days in this CY 2017 proposed rulemaking, and from 
29 percent of hospital-based PHP service days in the CY 2009 rulemaking 
to 12 percent of hospital-based PHP service days in this CY 2017 
proposed rulemaking. Level 1 PHP service days now represent a small 
portion of PHP service days, particularly for CMHCs, as shown in Table 
17 below. Based on this decline in the frequency of claims reporting 
Level 1 service days, we believe that the need for the PHP APC Level 1 
and Level 2 payment tiers that was present in CY 2009 no longer exists. 
The utilization data in Table 17 indicate that for the CY 2017 
rulemaking year, the Level 2 CMHC PHP service days and the hospital-
based PHP Level 2 service days are 96 percent and 88 percent, 
respectively. Because Level 1 service days are now less common for both 
provider types, we believe it is no longer necessary to pay a higher 
rate when 4 or more services are provided compared to when only 3 
services are

[[Page 45671]]

provided. Our proposed new PHP APCs 5853 and 5863 are based on cost 
data for 3 or more services per day (by provider type). Therefore the 
combined cost data used to derive proposed new PHP APCs 5853 and 5863 
result in appropriate per diems based on costs for providing 3 or more 
services per day.

Table 17--Utilization of PHP Level 1 Days (Providing Exactly 3 Services per Day) and PHP Level 2 Days (Providing
                        4 or More Services per Day), From CY 2007 Through CY 2015 Claims
----------------------------------------------------------------------------------------------------------------
                                                                                     Hospital-       Hospital-
                                                  CMHC  Level  1  CMHC  Level  2     based PHP       based PHP
         Rulemaking year            Claims year      days  (%)       days  (%)     Level 1 days    Level 2 days
                                                                                        (%)             (%)
----------------------------------------------------------------------------------------------------------------
CY 2009.........................         CY 2007              73              27              29              71
CY 2010.........................         CY 2008              66              34              25              75
CY 2011.........................         CY 2009               2              98              18              82
CY 2012.........................         CY 2010               2              98              19              81
CY 2013.........................         CY 2011               3              97              11              89
CY 2014.........................         CY 2012               4              96              11              89
CY 2015.........................         CY 2013               6              94              11              89
CY 2016.........................         CY 2014               5              95              11              89
CY 2017.........................         CY 2015               4              96              12              88
----------------------------------------------------------------------------------------------------------------

    When we implemented the PHP APCs Level 1 and Level 2 payment tiers 
in our CY 2009 rulemaking, we noted that we wanted to provide PHPs with 
flexibility in scheduling patients. Both the industry and CMS 
recognized that there may be limited circumstances when it is 
appropriate for PHPs to receive payment for days when exactly 3 units 
of service are provided (73 FR 68688 through 68689). Allowing PHPs to 
receive payment for a Level 1 service day where exactly 3 services are 
provided gives PHPs some flexibility in scheduling their patients. Our 
proposal to replace the existing two-tiered PHP APCs with proposed new 
PHP APCs 5853 and 5863 would provide payment for providing 3 or more 
services per day by CMHCs and hospital-based PHPs, respectively. 
Therefore, this flexibility in scheduling remains.
    Another primary reason for proposing to replace the Level 1 and 
Level 2 PHP APCs with a single PHP APC, by provider type, is the 
decrease in the number of PHPs, particularly CMHCs. With a small number 
of providers, data from large providers with a high percentage of all 
PHP service days and unusually high or low geometric mean costs per day 
will have a more pronounced effect on the PHP APCs geometric mean per 
diem costs, skewing the costs up or down. That effect would be 
magnified by continuing to split the geometric mean per diem costs 
further by distinguishing Level 1 and Level 2 PHP services. Creating a 
single PHP APC for each provider type providing 3 or more partial 
hospitalization services per day should reduce these cost fluctuations 
and provide more stability in the PHP APC geometric mean per diem 
costs.
    We also note that our proposal to replace the existing Level 1 and 
Level 2 PHP APCs by provider type with a single PHP APC for each 
provider type is permissible under the applicable statute and 
regulatory provisions. Section 1833(t)(2)(B) of the Act provides that 
the Secretary may establish groups of covered OPD services, within a 
classification system developed by the Secretary for covered OPD 
services, so that services classified within each group are comparable 
clinically and with respect to the use of resources. Moreover, the 
language that follows paragraph (t)(2) of section 1833 of the Act 
provides that, for purposes of subparagraph (B), items and services 
within a group shall not be treated as comparable with respect to use 
of resources if the highest mean cost for an item or services is more 
than two times greater than the lowest mean cost for an item or service 
within the group, with some exceptions. Section 419.31 of our 
regulations implements this statutory provision, providing that CMS 
classify outpatient services and procedures that are comparable 
clinically and in terms of resource use into APC groups. We believe our 
proposal to replace the existing Level 1 and Level 2 PHP APCs for both 
provider types with a single PHP APC, by provider type, is supported by 
the statute and regulations and will continue to pay for partial 
hospitalization services appropriately based upon actual provider 
costs.
    Both of the existing Level 1 and Level 2 PHP APCs are comprised of 
services described by the same HCPCS codes. Therefore, the types of 
services provided under the two payment tiers are the same. The 
difference is in the quantity of the services provided, where the Level 
1 PHP APCs provide for payment for providing exactly 3 services per 
day, while the Level 2 PHP APCs provide for payment for providing 4 or 
more services per day. Because the difference in the Level 1 and the 
Level 2 PHP APCs is in the quantity of the services provided, we would 
expect that the resource use (that is, the geometric mean per diem 
cost) for providing partial hospitalization services under Level 1 
would represent approximately 75 percent or less of the resource use 
for providing partial hospitalization services under Level 2, by 
provider type. Table 18 shows a clear trend for hospital-based PHPs, 
where the geometric mean per diem costs for providing Level 1 partial 
hospitalization services have approached the geometric mean per diem 
costs for providing Level 2 partial hospitalization services, until 
they exceed the geometric mean per diem costs for providing Level 2 
partial hospitalization services beginning in CY 2016. As the 
percentages in Table 18 approach 100 percent, the Level 1 and the Level 
2 PHP APC geometric mean per diem costs become closer to each other, 
demonstrating similar resource use. The trend is less clear for CMHCs, 
but the data still show the cost difference between the two tiers 
narrowing, except in CY 2016. We are not sure why the cost difference 
is wider among CMHCs in CY 2016 and welcome public comments that can 
help explain the difference.

[[Page 45672]]



              Table 18--Trends in Level 1 Per Diem Costs as a Percentage of Level 2 Per Diem Costs
----------------------------------------------------------------------------------------------------------------
                                   CY 2013  (%)    CY 2014  (%)    CY 2015  (%)    CY 2016  (%)    CY 2017  (%)
----------------------------------------------------------------------------------------------------------------
CMHCs--Level 1 PHP APC per diem             77.5            88.6            84.4            66.1            85.5
 costs/Level 2 PHP APC per diem
 costs..........................
Hospital-based PHPs--Level 1 PHP            79.2            89.0            91.6         * 110.0         * 128.9
 APC per diem costs/Level 2 PHP
 APC per diem costs.............
----------------------------------------------------------------------------------------------------------------
* Cost inversions occurred with the Level 1 PHP APC per diem costs exceeding the Level 2 PHP APC per diem costs.

    We evaluated the provision of more costly individual therapy in our 
CY 2017 analyses to determine if there were differences in its 
provision for PHP APC Level 1 service days compared to PHP APC Level 2 
service days, by provider type, because this could affect our expected 
difference in resource use (that is, geometric mean per diem costs) 
between the two payment tiers. We found that individual therapy was 
provided in roughly the same proportion under the two payment tiers for 
hospital-based PHPs (in 1.3 percent of PHP APC Level 1 service days and 
in 1.5 percent of PHP APC Level 2 service days). However, we found that 
individual therapy was provided less frequently under the Level 1 CMHC 
PHP service days than under the Level 2 CMHC PHP service days (2.1 
percent versus 5.1 percent). The greater frequency of CMHCs' providing 
more costly individual therapy under Level 2 PHP service days should 
increase resource use for the more costly partial hospitalization 
services provided under Level 2 CMHC PHP service days, widening the 
cost difference between Level 1 and Level 2 CMHC PHP service days. 
However, as noted previously, that is not what the data show.
    As we have described earlier, the services provided under the Level 
1 and Level 2 PHP APC payment tiers are comparable clinically and in 
terms of resource use. Therefore, based on the authority provided under 
section 1833(t)(2)(B) of the Act and our regulations at Sec.  
419.31(a)(1), and because of the policy concerns noted above, we are 
proposing to replace the Level 1 and Level 2 PHP APCs, by provider 
type, with a single PHP APC for each provider type for CY 2017 and 
subsequent years.
    Our proposal to replace the existing Level 1 and Level 2 PHP APCs 
for both provider types with a single PHP APC, by provider type, is 
designed to continue to pay for partial hospitalization services 
appropriately based upon actual provider costs. We believe that section 
1833(t)(2)(B) of the Act and our regulations at Sec.  419.31(a)(1) 
provide the Secretary with the authority to classify services that are 
comparable clinically and in terms of resource use under a single APC 
grouping, which is the basis for our proposal to replace the existing 
Level 1 and Level 2 PHP APCs for CMHCs and hospital-based PHPs for 
providing partial hospitalization services with a single PHP APC for 
each specific provider type. In addition, we believe that our proposal 
to combine the PHP APCs two-tiered payment structure by provider type 
would more appropriately pay providers for partial hospitalization 
services provided to Medicare beneficiaries and avoid cost inversions 
in the future. Our proposal to combine the PHP APC payment tiers by 
provider type also would provide more predictable per diem costs, 
particularly given the small number of CMHCs and the cost inversions 
that hospital-based PHPs have experienced. The cost inversions between 
PHP APC Level 1 and Level 2 service days in the hospital-based PHP 
claims data and the small number of CMHCs are the two primary reasons 
for our proposal to replace the two-tiered PHP APCs with a single PHP 
APC for each provider type. The small percentage of all PHP service 
days for partial hospitalization services provided under the Level 1 
PHP APCs further supports our proposal to replace the two-tiered PHP 
APCs with a single PHP APC for each provider type. As noted previously, 
we believe that the need for the PHP APC Level 1 and Level 2 payment 
tiers that was present in CY 2009 no longer exists.
    In summary, we are proposing to create proposed new CMHC PHP APC 
5853 to pay CMHCs for partial hospitalization services provided to 
Medicare beneficiaries for providing 3 or more services per PHP service 
day to replace existing CMHC PHP APCs 5851 and 5852 for CY 2017 and 
subsequent years. We also are proposing to create proposed new 
hospital-based PHP APC 5863 to pay hospital-based PHPs for partial 
hospitalization services provided to Medicare beneficiaries for 
providing 3 or more services per PHP service day to replace existing 
hospital-based PHP APCs 5861 and 5862 for CY 2017 and subsequent years. 
We discuss the proposed geometric mean per diem cost for proposed new 
CMHC APC 5853 and the proposed geometric mean per diem cost for 
proposed new hospital-based PHP APC 5863 in section VIII.B.2. of this 
proposed rule.
    If our CY 2017 proposals are implemented, we would pay both CMHCs 
and hospital-based PHP providers the same payment rate for providing 3 
partial hospitalization services in a single service day as is paid for 
providing 4 or more services in a single service day by the specific 
provider type. We remind providers that because PHP services are 
intensive outpatient services, our regulations at Sec.  410.43(c)(1) 
require that PHPs provide each beneficiary at least 20 hours of 
services each week. We reiterate that this 20 hour per week requirement 
is a minimum requirement, and have noted in multiple prior OPPS/ASC 
final rules with comment periods that a typical PHP program would 
include 5 to 6 hours per day (70 FR 68548, 71 FR 67999, 72 FR 66671, 
and 73 FR 68687). We want providers to continue to have flexibility in 
providing PHP services, and we will continue to monitor the utilization 
of providing 3 services per service day for those limited circumstances 
when a 3-service day is appropriate. We are considering multiple 
options for enhancing monitoring of providers to assure that they meet 
the 20 hours of services per week requirement, and we will communicate 
how we intend to undertake such enhanced monitoring in subregulatory 
guidance in the future.
    Finally, we are concerned by the low frequency of providing 
individual therapy, which we noted earlier in this section, and we will 
be monitoring its provision. We believe that appropriate treatment for 
PHP patients includes some individual therapy. We encourage providers 
to examine their provision of individual therapy to PHP patients, to 
ensure that patients are receiving all of the services that they may 
need.
c. Alternatives Considered
    We considered several alternatives to replacing the Level 1 and 
Level 2 PHP APCs with a single new APC for each PHP provider type. We 
investigated whether we could maintain the Level 1

[[Page 45673]]

and Level 2 PHP APCs if the PHP APC per diem costs were based upon unit 
costs. However, the same data issues that affected per diem costs also 
affected unit costs. The hospital-based unit cost data also were 
inverted such that a Level 1 service day would be more costly than a 
Level 2 service day. As we have previously noted, we do not believe 
that it is appropriate to pay more for providing Level 1 services than 
for providing Level 2 services because only 3 services are provided 
during Level 1 service days and 4 or more services are provided during 
Level 2 service days.
    We also considered continuing the two-tiered PHP APC payment 
structure by provider type, and addressing future cost inversions as 
they arise. Under this alternative, we could propose to use a default 
methodology for handling cost inversions by only combining the two-
tiered PHP APC structure for the provider type with inverted data, and 
only for the affected calendar year. However, we believe that it could 
be confusing if one provider type was paid for PHP services based on a 
two-tiered payment structure, while the other provider type was paid 
based on a single APC grouping. We also believe that providers would 
prefer the predictability of knowing whether they would be paid using a 
single PHP APC or using two-tiered PHP APCs for Level 1 and Level 2 
services.
    Another alternative for handling cost inversions could be to apply 
an equitable adjustment. However, the level of adjustment required 
would vary depending on the degree of the inversion, which also could 
fluctuate from year to year. Again, we believe that providers would 
prefer the predictability afforded by avoiding cost inversions 
altogether, rather than being subject to an ad hoc adjustment as cost 
inversions arise.
    We considered whether we should adjust our data trims, but we 
determined that the cause of the cost inversion was not due to 
providers with aberrantly high CCRs or costs per day. Rather, we 
believe that the cause of the cost inversion was largely the influence 
of high volume providers with high (but not inappropriately high) Level 
1 service day costs and low (but not inappropriately low) Level 2 
service day costs in the CY 2015 hospital-based PHP claims data used 
for this CY 2017 proposed rule. This suggested that adjusting data 
trims may not be an effective method for resolving the inversion. 
Nevertheless, we reconsidered our analysis of the CY 2015 claims data 
for hospital-based PHPs by testing a stricter trim on hospital-based 
PHP data using the published upper limit CCR that hospitals use for 
calculating outliers rather than the existing CCR>5 trim. This test of 
a stricter CCR trim did not remove the inversion, and as a result, we 
are not proposing to change the existing CCR>5 trim on hospital-based 
PHP service days for our CY 2017 ratesetting.
2. Development of the Proposed PHP APC Geometric Mean Per Diem Costs 
and Payment Rates
    For CY 2017 and subsequent years, generally, we are proposing to 
follow the detailed PHP ratesetting methodology described in section 
VIII.B.2.e. of the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70462 through 70466) to determine the proposed PHP APCs' geometric 
mean per diem costs and to calculate the proposed payment rates for the 
two proposed single hospital-based PHP APC and CMHC APC. However, as 
discussed in section VIII.B.1. of this preamble, in support of our CY 
2017 proposals to establish single PHP APCs for hospital-based PHPs and 
CMHCs, we are proposing to combine the geometric mean per diem costs 
for the two existing hospital-based PHP APCs to calculate a proposed 
geometric mean per diem cost for proposed new PHP APC 5863. Currently, 
hospital-based PHP service days with exactly 3 service units (based on 
allowable PHP HCPCS codes) are assigned to Level 1 PHP APC 5861, and 
hospital-based PHP service days with 4 or more service units (based on 
allowable PHP HCPCS codes) are assigned to Level 2 PHP APC 5862. Under 
our CY 2017 proposal, instead of separating the service days among 
these two APCs, we are proposing to combine the service days so that 
hospital-based PHP service days that provide 3 or more service units 
per day (based on allowable PHP HCPCS codes) are assigned to proposed 
new PHP APC 5863. We then are proposing to continue to follow the 
existing methodology to its end to calculate the proposed geometric 
mean per diem cost for proposed new PHP APC 5863. Therefore, the 
proposed geometric mean per diem cost for proposed new PHP APC 5863 
would be based upon actual hospital-based PHP claims and costs for PHP 
service days providing 3 or more services.
    Similarly, we are proposing to combine the geometric mean per diem 
costs for the two existing CMHC PHP APCs to calculate a proposed 
geometric mean per diem cost for proposed new CMHC PHP APC 5853. 
Currently, CMHC PHP service days with exactly 3 service units (based on 
allowable PHP HCPCS codes) are assigned to Level 1 CMHC PHP APC 5851, 
and CMHC PHP service days with 4 or more service units (based on 
allowable PHP HCPCS codes) are assigned to Level 2 CMHC PHP APC 5852. 
Under our CY 2017 proposal, instead of separating the service days 
among these two APCs, we are proposing to combine the service days so 
that CMHC PHP service days that provide 3 or more service units (based 
on allowable PHP HCPCS codes) are assigned to proposed new PHP APC 
5853. We then are proposing to continue to follow the existing PHP 
ratesetting methodology described in section VIII.B.2.e. of the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70462 through 70466) to 
its end to calculate the proposed geometric mean per diem cost for 
proposed new PHP APC 5853. Therefore, the proposed geometric mean per 
diem cost for proposed new PHP APC 5853 would be based upon actual CMHC 
claims and costs for CMHC PHP service days providing 3 or more 
services.
    To prevent confusion, we refer to the per diem costs listed in 
Table 17 of this proposed rule as the proposed PHP APC per diem costs 
or the proposed PHP APC geometric mean per diem costs, and the per diem 
payment rates listed in Addendum A to this proposed rule (which is 
available via the Internet on the CMS Web site) as the proposed PHP APC 
per diem payment rates or the proposed PHP APC geometric mean per diem 
payment rates. The PHP APC per diem costs are the provider-specific 
costs derived from the most recent claims and cost data. The PHP APC 
per diem payment rates are the national unadjusted payment rates 
calculated from the PHP APC per diem costs, after applying the OPPS 
budget neutrality adjustments described in section II.A.4. of this 
proposed rule.
    We are proposing to apply our established methodologies in 
developing the geometric mean per diem costs and payment rates under 
this proposal, including the application of a 2 standard 
deviation trim on costs per day for CMHCs and a CCR>5 hospital service 
day trim for hospital-based PHP providers. These two trims were 
finalized in our CY 2016 OPPS/ASC final rule with comment period (80 FR 
70456 through 70459) for CY 2016 and subsequent years.
    a. CMHC Data Preparation: Data Trims, Exclusions, and CCR 
Adjustments
    Prior to calculating the proposed geometric mean per diem cost for 
proposed new CMHC PHP APC 5853, we prepared the data by first applying 
trims and data exclusions, and assessing CCRs as described in the CY 
2016

[[Page 45674]]

OPPS/ASC final rule with comment period (80 FR 70463 through 70465), so 
that our ratesetting is not skewed by providers with extreme data. 
Under the 2 standard deviation trim policy, we exclude any 
data from a CMHC for ratesetting purposes when the CMHC's geometric 
mean cost per day is more than 2 standard deviations from 
the geometric mean cost per day for all CMHCs. By applying this trim 
for CY 2017 ratesetting, three CMHCs with geometric mean per diem costs 
per day below the trim's lower limit of $42.83 were excluded from the 
proposed ratesetting for CY 2017. We also apply the OPPS 3 
standard deviation trim on CCRs to exclude any data from CMHCs with 
CCRs above or below this range. This trim resulted in the exclusion of 
one CMHC with a very low CCR of 0.001. Both of these standard deviation 
trims removed a number of providers from ratesetting whose data would 
have skewed the calculated proposed geometric mean per diem cost 
downward.
    In accordance with our PHP ratesetting methodology, we also remove 
service days with no wage index values because we use the wage index 
data to remove the effects of geographic variation in costs prior to 
APC geometric mean per diem cost calculation (80 FR 70465). In our 
proposed CY 2017 ratesetting, one CMHC was excluded because it was 
missing wage index data for all of its service days.
    In addition to our trims and data exclusions, before determining 
the PHP APC geometric mean per diem costs, we also assess CCRs (80 FR 
70463). Our longstanding PHP OPPS ratesetting methodology defaults any 
CMHC CCR>1 to the statewide hospital ancillary CCR (80 FR 70457). In 
our proposed CY 2017 ratesetting, we identified one CMHC that had a 
CCR>1. This CMHC's CCR was 1.185 and was defaulted to its appropriate 
statewide hospital ancillary CCR for proposed CY 2017 ratesetting 
purposes.
    These data preparation steps adjusted the CCR for 1 CMHC and 
excluded 5 CMHCs, resulting in the inclusion of a total of 46 CMHCs in 
our CY 2017 ratesetting modeling, and the removal of 643 CMHC claims 
from the 17,033 total CMHC claims used. We believe that excluding 
providers with extremely low geometric mean costs per day or extremely 
low CCRs protects CMHCs from having that data inappropriately skew the 
calculation of the proposed CMHC PHP APC geometric mean per diem cost. 
Moreover, we believe that these trims, exclusions, and adjustments help 
prevent inappropriate fluctuations in the PHP APC geometric mean per 
diem payment rates.
    After applying all of the above trims, exclusions, or adjustments, 
the proposed geometric mean per diem cost for all CMHCs for providing 3 
or more services per day (proposed new CMHC PHP APC 5853) is $135.30.
    b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
    We followed a data preparation process for hospital-based PHP 
providers that is similar to that used for CMHCs by applying trims and 
data exclusions as described in the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70463 to 70465) so that our ratesetting is not 
skewed by providers with extreme data. Before any trimming or 
exclusions, there were 404 hospital-based PHP providers in the claims 
data. For hospital-based PHP providers, we apply a trim on hospital 
service days when the CCR is greater than 5 at the cost center level. 
The CCR>5 hospital service day trim removes hospital-based PHP service 
days that use a CCR>5 to calculate costs for at least one of their 
component services. Unlike the 2 standard deviation trim, 
which excludes CMHC providers that fail the trim, the CCR>5 trim 
excludes any hospital-based PHP service day where any of the services 
provided on that day are associated with a CCR>5. Applying this trim 
removed service days from 8 hospital-based PHP providers with CCRs 
ranging from 5.8763 to 19.9996. However, all of the service days for 
these eight hospital-based PHP providers had at least one service 
associated with a CCR>5, so the trim removed these providers entirely 
from ratesetting. In addition, the OPPS 3 standard 
deviation trim on costs per day removed four providers from 
ratesetting.
    Finally, we excluded 13 hospital-based PHP providers that reported 
zero daily costs on their claims, in accordance with our PHP 
ratesetting policy (80 FR 70465). Therefore, we excluded a total of 25 
hospital-based PHP providers, resulting in 379 hospital-based PHP 
providers in the data used for ratesetting. After completing these data 
preparation steps, we calculated the proposed geometric mean per diem 
cost for proposed new hospital-based PHP APC 5863 for hospital-based 
PHP services. The proposed geometric mean per diem cost for hospital-
based PHP providers that provide 3 or more services per service day 
(proposed hospital-based PHP APC 5863) is $192.57.
    Currently, the Level 2 hospital-based PHP per diem costs serve as 
the cap for all outpatient mental health services provided in a single 
service day. If our proposal to replace the existing two-tiered PHP 
APCs structure with a single APC grouping for these services by 
specific provider type is finalized, the proposed outpatient mental 
health cap would be the geometric mean per diem costs for proposed new 
hospital-based PHP APC 5863.
    The proposed CY 2017 PHP APC geometric mean per diem costs for the 
proposed new CMHC and hospital-based PHP APCs are shown in Table 19 
below. The proposed PHP APC payment rates are included in Addendum A to 
this proposed rule (which is available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).

    Table 19--Proposed CY 2017 PHP APC Geometric Mean Per Diem Costs
------------------------------------------------------------------------
                                                       Proposed  PHP APC
 Proposed CY 2017 APC            Group title             geometric mean
                                                         per diem costs
------------------------------------------------------------------------
5853..................  Partial Hospitalization (3 or            $135.30
                         more services per day) for
                         CMHCs.
5863..................  Partial Hospitalization (3 or             192.57
                         more services per day) for
                         hospital-based PHPs.
------------------------------------------------------------------------

    We are inviting public comments on these proposals.
3. PHP Ratesetting Process
    While PHP services are part of the OPPS, PHP ratesetting has some 
unique aspects. To foster understanding and transparency, we provided a 
detailed explanation of the PHP APC ratesetting process in the CY 2016 
OPPS/ASC final

[[Page 45675]]

rule with comment period (80 FR 70462 through 70467). The OPPS 
ratesetting process includes various steps as part of its data 
development process, such as CCR determination and calculation of 
geometric mean per diem costs, identification of allowable charges, 
development of the APC relative payment weights, calculation of the APC 
payment rates, and establishment of outlier thresholds. We refer 
readers to section II. of this proposed rule and encourage readers to 
review these discussions to increase their overall understanding of the 
entire OPPS ratesetting process. We also refer readers to the OPPS 
Claims Accounting narrative, which is a supporting document to this 
proposed rule, available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; click on the link to 
this proposed rule to find the Claims Accounting narrative. We 
encourage CMHCs and hospital-based PHPs to review their accounting and 
billing processes to ensure that they are following these procedures, 
which should result in greater accuracy in setting the PHP payment 
rates.

C. Proposed Outlier Policy for CMHCs

1. Estimated Outlier Threshold
    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), after examining the costs, charges, and 
outlier payments for CMHCs, we believed that establishing a separate 
OPPS outlier policy for CMHCs would be appropriate. A CMHC-specific 
outlier policy would direct OPPS outlier payments towards the genuine 
cost of outlier cases, and address situations where charges were being 
inflated to enhance outlier payments.
    We created a separate outlier policy that would be specific to the 
estimated costs and OPPS payments provided to CMHCs. Beginning in CY 
2004, we designated a portion of the estimated OPPS outlier threshold 
specifically for CMHCs, consistent with the percentage of projected 
payments to CMHCs under the OPPS each year, excluding outlier payments, 
and established a separate outlier threshold for CMHCs.
    The separate outlier threshold for CMHCs resulted in $1.8 million 
in outlier payments to CMHCs in CY 2004, and $0.5 million in outlier 
payments to CMHCs in CY 2005. In contrast, in CY 2003, more than $30 
million was paid to CMHCs in outlier payments. We note that, in the CY 
2009 OPPS/ASC final rule with comment period, we also established an 
outlier reconciliation policy to address charging aberrations related 
to OPPS outlier payments (73 FR 68594 through 68599).
    In this CY 2017 proposed rule, we are proposing to continue to 
designate a portion of the estimated 1.0 percent outlier threshold 
specifically for CMHCs, consistent with the percentage of projected 
payments to CMHCs under the OPPS in CY 2017, excluding outlier 
payments. CMHCs are projected to receive 0.03 percent of total OPPS 
payments in CY 2017, excluding outlier payments. As we do for each 
rulemaking cycle, we have updated the CMHC CCRs and claims data used to 
model the PHP payments rates. This results in CMHC outliers being paid 
under limited circumstances associated with costs from complex cases, 
rather than as a substitute for the standard PHP payment to CMHCs. 
Therefore, we are proposing to designate less than 0.01 percent of the 
estimated 1.0 percent outlier threshold for CMHCs.
    Based on our simulations of CMHC payments for CY 2017, in this 
proposed rule, we are proposing to continue to set the cutoff point for 
CY 2017 at 3.4 times the highest CMHC PHP APC payment rate implemented 
for that calendar year, which for CY 2017 is the proposed payment rate 
for proposed new CMHC PHP APC 5853. In addition, we are proposing to 
continue to apply the same outlier payment percentage that applies to 
hospitals. Therefore, for CY 2017, we are proposing to continue to pay 
50 percent of CMHC PHP APC geometric mean per diem costs over the 
cutoff point. For example, for CY 2017, if a CMHC's cost for partial 
hospitalization services paid under proposed new CMHC PHP APC 5853 
exceeds 3.4 times the proposed payment rate for proposed new CMHC PHP 
APC 5853, the outlier payment would be calculated as 50 percent of the 
amount by which the cost exceeds 3.4 times the payment rate for 
proposed new CMHC PHP APC 5853.
    In section II.G. of this proposed rule, for the hospital outpatient 
outlier payment policy, we are proposing to set a dollar threshold in 
addition to an APC multiplier threshold. Because the PHP APCs are the 
only APCs for which CMHCs may receive payment under the OPPS, we would 
not expect to redirect outlier payments by imposing a dollar threshold. 
Therefore, we are not proposing to set a dollar threshold for CMHC 
outlier payments.
    In summary, in this section, we are proposing to continue to 
calculate our CMHC outlier threshold and CMHC outlier payments 
according to our established policies.
2. Proposed CMHC Outlier Cap
    Prior to receipt of CY 2015 preliminary claims data, we analyzed CY 
2014 CMHC final claims data and found that CMHC outlier payments began 
to increase similarly to the way they had prior to CY 2004. While many 
CMHCs had little or no outlier payments, three CMHCs had very high 
charges for their CMHC services, which resulted in their collecting 
large outlier payments that exceeded their total per diem payments. 
CMHC total per diem payments are comprised of the Medicare CMHC total 
per diem payments and the beneficiary share of those per diem payments. 
In total, Medicare paid CMHCs $6.2 million in outlier payments in CY 
2014, which was 36 percent of all CMHC total per diem payments. 
Contrast that 36 percent with the OPPS outlier threshold of 1 percent 
of total OPPS payments (with the CMHC threshold being a fraction of 
that 1 percent, based on the percentage of projected per diem payments 
to CMHCs under the OPPS). In CY 2014, three CMHCs accounted for 98 
percent of all CMHC outlier payments that year and received outlier 
payments that ranged from 104 percent to 713 percent of their total per 
diem payments.
    When a CMHC's outlier payments approach or exceed its total per 
diem payments, it suggests that outlier payments are not being used as 
intended for exceptional high cost patients, but instead as a routine 
supplement to the per diem payment because outlier payments are being 
made for nearly all patients. The OPPS outlier policy is intended to 
compensate providers for treating exceptionally resource-intensive 
patients. As we noted in our CY 2004 OPPS/ASC final rule with comment 
period (68 FR 63470), outlier payments were never intended to be made 
for all patients and used as a supplement to the per diem payment 
amount. Sections 1833(t)(5)(A) and (B) of the Act specify that outlier 
payments are to approximate the marginal cost of care when charges, 
adjusted to cost, exceed a cutoff point established by the Secretary. 
As stated previously, for CMHCs, that cutoff point is 3.4 times the 
highest CMHC APC payment rate (PHP APC 0173). In the CY 2014 claims, 
that meant a CMHC was eligible for an outlier payment for a given day 
if the cost for that day was greater than 3.4 times CMHC APC 0173 rate 
for Level II services, or 3.4 times $111.73, which equals $379.88 
before wage adjustment.
    We examined the total average cost per day for the three CMHCs with 
outlier payments that were more than 100 percent of their regular 
payments.

[[Page 45676]]

In CY 2014, these three CMHCs had a total average cost per day of 
$1,065, which exceeded the FY 2014 daily payment rate for inpatient 
psychiatric care of $713.19. We do not believe that the cost of a day 
of intensive outpatient CMHC services, which usually comprises 4 hours 
of services (mostly group therapy), should equal or exceed the cost of 
a 24-hour period of inpatient care, which includes 24-hour nursing 
care, active psychiatric treatment, room and board, drugs, and 
laboratory tests. Because the outpatient PHP daily rate includes 
payment for fewer items and services than the inpatient psychiatric 
facility daily rate, we believe that the cost of a day of outpatient 
PHP care should be significantly less than the cost of a day of 
inpatient psychiatric care. Therefore, we believe that those three 
CMHCs with total average cost per day of $1,065 demonstrated excessive 
outlier payments.
    We believe that these excessive outlier payments to some CMHCs are 
the result of inflated costs, which result from artificially inflated 
charges. Costs are calculated by multiplying charges by the cost-to-
charge ratio. The cost-to-charge ratio used for calculating outlier 
payments has established upper limits for hospitals and for CMHCs (we 
refer readers to the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70456) and the Medicare Claims Processing Internet-only Manual, 
chapter 4, section 10.11.9, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf). 
Inflated costs, therefore, usually result from inflated charges, and 
lead to excessive outlier payments. We also believe that these 
excessive outlier payments do not approximate the marginal cost of care 
when costs exceed the established cutoff point, as specified in 
sections 1833(t)(5)(A) and (B) of the Act. The resulting outlier 
payments would be inappropriate. We are entrusted with paying CMHCs 
that are participating in Medicare accurately. Therefore, outlier 
payments resulting from inflated costs need to be addressed. We also 
are concerned that if these CMHCs continue this pattern of inflated 
charges for partial hospitalization services, CMHCs will continue to 
receive a disproportionate share of outlier payments compared to other 
OPPS providers that do not artificially inflate their charges, thereby 
limiting outlier payments for truly deserving cases.
    At this point in time, and based on our available claims data, we 
chose to apply 30 percent of total per diem payments as a cutoff point 
for reasonable outlier payments. In the CY 2014 claims data, the 
average charge per day for the 3 CMHCs that received outlier payments 
>=30 percent of their total per diem payments was $3,233, which was 
nearly 8 times greater than the average charge per day for the CMHCs 
that received outlier payments <30 percent of their total per diem 
payments. In our review of CY 2015 claims data for this CY 2017 
rulemaking, the average charge per day for the CMHCs that received 
outlier payments >=30 percent of their total per diem payments was 
$1,583, which was more than 3 times greater than the average charge per 
day for the CMHCs that received outlier payments <30 percent of their 
total per diem payments.
    In our review of CY 2015 claims data for this CY 2017 rulemaking, 
Medicare paid CMHCs $3.2 million in outlier payments, with over 99 
percent of those payments made to 4 CMHCs. These outlier payments were 
26 percent of all CMHC total per diem payments, and ranged from 39 
percent to 179 percent of the individual CMHC's total per diem 
payments. Total outlier payments to CMHCs decreased from $6.2 million 
in CY 2014 to $3.2 million in CY 2015 because the CMHC that received 
the largest outlier payments in CY 2014 no longer had outlier payments 
in CY 2015. This CMHC revised its charge structure downward. However, 
two additional CMHCs that did not receive outlier payments in CY 2014 
began receiving outlier payments in CY 2015 that were >=30 percent of 
their total payments, which suggests a growing problem.
    Under the current outlier reconciliation process, a MAC will 
reconcile a CMHC's outlier payments at the time of final cost report 
settlement if the CMHC's CCR has changed by 0.10 or more and if the 
CMHC received any outlier payments. This process is described in 
Section 10.7.2, Chapter 4, of the Medicare Claims Processing Manual, 
which is available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf. Typically, final cost report 
settlement occurs within 12 months of the MAC's acceptance of the cost 
report. However, because cost reports are filed up to 5 months after 
the CMHC's fiscal year end, CMHC outlier reconciliation can occur more 
than a year after outlier overpayments are made. Long timeframes 
between outlier payment and outlier reconciliation at final cost report 
settlement have also allowed cases with outlier overpayments to 
continue and to grow. For example, one CMHC with inflated charges in CY 
2013 continued to have inflated charges in CY 2014, and received more 
than double its CY 2013 outlier payments in CY 2014. This CMHC did not 
receive outlier payments in CY 2015 because it revised its charge 
structure downward and, therefore, no longer had costs qualifying for 
outlier payments.
    Although efforts geared towards limiting very high outlier payments 
to CMHCs are occurring, such as the outlier reconciliation process, 
these efforts typically occur after the outlier payments are made. We 
would prefer to focus on stopping questionable outlier payments before 
they occur, to avoid the risk that a provider would be unable to repay 
Medicare after those overpayments occur. Therefore, we considered 
whether a broader, supplementary policy change to our CMHC outlier 
payment policy might also be warranted to mitigate possible billing 
vulnerabilities associated with very high outlier payments, while at 
the same time ensuring that we adhere to the existing statutory 
requirements related to covering the marginal cost of care for 
exceptionally resource-intensive patients. We want to ensure that CMHCs 
that provide services that represent the cost of care for legitimate 
high-cost cases are able to continue to receive outlier payments.
    Given these program integrity concerns and our longstanding history 
of introducing CMHC-specific outlier policies when necessary (the CMHC-
specific outlier threshold and the CMHC-specific reconciliation 
process), we are proposing to implement a CMHC outlier payment cap to 
be applied at the provider level, such that in any given year, an 
individual CMHC would receive no more than a set percentage of its CMHC 
total per diem payments in outlier payments. This outlier payment cap 
would only affect CMHCs, and would not affect other provider types. 
This outlier payment cap would be in addition to and separate from the 
current outlier policy and reconciliation policy in effect. We are 
proposing that the CMHC outlier payment cap be set at 8 percent of the 
CMHC's total per diem payments. As noted previously, each CMHC's total 
per diem payments are comprised of its Medicare CMHC total per diem 
payments plus the total beneficiary share of those per diem payments. 
If implemented, this proposal would mean that a CMHC's total outlier 
payments in a calendar year could not exceed 8 percent of its total per 
diem payments in that year.
    To determine this proposed CMHC outlier cap percentage, we 
performed analyses to model the impact that a variety of cap 
percentages would have on CMHC outlier payments. We want to

[[Page 45677]]

ensure that any outlier cap policy would not disadvantage CMHCs with 
truly high-cost patients that merit an outlier payment, while also 
protecting the benefit from making payments for outlier cases that 
exceed the marginal cost of care. We used CY 2015 preliminary claims 
data to perform a detailed impact analysis of CMHC outlier payments. We 
will not have final CY 2015 claims data until after this proposed rule 
is published, but we will update this analysis using final claims data 
for our CY 2017 OPPS/ASC final rule with comment period. Out of 51 
CMHCs with paid claims in CY 2015, 9 CMHCs received outlier payments. 
We separated these 9 CMHCs into 4 CMHCs that received outlier payments 
>=30 percent of their total CMHC payments in CY 2015, and 5 CMHCs that 
received had outlier payments <30 percent of their total CMHC payments 
in CY 2015.
    The 5 CMHCs that received outlier payments that were <30 percent of 
their total per diem payments received a total of $11,496 in outlier 
payments. We believe that these 5 CMHCs are representative of the types 
of CMHCs we are most concerned about that would be disadvantaged with 
an outlier payment policy that includes a cap at the individual CMHC 
level. We tested the effects of CMHC outlier caps ranging from 3 
percent to 10 percent on these two groups of CMHCs. Our analysis 
focused on total CMHC per diem payments, total CMHC outlier payments, 
and percentage reductions in payments if a CMHC outlier payment cap 
were imposed, as shown in Table 20 below.

                                           Table 20--Effect of CMHC Outlier Cap Simulation on Outlier Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Simulated outlier payments
                                                              ------------------------------------------------------------------------------------------
                                                                Total per      Actual
                                                                   diem       outlier       3% cap       5% cap       6% cap       8% cap      10% cap
                                                                 payments     payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
All 51 CMHCs.................................................   12,316,182    3,222,896  ...........  ...........  ...........  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
5 CMHCs with Outlier Payments <30 Percent of Total Per Diem      9,471,380       11,496        4,196        6,465        7,599        9,868       12,136
 Payments....................................................
Reduction in Outlier Payments................................  ...........  ...........        7,299        5,031        3,896        1,628            0
Percent Reduction............................................  ...........  ...........  ...........  ...........  ...........  ...........  ...........
Number of CMHCs Affected.....................................  ...........  ...........            1            1            1            1            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 CMHCs with Outlier Payments >=30 Percent...................    2,844,802    3,211,401       85,344      142,240      170,688      227,584      284,480
Reduction in Outlier Payments................................  ...........  ...........    3,137,552    3,080,656    3,052,208    2,995,312    2,938,416
Percent Reduction............................................  ...........  ...........        97.7%        95.9%        95.0%        93.3%        91.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Based on CY 2015 preliminary claims data.
Note: Of 51 CMHCs in CY 2015 claims data, 9 received outlier payments; 4 CMHCs of those 9 CMHCs received outlier payments >=30 percent of their total
  per diem payments. Two of these 4 CMHCs received outlier payments that were >100 percent of their total per diem payments.

    The table above shows that 4 out of the 5 CMHCs that received 
outlier payments <30 percent of their total per diem payments received 
outlier payments that were less than 1 percent of their total per diem 
payments and, therefore, would be unaffected by a CMHC outlier payment 
cap. The 5th CMHC received outlier payments that were 9.4 percent of 
its total per diem payments and is the only CMHC that would have been 
affected by a CMHC outlier payment cap applied at the provider level. 
The effect on this CMHC is shown under the various cap percentage 
options. At the 8 percent level, this CMHC's outlier payments would 
have been reduced by $1,628. A 10-percent cap would have had no effect 
on this CMHC. The difference in total outlier payments to all CMHCs 
between the 8 percent and 10 percent cap levels was relatively small 
(about $58,000).
    We also conducted our CMHC outlier cap analysis using final CY 2014 
claims data. When we evaluated the effect of the different CMHC 
provider-level outlier cap percentages on the CMHCs with outlier 
payments < 30 percent of their total per diem payments, using the final 
CY 2014 claims data, we found that 5 CMHCs would be affected by an 8 
percent cap, and 4 CMHCs would be affected by a 10-percent cap, with a 
difference in outlier payments of only $4,069. However, an 8-percent 
cap compared to a 10-percent cap saved more than $37,000 in outlier 
payments to the CMHCs that were charging excessively (data not shown).
    We considered both the CY 2014 and CY 2015 claims data as we sought 
to balance our concern about disadvantaging CMHCs with our interest in 
protecting the benefit from excessive outlier payments by proposing an 
8-percent CMHC outlier payment cap. An 8-percent CMHC outlier payment 
cap would mitigate potential inappropriate outlier billing 
vulnerabilities by limiting the impact of inflated CMHC charges on 
outlier payments. The 8-percent cap would have reduced outlier payments 
to the 3 CMHCs that received outlier payments >=30 percent of their 
total per diem payments in CY 2015 by $3.0 million dollars, or 93.3 
percent.
    Therefore, for CY 2017 and subsequent years, we are proposing to 
apply a CMHC outlier payment cap of 8 percent to each CMHC's total per 
diem payments, such that in any given calendar year, an individual CMHC 
would not receive more than 8 percent of its CMHC total per diem 
payments in outlier payments. We are inviting public comment on the 
CMHC provider-level outlier cap percentage.
    Our existing outlier reconciliation policy would continue to remain 
in effect with the proposed CMHC outlier payment cap serving as a 
complement. We are proposing to revise Sec.  419.43(d) of the 
regulations by adding a paragraph (7) to require that CMHC outlier 
payments for the calendar year be subject to a CMHC outlier payment 
cap, applied at the individual CMHC level, that is, 8 percent of each 
CMHC's total per diem payments for that same calendar year.
    We will continue to monitor the trends in outlier payments and if 
our proposed CMHC outlier payment cap is implemented, we would also 
monitor these policy effects. We also would analyze CMHC outlier 
payments at the provider level, relative to the proposed 8 percent CMHC 
outlier cap. Finally, we will continue to utilize program integrity 
efforts, as necessary, for those CMHCs receiving excessive outlier 
payments.

[[Page 45678]]

3. Implementation Strategy for a Proposed 8-Percent Cap on CMHC Outlier 
Payments
    CMS envisions that the proposed 8-percent CMHC cap on outlier 
payments would be managed by the claims processing system. If the 
proposed CMHC outlier payment cap is finalized, we would provide 
detailed information on our implementation strategy through sub-
regulatory channels. However, to foster a clearer understanding of the 
proposed CMHC outlier payment cap, we are providing the following high-
level summary of the preliminary approach we envision.
    For each CMHC, for a given calendar year, the claims processing 
system would maintain a running tally of year-to-date (YTD) total CMHC 
per diem payments (Medicare payments and the beneficiary share) and YTD 
actual CMHC outlier payments. YTD outlier payments for that calendar 
year could never exceed 8 percent of YTD CMHC total per diem payments 
for that CMHC for that calendar year. For example, we could determine 
whether or not a given outlier payment exceeds the 8-percent cap on a 
``rolling'' basis. Under such an implementation approach, for each 
CMHC, the claims processing system would maintain a running tally of 
the YTD total CMHC per diem payments. The claims processing system 
would ensure that each time an outlier claim for a CMHC is processed, 
actual outlier payments would never exceed 8 percent of the CMHC's YTD 
total payments. While a CMHC would receive its per diem payment timely, 
the outlier portion of the claim would be paid as the CMHC's YTD 
payments support payment of the outlier. As part of our routine claims 
processing, we would utilize a periodic review process under which 
outlier payments that were withheld would subsequently be paid if the 
CMHC's total payments have increased to the point that its outlier 
payments can be made. This process would result in additional cash flow 
to CMHCs. As noted previously, we also would maintain our existing 
outlier reconciliation policy, which is applied at the time of cost 
report final settlement if the CMHC's CCR changed by 0.10 or more. With 
regard to revenue tracking by CMHCs, distinct coding would be used on 
the CMHC's remittance advice when outlier payments are withheld, 
assisting receivables accountants in identifying and accounting for the 
differences between expected and actual payments.
4. Summary of Proposals
    In summary, for CY 2017, we are proposing to:
     Continue to designate a portion of the estimated 1.0 
percent outlier threshold specifically for CMHCs, consistent with the 
percentage of projected payments to CMHCs under the OPPS in CY 2017, 
excluding outlier payments;
     Implement an 8-percent cap on CMHC outlier payments at the 
individual CMHC provider level for CY 2017 and subsequent years;
     Continue to set the cutoff point for CMHC outlier payments 
in CY 2017 at 3.4 times the highest CMHC PHP APC payment rate 
implemented for that calendar year, which for CY 2017 is proposed new 
CMHC PHP APC 5853; and
     Continue to pay 50 percent of CMHC APC geometric mean per 
diem costs over the cutoff point in CY 2017.
    We believe that these CMHC outlier proposals would minimize the 
impact of inflated CMHC charges on outlier payments, would result in a 
better approximation of the marginal cost of care beyond the applicable 
cutoff point compared to the current process, and better target outlier 
payments to truly exceptionally high-cost cases. We are inviting public 
comments on these proposals.

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

A. Background

    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full historical discussion of 
our longstanding policies on how we identify procedures that are 
typically provided only in an inpatient setting (referred to as the 
inpatient only (IPO) list) and, therefore, will not be paid by Medicare 
under the OPPS, and on the criteria that we use to review the IPO list 
each year to determine whether or not any procedures should be removed 
from the list. The complete list of codes (IPO list) that we are 
proposing to be paid by Medicare in CY 2017 as inpatient only 
procedures is included as Addendum E to this proposed rule (which is 
available via the Internet on the CMS Web site).

B. Proposed Changes to the Inpatient Only (IPO) List

    For CY 2017, we are proposing to use the same methodology 
(described in the November 15, 2004 final rule with comment period (69 
FR 65834)) of reviewing the current list of procedures on the IPO list 
to identify any procedures that may be removed from the list. The 
established criteria upon which we make such a determination are as 
follows:
    1. Most outpatient departments are equipped to provide the services 
to the Medicare population.
    2. The simplest procedure described by the code may be performed in 
most outpatient departments.
    3. The procedure is related to codes that we have already removed 
from the IPO list.
    4. A determination is made that the procedure is being performed in 
numerous hospitals on an outpatient basis.
    5. A determination is made that the procedure can be appropriately 
and safely performed in an ASC, and is on the list of approved ASC 
procedures or has been proposed by us for addition to the ASC list.
    Using the above-listed criteria, we are proposing to remove the 
following six codes (four spine procedure codes and two laryngoplasty 
codes) from the IPO list for CY 2017:
     CPT code 22840 (Posterior non-segmental instrumentation 
(e.g., Harrington rod technique, pedicle fixation across 1 interspace, 
atlantoaxial transarticular screw fixation, sublaminar wiring at C1, 
facet screw fixation) (List separately in addition to code for primary 
procedure));
     CPT code 22842 (Posterior segmental instrumentation (e.g., 
pedicle fixation, dual rods with multiple hooks and sublaminar wires); 
3 to 6 vertebral segments (List separately in addition to code for 
primary procedure));
     CPT code 22845 (Anterior instrumentation; 2 to 3 vertebral 
segments (List separately in addition to code for primary procedure));
     CPT code 22858 (Total disc arthroplasty (artificial disc), 
anterior approach, including discectomy with end plate preparation 
(includes osteophytectomy for nerve root or spinal cord decompression 
and microdissection); second level, cervical (List separately in 
addition to code for primary procedure));
     CPT code 31584 (Laryngoplasty; with open reduction of 
fracture); and
     CPT code 31587 (Laryngoplasty, cricoid split).
    We reviewed the clinical characteristics of the four spine 
procedure codes and related evidence, including input from multiple 
physician specialty societies whose members specialize in spine 
surgery, and determined the four spine procedure codes listed above to 
be appropriate candidates for removal from the IPO list. These four 
spine procedure codes are

[[Page 45679]]

add-on codes to procedures that are currently performed in the HOPD and 
describe variations of (including additional instrumentation used with) 
the base code procedure. Therefore, we believe these spine procedures 
satisfy criterion 3 as they are related to codes that we have already 
removed from the IPO list. Because these four spine procedure codes are 
add-on codes, in accordance with the regulations at 42 CFR 
419.2(b)(18), we are proposing to package them with the associated 
procedure and assign them status indicator ``N.''
    We also reviewed the clinical characteristics of the two 
laryngoplasty procedure codes and related evidence, and determined that 
the two laryngoplasty procedure codes listed above are appropriate 
candidates for removal from the IPO list because we believe they 
satisfy criterion 3 listed above: The procedure is related to codes 
that we have already removed from the IPO list. These two codes are 
related to and clinically similar to CPT code 21495 (Open treatment of 
hyoid fracture), which is currently not on the IPO list. We are 
proposing that the two laryngoplasty procedure codes would be assigned 
to APC 5165 (Level 5 ENT Procedures) with status indicator ``J1.''

C. Solicitation of Public Comments on the Possible Removal of Total 
Knee Arthroplasty (TKA) Procedure From the IPO List

1. Background
    Total knee arthroplasty (TKA) or total knee replacement, CPT code 
27447 (Arthroplasty, knee, condyle and plateau; medical and lateral 
compartments with or without patella resurfacing (total knee 
arthroplasty)), has traditionally been considered an inpatient surgical 
procedure. The procedure was placed on the original IPO list in the 
2000 OPPS final rule (65 FR 18781). In 2000, the primary factors that 
were used to determine the assignment of a procedure to the IPO list 
were as follows: (1) The invasive nature of the procedure; (2) the need 
for at least 24 hours of postoperative care; and (3) the underlying 
physical condition of the patient who would require the surgery (65 FR 
18443 and 18455). In 2000, the geometric mean average length of stay 
for the DRG to which an uncomplicated TKA procedure was assigned was 
4.6 days, and in 2016, the average length of stay for a current 
uncomplicated TKA procedure for the MS-DRG is 2.8 days.
    Recent innovations have enabled surgeons to perform TKA on an 
outpatient basis on non-Medicare patients (both in the HOPD and in the 
ASC). In this context, ``outpatient'' services include both same day 
outpatient surgery (that is, the patient goes home on the same day that 
the outpatient surgery was performed) and outpatient surgery that 
includes one overnight hospital stay for recovery from the surgery. 
These innovations in TKA care include minimally invasive techniques, 
improved perioperative anesthesia, alternative postoperative pain 
management, and expedited rehabilitation protocols. Patients generally 
benefit from a shorter hospital stay. Some of these benefits include a 
likelihood of fewer complications, more rapid recovery, increased 
patient satisfaction, recovery at home with the assistance of family 
members, and a likelihood of overall improved outcomes. On the 
contrary, unnecessary inpatient hospitalization exposes patients to the 
risk of hospital-acquired conditions such as infections and a host of 
other iatrogenic mishaps.
    Like most surgical procedures, TKA needs to be tailored to the 
individual patient's needs. Patients with a relatively low anesthesia 
risk and without significant comorbidities who have family members at 
home who can assist them would likely be good candidates for an 
outpatient TKA procedure. On the other hand, patients with severe 
illnesses aside from their osteoarthritis would more likely require 
inpatient hospitalization and possibly post-acute care in a skilled 
nursing facility or other facility. Surgeons who have discussed 
outpatient TKA procedures with us have emphasized the importance of 
careful patient selection and strict protocols to optimize outpatient 
TKA outcomes. These protocols typically manage all aspects of the 
patient's care, including the at-home preoperative and postoperative 
environment, anesthesia, pain management, and rehabilitation to 
maximize rapid recovery and ambulation.
    In the CY 2013 OPPS/ASC proposed rule, we proposed to remove the 
procedure described by CPT code 27447 from the IPO list (77 FR 45153). 
We proposed to remove the procedure described by CPT code 27447 from 
the IPO list because we believed that the procedure could be 
appropriately provided and paid for as a hospital outpatient procedure 
for some Medicare beneficiaries, based upon the five evaluation 
criteria for removal from the IPO list discussed earlier. The public 
comments we received on the CY 2013 proposal varied. There were several 
surgeons and other stakeholders who supported the proposal. They 
believed that, given thorough preoperative screening by medical teams 
with significant experience and expertise involving knee replacement 
procedures, the TKA procedure could be provided on an outpatient basis 
for some Medicare beneficiaries. These commenters discussed recent 
advances in total knee replacement technology and surgical care 
protocols, including improved perioperative anesthesia, and expedited 
rehabilitation protocols, as well as significant enhancements to the 
postoperative process, such as improvements in pain management, early 
mobilization, and careful monitoring. These commenters also stated that 
early preventive intervention for the most common medical complications 
has decreased the average length of hospital stays to the point that a 
TKA procedure can now be performed on an outpatient basis in certain 
cases. The commenters noted significant success involving same day 
discharge for patients who met the screening criteria and whose 
experienced medical teams were able to perform the procedure early 
enough in the day for the patients to achieve postoperative goals, 
allowing home discharge by the end of the day. The commenters believed 
that the benefits of providing TKA on an outpatient basis will lead to 
significant enhancements in patient well-being and cost savings to the 
Medicare program, including shorter hospital stays resulting in fewer 
medical complications, improved results, and enhanced patient 
satisfaction. However, the majority of the commenters disagreed with 
the CY 2013 proposal and believed that it would be unsafe to perform 
outpatient TKA for Medicare beneficiaries. (We refer readers to 77 FR 
68419 for a discussion of these comments.) After consideration of these 
public comments, we decided not finalize the proposal, and the 
procedure described by CPT code 27447 remains on the IPO list.
    We also note that not uncommonly we receive questions from the 
public about the IPO list that lead us to believe that some members of 
the public may misunderstand certain aspects of the IPO list. 
Therefore, two important principles of the IPO list must be reiterated 
at the outset of this discussion. First, just because a procedure is 
not on the IPO list does not mean that the procedure cannot be 
performed on an inpatient basis. IPO list procedures must be performed 
on an inpatient basis (regardless of the expected length of the 
hospital stay) in order to qualify for Medicare payment, but procedures 
that are not on the IPO list can be and very often are performed

[[Page 45680]]

on individuals who are inpatients (as well as individuals who are 
hospital outpatients and ASC patients). Second, the IPO list status of 
a procedure has no effect on the MPFS professional payment for the 
procedure. Whether or not a procedure is on the IPO list is not in any 
way a factor in the MPFS payment methodology.
2. Discussion of TKA and the IPO List
    Since 2000, when the IPO list was established, there have been 
significant developments in both TKA technique and patient care. The 
advances in TKA technique and patient care are discussed in general 
terms above. As noted above, in 2000, the criteria by which procedures 
were reviewed to determine IPO list assignment were as follows: (1) The 
invasive nature of the procedure; (2) the need for at least 24 hours of 
postoperative care; and (3) the underlying physical condition of the 
patient who would require the surgery. In order to discuss the 
possibility of removing TKA procedures from the IPO list, we believe it 
is helpful to explore each of these criteria in turn as they apply to 
present-day TKA. Then we are asking the public to comment on a list of 
questions that relate to considering removing TKA from the IPO list in 
the future.
    The first criterion was ``the invasive nature of the procedure.'' 
We elaborated on this criterion in the 2000 OPPS final rule by stating: 
``We believe that certain surgically invasive procedures on the brain, 
heart, and abdomen, such as craniotomies, coronary artery bypass 
grafting, and laparotomies, indisputably require inpatient care, and 
therefore are outside the scope of outpatient services'' (65 FR 18456). 
TKA does not invade the brain, heart, or abdomen; instead, like several 
other outpatient orthopedic surgeries, it is an operation on the knee 
joint. A similar procedure described by CPT code 27446 (Arthroplasty, 
knee, condyle and plateau; medical OR lateral compartment) 
(unicompartmental knee replacement) was removed from the IPO list on 
January 1, 2002, and also was added to the ASC covered surgical 
procedures list in 2008. The degree of invasiveness of TKA as compared 
to other major surgical procedures would not appear to prohibit its 
removal from the IPO list.
    The second IPO list criterion from the 2000 OPPS final rule is 
``the need for at least 24 hours of postoperative recovery time or 
monitoring before the patient can be safely discharged.'' Currently, 
for procedures that are not on the IPO list, services furnished to 
patients requiring 24 hours of postoperative recovery time may be 
payable as either outpatient services or inpatient services, depending 
on the condition of the patient. Therefore, the need for at least 24 
hours of postoperative recovery time or monitoring in many cases should 
not require IPO list placement.
    The third criterion is ``the underlying physical condition of the 
patient who would require the surgery.'' For this criterion to be the 
basis of an IPO list assignment seems to presume a relatively 
homogeneous and morbid patient population undergoing the surgical 
procedure. Otherwise, patients with a good underlying physical 
condition could be considered for outpatient surgery while those with a 
poor underlying physical condition might be more appropriate for 
inpatient admission. TKA candidates, although they all have 
osteoarthritis severe enough to warrant knee replacement, are a varied 
group in which the anticipated length of hospitalization is dictated 
more by comorbidities and diseases of other organ systems. Some 
patients may be appropriate for outpatient surgery while others may be 
appropriate for inpatient surgery.
3. Topics and Questions for Public Comment
    We are seeking public comments on whether we should remove the 
procedure described by CPT code 27447 from the IPO list from all 
interested parties, including the following groups or individuals: 
Medicare beneficiaries and advocate associations for Medicare 
beneficiaries; orthopedic surgeons and physician specialty societies 
that represent orthopedic surgeons who perform TKA procedures; 
hospitals and hospital trade associations; and any other interested 
stakeholders. We are seeking public comments on any of the topics 
discussed earlier in addition to the following questions:
    1. Are most outpatient departments equipped to provide TKA to some 
Medicare beneficiaries?
    2. Can the simplest procedure described by CPT code 27447 be 
performed in most outpatient departments?
    3. Is the procedure described by CPT code 27447 sufficiently 
related to or similar to the procedure described by CPT code 27446 such 
that the third criterion listed at the beginning of this section for 
identifying procedures that may be removed from the IPO list, that is, 
the procedure under consideration for removal from the IPO list is 
related to codes that we have already removed from the IPO, is 
satisfied?
    4. How often is the procedure described by CPT code 27447 being 
performed on an outpatient basis (either in an HOPD or ASC) on non-
Medicare patients?
    5. Would it be clinically appropriate for some Medicare 
beneficiaries in consultation with his or her surgeon and other members 
of the medical team to have the option of a TKA procedure as a hospital 
outpatient, which may or may not include a 24-hour period of recovery 
in the hospital after the operation?
    6. CMS is currently testing two episode-based payment models that 
include TKA: The Comprehensive Care for Joint Replacement (CJR) Model 
and the Bundled Payment for Care Improvements (BPCI) Model. These 
models hold hospitals and, in the case of the BPCI, physicians and 
postacute care providers, responsible for the quality and cost of an 
episode of care. Providers participating in the CJR model or BPCI 
Models 2 and 4 initiate episodes with admission to the hospital of a 
beneficiary who is ultimately discharged under an included MS-DRG. Both 
initiatives include MS-DRGs 469 (Major Joint Replacement or 
Reattachment of Lower Extremity with MCC) and 470 (Major Joint 
Replacement or Reattachment of Lower Extremity without MCC). Depending 
on the model, the episode ends 30 to 90 days postdischarge in order to 
cover the period of recovery for beneficiaries. Episodes include the 
inpatient stay and all related items and services paid under Medicare 
Part A and Part B for all Medicare fee-for-service (FFS) beneficiaries, 
with the exception of certain exclusions.
    In the BPCI and CJR models, services are paid on an FFS basis with 
a retrospective reconciliation for all episodes included in a defined 
time period (quarterly in BPCI and annually in CJR). At reconciliation, 
actual spending is compared to a target price. The target price is 
based on historical episode spending. If CMS were to remove the 
procedure described by CPT code 27447 from the IPO list and pay for 
outpatient TKA procedures, the historical episode spending data may no 
longer be an accurate predictor of episode spending for beneficiaries 
receiving inpatient TKA procedures. As such, establishing an accurate 
target price based on historical data would become more complicated. 
This is because some patients who previously would have received a TKA 
procedure in an inpatient setting may receive the procedure on an 
outpatient basis if the procedure is removed from the IPO list.
    We are seeking comment on how CMS could modify the CJR and BPCI 
models if the TKA procedure were to be moved off the IPO list. 
Specifically, we are seeking comment on how to reflect the

[[Page 45681]]

shift of some Medicare beneficiaries from an inpatient TKA procedure to 
an outpatient TKA procedure in the BPCI and CJR model pricing 
methodologies, including target price calculations and reconciliation 
processes. Some of the issues CMS faces include the lack of historical 
data on both the outpatient TKA episodes and the average episode 
spending for beneficiaries who would continue to receive the TKA 
procedure on an inpatient basis. Because historically the procedure 
described by CPT code 27447 has been on the IPO list, there is no 
claims history for beneficiaries receiving TKA on an outpatient basis. 
In addition, we are seeking public comment on the postdischarge care 
patterns for Medicare beneficiaries that may receive an outpatient TKA 
procedure if it were removed from the IPO list and how this may be 
similar or different from these beneficiaries' historical postdischarge 
care patterns. For example, Medicare beneficiaries who are appropriate 
candidates for an outpatient TKA procedure may be those who, in the 
past, would have received outpatient physical therapy services as 
follow-up care after an inpatient TKA procedure. CMS would need to 
develop a methodology to ensure model target prices account for the 
potentially higher risk profiles of Medicare beneficiaries who would 
continue to receive TKA procedures in inpatient settings.

X. Proposed Nonrecurring Policy Changes

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 
Relating to Payment for Certain Items and Services Furnished by Certain 
Off-Campus Departments of a Provider

1. Background
    In recent years, the research literature and popular press have 
documented the increased trend toward hospital acquisition of physician 
practices, integration of those practices as a department of the 
hospital, and the resultant increase in the delivery of physician's 
services in a hospital setting. When a Medicare beneficiary receives 
services in an off-campus department of a hospital, the total payment 
amount for the services made by Medicare is generally higher than the 
total payment amount made by Medicare when the beneficiary receives 
those same services in a physician's office. Medicare pays a higher 
amount because it generally pays two separate claims for these 
services--one under the OPPS for the institutional services and one 
under the MPFS for the professional services furnished by a physician 
or other practitioner. Medicare beneficiaries are responsible for the 
cost-sharing liability, if any, for both of these claims, often 
resulting in significantly higher total beneficiary cost-sharing than 
if the service had been furnished in a physician's office.
    Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74), 
enacted on November 2, 2015, amended section 1833(t) of the Act. 
Specifically, this provision amended the OPPS statute at section 
1833(t) by amending paragraph (1)(B) and adding a new paragraph (21). 
As a general matter, under section 1833(t)(1)(B)(v) and (t)(21) of the 
Act, applicable items and services furnished by certain off-campus 
outpatient departments of a provider on or after January 1, 2017, will 
not be considered covered OPD services as defined under section 
1833(t)(1)(B) for purposes of payment under the OPPS and will instead 
be paid ``under the applicable payment system'' under Medicare Part B 
if the requirements for such payment are otherwise met. We note that, 
in order to be considered part of a hospital, an off-campus department 
of a hospital must meet the provider-based criteria established under 
42 CFR 413.65. Accordingly, in this proposed rule, we refer to an 
``off-campus outpatient department of a provider,'' which is the term 
used in section 603, as an ``off-campus outpatient provider-based 
department'' or an ``off-campus PBD.''
    As noted earlier, section 603 of Public Law 114-74 made two 
amendments to section 1833 of the Act--one amending paragraph (t)(1)(B) 
and the other adding new paragraph (t)(21). The provision amended 
section 1833(t)(1)(B) by adding a new clause (v), which excludes from 
the definition of ``covered OPD services'' applicable items and 
services (defined in paragraph (t)(21)(A)) that are furnished on or 
after January 1, 2017 by an off-campus PBD, as defined in paragraph 
(t)(21)(B). The second amendment added a new paragraph (t)(21), which 
defines the terms ``applicable items and services'' and ``off-campus 
outpatient department of a provider,'' requires the Secretary to 
establish a new payment policy for such applicable items and services 
furnished by an off-campus PBD on or after January 1, 2017, provides 
that hospitals shall report on information as needed for implementation 
of the provision, and establishes a limitation on administrative and 
judicial review on certain determinations and information.
    In defining the term ``off-campus outpatient department of a 
provider,'' section 1833(t)(21)(B)(i) of the Act specifies that the 
term means a department of a provider (as defined at 42 CFR 
413.65(a)(2) as that regulation was in effect on November 2, 2015, the 
date of enactment of Public Law 114-74) that is not located on the 
campus of such provider, or within the distance from a remote location 
of a hospital facility. Section 1833(t)(21)(B)(ii) of the Act excepts 
from the definition of ``off-campus outpatient department of a 
provider,'' for purposes of paragraphs (1)(B)(v) and (21)(B), an off-
campus PBD that was billing under subsection (t) with respect to 
covered OPD services furnished prior to the date of enactment of 
paragraph (t)(21), that is, November 2, 2015. We are proposing to refer 
to this exception as providing ``excepted'' status to certain off-
campus PBDs and certain items and services furnished by such excepted 
off-campus PBDs, which would continue to be paid under the OPPS. 
Moreover, as noted earlier, because the definition of ``applicable 
items and services'' specifically excludes items and services furnished 
by a dedicated emergency department as defined at 42 CFR 489.24(b) and 
the definition of ``off-campus outpatient department of a provider'' 
does not include PBDs located on the campus of a hospital or within the 
distance (described in the definition of campus at 413.65(a)(2)) from a 
remote location of a hospital facility, the items and services 
furnished by these excepted off-campus PBDs on or after January 1, 2017 
will continue to be paid under the OPPS.
    In this proposed rule, we are making a number of proposals to 
implement section 603 of Public Law 114-74. Broadly, we are proposing 
to do three things: (1) Define applicable items and services in 
accordance with section 1833(t)(21)(A) of the Act for purposes of 
determining whether such items and services are covered OPD services 
under section 1833(t)(1)(B)(v) of the Act or whether payment for such 
items and services shall instead be made under section 1833(t)(21)(C) 
of the Act; (2) define off-campus PBD for purposes of sections 
1833(t)(1)(B)(v) and (t)(21) of the Act; and (3) establish policies for 
payment for applicable items and services furnished by an off-campus 
PBD (nonexcepted items and services) under section 1833(t)(21)(C) of 
the Act. To do so, in this rule, we are proposing policies that define 
whether certain items and services furnished by a given off-campus PBD 
may be considered excepted and, thus, continue to be paid under the 
OPPS; establish the requirements for the off-campus PBDs to maintain 
excepted status (both for the excepted off-campus PBD and for the items 
and services furnished by such

[[Page 45682]]

excepted off-campus PBDs); and describe the applicable payment system 
for nonexcepted items and services. In addition, we are soliciting 
public comments on information collection requirements for implementing 
this provision in accordance with section 1833(t)(21)(D) of the Act.
    There is no legislative history on record regarding section 603 of 
Public Law 114-74. However, the Congressional Budget Office estimated 
program savings for this provision of approximately $9.3 billion over a 
10-year period. In January 2016, we posted a notice on the CMS Web site 
that informed stakeholders that we expected to present our proposals 
for implementing section 603 of Public Law 114-74 in the CY 2017 OPPS/
ASC proposed rule. Because we had already received several inquiries or 
suggestions from stakeholders regarding implementation of the section 
603 provision, we provided a dedicated email address for stakeholders 
to provide information they believed was relevant in formulating these 
proposals. We have considered this stakeholder feedback in developing 
this proposed rule.
2. Defining Applicable Items and Services and an Off-Campus Outpatient 
Department of a Provider as Set Forth in Sections 1833(t)(21)(A) and 
(B) of the Act
a. Background on the Provider-Based Status Rules
    Since the beginning of the Medicare program, some hospitals, which 
we refer to as ``main providers,'' have functioned as a single entity 
while owning and operating multiple departments, locations, and 
facilities. Having clear criteria for provider-based status is 
important because this designation can result in additional Medicare 
payments under the OPPS for services provided at the provider-based 
facility and may also increase the coinsurance liability of Medicare 
beneficiaries receiving those services. The current criteria for 
provider-based status are located in the regulations at 42 CFR 413.65.
    When a facility or organization has provider-based status, it is 
considered to be part of the hospital. The hospital as a whole, 
including all of its PBDs, must meet all Medicare conditions of 
participation and conditions of payment that apply to hospitals. In 
addition, a hospital bills for services furnished by its provider-based 
facilities and organizations using the CMS Certification Number of the 
hospital. One type of facility or organization that a hospital may 
treat as provider-based is an off-campus outpatient department. In 
order for the hospital to do so, the off-campus outpatient department 
must meet certain requirements under 42 CFR 413.65, including, but not 
limited to:
     It generally must be located within a 35-mile radius of 
the campus of the main hospital;
     Its financial operations must be fully integrated within 
those of the main provider;
     Its clinical services must be integrated with those of the 
main hospital (for example, the professional staff at the off-campus 
outpatient department must have clinical privileges at the main 
hospital, the off-campus outpatient department medical records must be 
integrated into a unified retrieval system (or cross reference) of the 
main hospital), and patients treated at the off-campus outpatient 
department who require further care must have full access to all 
services of the main hospital;
     It is held out to the public as part of the main hospital.
    Section 603 makes certain distinctions with respect to whether a 
department of the hospital is ``on'' campus or ``off'' campus and also 
excludes from the definition of ``off-campus outpatient department of a 
provider'' a department of a provider within the distance from a remote 
location of a hospital facility. Below, we provide some details on the 
definitions of the terms ``campus'' and ``remote locations.''
    Section 413.65(a)(2) of the regulations defines a ``campus'' as 
``[T]he physical area immediately adjacent to the provider's main 
buildings, other areas and structures that are not strictly contiguous 
to the main buildings but are located within 250 yards of the main 
buildings, and any other areas determined on an individual case basis, 
by the CMS Regional Office, to be part of the provider's campus.''
    In developing the provider-based rules, CMS also recognized that 
many hospitals operated fully integrated, though geographically 
separate, inpatient facilities. While the initial scope of provider-
based rulemaking primarily concerned situations with outpatient 
departments, we believed the policies set forth were equally applicable 
to inpatient facilities. Therefore, CMS also finalized a regulatory 
definition for a ``remote location of a hospital'' at 42 CFR 
413.65(a)(2) as ``a facility or an organization that is either created 
by, or acquired by, a hospital that is a main provider for the purpose 
of furnishing inpatient hospital services under the name, ownership, 
and financial and administrative control of the main provider, in 
accordance with the provisions of this section. A remote location of a 
hospital comprises both the specific physical facility that serves as 
the site of services for which separate payment could be claimed under 
the Medicare or Medicaid program, and the personnel and equipment 
needed to deliver the services at that facility. The Medicare 
conditions of participation do not apply to a remote location of a 
hospital as an independent entity. For purposes of this part, the term 
`remote location of a hospital' does not include a satellite facility 
as defined in Sec. Sec.  412.22(h)(1) and 412.25(e)(1) of this 
chapter.''
    Under the provider-based rules, we consider these inpatient 
``remote locations'' to be ``off-campus,'' and CMS reiterated this 
position in the FY 2003 IPPS/LTCH PPS final rule (67 FR 50081 through 
50082). Hospitals that comprise several sites at which both inpatient 
and outpatient care are furnished are required to designate one site as 
its ``main'' campus for purposes of the provider-based rules. Thus, any 
facility not located on that main campus would be considered ``off-
campus'' and must satisfy the provider-based rules in order to be 
treated by the main hospital as provider-based.
    For Medicare purposes, a hospital that wishes to add an off-campus 
PBD must submit an amended Medicare provider enrollment form detailing 
the name and location of the provider-based facility within 90 days of 
adding the new facility to the hospital. In addition, a hospital may 
ask CMS to make a determination that a facility or organization has 
provider-based status by submitting a voluntary attestation to its MAC, 
for final review by the applicable CMS Regional Office, attesting that 
the facility meets all applicable provider-based criteria in the 
regulations. If no attestation is submitted and CMS later determines 
that the hospital treated a facility or organization as provider-based 
when the facility or organization did not meet the requirements for 
provider-based status, CMS will recover the difference between the 
amount of payments actually made to the hospital and the amount of 
payments that CMS estimates should have been made for items and 
services furnished at the facility in the absence of compliance with 
the provider-based requirements for all cost reporting periods subject 
to reopening. However, if the hospital submits a complete attestation 
of compliance with the provider-based status requirement for a facility 
or organization that has not previously been found by CMS to have

[[Page 45683]]

been inappropriately treated as provider based, but CMS subsequently 
determines that the facility or organization does not meet the 
requirements for provider-based status, CMS will recover the difference 
between the amount of payments actually made to the hospital since the 
date the attestation was submitted and the amount of payments that CMS 
estimates should have been made in the absence of compliance with the 
provider-based requirements.
    Historically, PBDs billed as part of the hospital and could not be 
distinguished from the main hospital or other PBDs within the claims 
data. In CY 2015 OPPS/ASC final rule with comment period (79 FR 66910 
through 66914), CMS adopted a voluntary claim modifier ``PO'' to 
identify services furnished in off-campus PBDs (other than emergency 
departments, remote locations and satellite locations of the hospital) 
to collect data that would help identify the type and costs of services 
typically furnished in off-campus PBDs. Based on the provision in the 
CY 2015 OPPS/ASC final rule with comment period, use of this modifier 
became mandatory beginning in CY 2016. While the modifier identifies 
that the service was provided in an off-campus PBD, it does not 
identify the type of PBD in which services were furnished, nor does it 
distinguish between multiple PBDs of the same hospital. As discussed 
later in this section, we are soliciting public comments on the type of 
information that would be needed to identify nonexcepted PBDs for 
purposes of section 603, although we are not proposing to collect such 
information for CY 2017.
b. Proposed Exemption of Items and Services Furnished in a Dedicated 
Emergency Department or by an Off-Campus PBD as Defined at Sections 
1833(t)(21)(B)(i)(I) and (II) of the Act (Excepted Off-Campus PBD)
(1) Dedicated Emergency Departments (EDs)
    Section 1833(t)(21)(A) of the Act specifies that, for purposes of 
paragraph (1)(B)(v) and [paragraph [21] of section 1833(t), the term 
``applicable items and services'' means items and services other than 
items and services furnished by a dedicated emergency department (as 
defined in 42 CFR 489.24(b)). Existing regulations at Sec.  489.24(b) 
define an ED as any department or facility of the hospital, regardless 
of whether it is located on or off the main hospital campus, that meets 
at least one of the following requirements:
     It is licensed by the State in which it is located under 
applicable State law as an emergency room or emergency department;
     It is held out to the public (by name, posted signs, 
advertising, or other means) as a place that provides care for 
emergency medical conditions on an urgent basis without requiring a 
previously scheduled appointment; or
     During the calendar year immediately preceding the 
calendar year in which a determination under this section is being 
made, based on a representative sample of patient visits that occurred 
during that calendar year, it provides at least one-third of all of its 
outpatient visits for the treatment of emergency medical conditions on 
an urgent basis without requiring a previously scheduled appointment.
    Accordingly, based on existing regulations, an ED may furnish both 
emergency and nonemergency services as long as the requirements under 
Sec.  489.24(b) are met. In accordance with section 1833(t)(21)(A) of 
the Act and regulations at Sec.  489.24(b), we are proposing that all 
services furnished in an ED, whether or not they are emergency 
services, would be exempt from application of sections 1833(t)(1)(B)(v) 
and 1833(t)(21) of the Act, and thus continue to be paid under the 
OPPS. Moreover, we are proposing to define ``applicable items and 
services'' to which sections 1833(t)(1)(B)(v) and (t)(21)(A) of the Act 
apply to include all items and services not furnished by a dedicated ED 
as described in the regulations at 42 CFR 489.24(b).
(2) On-Campus Locations
    As noted earlier, section 1833 (t)(21)(B)(i) of the Act defines the 
term ``off-campus outpatient department of a provider'' for purposes of 
paragraphs (t)(1)(B)(v) and (t)(21) as a department of a provider (as 
defined at 42 CFR 413.65(a)(2) as that term is in effect as of November 
2, 2015), that is not located on the campus of that provider or within 
the distance (described in the definition of campus at Sec.  
413.65(a)(2)) from a remote location of a hospital facility (as defined 
in Sec.  413.65(a)(2)). We believe that the statutory language refers 
to such departments as defined by the regulations at Sec.  413.65 as 
they existed at the time of enactment of Public Law 114-74. The 
existing regulatory definition of a ``department of a provider'' 
includes both the specific physical facility that serves as the site of 
services of a type for which payment could be claimed under the 
Medicare or Medicaid program, and the personnel and equipment needed to 
deliver the services at that facility. We used the existing regulatory 
definition of a department of a provider as a guide in designing our 
proposals to implement section 603 of Public Law 114-74.
    We are not proposing to change the existing definition of 
``campus'' located at Sec.  413.65(a)(2) of our regulations and believe 
hospitals can adequately determine whether their departments are on-
campus, including by using the current provider-based attestation 
process described in Sec.  413.65(b) to affirm their on-campus status. 
Currently, the CMS Regional Offices review provider-based attestations 
to determine whether a facility is within full compliance of the 
provider-based rules, and hospitals that ask for a provider-based 
determination are required to specify whether they are seeking 
provider-based status for an on-campus or off-campus facility or 
organization. If a CMS Regional Office determines that a department is 
not in full compliance with the provider-based rules, hospitals may 
utilize the reconsideration process described under Sec.  413.65(j) and 
the administrative appeal process described at 42 CFR part 498. As we 
gain experience under section 603 of Public Law 114-74, we may consider 
issuing further guidance regarding provider-based attestations if 
needed.
    In accordance with section 1833(t)(21)(B)(i)(I) of the Act, we are 
proposing that on-campus PBDs and the items and services provided by 
such a department would be excepted from application of sections 
1833(t)(1)(B)(v) and (t)(21) of the Act.
(3) Within the Distance From Remote Locations
    In addition to the statutory exception for off-campus PBDs located 
on the campus of a provider, section 1833(t)(21)(B)(i)(II) of the Act 
excepts from the definition of off-campus PBDs those that are not 
located within the distance (as described in the definition of campus 
at Sec.  413.65(a)(2)) from a ``remote location'' (as also defined at 
Sec.  413.65(a)(2)) of a hospital facility. The ``distance'' described 
in the definition of ``campus'' at Sec.  413.65(a)(2) is 250 yards. 
While hospitals that operate remote locations are referred to as 
``multicampus'' hospitals, as discussed previously, under current 
provider-based rules, a hospital is only allowed to have a single 
``main'' campus for each hospital. Therefore, when determining whether 
an off-campus PBD meets the exception set forth at section 
1833(t)(21)(B)(i)(II) of the Act, we are proposing that the off-campus 
PBD must be located at or within the distance of

[[Page 45684]]

250 yards from a remote location of a hospital facility. Hospitals 
should use surveyor reports or other appropriate documentation to 
ensure that their off-campus PBDs are within 250 yards (straight-line) 
from any point of a remote location for this purpose.
c. Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act
    Section 1833(t)(21)(B)(ii) of the Act states that, for purposes of 
sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act, the term ``off-
campus outpatient department of a provider'' shall not include a 
department of a provider (that is, an off-campus PBD) (as so defined) 
that was billing under this subsection, that is, the OPPS, with respect 
to covered OPD services furnished prior to November 2, 2015. We are 
proposing that, as provided in section 1833(t)(21)(B)(ii) of the Act, 
if an off-campus PBD meets this exception, sections 1833(t)(1)(B)(v) 
and 1833(t)(21) of the Act do not apply to that department or to the 
types of items and services furnished by that department (to be 
discussed in greater detail below) that were being billed under the 
OPPS prior to November 2, 2015.
    A major concern with determining the scope of the exception set 
forth at section 1833(t)(21)(B)(ii) of the Act for purposes of applying 
sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act is determining how 
relocation of the physical location or expansion of services lines 
furnished at the ``excepted'' off-campus PBD affects the excepted 
status of the off-campus PBD itself and the items and services 
furnished by that excepted off-campus PBD.
    We have heard from some providers that they believe that section 
1833(t)(21)(B)(ii) of the Act specifically excepted off-campus PBDs 
billing for covered OPD services furnished before November 2, 2015, and 
that these excepted departments should remain excepted, regardless of 
whether they relocate or expand services, or both. These providers 
noted that the exception for certain off-campus PBDs states that 
section 1833(t)(21)(B)(ii) of the Act does not include an off-campus 
PBD (as so defined) that was billing under this subsection with respect 
to covered OPD services furnished prior to the date of the enactment of 
this paragraph. These providers argued that, because the statute does 
not include a specific limitation on relocation or expansion of 
services, no limitation should be applied.
    Providers also have suggested that off-campus PBDs should be able 
to relocate and maintain excepted status as long as the structure of 
the PBD is substantially similar to the PBD prior to the relocation. 
Some stakeholders have suggested that the criteria for defining 
substantially similar could be based on maintaining similar personnel, 
space, patient population, or equipment, or a combination of these 
factors.
    We believe that section 1833(t)(21)(B)(ii) of the Act excepted off-
campus PBDs as they existed at the time that Public Law 114-74 was 
enacted, including those items and services furnished and billed by 
such a PBD prior to that time. Thus, as noted above, we have developed 
our proposals in defining the scope of the excepted off-campus PBD and 
the items and services it furnishes based on the existing regulatory 
definition of department of a provider, which speaks to both the 
specific physical facility that serves as the site of services of a 
type for which payment could be claimed under the Medicare or Medicaid 
program and the personnel and equipment needed to deliver the services 
at that facility.
    Below we are making a number of proposals regarding the scope of 
the exception at section 1833(t)(21)(B)(ii) of the Act for purposes of 
applying sections 1833(t)(1)(B)(v) and (t)(21) of the Act. These 
proposals are made in accordance with our belief that section 603 of 
Public Law 114-74 is intended to curb the practice of hospital 
acquisition of physician practices that then result in receiving 
additional Medicare payment for similar services.
(1) Relocation of Off-Campus PBDs Excepted Under Section 
1833(t)(21)(B)(ii) of the Act
    In considering how relocation of an excepted off-campus PBD could 
affect application of sections 1833(t)(1)(B)(v) and (t)(21) of the Act, 
we are concerned that if we propose to permit excepted off-campus PBDs 
to relocate and continue such status, hospitals would be able to 
relocate excepted off-campus PBDs to larger facilities, purchase 
additional physician practices, move these practices into the larger 
relocated facilities, and receive OPPS payment for services furnished 
by these physicians, which we believe section 603 of Public Law 114-74 
intended to preclude.
    As previously stated, we believe that section 603 of Public Law 
114-74 applies to off-campus PBDs as they existed at the time of 
enactment and only excepts those items and services that were being 
furnished and billed by off-campus PBDs prior to November 2, 2015.
    After reviewing the statutory authority, and the concerns noted 
earlier, we are proposing that, for purposes of paragraphs (t)(1)(B)(v) 
and (t)(21) of section 1833 of the Act, excepted off-campus PBDs and 
the items and services that are furnished by such departments would no 
longer be excepted if the excepted off-campus PBD moves or relocates 
from the physical address that was listed on the provider's hospital 
enrollment form as of November 1, 2015. In the case of addresses with 
multiple units, such as a multi-office building, the unit number is 
considered part of the address; in other words, an excepted hospital 
PBD could not purchase and expand into other units in its building, and 
remain excepted. Once an excepted off-campus PBD has relocated, we are 
proposing that both the off-campus PBD itself and the items and 
services provided at that off-campus PBD would no longer be excepted, 
that is considered to be an excepted off-campus PBD for which the items 
and services furnished are covered OPD services payable under the OPPS, 
and instead, would be subject to paragraphs (1)(B)(v) and (21) of 
section 1833(t) of the Act.
    Hospitals have expressed concern that there may be instances when 
an excepted off-campus PBD may need to relocate, including, for 
example, to meet Federal or State requirements, or due a natural 
disaster. We recognize that there may be circumstances beyond the 
hospital's control where an excepted off-campus PBD must move from the 
location in which it existed prior to November 2, 2015. We are 
soliciting public comments on whether we should develop a clearly 
defined, limited relocation exception process, similar to the disaster/
extraordinary circumstance exception process under the Hospital VBP 
program (as implemented in the FY 2014 IPPS/LTCH PPS final rule; 78 FR 
50704) for hospitals struck by a natural disaster or experiencing 
extraordinary circumstances (under which CMS allows a hospital to 
request a Hospital VBP Program exception within 90 days of the natural 
disaster or other extraordinary circumstance) that would allow off-
campus PBDs to relocate in very limited situations, and that mitigate 
the potential for the hospital to avoid application of sections 
1833(t)(1)(B)(v), and (t)(21)(C) of the Act. In addition, we are 
seeking public comments on whether we should consider exceptions for 
any other circumstances that are completely beyond the control of the 
hospital, and, if so, what those specific circumstance would be.

[[Page 45685]]

(2) Expansion of Clinical Family of Services at an Off-Campus PBD 
Excepted Under Section 1833(t)(21)(B)(ii) of the Act
    We have received questions from some hospitals regarding whether an 
excepted off-campus PBD can expand the number or type of services the 
department furnishes and maintain excepted status for purposes of 
paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act. As 
mentioned earlier in the relocation discussion, we have heard that some 
providers believe that section 1833(t)(21)(B)(ii) of the Act 
specifically excepted departments, pointing out that the statute is not 
written with any limiting language and that excepted departments should 
remain excepted, regardless of whether these departments expand either 
the number of services or the types of services they provide. Under 
this interpretation, section 1833(t)(21)(B)(ii) of the Act would limit 
only the number of excepted off-campus PBDs a hospital can have to the 
number of off-campus PBDs that were billing Medicare for covered OPD 
services furnished prior to enactment of Public Law 114-74.
    We believe that section 1833(t)(21)(B)(ii) of the Act excepts off-
campus PBDs and the items and services that are furnished by such 
excepted off-campus PBDs for purposes of paragraphs (1)(B)(v) and (21) 
of section 1833(t) of the Act as they were being furnished on the date 
of enactment of section 603 of Public Law 114-74, as guided by our 
regulatory definition of department of a provider. Thus, we are 
proposing that the excepted off-campus PBD would be limited to seeking 
payment under the OPPS for the provision of items and services it was 
furnishing prior to the date of enactment of section 603 of Public Law 
114-74 only. Moreover, we are proposing that items and services that 
are not part of a clinical family of services furnished and billed by 
the excepted off-campus PBD prior to November 2, 2015 would be subject 
to paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act, that 
is, not payable under the OPPS.
    As noted earlier, we believe that the amendments to section 1833(t) 
of the Act were intended to address items and services furnished at 
physicians' offices that are converted to hospital off-campus PBDs on 
or after November 2, 2015 from being paid at OPPS rates. One issue we 
contemplated in considering how expanded services should affect 
excepted status is how it could affect payment to physicians' offices 
purchased after the date of enactment of section 603. We are concerned 
that if excepted off-campus PBDs could expand the types of services 
provided at the excepted off-campus PBDs and also be paid OPPS rates 
for these new types of services, hospitals may be able to purchase 
additional physician practices and add those physicians to existing 
excepted off-campus PBDs. This could result in newly purchased 
physician practices furnishing services that are paid at OPPS rates, 
which we believe these amendments to section 1833(t) of the Act are 
intended to address.
    After reviewing the statutory authority and the concerns raised by 
commenters noted above, we are proposing, for purposes of paragraphs 
(1)(B)(v) and (21) of section 1833(t) of the Act, that excepted status 
of items and services furnished in excepted off-campus PBDs is limited 
to the items and services (defined as clinical families of services 
below) such department was billing for under the OPPS and were 
furnished prior to November 2, 2015. We are proposing that if an 
excepted off-campus PBD furnishes services from a clinical family of 
services that it did not furnish prior to November 2, 2015, and thus 
did not also bill for, these new or expanded clinical families of 
services would not be covered OPD services, and instead would be 
subject to paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act 
as described in section X.A.1.c. of this proposed rule. We note that we 
are proposing not to limit the volume of excepted items and services 
within a clinical family of services that an excepted off-campus PBD 
could furnish.
    In summary, our proposals related to expansion of clinical families 
of services are as follows: We are proposing that service types be 
defined by the 19 clinical families of hospital outpatient service 
types described in Table 21 below. Moreover, we are proposing that if 
an excepted off-campus PBD furnished and billed for any specific 
service within a clinical family of services prior to November 2, 2015, 
such clinical family of services would be excepted and be eligible to 
receive payment under the OPPS. However, we are proposing that if an 
excepted off-campus PBD furnishes services from a clinical family of 
services that such department did not furnish and bill for prior to 
November 2, 2015, those services would be subject to sections 1833(t) 
(1)(B)(v) and (t)(21) of the Act in CY 2017 and subsequent years. We 
refer readers to Addendum B to this proposed rule (which is available 
via the Internet on the CMS Web site) for which HCPCS codes map to each 
clinical family of services. If we add a new HCPCS code or APC in 
future years, we will provide mapping to these clinical families of 
services, where relevant.
    In addition, we considered, but are not proposing in this proposed 
rule, to specify a specific timeframe in which service lines had to be 
billed under the OPPS for covered OPD services furnished prior to 
November 2, 2015. We are seeking public comment on whether we should 
adopt a specific timeframe for which the billing had to occur, such as 
CY 2013 through November 1, 2015.

Table 21--Proposed Clinical Families of Services for Purposes of Section
                           603 Implementation
------------------------------------------------------------------------
           Clinical families                           APCs
------------------------------------------------------------------------
Advanced Imaging.......................  5523-25, 5571-73, 5593-4.
Airway Endoscopy.......................  5151-55.
Blood Product Exchange.................  5241-44.
Cardiac/Pulmonary Rehabilitation.......  5771, 5791.
Clinical Oncology......................  5691-94.
Diagnostic tests.......................  5721-24, 5731-35, 5741-43.
Ear, Nose, Throat (ENT)................  5161-66.
General Surgery........................  5051-55, 5061, 5071-73, 5091-
                                          94, 5361-62.
Gastrointestinal (GI)..................  5301-03, 5311-13, 5331, 5341.
Gynecology.............................  5411-16.
Minor Imaging..........................  5521-22, 5591-2.
Musculoskeletal Surgery................  5111-16, 5101-02.
Nervous System Procedures..............  5431-32, 5441-43, 5461-64,
                                          5471.
Ophthalmology..........................  5481, 5491-95, 5501-04.
Pathology..............................  5671-74.

[[Page 45686]]

 
Radiation Oncology.....................  5611-13, 5621-27, 5661.
Urology................................  5371-77.
Vascular/Endovascular/Cardiovascular...  5181-83, 5191-94, 5211-13, 5221-
                                          24, 5231-32.
Visits and Related Services............  5012, 5021-25, 5031-35, 5041,
                                          5045, 5821-22, 5841.
------------------------------------------------------------------------

    Under our proposal, while excepted off-campus PBDs would not be 
eligible to receive OPPS payments for expanded clinical families of 
services, such excepted off-campus PBDs would continue to be eligible 
to receive OPPS payment for clinical families of services that were 
furnished and billed prior to that date. We discuss later in this 
section how we are proposing to pay for expanded items and services 
that are furnished at excepted off-campus PBDs, that is, are 
nonexcepted items and services.
    We are seeking public comments on these proposals. In addition, we 
are seeking public comments on our proposed categories of clinical 
families of services, and our proposal not to limit the volume of 
services furnished within a clinical family of services that the 
hospital was billing prior to November 2, 2015.
d. Change of Ownership and Excepted Status
    Under current policy, provider-based status is defined as the 
relationship between a facility and a main provider. If a Medicare-
participating hospital, in its entirety, is sold or merges with another 
hospital, a PBD's provider-based status generally transfers to new 
ownership as long as the transfer would not result in any material 
change of provider-based status. A provider-based approval letter for 
such a department would be considered valid as long as the new owners 
accepted the prior hospital's provider agreement, consistent with other 
hospital payment policies.
    We have received inquiries regarding whether excepted off-campus 
PBDs would maintain excepted status if a hospital were purchased by a 
new owner, if a hospital merged with another provider, or if only an 
excepted off-campus PBD were sold to another hospital.
    We are proposing that excepted status for the off-campus PBD would 
be transferred to new ownership only if ownership of the main provider 
is also transferred and the Medicare provider agreement is accepted by 
the new owner. If the provider agreement is terminated, all excepted 
off-campus PBDs and the excepted items and services furnished by such 
off-campus PBD would no longer be excepted for purposes of paragraphs 
(1)(B)(v) and (21) of section 1833(t) of the Act. We are proposing that 
individual excepted off-campus PBDs cannot be transferred from one 
hospital to another and maintain excepted status. We are soliciting 
public comments on these proposals.
e. Comment Solicitation for Data Collection Under Section 
1833(t)(21)(D) of the Act
    Hospitals are required to include all practice locations on the CMS 
855 enrollment form. Beginning in March 2011 and ending in March 2015, 
in accordance with section 1866(j) of the Act, CMS conducted a 
revalidation process where all actively enrolled hospitals were 
required to complete a new CMS 855 enrollment form to (1) initially 
enroll in Medicare, (2) add a new practice location, or (3) revalidate 
existing enrollment information.
    Collection and retention of Medicare enrollment data have been 
authorized through a Paperwork Reduction Act notice in the Federal 
Register. The authority for the various types of data to be collected 
is found in multiple sections of the Act and the Code of Federal 
Regulations; specifically, in sections 1816, 1819, 1833, 1834, 1842, 
1861, 1866, and 1891 of the Act, and 42 CFR Chapter IV, Subchapter A.
    Sections 1833(t)(21)(A) and (B) of the Act exempt both certain off-
campus PBDs and the items and services furnished in certain types of 
off-campus PBDs from application of sections 1833(t)(1)(B)(v) and (21) 
of the Act. However, while the Medicare enrollment process requires 
that a hospital identify the name and address of each of its off-campus 
PBDs, such departments bill under the CMS Certification Number of the 
hospital, rather than a separate identifier. Accordingly, at this time, 
we are unable to automate a process by which we could link hospital 
enrollment information to claims processing information to identify 
items and services to specific off-campus PBDs of a hospital. In order 
to accurately identify items and services furnished by each off-campus 
PBD (exempt or not) and to actively monitor the expansion of clinical 
family of services at excepted off-campus PBDs, we are seeking public 
comments on whether to require hospitals to self-report this 
information to us (via their MAC) using the authority under section 
1833(t)(21)(D) of the Act to collect information as necessary to 
implement the provision.
    Specifically, we are seeking public comments on whether hospitals 
should be required to separately identify all individual excepted off-
campus PBD locations, the date that each excepted off-campus PBD began 
billing and the clinical families of services (shown earlier in Table 
21) that were provided by the excepted off-campus PBD prior to the 
November 2, 2015 date of enactment. If we were to require hospitals to 
report this information, we would expect to collect this information 
through a newly developed form which would be available for download on 
the CMS Web site.
3. Payment for Services Furnished in Off-Campus PBDs to Which Sections 
1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Off-
Campus PBDs)
a. Background on Medicare Payment for Services Furnished in an Off-
Campus PBD
    As previously noted, under existing policies, Medicare generally 
makes two types of payments for items and services furnished in an off-
campus PBD: (1) Payment for the items and services furnished by the 
off-campus PBD (that is, the facility) where the procedure is performed 
(for example, surgical supplies, equipment, and nursing services); and 
(2) payment for the physician's professional services in furnishing the 
service(s).
    The first type of payment is made under the OPPS. Items and 
services furnished in an off-campus PBD are billed using HCPCS codes 
and paid under the OPPS according to the APC group to which the item or 
service is assigned. The OPPS includes payment for most hospital 
outpatient services, except those identified in section I.C. of this 
proposed rule. Section 1833(t)(1)(B) of the Act generally outlines what 
are covered OPD services eligible for

[[Page 45687]]

payment under the OPPS. Sections 1833(t)(1)(B)(i) through (iii) of the 
Act provide for Medicare payment under the OPPS for hospital outpatient 
services designated by the Secretary (which includes partial 
hospitalization services furnished by community mental health centers 
(CMHCs)), certain items and services that are furnished to inpatients 
who have exhausted their Part A benefits or who are otherwise not in a 
covered Part A stay, and certain implantable items. Section 
1833(t)(1)(B)(iv) and new subsection (v) list those items and services 
that are not covered OPD services and, therefore, not eligible for 
Medicare payment under the OPPS.
    The second type of payment for services furnished in an off-campus 
PBD is for physicians' services and is made under the MPFS at the MPFS 
``facility rate.'' For most MPFS services, Medicare maintains two 
separate payment rates: One that assumes a payment is also made to the 
facility (the facility rate); and another that assumes the professional 
furnishes and incurs the full costs associated with furnishing the 
service (the nonfacility rate). The MPFS facility rate is based on the 
relative resources involved in furnishing a service when separate 
Medicare payment is also made to the facility, usually through an 
institutional payment system, like the OPPS. The MPFS nonfacility rate, 
which reflects all of the direct and indirect practice expenses 
involved in furnishing the particular services, is paid in a variety of 
settings such as physician offices, where Medicare does not make a 
separate, institutional payment to the facility.
    Under Medicare Part B, the beneficiary is responsible for paying 
cost-sharing, which is generally about 20 percent of both the OPPS 
hospital payment amount and the MPFS allowed amount. Because the sum of 
the OPPS payment and the MPFS facility payment for most services is 
greater than the MPFS nonfacility payment for most services, there is 
generally a greater cost to both the beneficiary and the Medicare 
program for services furnished in facilities paid through both an 
institutional payment system like the OPPS and the MPFS.
    The incentives for hospital acquisition of physician practices and 
the resultant higher payments for the same types of services have been 
the topic of several reports in the popular media and by governmental 
agencies. For example, the Medicare Payment Advisory Commission 
(MedPAC) stated in its March 2014 Report to Congress that Medicare pays 
more than twice as much for a level II echocardiogram in an outpatient 
facility ($453) as it does in a freestanding physician office ($189) 
(based on CY 2014 payment rates). The report determined that the 
payment difference creates a financial incentive for hospitals to 
purchase freestanding physicians' offices and convert them to HOPDs 
without changing their location or patient mix. (MedPAC March 2014 
Report to Congress, Chapter 3.) The Government Accountability Office 
(GAO) also published a report in response to a Congressional request 
about hospital vertical consolidation. Vertical consolidation is a 
financial arrangement that occurs when a hospital acquires a physician 
practice and/or hires physicians to work as salaried employees. In 
addition, the Office of Inspector General (OIG) published a report in 
June 2016 entitled ``CMS Is Taking Steps To Improve Oversight of 
Provider-Based Facilities, But Vulnerabilities Remain'' (OEI-04-12-
00380), in which it highlighted concerns about provider-based status in 
light of the higher costs to both the Medicare program and Medicare 
beneficiaries relative to when the same services are furnished in the 
physician office setting. These types of reports highlight the types of 
concerns we believe Congress may have been trying to address when it 
legislated section 603 of Public Law 114-74. As we developed our 
proposal to implement section 603, we took into consideration the 
concerns described above, the specific statutory language, and the 
available discretion found in that statutory language.
    As described in detail above and below, section 603 of Public Law 
114-74, through amendments to section 1833(t) at paragraphs (1)(B)(v) 
and (21), provides that items and services furnished by nonexcepted 
off-campus PBDs and certain items and services furnished by excepted 
off-campus PBDs are not covered OPD services under the OPPS, and that 
payment shall be made for those applicable items and services under the 
applicable payment system if the requirements for such payment are 
otherwise met. However, the statutory amendments do not reference or 
define a specific applicable payment system under which payment shall 
be made.
    We have established and maintained institutional Medicare payment 
systems based on specific statutory requirements and on how particular 
institutions provide particular kinds of services and incur particular 
kinds of costs. The rules regarding provider and supplier enrollment, 
conditions of participation, coverage, payment, billing, cost 
reporting, and coding vary across these institutional payment systems. 
While some of the requirements are explicitly described in statute and 
others are captured in CMS regulatory rules or subregulatory guidance, 
the requirements are unique to the particular type of institution.
    Section 1833(t)(21)(C) of the Act provides for the availability of 
payment under other payment systems for items and services furnished by 
nonexcepted off-campus PBDs and for certain items and services 
furnished by excepted off-campus PBDs that are not covered OPD services 
under the OPPS (for example, expanded clinical families of services). 
We refer to these items and services collectively as ``nonexcepted 
items and services.'' Section 1833(t)(21)(C) of the Act provides that 
payments for these nonexcepted items and services furnished by an off-
campus outpatient department of a provider shall be made under the 
applicable payment system under Medicare Part B (other than under this 
subsection, that is OPPS), if the requirements for such payment are 
otherwise met.
    While we intend to provide a mechanism for an off-campus PBD to 
bill and receive payment for furnishing nonexcepted items and services 
under an applicable payment system that is not the OPPS, at this time, 
there is no straightforward way to do that before January 1, 2017. At a 
minimum, numerous complex systems changes would need to be made to 
allow an off-campus PBD to bill and be paid as another provider or 
supplier type. For example, currently, off-campus PBDs bill under the 
OPPS for their services on an institutional claim, whereas physicians 
and other suppliers bill under the MPFS on a practitioner claim; and 
there are numerous systems edits designed to be sure that entities 
enrolled in Medicare bill for their services only within their own 
payment systems. The Medicare system that is used to process 
professional claims (the Multi-Carrier System or ``MCS'') was not 
designed to accept nor process institutional OPPS claims. Rather, OPPS 
claims are processed through an entirely separate system referred to as 
the Fiscal Intermediary Standard System or ``FISS'' system. To permit 
an off-campus PBD to bill under a different payment system than the 
OPPS would require significant changes to these complex systems as well 
as other systems involved in the processing of Medicare Part B claims. 
We are not suggesting these operational issues are insurmountable, but 
they are multifaceted and will require time and care to resolve. As 
such, we are not able to propose at this time a mechanism for an off-
campus PBD to bill and receive

[[Page 45688]]

payment for nonexcepted items and services furnished on or after 
January 1, 2017, under an applicable payment system that is not the 
OPPS.
    As described in greater detail below, in order to begin 
implementing the requirements of section 603 of Public Law 114-74, we 
are proposing to specify that the applicable payment system for 
purposes of section 1833(t)(21)(C) of the Act is the MPFS. While we do 
not believe there is a way to permit off-campus PBDs to bill for 
nonexcepted items and services they furnish under the MPFS beginning 
January 1, 2017, we are actively exploring options that would allow 
off-campus PBDs to bill for these services under another payment 
system, such as the MPFS, and be paid at the applicable rate under such 
system beginning in CY 2018. We are soliciting public comment on the 
changes that might need to be made to enrollment forms, claim forms, 
the hospital cost report, as well as any other operational changes that 
might need to be made in order to allow an off-campus PBD to bill for 
nonexcepted items and services under a payment system other than the 
OPPS in a way that provides accurate payments under such payment system 
and minimizes burden on both providers and Medicare beneficiaries. 
Accordingly, we intend the policy we are proposing in this proposed 
rule to be a temporary, 1-year solution until we can adapt our systems 
to accommodate payment to off-campus PBDs for the nonexcepted items and 
services they furnish under the applicable payment system, other than 
OPPS.
b. Proposed Payment for Applicable Items and Services Furnished in Off-
Campus PBDs That Are Subject to Sections 1833(t)(1)(B)(v) and (21) of 
the Act
(1) Definition of ``Applicable Payment System'' for Nonexcepted Items 
and Services
    In this section, we describe our interpretation and proposed 
implementation of section 1833(t)(21)(C) of the Act, as it applies to 
nonexcepted items and services for CY 2017 only. Section 1833(t)(21)(C) 
of the Act requires that payments for nonexcepted items and services be 
made under the applicable payment system under Medicare Part B (other 
than under this subsection; that is, the OPPS) if the requirements for 
such payment are otherwise met. While section 1833(t)(21)(C) of the Act 
clearly specifies that payment for nonexcepted items and services shall 
not be made under subsection (t) of section 1833 (that is, the OPPS), 
it does not define the term ``applicable payment system.'' In analyzing 
the term ``applicable payment system,'' we considered whether and how 
the requirements for payment could be met under alternative payment 
systems in order to pay for nonexcepted items and services, and 
considered several other payment systems under which payment is made 
for similar items and services, such as the ASC payment system, the 
MPFS, or the CLFS.
    As noted above, many off-campus PBDs were initially enrolled in 
Medicare as freestanding physician practices, and were converted as 
evidenced by the rapid growth of vertical hospital consolidation and 
hospital acquisition of physician practices.\4\ Before these physician 
practices were converted to off-campus PBDs, the services furnished in 
these locations, were paid under the MPFS using an appropriate place of 
service code that identified the location as a nonfacility setting. 
This would trigger Medicare payment under the MPFS at the nonfacility 
rate, which includes payment for the ``practice expense'' resources 
involved in furnishing services. Many physician practices that were 
acquired by a hospital became provider-based to the hospital in 
accordance with the regulations at 42 CFR 413.65. Once a hospital-
acquired physician practice became provider-based, the location became 
an off-campus PBD eligible to bill Medicare under the OPPS for its 
facility services, while physicians' services furnished in the off-
campus PBD were paid at the facility rate under the MPFS. Because many 
of the services furnished in off-campus PBDs are identical to those 
furnished in freestanding physician practices, as discussed later in 
this section, we are proposing to designate the applicable payment 
system for the payment of the majority of nonexcepted items and 
services to be the MPFS. Specifically, we are proposing that, because 
we currently do not have a mechanism to pay the off-campus PBD for 
nonexcepted items and services, the physician or practitioner would 
bill and be paid for items and services in the off-campus PBD under the 
MPFS at the nonfacility rate instead of the facility rate.
---------------------------------------------------------------------------

    \4\ The number of vertically consolidated hospitals and 
physicians increased from 2007 through 2013. Specifically, the 
number of vertically consolidated hospitals increased from about 
1,400 to 1,700, while the number of vertically consolidated 
physicians nearly doubled from about 96,000 to 182,000. This growth 
occurred across all regions and hospital sizes, but was more rapid 
in recent years. (Government Accountability Office; GAO 16-189, 
December 2015; http://www.gao.gov/products/GAO-16-189)
---------------------------------------------------------------------------

    When items and services similar to those often furnished by off-
campus PBDs are furnished outside of a setting with an applicable 
Medicare institutional payment system, Medicare payment is generally 
made under the MPFS under one of several different benefit categories 
of Medicare benefit such as physician's services, diagnostic tests, 
preventive services, or radiation treatment services. Although section 
1833(t)(1)(B)(v) of the Act specifically carves out from the definition 
of covered OPD services those items and services defined at section 
1833(t)(21)(A) of the Act furnished by certain off-campus PBDs defined 
by section 1833(t)(21)(B) of the Act, the amendments to section 1833(t) 
of the Act do not specify that the off-campus outpatient departments of 
a provider are no longer considered a PBD part of the hospital. This 
nuance made it difficult for us to determine how to provide payment for 
the hospital-based portion of the services under MPFS because, as 
previously noted, Medicare payment processing systems were not designed 
to allow these off-campus PBDs to bill for their hospital services 
under a payment system other than OPPS.
    Currently, a hospital (including a PBD) does not meet the 
requirements to bill under another payment system; that is, a hospital 
and its departments are enrolled as such in the Provider Enrollment, 
Chain and Ownership System (PECOS) and may only submit institutional 
claims for payment of covered OPD services under the hospital OPPS 
under the CMS Certification Number of the hospital. As explained above, 
there are several other Medicare payment systems for other types of 
providers and suppliers. Many of these are designed for particular 
kinds of institutional settings, are specifically authorized by law, 
and have their own regulations, payment methodologies, rates, 
enrollment and billing requirements, and in some cases, cost reporting 
requirements. While the services furnished in a PBD may be the same or 
similar to those that are furnished in other sites of service, for 
Medicare purposes, an off-campus PBD is considered to be part of the 
hospital that meets the requirements for payment under the OPPS for 
covered OPD services. There currently is no mechanism for it to be paid 
under a different payment system. In order to allow an off-campus PBD 
to bill under the MPFS for nonexcepted items and services, we believe 
it would be necessary to establish a new provider/supplier type (for 
nonexcepted off-

[[Page 45689]]

campus PBDs) that could bill and be paid under the MPFS for nonexcepted 
items and services using the professional claim. At this time, we are 
not proposing new mechanisms to allow an off-campus PBD to bill and 
receive payment from Medicare for nonexcepted items and services as 
currently enrollment as a hospital based department. However, as 
described in detail later in this section, we are soliciting comment on 
changes that would need to be made in order to allow an off-campus PBD 
to bill for nonexcepted items services it furnishes under a payment 
system other than the OPPS.
    Accordingly, for CY 2017, we are proposing the MPFS to be the 
applicable payment system for nonexcepted items and services that, but 
for section 603, would have otherwise been paid under the OPPS; and 
that payment would be made for applicable nonexcepted items and 
services to the physician or practitioner under the MPFS at the 
nonfacility rate because no separate facility payment would be made to 
the hospital. We note that the hospital may continue to bill for 
services that are not paid under the OPPS, such as laboratory services.
(2) Definition of Applicable Items and Services and Section 603 
Amendment to Section 1833(t)(1)(B) of the Act and Proposed Payment for 
Nonexcepted Items and Services for CY 2017
(a) Background
    Section 1833(t)(21)(A) of the Act defines the term ``applicable 
items and services'' for purposes of paragraph (t)(1)(B)(v) and 
paragraph (t)(21) to mean items and services (other than those 
furnished by a dedicated emergency department). Paragraph (1)(B)(v) 
then specifically carves out from the definition of covered OPD 
services, that is, those applicable items and services that are 
furnished on or after January 1, 2017, by an off-campus PBD, as defined 
in paragraph (t)(21)(B). Thus, such applicable items and services are 
not eligible for payment under the OPPS because they are not covered 
OPD services. Under our proposals, this would mean that all items and 
services furnished by a nonexcepted off-campus PBD and those 
nonexcepted items and services furnished by an excepted off-campus PBD 
(collectively references as nonexcepted items and services) are 
applicable items and services under the statute. Therefore, instead of 
being eligible for payment under the OPPS as covered OPD services, 
paragraph (t)(21)(C) requires that, for nonexcepted items and services, 
payment shall be made under the applicable payment system, other than 
OPPS, if the requirements for such payment are otherwise met. In other 
words, the payment requirement under paragraph (t)(21)(C) applies to 
items and services furnished by nonexcepted off-campus PBDs and for 
expanded clinical families of services furnished by excepted off-campus 
PBDs (nonexcepted items and services).
(b) Proposed Payment Policy for CY 2017
    In accordance with sections 1833(t)(1)(B)(v) and 1833(t)(21)(C) of 
the Act, payment for nonexcepted items and services as defined in 
section X.A.2. of this proposed rule will no longer be made under the 
OPPS, effective January 1, 2017. Instead, we are proposing that, for 
items and services for which payment can be made to a billing physician 
or practitioner under the MPFS, the physician or practitioner 
furnishing such services in the off-campus PBD would bill under the 
MPFS at the nonfacility rate. As discussed earlier in this section, we 
do not believe that, under current systems, an off-campus PBD could be 
paid for its facility services under the MPFS, but are actively 
exploring options that would allow for this beginning in CY 2018. 
Alternatively, an off-campus PBD would have the option to enroll as a 
freestanding facility or supplier in order to bill for the nonexcepted 
items and services it furnishes (which is different from billing only 
for reassigned physicians' services) under the MPFS.
    At this time, we are not proposing a change in payment policy under 
the MPFS regarding these nonexcepted items and services. However, in 
the CY 2017 MPFS proposed rule, we are proposing to amend our 
regulations and subregulatory guidance to specify that physicians and 
nonphysician practitioners furnishing professional services would be 
paid the MPFS nonfacility rate when billing for such services because 
there will be no accompanying Medicare facility payment for nonexcepted 
items and services furnished in that setting. The MPFS nonfacility rate 
is calculated based on the full costs of furnishing a service, 
including, but not limited, to space, overhead, equipment, and 
supplies. Under the MPFS, there are many services that include both a 
professional component and a technical component. Similarly, there are 
some services that are defined as either a ``professional-only'' or 
``technical-only'' service. The professional component is based on the 
relative resource costs of the physician's work involved in furnishing 
the service and is generally paid at a single rate under the MPFS, 
regardless of where the service is performed. The technical component 
portion of the service is based on the relative resource costs of the 
nonphysician clinical staff who perform the test, medical equipment, 
medical supplies, and overhead expenses. When the service is furnished 
in a setting where Medicare makes a separate payment to the facility 
under an institutional payment system, the technical component is not 
paid under the MPFS because the practitioner/supplier did not incur the 
cost of furnishing the technical component. Rather, it would be paid to 
the facility under the applicable institutional payment system.
    If an off-campus PBD that furnishes nonexcepted items and services 
wishes to bill Medicare for those services, it could choose to meet the 
requirements to bill and receive payment under a payment system other 
than the OPPS by enrolling the off-campus PBD as another provider/
supplier type. For example, an off-campus PBD could enroll in Medicare 
as an appropriate alternative provider or supplier type (such as an ASC 
or physician group practice). The enrolled provider/supplier would then 
be able to bill and be paid under the payment system for that type of 
Medicare enrolled entity. For example, if an off-campus PBD were to 
enroll as a group practice, it would bill on the professional claim and 
be paid under the MPFS at the nonfacility rate in accordance with laws 
and regulations that apply under the MPFS.
    We recognize that our proposal to pay under the MPFS for all 
nonexcepted items and services furnished to beneficiaries may result in 
hospitals establishing business arrangements with the physicians or 
nonphysician practitioners who bill under the MPFS. We are interested 
in public comments regarding the impact of other billing and claims 
submission rules, the fraud and abuse laws, and other statutory and 
regulatory provisions on our proposals. Specifically, we are interested 
in public comments regarding the limitations of section 1815(c) of the 
Act and 42 CFR 424.73 (the reassignment rules); the limitations of 
section 1842(n) of the Act and 42 CFR 414.50 (the anti-markup 
prohibition); the application of section 1877 of the Act and 42 CFR 
411.350 through 411.389 (the physician self-referral provisions) to any 
compensation arrangements that may arise; and the application of 
section 1128B(b) of the Act (the Federal anti-kickback statute) to 
arrangements between hospitals and the physicians and other 
nonphysician

[[Page 45690]]

practitioners who refer to them. We will consider these laws and 
regulations as well, and look forward to reviewing public comments on 
the anticipated impact of these provisions on our proposed policy and 
any possible future proposals.
    We note that there are some services that off-campus departments 
may furnish that are not billed or paid under the OPPS. For example, 
although laboratory tests are generally packaged under the OPPS, there 
are some circumstances in which hospitals are permitted to bill for 
certain laboratory tests and receive separate payment under the CLFS. 
These circumstances include:
     Outpatient laboratory tests are the only services 
provided. If the hospital provides outpatient laboratory tests only and 
no other hospital outpatient services are reported on the same claim.
     Unrelated outpatient laboratory tests. If the hospital 
provides an outpatient laboratory test on the same claim as other 
hospital outpatient services that is clinically unrelated to the other 
hospital outpatient services (that is, the laboratory test is ordered 
by a different practitioner than the practitioner who ordered the other 
hospital outpatient services and for a different diagnosis than the 
other hospital outpatient services). We note that this exception is 
being proposed for deletion for CY 2017. We refer readers to section 
II.B.3.b.(2) of this proposed rule for a discussion of this policy.
     Molecular pathology laboratory tests and advanced 
diagnostic laboratory tests (ADLTs) (proposed for CY 2017 in section 
II.B.3.b.(3) of this proposed rule).
     Laboratory tests that are preventive services.
    Under our proposal, if a laboratory test furnished by a nonexcepted 
off-campus PBD is eligible for separate payment under the CLFS, the 
hospital may continue to bill for it and receive payment under the 
CLFS. In addition, a bill may be submitted under the MPFS by the 
practitioner (or hospital for physicians who have reassigned their 
benefit), provided that the practitioner meets all the MPFS 
requirements. Consistent with cost reporting guidance and Medicare 
Program Reimbursement Manual, Part 1, Chapter 23, Section 2302.8, 
hospitals should report these laboratory services on a reimbursable 
cost center on the hospital cost report.
    In addition, with respect to partial hospitalization programs (PHP) 
(intensive outpatient psychiatric day treatment programs furnished to 
patients as an alternative to inpatient psychiatric hospitalization or 
as a stepdown to shorten an inpatient stay and transition a patient to 
a less intensive level of care), section 1861(ff)(3)(A) of the Act 
specifies that a PHP is a program furnished by a hospital, to its 
outpatients, or by a CMHC. Because CMHCs also furnish PHP services and 
are ineligible to be provider-based to a hospital, we note that a 
nonexcepted off-campus PBD is eligible for PHP payment if the entity 
enrolls and bills as a CMHC for payment under the OPPS. A hospital may 
choose to enroll a nonexcepted off-campus PBD as a CMHC, provided it 
meets all Medicare requirements and conditions of participation.
(3) Comment Solicitation on Allowing Direct Billing and Payment for 
Nonexcepted Items and Services in CY 2018
    For nonexcepted items and services furnished in an off-campus PBD, 
we are soliciting public comments which we intend to consider in 
developing a new billing and payment policy proposal for CY 2018. 
Specifically, we are interested in comments regarding whether an off-
campus PBD should be allowed to bill nonexcepted items and services on 
the professional (not institutional) claim and receive payment under 
the MPFS, provided the PBD meets all the applicable MPFS requirements. 
Under this proposal, we envision that the PBD would still be considered 
to be part of the hospital and that the hospital as a whole would 
continue to be required to meet all applicable conditions of 
participations and regulations governing its provider-based status, 
but, for payment purposes, the off-campus PBD would be considered a 
nonhospital setting that is similar to a freestanding physician office 
or clinic and that is paid the same rate that is paid to freestanding 
offices or clinics under the MPFS. We note that there are other 
nonpractitioner entities that bill these kinds of services under the 
MPFS (for example, Independent Diagnostic Testing Facilities, Radiation 
Treatment Centers), and we are seeking public comments on whether or 
not there are administrative impediments for hospitals billing for such 
services. We are seeking public comments on whether making the 
necessary administrative changes that would allow the hospital to bill 
for these kinds of services under the MPFS would provide any practical 
benefit to the hospitals relative to the current requirements for 
billing under the MPFS. We also are seeking public comments on other 
implications or considerations for allowing the hospital to do this, 
such as how the cost associated with furnishing such services might be 
reflected on the hospital cost report.
4. Beneficiary Cost-Sharing
    Under our proposed policy, payment for most nonexcepted items and 
services under section 1833(t)(21)(C) of the Act would be made under 
the MPFS to the physician at the nonfacility rate. As a result, we 
expect that the beneficiary cost-sharing for such nonexcepted items and 
services would generally be equal to the beneficiary cost-sharing if 
the service was provided at a freestanding facility.
5. Summary of Proposals
    Under our proposed policy, all excepted off-campus PBDs would be 
permitted to continue to bill for excepted items and services under the 
OPPS. These excepted items and services include those furnished in an 
ED, in an on-campus PBD, or within the distance from a remote location 
of a hospital facility. In addition, excepted items and services 
include those furnished by an off-campus PBD that was billing Medicare 
for covered OPD services furnished prior to November 2, 2015 for all 
services within a clinical family of services, provided that those 
services continue to be furnished at the same physical address of the 
PBD as of November 2, 2015. Items and services furnished in a new off-
campus PBD (that is, not billing under the OPPS for covered OPD 
services furnished prior to November 2, 2015) or new lines of service 
furnished in an excepted off-campus PBD would not be excepted items and 
services. An excepted off-campus PBD would lose its status as excepted 
(that is, the off-campus PBD would be considered a new nonexcepted off-
campus PBD) if the excepted off-campus PBD changes location or changes 
ownership; if the new owners also acquire the main hospital and adopt 
the existing Medicare provider agreement, the excepted off-campus PBD 
may maintain its excepted status under the other rules outlined in this 
proposed rule.
    For CY 2017, we are proposing that the MPFS will be the 
``applicable payment system'' for the majority of nonexcepted items and 
services furnished in an off-campus PBD. Physicians furnishing services 
in these departments would be paid based on the professional claim and 
would be paid at the nonfacility rate for services for which they are 
permitted to bill. Provided it can meet all Federal and other 
requirements, a hospital continues to have the option of enrolling the 
nonexcepted off-campus PBD as the

[[Page 45691]]

type of provider/supplier for which it wishes to bill in order to meet 
the requirements of that payment system (such as an ASC or group 
practice).
    For CY 2018, we are soliciting public comments on regulatory and 
operational changes that we could make to allow an off-campus PBD to 
bill and be paid for its services under an applicable payment system. 
We will take these comments into consideration in developing a new 
payment policy proposal for CY 2018.
    As we and our contractors conduct audits of hospital billing, we 
and our contractors will examine whether off-campus PBDs are billing 
under the proper billing system. We expect hospitals to maintain proper 
documentation showing what lines of service were provided at each off-
campus PBD prior to November 2, 2015, and to make this documentation 
available to us and our contractors upon request.
6. Proposed Changes to Regulations
    To implement the provisions of section 1833(t) of the Act, as 
amended by section 603 of Public Law 114-74, we are proposing to amend 
the Medicare regulations by (a) adding a new paragraph (v) to Sec.  
419.22 to specify that, effective January 1, 2017, for cost reporting 
periods beginning January 1, 2017, excluded from payment under the OPPS 
are items and services that are provided by an off-campus provider-
based department of a hospital that do not meet the definition of 
excepted items and services; and (b) adding a new Sec.  419.48 that 
sets forth the definition of excepted items and services.

B. Changes for Payment for Film X-Ray

    Section 502(b) of Division O, Title V of the Consolidated 
Appropriations Act, 2016 (Pub. L. 114-113) amended section 1833(t)(16) 
of the Act by adding new subparagraph (F). New section 
1833(t)(16)(F)(i) of the Act provides that, effective for services 
furnished during 2017 or any subsequent year, the payment under the 
OPPS for imaging services that are X-rays taken using film (including 
the X-ray component of a packaged service) that would otherwise be made 
under the OPPS (without application of subparagraph (F)(i) and before 
application of any other adjustment) shall be reduced by 20 percent. 
New section 1833(t)(16)(F)(ii) of the Act provides that payments for 
imaging services that are X-rays taken using computed radiography 
(including the X-ray component of a packaged service) furnished during 
CY 2018, 2019, 2020, 2021, or 2022, that would otherwise be made under 
the OPPS (without application of subparagraph (F)(ii) and before 
application of any other adjustment), be reduced by 7 percent, and 
similarly, if such X-ray services are furnished during CY 2023 or a 
subsequent year, by 10 percent. New section 1833(t)(16)(F)(iii) of the 
Act provides that the reductions made under section 1833(t)(16)(F) 
shall not be considered an adjustment under section 1833(t)(2)(E) of 
the Act, and shall not be implemented in a budget neutral manner. New 
section 1833(t)(16)(F)(iv) of the Act instructs the implementation of 
the reductions in payment set forth in subparagraph (F) through 
appropriate mechanisms which may include use of modifiers. Below we 
discuss the proposed implementation of the reduction in payment for 
imaging services that are X-rays taken using film provided for in 
section 1833(t)(16)(F)(i) of the Act. We will address the reductions in 
OPPS payment for imaging services that are X-rays taken using computed 
radiography technology (including the imaging portion of a service) in 
future rulemaking.
    To implement the provisions of sections 1833(t)(16)(F)(i) of the 
Act relating to the payment reduction for imaging services that are X-
rays taken using film that are furnished during CY 2017 or a subsequent 
year, in this proposed rule, we are proposing to establish a new 
modifier to be used on claims, as allowed under the provisions of new 
section 1833(t)(16)(F)(iv) of the Act. The applicable HCPCS codes 
describing imaging services that are X-rays taken using film can be 
found in Addendum B to this proposed rule (which is available via the 
Internet on the CMS Web site). We are proposing that, beginning January 
1, 2017, hospitals would be required to use this modifier on claims 
imaging services that are X-rays taken using film. The use of this 
proposed modifier would result in a 20-percent payment reduction for an 
imaging service that is an X-ray service taken using film, as specified 
under section 1833(t)(16)(F)(i) of the Act, of the determined OPPS 
payment amount (without application of subparagraph (F)(i) and before 
any other adjustments under section 1833(t) of the Act). For further 
discussion regarding the budget neutrality of the payment reductions 
under section 1833(t)(16)(F) of the Act, we refer readers to section 
XX.A.3. of this proposed rule.

C. Changes to Certain Scope-of-Service Elements for Chronic Care 
Management (CCM) Services

    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70450 
through 70453), we finalized the CCM scope of service elements (as 
described in the CY 2015 MPFS final rule with comment period (79 FR 
67721)) required in order for hospitals to bill and receive OPPS 
payment for furnishing CCM services. These scope-of-service elements 
are the same as those required for CCM under the MPFS. In the CY 2017 
MPFS proposed rule, we are proposing some minor changes to certain CCM 
scope of service elements. We are proposing that these proposed changes 
also would apply to CCM services furnished to hospital outpatients 
under the OPPS. All of the fundamental scope-of-service requirements 
are remaining intact. An example of these proposed minor changes are 
that the electronic sharing of care plan information would need to be 
timely but not necessarily on a 24 hour a day/7 days week basis, as is 
currently required. We refer readers to the CY 2017 MPFS proposed rule 
for a detailed discussion of the proposed changes to the scope of 
service elements for CCM.

D. Appropriate Use Criteria for Advanced Diagnostic Imaging Services

    Section 218(b) of the Protecting Access of Medicare Act of 2014 
(PAMA, Pub. L. 113-93) amended section 1834 of the Act by adding 
paragraph (q) which directs the Secretary to establish a program to 
promote the use of appropriate use criteria (AUC) for advanced 
diagnostic imaging services. The CY 2016 MPFS final rule with comment 
period (80 FR 71102 through 71116) addressed the initial component of 
the Medicare AUC program, including specifying applicable AUC and 
establishing CMS authority to identify clinical priority areas for 
making outlier determinations. The regulations governing the Medicare 
AUC program are codified at 42 CFR 414.94. The program's criteria and 
requirements were established and are being updated as appropriate 
through the MPFS rulemaking process. While the MPFS is the most 
appropriate vehicle for this practitioner-based program, we note that 
ordering practitioners will be required to consult AUC at the time of 
ordering advanced diagnostic imaging, and imaging suppliers will be 
required to report information related to such consultations on claims, 
for all applicable advanced diagnostic imaging services paid under the 
MPFS, the OPPS, and the ASC payment system. The CY 2017 MPFS proposed 
rule includes proposed requirements and processes for the second 
component of the Medicare AUC program, which is the specification of 
qualified clinical

[[Page 45692]]

decision support mechanisms (CDSMs) under the program. The CDSM is the 
electronic tool through which the ordering practitioner consults AUC. 
It also proposes specific clinical priority areas and exceptions to the 
AUC consultation and reporting requirements. We refer readers to the CY 
2017 MPFS proposed rule for further information.

XI. Proposed CY 2017 OPPS Payment Status and Comment Indicators

A. Proposed CY 2017 OPPS Payment Status Indicator Definitions

    Payment status indicators (SIs) that we assign to HCPCS codes and 
APCs serve an important role in determining payment for services under 
the OPPS. They indicate whether a service represented by a HCPCS code 
is payable under the OPPS or another payment system and also whether 
particular OPPS policies apply to the code. The complete list of the 
payment status indicators and their definitions that we are proposing 
for CY 2017 is displayed in Addendum D1 to this proposed rule, which is 
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The proposed 
CY 2017 payment status indicator assignments for APCs and HCPCS codes 
are shown in Addendum A and Addendum B, respectively, to this proposed 
rule, which are available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    For CY 2017, we are proposing to revise the current definition of 
status indicator ``E'' by creating two status indicators, ``E1'' and 
``E2,'' to replace status indicator ``E.'' Status indicator ``E1'' 
would be specific to items and services not covered by Medicare and 
status indicator ``E2'' would be exclusive to those items and services 
for which pricing information or claims data are not available.

B. Proposed CY 2017 Comment Indicator Definitions

    For CY 2017 OPPS, we are proposing to use four comment indicators. 
Three of these comment indicators, ``CH,'' ``NI,'' and ``NP,'' are in 
effect for CY 2016 and we are proposing to continue their use in CY 
2017. In this proposed rule, we are proposing to create new comment 
indicator ``NC'' that would be used in the final rule to flag the HCPCS 
codes that were assigned to comment indicator ``NP'' in the proposed 
rule. Codes assigned the ``NC'' comment indicator in the final rule 
will not be subject to comments to the final rule. We believe that this 
new comment indicator ``NC'' will help hospitals easily identify new 
HCPCS codes that will have a final payment assignment effective January 
1, 2017. The proposed CY 2017 OPPS comment indicators are as follows:
     ``CH''--Active HCPCS code in current and next calendar 
year, status indicator and/or APC assignment has changed; or active 
HCPCS code that will be discontinued at the end of the current calendar 
year.
     ``NI''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year, interim APC 
assignment; comments will be accepted on the interim APC assignment for 
the new code.
     ``NP''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code.
     ``NC''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year for which we 
requested comments in the proposed rule, final APC assignment; comments 
will not be accepted on the final APC assignment for the new code.
    The definitions of the OPPS comment indicators for CY 2017 are 
listed in Addendum D2 to this proposed rule, which is available on the 
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for 
the ASC Payment System
    For a detailed discussion of the legislative history and statutory 
authority related to payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74378 through 74379), the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68434 through 68467), the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75064 through 75090), the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66915 through 66940), and the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70474 through 
70502).
2. Policies Governing Changes to the Lists of Codes and Payment Rates 
for ASC Covered Surgical Procedures and Covered Ancillary Services
    Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject 
to certain exclusions, covered surgical procedures in an ASC are 
surgical procedures that are separately paid under the OPPS, that would 
not be expected to pose a significant risk to beneficiary safety when 
performed in an ASC, and for which standard medical practice dictates 
that the beneficiary would not typically be expected to require active 
medical monitoring and care at midnight following the procedure 
(``overnight stay''). We adopted this standard for defining which 
surgical procedures are covered under the ASC payment system as an 
indicator of the complexity of the procedure and its appropriateness 
for Medicare payment in ASCs. We use this standard only for purposes of 
evaluating procedures to determine whether or not they are appropriate 
to be furnished to Medicare beneficiaries in ASCs. We define surgical 
procedures as those described by Category I CPT codes in the surgical 
range from 10000 through 69999, as well as those Category III CPT codes 
and Level II HCPCS codes that directly crosswalk or are clinically 
similar to procedures in the CPT surgical range that we have determined 
do not pose a significant safety risk, that we would not expect to 
require an overnight stay when performed in ASCs, and that are 
separately paid under the OPPS (72 FR 42478).
    In the August 2, 2007 final rule (72 FR 42495), we also established 
our policy to make separate ASC payments for the following ancillary 
items and services when they are provided integral to ASC covered 
surgical procedures: (1) Brachytherapy sources; (2) certain implantable 
items that have pass-through payment status under the OPPS; (3) certain 
items and services that we designate as contractor-priced, including, 
but not limited to, procurement of corneal tissue; (4) certain drugs 
and biologicals for which separate payment is allowed under the OPPS; 
and (5) certain radiology services for which separate payment is 
allowed under the OPPS. In the CY 2015 OPPS/ASC final rule with comment 
period (79

[[Page 45693]]

FR 66932 through 66934), we expanded the scope of ASC covered ancillary 
services to include certain diagnostic tests within the medicine range 
of CPT codes for which separate payment is allowed under the OPPS when 
they are provided integral to an ASC covered surgical procedure. 
Covered ancillary services are specified in Sec.  416.164(b) and, as 
stated previously, are eligible for separate ASC payment. Payment for 
ancillary items and services that are not paid separately under the ASC 
payment system is packaged into the ASC payment for the covered 
surgical procedure.
    We update the lists of, and payment rates for, covered surgical 
procedures and covered ancillary services in ASCs in conjunction with 
the annual proposed and final rulemaking process to update the OPPS and 
the ASC payment system (Sec.  416.173; 72 FR 42535). We base ASC 
payment and policies for most covered surgical procedures, drugs, 
biologicals, and certain other covered ancillary services on the OPPS 
payment policies, and we use quarterly change requests (CRs) to update 
services covered under the OPPS. We also provide quarterly update CRs 
for ASC covered surgical procedures and covered ancillary services 
throughout the year (January, April, July, and October). CMS releases 
new and revised Level II HCPCS codes and recognizes the release of new 
and revised CPT codes by the AMA and makes these codes effective (that 
is, the codes are recognized on Medicare claims) via these ASC 
quarterly update CRs. CMS releases new and revised Category III CPT 
codes in the July and January CRs. These updates implement newly 
created and revised Level II HCPCS and Category III CPT codes for ASC 
payment and update the payment rates for separately paid drugs and 
biologicals based on the most recently submitted ASP data. New and 
revised Category I CPT codes, except vaccine codes, are released only 
once a year and are implemented only through the January quarterly CR 
update. New and revised Category I CPT vaccine codes are released twice 
a year and are implemented through the January and July quarterly CR 
updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC proposed 
rule for an example of how this process is used to update HCPCS and CPT 
codes (76 FR 42291).
    In our annual updates to the ASC list of, and payment rates for, 
covered surgical procedures and covered ancillary services, we 
undertake a review of excluded surgical procedures (including all 
procedures newly proposed for removal from the OPPS inpatient list), 
new codes, and codes with revised descriptors, to identify any that we 
believe meet the criteria for designation as ASC covered surgical 
procedures or covered ancillary services. Updating the lists of ASC 
covered surgical procedures and covered ancillary services, as well as 
their payment rates, in association with the annual OPPS rulemaking 
cycle is particularly important because the OPPS relative payment 
weights and, in some cases, payment rates, are used as the basis for 
the payment of many covered surgical procedures and covered ancillary 
services under the revised ASC payment system. This joint update 
process ensures that the ASC updates occur in a regular, predictable, 
and timely manner.

B. Proposed Treatment of New and Revised Codes

1. Background on Current Process for Recognizing New and Revised 
Category I and Category III CPT Codes and Level II HCPCS Codes
    Category I CPT, Category III CPT, and Level II HCPCS codes are used 
to report procedures, services, items, and supplies under the ASC 
payment system. Specifically, we recognize the following codes on ASC 
claims:
     Category I CPT codes, which describe surgical procedures 
and vaccine codes;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes, which are used primarily to identify 
items, supplies, temporary procedures, and services not described by 
CPT codes.
    We finalized a policy in the August 2, 2007 final rule (72 FR 42533 
through 42535) to evaluate each year all new and revised Category I and 
Category III CPT codes and Level II HCPCS codes that describe surgical 
procedures, and to make preliminary determinations during the annual 
OPPS/ASC rulemaking process regarding whether or not they meet the 
criteria for payment in the ASC setting as covered surgical procedures 
and, if so, whether or not they are office-based procedures. In 
addition, we identify new and revised codes as ASC covered ancillary 
services based upon the final payment policies of the revised ASC 
payment system. In prior rulemakings, we refer to this process as 
recognizing new codes; however, this process has always involved the 
recognition of new and revised codes. We consider revised codes to be 
new when they have substantial revision to their code descriptors that 
necessitate a change in the current ASC payment indicator. To clarify, 
we refer to these codes as new and revised in this CY 2017 OPPS/ASC 
proposed rule.
    We have separated our discussion below based on when the codes are 
released and whether we are proposing to solicit public comments in 
this proposed rule (and respond to those comments in the CY 2017 OPPS/
ASC final rule with comment period) or whether we will be soliciting 
public comments in the CY 2017 OPPS/ASC final rule with comment period 
(and responding to those comments in the CY 2018 OPPS/ASC final rule 
with comment period).
    We note that we sought public comments in the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70371 through 70372) on the new 
and revised Category I and III CPT and Level II HCPCS codes that were 
effective January 1, 2016. We also sought public comments in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70371) on the new 
and revised Level II HCPCS codes effective October 1, 2015 or January 
1, 2016. These new and revised codes, with an effective date of October 
1, 2015 or January 1, 2016, were flagged with comment indicator ``NI'' 
in Addenda AA and BB to the CY 2016 OPPS/ASC final rule with comment 
period to indicate that we were assigning them an interim payment 
status and payment rate, if applicable, which were subject to public 
comment following publication of the CY 2016 OPPS/ASC final rule with 
comment period. We will respond to public comments and finalize the 
treatment of these codes under the ASC payment system in the CY 2017 
OPPS/ASC final rule with comment period.
    In Table 22 below, we summarize our process for updating codes 
through our ASC quarterly update CRs, seeking public comments, and 
finalizing the treatment of these new codes under the OPPS.

[[Page 45694]]



 Table 22--Comment and Finalization Timeframes for CY 2017 for New and Revised Category I and III CPT Codes and
                                              Level II HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    ASC  quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2016...................  Level II HCPCS      April 1, 2016.....  CY 2017 OPPS/ASC    CY 2017 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
July 1, 2016....................  Level II HCPCS      July 1, 2016......  CY 2017 OPPS/ASC    CY 2017 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2016......  CY 2017 OPPS/ASC    CY 2017 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2016.................  Level II HCPCS      October 1, 2016...  CY 2017 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2017.................  Level II HCPCS      January 1, 2017...  CY 2017 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2017...  CY 2017 OPPS/ASC    CY 2017 OPPS/ASC
                                   CPT Codes.                              proposed rule.      final rule with
                                                                                               comment period.
----------------------------------------------------------------------------------------------------------------
Note: In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised
  process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be
  effective January 1. We refer readers to section XII.A.3. of this CY 2017 OPPS/ASC proposed rule for further
  discussion of this issue.

2. Proposed Treatment of New and Revised Level II HCPCS Codes and 
Category III CPT Codes Implemented in April 2016 and July 2016 for 
Which We Are Soliciting Public Comments in This Proposed Rule
    In the April 2016 and July 2016 CRs, we made effective for April 1, 
2016 and July 1, 2016, respectively, a total of 20 new Level II HCPCS 
codes and 9 new Category III CPT codes that describe covered ASC 
services that were not addressed in the CY 2016 OPPS/ASC final rule 
with comment period.
    In the April 2016 ASC quarterly update (Transmittal 3478, CR 9557, 
dated March 11, 2016), we added 10 new drug and biological Level II 
HCPCS codes to the list of covered ancillary services. Table 23 below 
lists the new Level II HCPCS codes that were implemented April 1, 2016, 
along with their proposed payment indicators for CY 2017.
    In the July 2016 ASC quarterly update (Transmittal R3531CP, CR 
9668, dated May 27, 2016), we added nine new drug and biological Level 
II HCPCS codes to the list of covered ancillary services. Table 24 
below lists the new Level II HCPCS codes that were implemented July 1, 
2016. The proposed payment rates, where applicable, for these April and 
July codes can be found in Addendum BB to this proposed rule (which is 
available via the Internet on the CMS Web site).
    Through the July 2016 quarterly update CR, we also implemented ASC 
payment for nine new Category III CPT codes as ASC covered surgical 
procedures, effective July 1, 2016. These codes are listed in Table 25 
below, along with their proposed payment indicators. The proposed 
payment rates for these new Category III CPT codes can be found in 
Addendum AA to this proposed rule (which is available via the Internet 
on the CMS Web site).
    We are inviting public comments on these proposed payment 
indicators and the proposed payment rates for the new Category III CPT 
codes and Level II HCPCS codes that were newly recognized as ASC 
covered surgical procedures or covered ancillary services in April 2016 
and July 2016 through the quarterly update CRs, as listed in Tables 23, 
24, and 25 below. We are proposing to finalize their payment indicators 
and their payment rates in the CY 2017 OPPS/ASC final rule with comment 
period.

  Table 23--New Level II HCPCS Codes for Covered Surgical Procedures or
          Covered Ancillary Services Implemented in April 2016
------------------------------------------------------------------------
                                                           Proposed CY
    CY 2016  HCPCS code        CY 2016 long descriptor     2017 payment
                                                            indicator
------------------------------------------------------------------------
C9137......................  Injection, Factor VIII                  K2
                              (antihemophilic factor,
                              recombinant) PEGylated, 1
                              I.U.
C9138......................  Injection, Factor VIII                  K2
                              (antihemophilic factor,
                              recombinant) (Nuwiq), 1
                              I.U.
C9461......................  Choline C 11, diagnostic,               K2
                              per study dose.
C9470......................  Injection, aripiprazole                 K2
                              lauroxil, 1 mg.
C9471......................  Hyaluronan or derivative,               K2
                              Hymovis, for intra-
                              articular injection, 1 mg.
C9472......................  Injection, talimogene                   K2
                              laherparepvec, 1 million
                              plaque forming units
                              (PFU).
C9473......................  Injection, mepolizumab, 1               K2
                              mg.
C9474......................  Injection, irinotecan                   K2
                              liposome, 1 mg.
C9475......................  Injection, necitumumab, 1               K2
                              mg.
J7503......................  Tacrolimus, extended                    K2
                              release, (Envarsus XR),
                              oral, 0.25 mg.
------------------------------------------------------------------------


[[Page 45695]]


    Table 24--New Level II HCPCS Codes for Covered Ancillary Services
                        Implemented in July 2016
------------------------------------------------------------------------
                                                           Proposed CY
    CY 2016  HCPCS code        CY 2016 long descriptor     2017 payment
                                                            indicator
------------------------------------------------------------------------
C9476......................  Injection, daratumumab, 10              K2
                              mg.
C9477......................  Injection, elotuzumab, 1                K2
                              mg.
C9478......................  Injection, sebelipase                   K2
                              alfa, 1 mg.
C9479......................  Instillation,                           K2
                              ciprofloxacin otic
                              suspension, 6 mg.
C9480......................  Injection, trabectedin,                 K2
                              0.1 mg.
Q9981......................  Rolapitant, oral, 1 mg....              K2
Q5102......................  Injection, infliximab,                  K2
                              biosimilar, 10 mg.
Q9982 *....................  Flutemetamol F18,                       K2
                              diagnostic, per study
                              dose, up to 5 millicuries.
Q9983 **...................  Florbetaben f18,                        K2
                              diagnostic, per study
                              dose, up to 8.1
                              millicuries.
------------------------------------------------------------------------
* HCPCS code C9459 (Flutemetamol f18, diagnostic, per study dose, up to
  5 millicuries) was deleted on June 30, 2016, and replaced with HCPCS
  code Q9982 effective July 1, 2016.
** HCPCS code C9458 (Florbetaben f18, diagnostic, per study dose, up to
  8.1 millicuries) was deleted on June 30, 2016, and replaced with HCPCS
  code Q9983 effective July 1, 2016.


 Table 25--New Category III CPT Codes for Covered Surgical Procedures or
           Covered Ancillary Services Implemented in July 2016
------------------------------------------------------------------------
                                                           Proposed CY
      CY 2016 CPT code         CY 2016 long descriptor     2017 payment
                                                            indicator
------------------------------------------------------------------------
0437T......................  Implantation of non-                    N1
                              biologic or synthetic
                              implant (eg,
                              polypropylene) for
                              fascial reinforcement of
                              the abdominal wall (List
                              separately in addition to
                              primary procedure).
0438T *....................  Transperineal placement of              G2
                              biodegradable material,
                              peri-prostatic (via
                              needle), single or
                              multiple, includes image
                              guidance.
0439T......................  Myocardial contrast                     N1
                              perfusion
                              echocardiography; at rest
                              or with stress, for
                              assessment of myocardial
                              ischemia or viability
                              (List separately in
                              addition to primary
                              procedure).
0440T......................  Ablation, percutaneous,                 G2
                              cryoablation, includes
                              imaging guidance; upper
                              extremity distal/
                              peripheral nerve.
0441T......................  Ablation, percutaneous,                 G2
                              cryoablation, includes
                              imaging guidance; lower
                              extremity distal/
                              peripheral nerve.
0442T......................  Ablation, percutaneous,                 G2
                              cryoablation, includes
                              imaging guidance; nerve
                              plexus or other truncal
                              nerve (eg, brachial
                              plexus, pudendal nerve).
0443T......................  Real time spectral                      G2
                              analysis of prostate
                              tissue by fluorescence
                              spectroscopy.
0444T......................  Initial placement of a                  N1
                              drug-eluting ocular
                              insert under one or more
                              eyelids, including
                              fitting, training, and
                              insertion, unilateral or
                              bilateral.
0445T......................  Subsequent placement of a               N1
                              drug-eluting ocular
                              insert under one or more
                              eyelids, including re-
                              training, and removal of
                              existing insert,
                              unilateral or bilateral.
------------------------------------------------------------------------
* HCPCS code C9743 (Injection/implantation of bulking or spacer material
  (any type) with or without image guidance (not to be used if a more
  specific code applies) was deleted on June 30, 2016 and replaced with
  CPT code 0438T effective July 1, 2016.

3. Process for Recognizing New and Revised Category I and Category III 
CPT Codes That Will Be Effective January 1, 2017 for Which We Are 
Accepting Comments in This CY 2017 Proposed Rule
    For new and revised CPT codes effective January 1 that are received 
in time to be included in the proposed rule, we are proposing APC and 
status indicator assignments. We will accept comments and finalize the 
APC and status indicator assignments in the OPPS/ASC final rule with 
comment period. For those new/revised CPT codes that are received too 
late for inclusion in the OPPS/ASC proposed rule, we may either make 
interim final assignments in the final rule with comment period or 
possibly use HCPCS G-codes that mirror the predecessor CPT codes and 
retain the current APC and status indicator assignments for a year 
until we can propose APC and status indicator assignments in the 
following year's rulemaking cycle.
    For the CY 2017 ASC update, the new and revised CY 2017 Category I 
and III CPT codes will be effective on January 1, 2017 and can be found 
in ASC Addendum AA and Addendum BB to this proposed rule (which are 
available via the Internet on the CMS Web site). The new and revised CY 
2017 Category I and III CPT codes are assigned to new comment indicator 
``NP'' to indicate that the code is new for the next calendar year or 
the code is an existing code with substantial revision to its code 
descriptor in the next calendar year as compared to current calendar 
year and that comments will be accepted on the proposed payment 
indicator. Further, we remind readers that the CPT code descriptors 
that appear in Addendum AA and Addendum BB are short descriptors and do 
not accurately describe the complete procedure, service, or item 
described by the CPT code. Therefore, we are including the 5-digit 
placeholder codes and their long descriptors for the new and revised CY 
2017 CPT codes in Addendum O to this proposed rule (which is available 
via the Internet on the CMS Web site) so that the public can adequately 
comment on our proposed payment indicator assignments. The 5-digit 
placeholder codes can be found in Addendum O, specifically under the 
column labeled ``CY 2017 OPPS/ASC Proposed Rule 5-Digit Placeholder 
Code,'' to this proposed rule. The final CPT code numbers will be 
included in the CY 2017 OPPS/ASC final rule with comment period. We 
note that not every code listed in Addendum O is subject to comment. 
For the new/revised Category I and III CPT codes, we are requesting 
comments on only those codes that are assigned to comment indicator 
``NP.''
    In summary, we are soliciting public comments on the proposed CY 
2017 payment indicators for the new and revised Category I and III CPT 
codes that will be effective January 1, 2017. The

[[Page 45696]]

CPT codes are listed in Addendum AA and Addendum BB to this proposed 
rule with short descriptors only. We list them again in Addendum O to 
this proposed rule with long descriptors. We also are proposing to 
finalize the payment indicator for these codes (with their final CPT 
code numbers) in the CY 2017 OPPS/ASC final rule with comment period. 
The proposed payment indicator for these codes can be found in Addendum 
AA and Addendum BB to this proposed rule (which are available via the 
Internet on the CMS Web site).
4. Proposed Process for New and Revised Level II HCPCS Codes That Will 
Be Effective October 1, 2016 and January 1, 2017 for Which We Will Be 
Soliciting Public Comments in the CY 2017 OPPS/ASC Final Rule With 
Comment Period
    As has been our practice in the past, we incorporate those new and 
revised Level II HCPCS codes that are effective January 1 in the final 
rule with comment period, thereby updating the OPPS and the ASC payment 
system for the following calendar year. These codes are released to the 
public via the CMS HCPCS Web site, and also through the January OPPS 
quarterly update CRs. In the past, we also released new and revised 
Level II HCPCS codes that are effective October 1 through the October 
OPPS quarterly update CRs and incorporated these new codes in the final 
rule with comment period, thereby updating the OPPS and the ASC payment 
system for the following calendar year.
    For CY 2017, we are proposing to continue our established policy of 
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final 
rule with comment period to those new and revised Level II HCPCS codes 
that are effective October 1 and January 1 to indicate that we are 
assigning them an interim payment status which is subject to public 
comment. Specifically, the Level II HCPCS codes that will be effective 
October 1, 2016 and January 1, 2017 would be flagged with comment 
indicator ``NI'' in Addendum B to the CY 2017 OPPS/ASC final rule with 
comment period to indicate that we have assigned the codes an interim 
OPPS payment status for CY 2017. We will invite public comments in the 
CY 2017 OPPS/ASC final rule with comment period on the status 
indicator, APC assignments, and payment rates for these codes that will 
be finalized in the CY 2018 OPPS/ASC final rule with comment period.

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

1. Covered Surgical Procedures
a. Proposed Covered Surgical Procedures Designated as Office-Based
(1) Background
    In the August 2, 2007 ASC final rule, we finalized our policy to 
designate as ``office-based'' those procedures that are added to the 
ASC list of covered surgical procedures in CY 2008 or later years that 
we determine are performed predominantly (more than 50 percent of the 
time) in physicians' offices based on consideration of the most recent 
available volume and utilization data for each individual procedure 
code and/or, if appropriate, the clinical characteristics, utilization, 
and volume of related codes. In that rule, we also finalized our policy 
to exempt all procedures on the CY 2007 ASC list from application of 
the office-based classification (72 FR 42512). The procedures that were 
added to the ASC list of covered surgical procedures beginning in CY 
2008 that we determined were office-based were identified in Addendum 
AA to that rule by payment indicator ``P2'' (Office-based surgical 
procedure added to ASC list in CY 2008 or later with MPFS nonfacility 
PE RVUs; payment based on OPPS relative payment weight); ``P3'' 
(Office-based surgical procedures added to ASC list in CY 2008 or later 
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE 
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in 
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on 
OPPS relative payment weight), depending on whether we estimated the 
procedure would be paid according to the standard ASC payment 
methodology based on its OPPS relative payment weight or at the MPFS 
nonfacility PE RVU-based amount.
    Consistent with our final policy to annually review and update the 
list of covered surgical procedures eligible for payment in ASCs, each 
year we identify covered surgical procedures as either temporarily 
office-based (these are new procedure codes with little or no 
utilization data that we have determined are clinically similar to 
other procedures that are permanently office-based), permanently 
office-based, or nonoffice-based, after taking into account updated 
volume and utilization data.
(2) Proposed Changes for CY 2017 to Covered Surgical Procedures 
Designated as Office-Based
    In developing this proposed rule, we followed our policy to 
annually review and update the covered surgical procedures for which 
ASC payment is made and to identify new procedures that may be 
appropriate for ASC payment, including their potential designation as 
office-based. We reviewed CY 2015 volume and utilization data and the 
clinical characteristics for all covered surgical procedures that are 
assigned payment indicator ``G2'' (Nonoffice-based surgical procedure 
added in CY 2008 or later; payment based on OPPS relative payment 
weight) in CY 2016, as well as for those procedures assigned one of the 
temporary office-based payment indicators, specifically ``P2,'' ``P3,'' 
or ``R2'' in the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70480 through 70482).
    Our review of the CY 2015 volume and utilization data resulted in 
our identification of one covered surgical procedure, CPT code 0377T 
(Anoscopy with directed submucosal injection of bulking agent for fecal 
incontinence), that we believe meets the criteria for designation as 
office-based. The data indicate that this procedure is performed more 
than 50 percent of the time in physicians' offices, and we believe the 
services are of a level of complexity consistent with other procedures 
performed routinely in physicians' offices. The CPT code that we are 
proposing to permanently designate as office-based for CY 2017 is 
listed in Table 26 below.

[[Page 45697]]



Table 26--ASC Covered Surgical Procedure Proposed To Be Newly Designated as Permanently Office-Based for CY 2017
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                                  CY 2016 ASC        2017 ASC
           CY 2017 CPT code                     CY 2017 long descriptor             payment          payment
                                                                                   indicator       indicator *
----------------------------------------------------------------------------------------------------------------
0377T.................................  Anoscopy with directed submucosal                   G2               R2
                                         injection of bulking agent for fecal
                                         incontinence Esophagoscopy, flexible,
                                         transnasal; diagnostic, including
                                         collection of specimen(s) by brushing
                                         or washing, when performed (separate
                                         procedure).
----------------------------------------------------------------------------------------------------------------
* Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
  ratesetting methodology and the MPFS proposed rates. Current law specifies a 0.5 percent update to the MPFS
  payment rates for CY 2017. For a discussion of the MPFS rates, we refer readers to the CY 2017 MPFS proposed
  rule.

    We also reviewed CY 2015 volume and utilization data and other 
information for eight procedures finalized for temporary office-based 
status in Tables 64 and 65 in the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70480 through 70482). Of these eight procedures, 
there were very few claims in our data or no claims data for all eight 
procedures: CPT code 0299T (Extracorporeal shock wave for integumentary 
wound healing, high energy, including topical application and dressing 
care; initial wound); CPT code 0402T (Collagen cross-linking of cornea 
(including removal of the corneal epithelium and intraoperative 
pachymetry when performed)); CPT code 10030 (Image-guided fluid 
collection drainage by catheter (e.g., abscess, hematoma, seroma, 
lymphocele, cyst), soft tissue (e.g., extremity, abdominal wall, neck), 
percutaneous); CPT code 64461 (Paravertebral block (PVB) (paraspinous 
block), thoracic; single injection site (includes imaging guidance, 
when performed); CPT code 64463 (Paravertebral block (PVB) (paraspinous 
block), thoracic; continuous infusion by catheter (includes imaging 
guidance, when performed)); CPT code 65785 (Implantation of 
intrastromal corneal ring segments); CPT code 67229 (Treatment of 
extensive or progressive retinopathy, one or more sessions; preterm 
infant (less than 37 weeks gestation at birth), performed from birth up 
to 1 year of age (for example, retinopathy of prematurity), 
photocoagulation or cryotherapy); and CPT code C9800 (Dermal injection 
procedure(s) for facial lipodystrophy syndrome (LDS) and provision of 
Radiesse or Sculptra dermal filler, including all items and supplies). 
Consequently, we are proposing to maintain the temporary office-based 
designations for these eight codes for CY 2017. We list all of these 
codes for which we are proposing to maintain the temporary office-based 
designations for CY 2017 in Table 27 below. The procedures for which 
the proposed office-based designations for CY 2017 are temporary also 
are indicated by asterisks in Addendum AA to this proposed rule (which 
is available via the Internet on the CMS Web site).

   Table 27--Proposed CY 2017 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporarily
                       Office-Based in the CY 2016 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
                                                                                                   CY 2017 ASC
                                                                                  CY 2016 ASC        proposed
           CY 2017 CPT code                     CY 2017 long descriptor             payment          payment
                                                                                  indicator *      indicator **
----------------------------------------------------------------------------------------------------------------
0299T.................................  Extracorporeal shock wave for                     R2 *            R2 **
                                         integumentary wound healing, high
                                         energy, including topical application
                                         and dressing care; initial wound.
0402T.................................  Collagen cross-linking of cornea                  R2 *            R2 **
                                         (including removal of the corneal
                                         epithelium and intraoperative
                                         pachymetry when performed).
10030.................................  Image-guided fluid collection drainage            P2 *            P2 **
                                         by catheter (e.g., abscess, hematoma,
                                         seroma, lymphocele, cyst), soft
                                         tissue (e.g., extremity abdominal
                                         wall, neck), percutaneous.
64461.................................  Paravertebral block (PVB) (paraspinous            P3 *            P3 **
                                         block), thoracic; single injection
                                         site (includes imaging guidance, when
                                         performed).
64463.................................  Continuous infusion by catheter                   P3 *            P3 **
                                         (includes imaging guidance, when
                                         performed).
65785.................................  Implantation of intrastromal corneal              R2 *            P2 **
                                         ring segments.
67229.................................  Treatment of extensive or progressive             R2 *            R2 **
                                         retinopathy, one or more sessions;
                                         preterm infant (less than 37 weeks
                                         gestation at birth), performed from
                                         birth up to 1 year of age (e.g.,
                                         retinopathy of prematurity),
                                         photocoagulation or cryotherapy.
C9800.................................  Dermal injection procedure(s) for                 R2 *            R2 **
                                         facial lipodystrophy syndrome (LDS)
                                         and provision of Radiesse or Sculptra
                                         dermal filler, including all items
                                         and supplies.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
  ratesetting methodology and the MPFS proposed rates. Current law specifies a 0.5 percent update to the MPFS
  payment rates for CY 2017. For a discussion of the MPFS rates, we refer readers to the CY 2017 MPFS proposed
  rule.

    For CY 2017, we are proposing to designate certain new CY 2017 
codes for ASC covered surgical procedures as temporary office-based, 
displayed in Table 28 below. After reviewing the clinical 
characteristics, utilization, and volume of related codes, we 
determined that the procedures described by these new CPT codes would 
be predominantly performed in physicians' offices. However, because we 
had no utilization data for the procedures specifically described by 
these new CPT codes, we are proposing to make the office-based 
designations temporary rather than permanent and we will reevaluate the 
procedures when data become available. The procedures for

[[Page 45698]]

which the proposed office-based designations for CY 2017 are temporary 
also are indicated by asterisks in Addendum AA to this proposed rule 
(which is available via the Internet on the CMS Web site).
    We are inviting public comment on these proposals.

 Table 28--Proposed CY 2017 Payment Indicators for New CY 2017 CPT Codes
  for ASC Covered Surgical Procedures Designated as Temporarily Office-
                                  Based
------------------------------------------------------------------------
                                                           Proposed CY
 Proposed CY 2017  OPPS/ASC                                  2017 ASC
 proposed rule 5-digit CMS     CY 2017 long descriptor       payment
    placeholder code ***                                   indicator **
------------------------------------------------------------------------
369X1 ***..................  Introduction of needle(s)             P2 *
                              and/or catheter(s),
                              dialysis circuit, with
                              diagnostic angiography of
                              the dialysis circuit,
                              including all direct
                              puncture(s) and catheter
                              placement(s),
                              injection(s) of contrast,
                              all necessary imaging
                              from the arterial
                              anastomosis and adjacent
                              artery through entire
                              venous outflow including
                              the inferior or superior
                              vena cava, fluoroscopic
                              guidance, radiological
                              supervision and
                              interpretation and image
                              documentation and report.
36X41 ***..................  Endovenous ablation                   P2 *
                              therapy of incompetent
                              vein, extremity,
                              inclusive of all imaging
                              guidance and monitoring,
                              percutaneous,
                              mechanochemical; first
                              vein treated.
------------------------------------------------------------------------
* If designation is temporary.
** Proposed payment indicators are based on a comparison of the proposed
  rates according to the ASC standard ratesetting methodology and the
  MPFS proposed rates. Current law specifies a 0.5 percent update to the
  MPFS payment rates for CY 2017. For a discussion of the MPFS rates, we
  refer readers to the CY 2017 MPFS proposed rule.
*** New CPT codes (with CMS 5-digit placeholder codes) that will be
  effective January 1, 2017. The proposed ASC payment rate for this code
  can be found in ASC Addendum AA, which is available via the Internet
  on the CMS Web site.

b. ASC Covered Surgical Procedures Designated as Device-Intensive--
Finalized Policy for CY 2016 and Proposed Policy for CY 2017
(1) Background
    As discussed in the August 2, 2007 final rule (72 FR 42503 through 
42508), we adopted a modified payment methodology for calculating the 
ASC payment rates for covered surgical procedures that are assigned to 
the subset of OPPS device-dependent APCs with a device offset 
percentage greater than 50 percent of the APC cost under the OPPS, in 
order to ensure that payment for the procedure is adequate to provide 
packaged payment for the high-cost implantable devices used in those 
procedures. According to that modified ASC payment methodology, we 
apply the device offset percentage based on the standard OPPS APC 
ratesetting methodology to the OPPS national unadjusted payment to 
determine the device cost included in the OPPS payment rate for a 
device-intensive ASC covered surgical procedure, which we then set as 
equal to the device portion of the national unadjusted ASC payment rate 
for the procedure. We then calculate the service (nondevice) portion of 
the ASC payment for device-intensive procedures by applying the uniform 
ASC conversion factor to the service portion of the OPPS relative 
payment weight for the device-intensive procedure. Finally, we sum the 
ASC device portion and ASC service portion to establish the full 
payment for the device-intensive procedure under the revised ASC 
payment system. For CY 2015, we implemented a comprehensive APC policy 
under the OPPS under which we created C-APCs to replace most of the 
then-current device-dependent APCs and a few nondevice-dependent APCs 
under the OPPS, which discontinued the device-dependent APC policy (79 
FR 66798 through 66810). We did not implement C-APCs in the ASC payment 
system.
    Therefore, in the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66925), we provided that all separately paid covered ancillary 
services that are provided integral to covered surgical procedures that 
mapped to C-APCs continue to be separately paid under the ASC payment 
system instead of being packaged into the payment for the C-APC as 
under the OPPS. To avoid duplicating payment, we provided that the CY 
2015 ASC payment rates for these C-APCs were based on the CY 2015 OPPS 
relative payments weights that had been calculated using the standard 
APC ratesetting methodology for the primary service instead of the 
relative payment weights that were based on the comprehensive bundled 
service. For the same reason, under the ASC payment system, we also 
used the standard OPPS APC ratesetting methodology instead of the C-APC 
methodology to calculate the device offset percentage for C-APCs for 
purposes of identifying device-intensive procedures and to calculate 
payment rates for device-intensive procedures assigned to C-APCs. 
Because we implemented the C-APC policy and, therefore, eliminated 
device-dependent APCs under the OPPS in CY 2015, we revised our 
definition of ASC device-intensive procedures to be those procedures 
that are assigned to any APC (not only an APC formerly designated as 
device-dependent) with a device offset percentage greater than 40 
percent based on the standard OPPS APC ratesetting methodology.
    We also provided that we would update the ASC list of covered 
surgical procedures that are eligible for payment according to our 
device-intensive procedure payment methodology, consistent with our 
modified definition of device-intensive procedures, reflecting the APC 
assignments of procedures and APC device offset percentages based on 
the CY 2013 OPPS claims and cost report data available for the CY 2015 
OPPS/ASC proposed rule and final rule with comment period.
(2) Proposed ASC Device-Intensive Designation by HCPCS Code
    In CY 2016, we restructured many of the APCs under the OPPS, which 
resulted in some procedures with significant device costs not being 
designated device-intensive. In the CY 2016 OPPS/ASC proposed rule (80 
FR 39310), we specifically recognized that, in some instances, there 
may be a surgical procedure that uses a high-cost device but is not 
assigned to a device-intensive APC. When an ASC covered surgical 
procedure is not designated as device-intensive, it will be paid under 
the ASC methodology established for that covered surgical procedure, 
through

[[Page 45699]]

either an MPFS nonfacility PE RVU based amount or an OPPS relative 
payment weight based methodology, depending on the ASC payment 
indicator assignment.
    In response to stakeholder concerns regarding circumstances where 
procedures with high-cost devices are not classified as device-
intensive under the ASC payment system, we solicited public comments in 
the CY 2016 OPPS/ASC proposed rule, specifically requesting suggestions 
for alternative methodologies for establishing device-intensive status 
for ASC covered surgical services (80 FR 39310). We received several 
comments, which we summarized in the CY 2016 OPPS/ASC final rule with 
comment period, and we indicated we would take them into consideration 
for future rulemaking (80 FR 70484). Among the comments we received, 
several commenters requested that we calculate device intensity at the 
HCPCS level because the commenters believed the current method of 
calculating device intensity at the APC level does not take into 
account device similarity within an APC.
    We believe it is no longer appropriate to designate ASC device-
intensive procedures based on APC assignment because APC groupings of 
clinically similar procedures do not necessarily factor in device cost 
similarity. This means that there are some surgical procedures that 
include high-cost implantable devices that are assigned to an APC with 
procedures that include the cost of significantly lower-cost devices or 
no device at all. As a result, the proportion of the APC geometric mean 
unit cost attributed to implantation of a high-cost device can be 
underrepresented due to higher claim volume and the lower costs of 
relatively low-cost device implantation procedures or procedures that 
do not use an implantable device.
    We believe a HCPCS code-level device offset would be a better 
representation of a procedure's device cost than an APC-wide average 
device offset based on the device offset of many procedures. Unlike a 
device offset calculated at the APC level, which is a weighted average 
offset for all devices used in all of the procedures assigned to an 
APC, a HCPCS code-level device offset is calculated using only claims 
for a single HCPCS code. We believe that such a methodological change 
would result in a more accurate representation of the cost attributable 
to implantation of a high-cost device, which would ensure consistent 
device-intensive designation of procedures with a significant device 
cost. Further, we believe a HCPCS code-level device offset would remove 
inappropriate device-intensive status to procedures without a 
significant device cost but which are granted such status because of 
APC assignment.
    Therefore, for CY 2017, we are proposing that a procedure with a 
HCPCS code-level device offset of greater than 40 percent of the APC 
costs when calculated according to the standard OPPS APC ratesetting 
methodology would be designated as ASC device-intensive and would be 
subject to all of the payment policies applicable to procedures 
designated as an ASC device-intensive procedure under our established 
methodology, including our policies on device credits and discontinued 
procedures. We are proposing to revise the regulations at 42 CFR 
416.171(b)(2) to redefine device-intensive procedures in accordance 
with this proposal.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, we are proposing to apply device-intensive status with a 
default device offset set at 41 percent until claims data are available 
to establish the HCPCS code-level device offset for the procedures. 
This default device offset amount of 41 percent would not be calculated 
from claims data; instead it would be applied as a default until claims 
data are available upon which to calculate an actual device offset for 
the new code. The purpose of applying the 41 percent default device 
offset to new codes that describe procedures that implant medical 
devices would be to ensure ASC access for new procedures until claims 
data become available. However, in certain rare instances, for example, 
in the case of a very expensive implantable device, we may temporarily 
assign a higher offset percentage if warranted by additional 
information such as pricing data from a device manufacturer. Once 
claims data are available for a new procedure requiring the 
implantation of a medical device, device-intensive status would be 
applied to the code if the HCPCS code device offset is greater than 40 
percent, according to our proposed policy of determining device-
intensive status by calculating the HCPCS code-level device offset. The 
full listing of ASC device-intensive procedures can be found in 
Addendum AA to this proposed rule (which is available via the Internet 
on the CMS Web site).
(3) Proposed Changes to List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2017
    For CY 2017, we are proposing to revise our methodology for 
designating ASC covered surgical procedures as device-intensive. 
Specifically, for CY 2017, we are proposing to update the ASC list of 
covered surgical procedures that are eligible for payment according to 
our device-intensive procedure payment methodology, consistent with our 
proposed revised definition of device-intensive procedures, reflecting 
the proposed individual HCPCS code device offset percentages based on 
CY 2015 OPPS claims and cost report data available for this proposed 
rule.
    The ASC covered surgical procedures we are proposing to designate 
as device-intensive and would be subject to the device-intensive 
procedure payment methodology for CY 2017 can be found in Addendum AA 
to this proposed rule (which is available via the Internet on the CMS 
Web site). The CPT code, the CPT code short descriptor, the proposed CY 
2017 ASC payment indicator, the proposed CY 2017 HCPCS code device 
offset percentage, and an indication if the full credit/partial credit 
(FB/FC) device adjustment policy would apply can also be found in 
Addendum AA. All of these procedures are included in Addendum AA to 
this proposed rule (which is available via the Internet on the CMS Web 
site).
    We are inviting public comments on the proposed list of ASC device-
intensive procedures.
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    Our ASC payment policy for costly devices implanted in ASCs at no 
cost/full credit or partial credit, as set forth in Sec.  416.179 of 
our regulations, is consistent with the OPPS policy that was in effect 
until CY 2014. The established ASC policy reduces payment to ASCs when 
a specified device is furnished without cost or with full credit or 
partial credit for the cost of the device for those ASC covered 
surgical procedures that are assigned to APCs under the OPPS to which 
this policy applies. We refer readers to the CY 2009 OPPS/ASC final 
rule with comment period for a full discussion of the ASC payment 
adjustment policy for no cost/full credit and partial credit devices 
(73 FR 68742 through 68744).
    As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75005 through 75006), we finalized our 
proposal to modify our former policy of reducing

[[Page 45700]]

OPPS payment for specified APCs when a hospital furnishes a specified 
device without cost or with a full or partial credit. Formerly, under 
the OPPS, our policy was to reduce OPPS payment by 100 percent of the 
device offset amount when a hospital furnished a specified device 
without cost or with a full credit and by 50 percent of the device 
offset amount when the hospital received partial credit in the amount 
of 50 percent or more (but less than 100 percent) of the cost for the 
specified device. For CY 2014, we finalized our proposal to reduce OPPS 
payment for applicable APCs by the full or partial credit a provider 
receives for a replaced device, capped at the device offset amount.
    Although we finalized our proposal to modify the policy of reducing 
payments when a hospital furnishes a specified device without cost or 
with full or partial credit under the OPPS, in that final rule with 
comment period (78 FR 75076 through 75080), we finalized our proposal 
to maintain our ASC policy for reducing payments to ASCs for specified 
device-intensive procedures when the ASC furnishes a device without 
cost or with full or partial credit. Unlike the OPPS, there is 
currently no mechanism within the ASC claims processing system for ASCs 
to submit to CMS the actual amount received when furnishing a specified 
device at full or partial credit. Therefore, under the ASC payment 
system, we finalized our proposal for CY 2014 to continue to reduce ASC 
payments by 100 percent or 50 percent of the device offset amount when 
an ASC furnishes a device without cost or with full or partial credit, 
respectively.
    We are proposing to update the list of ASC covered device-intensive 
procedures, based on the proposed CY 2017 device-intensive definition, 
which would be subject to the no cost/full credit and partial credit 
device adjustment policy for CY 2017. Specifically, when a device-
intensive procedure is subject to the no cost/full credit or partial 
credit device adjustment policy and is performed to implant a device 
that is furnished at no cost or with full credit from the manufacturer, 
the ASC would append the HCPCS ``FB'' modifier on the line in the claim 
with the procedure to implant the device. The contractor would reduce 
payment to the ASC by the device offset amount that we estimate 
represents the cost of the device when the necessary device is 
furnished without cost or with full credit to the ASC. We continue to 
believe that the reduction of ASC payment in these circumstances is 
necessary to pay appropriately for the covered surgical procedure 
furnished by the ASC.
    For partial credit, we are proposing to reduce the payment for 
implantation procedures that are subject to the no cost/full credit or 
partial credit device adjustment policy by one-half of the device 
offset amount that would be applied if a device was provided at no cost 
or with full credit, if the credit to the ASC is 50 percent or more 
(but less than 100 percent) of the cost of the new device. The ASC 
would append the HCPCS ``FC'' modifier to the HCPCS code for a device-
intensive surgical procedure that is subject to the no cost/full credit 
or partial credit device adjustment policy, when the facility receives 
a partial credit of 50 percent or more (but less than 100 percent) of 
the cost of a device. To report that the ASC received a partial credit 
of 50 percent or more (but less than 100 percent) of the cost of a new 
device, ASCs would have the option of either: (1) Submitting the claim 
for the device replacement procedure to their Medicare contractor after 
the procedure's performance but prior to manufacturer acknowledgment of 
credit for the device, and subsequently contacting the contractor 
regarding a claim adjustment once the credit determination is made; or 
(2) holding the claim for the device implantation procedure until a 
determination is made by the manufacturer on the partial credit and 
submitting the claim with the ``FC'' modifier appended to the 
implantation procedure HCPCS code if the partial credit is 50 percent 
or more (but less than 100 percent) of the cost of the replacement 
device. Beneficiary coinsurance would be based on the reduced payment 
amount. As finalized in the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66926), to ensure our policy covers any situation 
involving a device-intensive procedure where an ASC may receive a 
device at no cost/full credit or partial credit, we apply our FB/FC 
policy to all device-intensive procedures.
    We are inviting public comments on our proposals to adjust ASC 
payments for no cost/full credit and partial credit devices.
d. Proposed Additions to the List of ASC Covered Surgical Procedures
    We conducted a review of HCPCS codes that currently are paid under 
the OPPS, but not included on the ASC list of covered surgical 
procedures, to determine if changes in technology and/or medical 
practice affected the clinical appropriateness of these procedures for 
the ASC setting. Based on this review, we are proposing to update the 
list of ASC covered surgical procedures by adding eight procedures to 
the list for CY 2017. We determined that these eight procedures would 
not be expected to pose a significant risk to beneficiary safety when 
performed in an ASC, and would not be expected to require active 
medical monitoring and care of the beneficiary at midnight following 
the procedure. These codes are add-on codes to procedures that are 
currently performed in the ASC and describe variations of (including 
additional instrumentation used with) the base code procedure. 
Therefore, we are proposing to include them on the list of ASC covered 
surgical procedures for CY 2017.
    The eight procedures that we are proposing to add to the ASC list 
of covered surgical procedures, including their HCPCS code long 
descriptors and proposed CY 2017 payment indicators, are displayed in 
Table 29 below.

    Table 29--Proposed Additions to the List of ASC Covered Surgical
                         Procedures for CY 2017
------------------------------------------------------------------------
                                                           Proposed CY
                                                             2017 ASC
     CY 2017 HCPCS code        CY 2017 long descriptor       payment
                                                            indicator
------------------------------------------------------------------------
20936......................  Autograft for spine                     N1
                              surgery only (includes
                              harvesting the graft);
                              local (eg, ribs, spinous
                              process, or laminar
                              fragments) obtained from
                              the same incision (List
                              separately in addition to
                              code for primary
                              procedure).
20937......................  Autograft for spine                     N1
                              surgery only (includes
                              harvesting the graft);
                              morselized (through
                              separate skin or fascial
                              incision) (List
                              separately in addition to
                              code for primary
                              procedure).
20938......................  Autograft for spine                     N1
                              surgery only (includes
                              harvesting the graft);
                              structural, biocortical
                              or tricortical (through
                              separate skin fascial
                              incision).

[[Page 45701]]

 
22552......................  Arthrodesis, anterior                   N1
                              interbody, including disc
                              space preparation,
                              discectomy,
                              osteophytectomy and
                              decompression of spinal
                              cord and/or nerve roots;
                              cervical C2, each
                              additional interspace
                              (List separately in
                              addition to code for
                              separate procedure).
22840......................  Posterior non-segmental                 N1
                              instrumentation (eg,
                              Harrington rod technique,
                              pedicle fixation across 1
                              interspace, atlantoaxial
                              transarticular screw
                              fixation, sublaminar
                              wiring at C1, facet screw
                              fixation).
22842......................  Posterior non-segmental                 N1
                              instrumentation (eg,
                              Harrington rod technique,
                              pedicle fixation across 1
                              interspace, atlantoaxial
                              transarticular screw
                              fixation, sublaminar
                              wiring at C1, facet screw
                              fixation).
22845......................  Anterior instrumentation;               N1
                              2 to 3 vertebral segments.
22851......................  Application of                          N1
                              intervertebral
                              biomechanical device(s)
                              (eg, synthetic cage(s),
                              methlmethacrylate) to
                              vertebral defect or
                              interspace (List
                              separately in addition to
                              code for primary
                              procedure).
------------------------------------------------------------------------

    As we discussed in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68724), we adopted a policy to include, in our annual 
evaluation of the ASC list of covered surgical procedures, a review of 
the procedures that are being proposed for removal from the OPPS 
inpatient list for possible inclusion on the ASC list of covered 
surgical procedures. After reviewing the procedures proposed to be 
removed from the OPPS IPO list for CY 2017, we also are proposing to 
add CPT codes 22840, 22842, and 22845 listed in Table 29 above to the 
ASC list of covered surgical procedures for CY 2017. We are proposing 
to add these three procedure codes to the ASC list of covered surgical 
procedures (as well as proposing to remove them from the IPO list) for 
CY 2017 because these codes are add-on codes to procedures that are 
currently performed in the ASC and describe variations of (including 
additional instrumentation used with) the base code procedure. 
Therefore, we expect that the procedures described by these codes can 
be safely performed in an ASC without the need for an overnight stay.
    Regarding the other codes that we are proposing to remove from the 
OPPS IPO list, we believe that CPT codes 22858 (Total disc arthroplasty 
(artificial disc), anterior approach, including discectomy with end 
plate preparation (includes osteophytectomy for nerve root or spinal 
cord decompression and microdissection); second level, cervical (List 
separately in addition to code for primary procedure), 31584 
(Laryngoplasty; with open reduction of fracture), and 31587 
(Laryngoplasty, cricoid split), which also are proposed to be removed 
from the OPPS IPO list for CY 2017, should continue to be excluded from 
the ASC list of covered surgical procedures because the procedures 
described by these codes would generally be expected to require at 
least an overnight stay.
2. Covered Ancillary Services
a. Proposed List of Covered Ancillary Services
    Consistent with the established ASC payment system policy, we are 
proposing to update the ASC list of covered ancillary services to 
reflect the proposed payment status for the services under the CY 2017 
OPPS. Maintaining consistency with the OPPS may result in proposed 
changes to ASC payment indicators for some covered ancillary services 
because of changes that are being proposed under the OPPS for CY 2017. 
For example, a covered ancillary service that was separately paid under 
the revised ASC payment system in CY 2015 may be proposed for packaged 
status under the CY 2017 OPPS and, therefore, also under the ASC 
payment system for CY 2017.
    To maintain consistency with the OPPS, we are proposing that these 
services also would be packaged under the ASC payment system for CY 
2017. We are proposing to continue this reconciliation of packaged 
status for subsequent calendar years. Comment indicator ``CH,'' 
discussed in section XII.F. of this proposed rule, is used in Addendum 
BB to this proposed rule (which is available via the Internet on the 
CMS Web site) to indicate covered ancillary services for which we are 
proposing a change in the ASC payment indicator to reflect a proposed 
change in the OPPS treatment of the service for CY 2017.
    All ASC covered ancillary services and their proposed payment 
indicators for CY 2017 are included in Addendum BB to this proposed 
rule. We are inviting public comments on this proposal.

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

1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
    Our ASC payment policies for covered surgical procedures under the 
revised ASC payment system are fully described in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66828 through 66831). Under our 
established policy for the revised ASC payment system, we use the ASC 
standard ratesetting methodology of multiplying the ASC relative 
payment weight for the procedure by the ASC conversion factor for that 
same year to calculate the national unadjusted payment rates for 
procedures with payment indicators ``G2'' and ``A2.'' Payment indicator 
``A2'' was developed to identify procedures that were included on the 
list of ASC covered surgical procedures in CY 2007 and, therefore, were 
subject to transitional payment prior to CY 2011. Although the 4-year 
transitional period has ended and payment indicator ``A2'' is no longer 
required to identify surgical procedures subject to transitional 
payment, we retained payment indicator ``A2'' because it is used to 
identify procedures that are exempted from application of the office-
based designation.
    The rate calculation established for device-intensive procedures 
(payment indicator ``J8'') is structured so that the packaged device 
payment amount is the same as under the OPPS, and only the service 
portion of the rate is subject to the ASC standard ratesetting 
methodology. In the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70474 through 70502), we updated the CY 2015 ASC payment rates for 
ASC covered surgical procedures with payment indicators of ``A2,'' 
``G2,'' and ``J8'' using CY 2014 data, consistent with the CY 2016 OPPS 
update. We also

[[Page 45702]]

updated payment rates for device-intensive procedures to incorporate 
the CY 2016 OPPS device offset percentages calculated under the 
standard APC ratesetting methodology as discussed earlier in this 
section.
    Payment rates for office-based procedures (payment indicators 
``P2,'' ``P3,'' and ``R2'') are the lower of the MPFS nonfacility PE 
RVU-based amount (we refer readers to the CY 2017 MPFS proposed rule) 
or the amount calculated using the ASC standard ratesetting methodology 
for the procedure. In the CY 2016 OPPS/ASC final rule with comment 
period, we updated the payment amounts for office-based procedures 
(payment indicators ``P2,'' ``P3,'' and ``R2'') using the most recent 
available MPFS and OPPS data. We compared the estimated CY 2016 rate 
for each of the office-based procedures, calculated according to the 
ASC standard ratesetting methodology, to the MPFS nonfacility PE RVU-
based amount to determine which was lower and, therefore, would be the 
CY 2016 payment rate for the procedure under our final policy for the 
revised ASC payment system (Sec.  416.171(d)).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75081), we finalized our proposal to calculate the CY 2014 payment 
rates for ASC covered surgical procedures according to our established 
methodologies, with the exception of device removal procedures. For CY 
2014, we finalized a policy to conditionally package payment for device 
removal codes under the OPPS. Under the OPPS, a conditionally packaged 
code (status indicators ``Q1'' and ``Q2'') describes a HCPCS code where 
the payment is packaged when it is provided with a significant 
procedure but is separately paid when the service appears on the claim 
without a significant procedure. Because ASC services always include a 
covered surgical procedure, HCPCS codes that are conditionally packaged 
under the OPPS are always packaged (payment indicator ``N1'') under the 
ASC payment system. Under the OPPS, device removal procedures are 
conditionally packaged and, therefore, would be packaged under the ASC 
payment system. There would be no Medicare payment made when a device 
removal procedure is performed in an ASC without another surgical 
procedure included on the claim; therefore, no Medicare payment would 
be made if a device was removed but not replaced. To address this 
concern, for the device removal procedures that are conditionally 
packaged in the OPPS (status indicator ``Q2''), we assigned the current 
ASC payment indicators associated with these procedures and continued 
to provide separate payment in CYs 2014, 2015, and 2016.
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for 
CY 2017
    We are proposing to update ASC payment rates for CY 2017 and 
subsequent years using the established rate calculation methodologies 
under Sec.  416.171 and using our proposed modified definition of 
device-intensive procedures, as discussed in section XI.C.1.b. of this 
proposed rule. Because the proposed OPPS relative payment weights are 
based on geometric mean costs for CY 2017 and subsequent years, the ASC 
system will use geometric means to determine proposed relative payment 
weights under the ASC standard methodology. We are proposing to 
continue to use the amount calculated under the ASC standard 
ratesetting methodology for procedures assigned payment indicators 
``A2'' and ``G2.''
    We are proposing that payment rates for office-based procedures 
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive 
procedures (payment indicator ``J8'') be calculated according to our 
established policies and, for device-intensive procedures, using our 
proposed modified definition of device-intensive procedures, as 
discussed in section XI.C.1.b. of this proposed rule. Therefore, we are 
proposing to update the payment amount for the service portion of the 
device-intensive procedures using the ASC standard ratesetting 
methodology and the payment amount for the device portion based on the 
proposed CY 2017 OPPS device offset percentages that have been 
calculated using the standard OPPS APC ratesetting methodology. Payment 
for office-based procedures would be at the lesser of the proposed CY 
2017 MPFS nonfacility PE RVU-based amount or the proposed CY 2017 ASC 
payment amount calculated according to the ASC standard ratesetting 
methodology.
    As we did for CYs 2014, 2015, and 2016, for CY 2017, we are 
proposing to continue our policy for device removal procedures such 
that device removal procedures that are conditionally packaged in the 
OPPS (status indicators ``Q1'' and ``Q2'') would be assigned the 
current ASC payment indicators associated with these procedures and 
would continue to be paid separately under the ASC payment system.
    We are inviting public comments on these proposals.
2. Proposed Payment for Covered Ancillary Services
a. Background
    Our final payment policies under the revised ASC payment system for 
covered ancillary services vary according to the particular type of 
service and its payment policy under the OPPS. Our overall policy 
provides separate ASC payment for certain ancillary items and services 
integrally related to the provision of ASC covered surgical procedures 
that are paid separately under the OPPS and provides packaged ASC 
payment for other ancillary items and services that are packaged or 
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'') 
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 
FR 68457 through 68458), we further clarified our policy regarding the 
payment indicator assignment of codes that are conditionally packaged 
in the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a 
conditionally packaged code describes a HCPCS code where the payment is 
packaged when it is provided with a significant procedure but is 
separately paid when the service appears on the claim without a 
significant procedure. Because ASC services always include a surgical 
procedure, HCPCS codes that are conditionally packaged under the OPPS 
are always packaged (payment indictor ``N1'') under the ASC payment 
system (except for device removal codes as discussed in section IV. of 
this proposed rule). Thus, our final policy generally aligns ASC 
payment bundles with those under the OPPS (72 FR 42495). In all cases, 
in order for those ancillary services also to be paid, ancillary items 
and services must be provided integral to the performance of ASC 
covered surgical procedures for which the ASC bills Medicare.
    Our ASC payment policies provide separate payment for drugs and 
biologicals that are separately paid under the OPPS at the OPPS rates. 
We generally pay for separately payable radiology services at the lower 
of the MPFS nonfacility PE RVU-based (or technical component) amount or 
the rate calculated according to the ASC standard ratesetting 
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators 
for all nuclear medicine procedures (defined as CPT codes in the range 
of 78000 through 78999) that are designated as radiology services that 
are paid separately when provided integral to a surgical procedure on 
the ASC list are set to

[[Page 45703]]

``Z2'' so that payment is made based on the ASC standard ratesetting 
methodology rather than the MPFS nonfacility PE RVU amount, regardless 
of which is lower.
    Similarly, we also finalized our policy to set the payment 
indicator to ``Z2'' for radiology services that use contrast agents so 
that payment for these procedures will be based on the OPPS relative 
payment weight using the ASC standard ratesetting methodology and, 
therefore, will include the cost for the contrast agent (42 CFR 
416.171(d)(2)).
    ASC payment policy for brachytherapy sources mirrors the payment 
policy under the OPPS. ASCs are paid for brachytherapy sources provided 
integral to ASC covered surgical procedures at prospective rates 
adopted under the OPPS or, if OPPS rates are unavailable, at 
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 
have been paid for brachytherapy sources provided integral to ASC 
covered surgical procedures at prospective rates adopted under the 
OPPS.
    Our ASC policies also provide separate payment for: (1) Certain 
items and services that CMS designates as contractor-priced, including, 
but not limited to, the procurement of corneal tissue; and (2) certain 
implantable items that have pass-through payment status under the OPPS. 
These categories do not have prospectively established ASC payment 
rates according to the final policies for the revised ASC payment 
system (72 FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under 
the revised ASC payment system, we have designated corneal tissue 
acquisition and hepatitis B vaccines as contractor-priced. Corneal 
tissue acquisition is contractor-priced based on the invoiced costs for 
acquiring the corneal tissue for transplantation. Hepatitis B vaccines 
are contractor-priced based on invoiced costs for the vaccine.
    Devices that are eligible for pass-through payment under the OPPS 
are separately paid under the ASC payment system and are contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for 
the surgical procedure associated with the pass-through device is made 
according to our standard methodology for the ASC payment system, based 
on only the service (nondevice) portion of the procedure's OPPS 
relative payment weight if the APC weight for the procedure includes 
other packaged device costs. We also refer to this methodology as 
applying a ``device offset'' to the ASC payment for the associated 
surgical procedure. This ensures that duplicate payment is not provided 
for any portion of an implanted device with OPPS pass-through payment 
status.
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 
through 66934), we finalized that, beginning in CY 2015, certain 
diagnostic tests within the medicine range of CPT codes for which 
separate payment is allowed under the OPPS are covered ancillary 
services when they are integral to an ASC covered surgical procedure. 
We finalized that diagnostic tests within the medicine range of CPT 
codes include all Category I CPT codes in the medicine range 
established by CPT, from 90000 to 99999, and Category III CPT codes and 
Level II HCPCS codes that describe diagnostic tests that crosswalk or 
are clinically similar to procedures in the medicine range established 
by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also 
finalized our policy to pay for these tests at the lower of the MPFS 
nonfacility PE RVU-based (or technical component) amount or the rate 
calculated according to the ASC standard ratesetting methodology (79 FR 
66933 through 66934). We finalized that the diagnostic tests for which 
the payment is based on the ASC standard ratesetting methodology be 
assigned to payment indicator ``Z2'' and revised the definition of 
payment indicator ``Z2'' to include reference to diagnostic services 
and those for which the payment is based on the MPFS nonfacility PE 
RVU-based amount be assigned payment indicator ``Z3,'' and revised the 
definition of payment indicator ``Z3'' to include reference to 
diagnostic services.
b. Proposed Payment for Covered Ancillary Services for CY 2017
    For CY 2017 and subsequent years, we are proposing to update the 
ASC payment rates and to make changes to ASC payment indicators as 
necessary to maintain consistency between the OPPS and ASC payment 
system regarding the packaged or separately payable status of services 
and the proposed CY 2017 OPPS and ASC payment rates and subsequent year 
payment rates. We also are proposing to continue to set the CY 2017 ASC 
payment rates and subsequent year payment rates for brachytherapy 
sources and separately payable drugs and biologicals equal to the OPPS 
payment rates for CY 2017 and subsequent year payment rates.
    Consistent with established ASC payment policy (72 FR 42497), we 
are proposing that the CY 2017 payment for separately payable covered 
radiology services be based on a comparison of the proposed CY 2017 
MPFS nonfacility PE RVU-based amounts (we refer readers to the CY 2017 
MPFS proposed rule) and the proposed CY 2017 ASC payment rates 
calculated according to the ASC standard ratesetting methodology and 
then set at the lower of the two amounts (except as discussed below for 
nuclear medicine procedures and radiology services that use contrast 
agents). For CY 2017 and subsequent years, we are proposing that 
payment for a radiology service would be packaged into the payment for 
the ASC covered surgical procedure if the radiology service is packaged 
or conditionally packaged under the OPPS. The payment indicators in 
Addendum BB to this proposed rule (which is available via the Internet 
on the CMS Web site) indicate whether the proposed payment rates for 
radiology services are based on the MPFS nonfacility PE RVU-based 
amount or the ASC standard ratesetting methodology; or whether payment 
for a radiology service is packaged into the payment for the covered 
surgical procedure (payment indicator ``N1''). Radiology services that 
we are proposing to pay based on the ASC standard ratesetting 
methodology in CY 2017 and subsequent years are assigned payment 
indicator ``Z2'' (Radiology or diagnostic service paid separately when 
provided integral to a surgical procedure on ASC list; payment based on 
OPPS relative payment weight), and those for which the proposed payment 
is based on the MPFS nonfacility PE RVU-based amount are assigned 
payment indicator ``Z3'' (Radiology or diagnostic service paid 
separately when provided integral to a surgical procedure on ASC list; 
payment based on MPFS nonfacility PE RVUs).
    As finalized in the CY 2011 OPPS/ASC final rule with comment period 
(75 FR 72050), payment indicators for all nuclear medicine procedures 
(defined as CPT codes in the range of 78000 through 78999) that are 
designated as radiology services that are paid separately when provided 
integral to a surgical procedure on the ASC list are set to ``Z2'' so 
that payment for these procedures will be based on the OPPS relative 
payment weight using the ASC standard ratesetting methodology (rather 
than the MPFS nonfacility PE RVU-based amount, regardless of which is 
lower) and, therefore, will include the cost for the diagnostic 
radiopharmaceutical. We are proposing to continue this modification to 
the payment methodology for CY 2017 and subsequent years and, 
therefore, are proposing to assign payment indicator ``Z2'' to nuclear 
medicine procedures.
    As finalized in the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74429 through 74430), payment

[[Page 45704]]

indicators for radiology services that use contrast agents are set to 
``Z2'' so that payment for these procedures will be based on the OPPS 
relative payment weight using the ASC standard ratesetting methodology 
and, therefore, will include the cost for the contrast agent. We are 
proposing to continue this modification to the payment methodology for 
CY 2017 and subsequent years and, therefore, are proposing to assign 
the payment indicator ``Z2'' to radiology services that use contrast 
agents.
    As finalized in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70471 through 70473), we are proposing to continue in CY 2017 to 
not make separate payment as a covered ancillary service for 
procurement of corneal tissue when used in any noncorneal transplant 
procedure under the ASC payment system. We also are proposing for CY 
2017 ASC payments to continue to designate hepatitis B vaccines as 
contractor-priced based on the invoiced costs for the vaccine, and 
corneal tissue acquisition as contractor-priced based on the invoiced 
costs for acquiring the corneal tissue for transplant.
    Consistent with our established ASC payment policy, we are 
proposing that the CY 2017 payment for devices that are eligible for 
pass-through payment under the OPPS are separately paid under the ASC 
payment system and would be contractor-priced. Currently, the four 
devices that are eligible for pass-through payment in the OPPS are 
described by HCPCS code C1822 (Generator, neurostimulator 
(implantable), high frequency, with rechargeable battery and charging 
system); HCPCS code C2613 (Lung biopsy plug with delivery system); 
HCPCS code C2623 (Catheter, transluminal angioplasty, drug-coated, non-
laser); and HCPCS code C2624 (Implantable wireless pulmonary artery 
pressure sensor with delivery catheter, including all system 
components). Consistent with our current policy, we are proposing for 
CY 2017 that payment for the surgical procedure associated with the 
pass-through device is made according to our standard methodology for 
the ASC payment system, based on only the service (nondevice) portion 
of the procedure's OPPS relative payment weight, if the APC weight for 
the procedure includes similar packaged device costs.
    Consistent with our current policy, we are proposing that certain 
diagnostic tests within the medicine range of CPT codes (that is, all 
Category I CPT codes in the medicine range established by CPT, from 
90000 to 99999, and Category III CPT codes and Level II HCPCS codes 
that describe diagnostic tests that crosswalk or are clinically similar 
to procedures in the medicine range established by CPT) for which 
separate payment is allowed under the OPPS are covered ancillary 
services when they are provided integral to an ASC covered surgical 
procedure. We would pay for these tests at the lower of the MPFS 
nonfacility PE RVU-based (or technical component) amount or the rate 
calculated according to the ASC standard ratesetting methodology (79 FR 
66933 through 66934). There are no additional codes that meet this 
criterion for CY 2017.
    In summary, for CY 2017, we are proposing to continue the 
methodologies for paying for covered ancillary services established for 
CY 2016. Most covered ancillary services and their proposed payment 
indicators for CY 2017 are listed in Addendum BB to this proposed rule 
(which is available via the Internet on the CMS Web site).

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
NTIOLs is as follows:
     Applicants submit their NTIOL requests for review to CMS 
by the annual deadline. For a request to be considered complete, we 
require submission of the information that is found in the guidance 
document entitled ``Application Process and Information Requirements 
for Requests for a New Class of New Technology Intraocular Lenses 
(NTIOLs) or Inclusion of an IOL in an Existing NTIOL Class'' posted on 
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
     We announce annually, in the proposed rule updating the 
ASC and OPPS payment rates for the following calendar year, a list of 
all requests to establish new NTIOL classes accepted for review during 
the calendar year in which the proposal is published. In accordance 
with section 141(b)(3) of Public Law 103-432 and our regulations at 42 
CFR 416.185(b), the deadline for receipt of public comments is 30 days 
following publication of the list of requests in the proposed rule.
     In the final rule updating the ASC and OPPS payment rates 
for the following calendar year, we--
    ++ Provide a list of determinations made as a result of our review 
of all new NTIOL class requests and public comments;
    ++ When a new NTIOL class is created, identify the predominant 
characteristic of NTIOLs in that class that sets them apart from other 
IOLs (including those previously approved as members of other expired 
or active NTIOL classes) and that is associated with an improved 
clinical outcome.
    ++ Set the date of implementation of a payment adjustment in the 
case of approval of an IOL as a member of a new NTIOL class 
prospectively as of 30 days after publication of the ASC payment update 
final rule, consistent with the statutory requirement.
    ++ Announce the deadline for submitting requests for review of an 
application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2017
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2017 by March 1, 2016, the due date published in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70497).
3. Payment Adjustment
    The current payment adjustment for a 5-year period from the 
implementation date of a new NTIOL class is $50 per lens. Since 
implementation of the process for adjustment of payment amounts for 
NTIOLs in 1999, we have not revised the payment adjustment amount, and 
we are not proposing to revise the payment adjustment amount for CY 
2017.

F. Proposed ASC Payment and Comment Indicators

1. Background
    In addition to the payment indicators that we introduced in the 
August 2, 2007 final rule, we created final comment indicators for the 
ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy 
relevant characteristics of HCPCS codes that may receive packaged or 
separate payment in ASCs, such as whether they were on the ASC list of 
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment 
methodology; and their classification as

[[Page 45705]]

separately payable ancillary services, including radiology services, 
brachytherapy sources, OPPS pass-through devices, corneal tissue 
acquisition services, drugs or biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators used in Addenda AA and BB to the proposed 
rules and final rules with comment period serve to identify, for the 
revised ASC payment system, the status of a specific HCPCS code and its 
payment indicator with respect to the timeframe when comments will be 
accepted. The comment indicator ``NP'' is used in the OPPS/ASC proposed 
rule to indicate new codes for the next calendar year for which the 
interim payment indicator assigned is subject to comment. The comment 
indicator ``NP'' also is assigned to existing codes with substantial 
revisions to their descriptors such that we consider them to be 
describing new services, as discussed in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60622). In the CY 2017 OPPS/ASC final 
rule with comment period, we will respond to public comments and 
finalize the ASC treatment of all codes that are labeled with comment 
indicator ``NP'' in Addenda AA and BB to the CY 2016 OPPS/ASC final 
rule with comment period.
    The ``CH'' comment indicator is used in Addenda AA and BB to this 
proposed rule (which are available via the Internet on the CMS Web 
site) to indicate that the payment indicator assignment has changed for 
an active HCPCS code in the current year and the next calendar year; an 
active HCPCS code is newly recognized as payable in ASCs; or an active 
HCPCS code is discontinued at the end of the current calendar year. The 
``CH'' comment indicators that are published in the final rule with 
comment period are provided to alert readers that a change has been 
made from one calendar year to the next, but do not indicate that the 
change is subject to comment.
2. Proposed ASC Payment and Comment Indicators
    For CY 2017 and subsequent years, we are proposing to continue 
using the current comment indicators of ``NP'' and ``CH.'' For CY 2017, 
there are new and revised Category I and III CPT codes as well as new 
and revised Level II HCPCS codes. Therefore, we are proposing that 
Category I and III CPT codes that are new and revised for CY 2017 and 
any new and existing Level II HCPCS codes with substantial revisions to 
the code descriptors for CY 2017 compared to the CY 2016 descriptors 
that are included in ASC Addenda AA and BB to this CY 2017 OPPS/ASC 
proposed rule would be labeled with proposed new comment indicator 
``NP'' to indicate that these CPT and Level II HCPCS codes are open for 
comment as part of this CY 2017 OPPS/ASC proposed rule. Proposed new 
comment indicator ``NP'' means a new code for the next calendar year or 
an existing code with substantial revision to its code descriptor in 
the next calendar year as compared to current calendar year; comments 
will be accepted on the proposed ASC payment indicator for the new 
code.
    We will respond to public comments on ASC payment and comment 
indicators and finalize their ASC assignment in the CY 2017 OPPS/ASC 
final rule with comment period. We refer readers to Addenda DD1 and DD2 
to this proposed rule (which are available via the Internet on the CMS 
Web site) for the complete list of ASC payment and comment indicators 
proposed for the CY 2017 update.

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

1. Background
    In the August 2, 2007 final rule (72 FR 42493), we established our 
policy to base ASC relative payment weights and payment rates under the 
revised ASC payment system on APC groups and the OPPS relative payment 
weights. Consistent with that policy and the requirement at section 
1833(i)(2)(D)(ii) of the Act that the revised payment system be 
implemented so that it would be budget neutral, the initial ASC 
conversion factor (CY 2008) was calculated so that estimated total 
Medicare payments under the revised ASC payment system in the first 
year would be budget neutral to estimated total Medicare payments under 
the prior (CY 2007) ASC payment system (the ASC conversion factor is 
multiplied by the relative payment weights calculated for many ASC 
services in order to establish payment rates). That is, application of 
the ASC conversion factor was designed to result in aggregate Medicare 
expenditures under the revised ASC payment system in CY 2008 being 
equal to aggregate Medicare expenditures that would have occurred in CY 
2008 in the absence of the revised system, taking into consideration 
the cap on ASC payments in CY 2007 as required under section 
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the 
system budget neutral in subsequent calendar years (72 FR 42532 through 
42533; 42 CFR 416.171(e)).
    We note that we consider the term ``expenditures'' in the context 
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of 
the Act to mean expenditures from the Medicare Part B Trust Fund. We do 
not consider expenditures to include beneficiary coinsurance and 
copayments. This distinction was important for the CY 2008 ASC budget 
neutrality model that considered payments across the OPPS, ASC, and 
MPFS payment systems. However, because coinsurance is almost always 20 
percent for ASC services, this interpretation of expenditures has 
minimal impact for subsequent budget neutrality adjustments calculated 
within the revised ASC payment system.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 
through 66858), we set out a step-by-step illustration of the final 
budget neutrality adjustment calculation based on the methodology 
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531) 
and as applied to updated data available for the CY 2008 OPPS/ASC final 
rule with comment period. The application of that methodology to the 
data available for the CY 2008 OPPS/ASC final rule with comment period 
resulted in a budget neutrality adjustment of 0.65.
    For CY 2008, we adopted the OPPS relative payment weights as the 
ASC relative payment weights for most services and, consistent with the 
final policy, we calculated the CY 2008 ASC payment rates by 
multiplying the ASC relative payment weights by the final CY 2008 ASC 
conversion factor of $41.401. For covered office-based surgical 
procedures, covered ancillary radiology services (excluding covered 
ancillary radiology services involving certain nuclear medicine 
procedures or involving the use of contrast agents, as discussed in 
section XII.D.2. of this proposed rule), and certain diagnostic tests 
within the medicine range that are covered ancillary services, the 
established policy is to set the payment rate at the lower of the MPFS 
unadjusted nonfacility PE RVU-based amount or the amount calculated 
using the ASC standard ratesetting methodology. Further, as discussed 
in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66841 
through 66843), we also adopted alternative ratesetting methodologies 
for specific types of services (for example, device-intensive 
procedures).
    As discussed in the August 2, 2007 final rule (72 FR 42517 through 
42518) and as codified at Sec.  416.172(c) of the regulations, the 
revised ASC payment

[[Page 45706]]

system accounts for geographic wage variation when calculating 
individual ASC payments by applying the pre-floor and pre-reclassified 
IPPS hospital wage indexes to the labor-related share, which is 50 
percent of the ASC payment amount based on a GAO report of ASC costs 
using 2004 survey data. Beginning in CY 2008, CMS accounted for 
geographic wage variation in labor cost when calculating individual ASC 
payments by applying the pre-floor and pre-reclassified hospital wage 
index values that CMS calculates for payment under the IPPS, using 
updated Core Based Statistical Areas (CBSAs) issued by OMB in June 
2003.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to hospitals. We believe that using the most recently 
available pre-floor and pre-reclassified IPPS hospital wage indexes 
results in the most appropriate adjustment to the labor portion of ASC 
costs. We continue to believe that the unadjusted hospital wage 
indexes, which are updated yearly and are used by many other Medicare 
payment systems, appropriately account for geographic variation in 
labor costs for ASCs. Therefore, the wage index for an ASC is the pre-
floor and pre-reclassified hospital wage index under the IPPS of the 
CBSA that maps to the CBSA where the ASC is located.
    On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which 
provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010 in the Federal Register (75 FR 37246 through 37252) and 2010 
Census Bureau data. (A copy of this bulletin may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf). In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 
49963), we implemented the use of the CBSA delineations issued by OMB 
in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY 
2015. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66937), we finalized a 1-year transition policy that we applied in CY 
2015 for all ASCs that experienced any decrease in their actual wage 
index exclusively due to the implementation of the new OMB 
delineations. This transition does not apply in CY 2017.
    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 and ASC 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.
    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25062), we 
proposed to implement these revisions, effective October 1, 2016, 
beginning with the FY 2017 wage indexes. In the FY 2017 IPPS/LTCH PPS 
proposed rule, we proposed to use these new definitions to calculate 
area IPPS 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. We believe that it is important for the ASC payment 
system 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. Therefore, for purposes of the ASC 
payment system, we are proposing to implement these revisions to the 
OMB statistical area delineations effective January 1, 2017, beginning 
with the CY 2017 ASC wage indexes. We are inviting public comments on 
these proposals.
    For CY 2017, the proposed CY 2017 ASC wage indexes fully reflect 
the new OMB labor market area delineations (including the revisions to 
the OMB labor market delineations discussed above, as set forth in OMB 
Bulletin No. 15-01).
    We note that, in certain instances, there might be urban or rural 
areas for which there is no IPPS hospital that has wage index data that 
could be used to set the wage index for that area. For these areas, our 
policy has been to use the average of the wage indexes for CBSAs (or 
metropolitan divisions as applicable) that are contiguous to the area 
that has no wage index (where ``contiguous'' is defined as sharing a 
border). For example, for CY 2014, we applied a proxy wage index based 
on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort 
Stewart, GA) and CBSA 08 (Rural Delaware).
    When all of the areas contiguous to the urban CBSA of interest are 
rural and there is no IPPS hospital that has wage index data that could 
be used to set the wage index for that area, we determine the ASC wage 
index by calculating the average of all wage indexes for urban areas in 
the State (75 FR 72058 through 72059). (In other situations, where 
there are no IPPS hospitals located in a relevant labor market area, we 
will continue our current policy of calculating an urban or rural 
area's wage index by calculating the average of the wage indexes for 
CBSAs (or metropolitan divisions where applicable) that are contiguous 
to the area with no wage index.)
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2017 and Future 
Years
    We update the ASC relative payment weights each year using the 
national OPPS relative payment weights (and MPFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly 
scale the

[[Page 45707]]

ASC relative payment weights for each update year to make them budget 
neutral (72 FR 42533). Consistent with our established policy, we are 
proposing to scale the CY 2017 relative payment weights for ASCs 
according to the following method. Holding ASC utilization, the ASC 
conversion factor, and the mix of services constant from CY 2015, we 
are proposing to compare the total payment using the CY 2016 ASC 
relative payment weights with the total payment using the CY 2017 ASC 
relative payment weights to take into account the changes in the OPPS 
relative payment weights between CY 2016 and CY 2017. We are proposing 
to use the ratio of CY 2016 to CY 2017 total payment (the weight 
scalar) to scale the ASC relative payment weights for CY 2017. The 
proposed CY 2017 ASC scalar is 0.9030 and scaling would apply to the 
ASC relative payment weights of the covered surgical procedures, 
covered ancillary radiology services, and certain diagnostic tests 
within the medicine range of CPT codes which are covered ancillary 
services for which the ASC payment rates are based on OPPS relative 
payment weights.
    Scaling would not apply in the case of ASC payment for separately 
payable covered ancillary services that have a predetermined national 
payment amount (that is, their national ASC payment amounts are not 
based on OPPS relative payment weights), such as drugs and biologicals 
that are separately paid or services that are contractor-priced or paid 
at reasonable cost in ASCs. Any service with a predetermined national 
payment amount would be included in the ASC budget neutrality 
comparison, but scaling of the ASC relative payment weights would not 
apply to those services. The ASC payment weights for those services 
without predetermined national payment amounts (that is, those services 
with national payment amounts that would be based on OPPS relative 
payment weights) would be scaled to eliminate any difference in the 
total payment between the current year and the update year.
    For any given year's ratesetting, we typically use the most recent 
full calendar year of claims data to model budget neutrality 
adjustments. At the time of this proposed rule, we have available 98 
percent of CY 2015 ASC claims data.
    To create an analytic file to support calculation of the weight 
scalar and budget neutrality adjustment for the wage index (discussed 
below), we summarized available CY 2015 ASC claims by ASC and by HCPCS 
code. We used the National Provider Identifier for the purpose of 
identifying unique ASCs within the CY 2015 claims data. We used the 
supplier zip code reported on the claim to associate State, county, and 
CBSA with each ASC. This file, available to the public as a supporting 
data file for this proposed rule, is posted on the CMS Web site at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Updating the ASC Conversion Factor
    Under the OPPS, we typically apply a budget neutrality adjustment 
for provider level changes, most notably a change in the wage index 
values for the upcoming year, to the conversion factor. Consistent with 
our final ASC payment policy, for the CY 2017 ASC payment system and 
subsequent years, we are proposing to calculate and apply a budget 
neutrality adjustment to the ASC conversion factor for supplier level 
changes in wage index values for the upcoming year, just as the OPPS 
wage index budget neutrality adjustment is calculated and applied to 
the OPPS conversion factor. For CY 2017, we calculated this proposed 
adjustment for the ASC payment system by using the most recent CY 2015 
claims data available and estimating the difference in total payment 
that would be created by introducing the proposed CY 2017 ASC wage 
indexes. Specifically, holding CY 2015 ASC utilization and service-mix 
and the proposed CY 2017 national payment rates after application of 
the weight scalar constant, we calculated the total adjusted payment 
using the CY 2016 ASC wage indexes (which reflect the new OMB 
delineations and include any applicable transition period) and the 
total adjusted payment using the proposed CY 2017 ASC wage indexes 
(which would fully reflect the new OMB delineations). We used the 50-
percent labor-related share for both total adjusted payment 
calculations. We then compared the total adjusted payment calculated 
with the CY 2016 ASC wage indexes to the total adjusted payment 
calculated with the proposed CY 2017 ASC wage indexes and applied the 
resulting ratio of 0.9992 (the proposed CY 2017 ASC wage index budget 
neutrality adjustment) to the CY 2016 ASC conversion factor to 
calculate the proposed CY 2017 ASC conversion factor.
    Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary 
has not updated amounts established under the revised ASC payment 
system in a calendar year, the payment amounts shall be increased by 
the percentage increase in the Consumer Price Index for all urban 
consumers (CPI-U), U.S. city average, as estimated by the Secretary for 
the 12-month period ending with the midpoint of the year involved. 
Therefore, the statute does not mandate the adoption of any particular 
update mechanism, but it requires the payment amounts to be increased 
by the CPI-U in the absence of any update. Because the Secretary 
updates the ASC payment amounts annually, we adopted a policy, which we 
codified at 42 CFR 416.171(a)(2)(ii), to update the ASC conversion 
factor using the CPI-U for CY 2010 and subsequent calendar years. 
Therefore, the annual update to the ASC payment system is the CPI-U 
(referred to as the CPI-U update factor).
    Section 3401(k) of the Affordable Care Act amended section 
1833(i)(2)(D) of the Act by adding a new clause (v) which requires that 
any annual update under the ASC payment system for the year, after 
application of clause (iv), shall be reduced by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act, 
effective with the calendar year beginning January 1, 2011. The statute 
defines the productivity adjustment to be equal to the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multifactor productivity (MFP) (as projected by the Secretary for the 
10-year period ending with the applicable fiscal year, year, cost 
reporting period, or other annual period) (the ``MFP adjustment''). 
Clause (iv) of section 1833(i)(2)(D) of the Act authorizes the 
Secretary to provide for a reduction in any annual update for failure 
to report on quality measures. Clause (v) of section 1833(i)(2)(D) of 
the Act states that application of the MFP adjustment to the ASC 
payment system may result in the update to the ASC payment system being 
less than zero for a year and may result in payment rates under the ASC 
payment system for a year being less than such payment rates for the 
preceding year.
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74516), we finalized a policy that ASCs begin submitting data on 
quality measures for services beginning on October 1, 2012 for the CY 
2014 payment determination under the ASC Quality Reporting (ASCQR) 
Program. In the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68499 through 68500), we finalized a methodology to calculate reduced 
national unadjusted payment rates using the ASCQR Program reduced 
update conversion factor that would apply to ASCs that fail to meet 
their quality reporting requirements for the CY 2014 payment 
determination and subsequent years. The application of the

[[Page 45708]]

2.0 percentage point reduction to the annual update factor, which 
currently is the CPI-U, may result in the update to the ASC payment 
system being less than zero for a year for ASCs that fail to meet the 
ASCQR Program requirements. We amended Sec. Sec.  416.160(a)(1) and 
416.171 to reflect these policies.
    In accordance with section 1833(i)(2)(C)(i) of the Act, before 
applying the MFP adjustment, the Secretary first determines the 
``percentage increase'' in the CPI-U, which we interpret cannot be a 
negative percentage. Thus, in the instance where the percentage change 
in the CPI-U for a year is negative, we would hold the CPI-U update 
factor for the ASC payment system to zero. For the CY 2014 payment 
determination and subsequent years, under section 1833(i)(2)(D)(iv) of 
the Act, we would reduce the annual update by 2.0 percentage points for 
an ASC that fails to submit quality information under the rules 
established by the Secretary in accordance with section 1833(i)(7) of 
the Act. Section 1833(i)(2)(D)(v) of the Act, as added by section 
3401(k) of the Affordable Care Act, requires that the Secretary reduce 
the annual update factor, after application of any quality reporting 
reduction, by the MFP adjustment, and states that application of the 
MFP adjustment to the annual update factor after application of any 
quality reporting reduction may result in the update being less than 
zero for a year. If the application of the MFP adjustment to the annual 
update factor after application of any quality reporting reduction 
would result in an MFP-adjusted update factor that is less than zero, 
the resulting update to the ASC payment rates would be negative and 
payments would decrease relative to the prior year. We refer readers to 
the CY 2011 OPPS/ASC final rule with comment period (75 FR 72062 
through 72064) for examples of how the MFP adjustment is applied to the 
ASC payment system.
    For this proposed rule, based on IHS Global Insight's (IGI's) 2016 
first quarter forecast with historical data through the fourth quarter 
of 2015, for the 12-month period ending with the midpoint of CY 2017, 
the CPI-U update is projected to be 1.7 percent. Also, based on IGI's 
2016 first quarter forecast, the MFP adjustment for the period ending 
with the midpoint of CY 2017 is projected to be 0.5 percent. We 
finalized the methodology for calculating the MFP adjustment in the CY 
2011 MPFS final rule with comment period (75 FR 73394 through 73396) 
and revised it in the CY 2012 MPFS final rule with comment period (76 
FR 73300 through 73301) and the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70500 through 70501).
    As we discussed in the CY 2011 MPFS final rule with comment period, 
section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the 
Affordable Care Act, requires that any annual update to the ASC payment 
system after application of the quality adjustment be reduced by the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the 
productivity adjustment to be equal to the 10-year moving average of 
changes in annual economy-wide private nonfarm business multifactor 
productivity (MFP) (as projected by the Secretary for the 10-year 
period ending with the applicable fiscal year, year, cost reporting 
period, or other annual period). 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 IHS Global Insight, Inc. (IGI), a 
nationally recognized economic forecasting firm with which CMS 
contracts to forecast the components of MFP. As we discussed in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70500 through 
70501), beginning with the CY 2016 rulemaking cycle, the MFP adjustment 
is calculated using a revised series developed by IGI to proxy the 
aggregate capital inputs. Specifically, 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 CY 2016 OPPS/ASC final rule with comment period (80 FR 70500 
through 70501), if IGI makes changes to the MFP methodology, we will 
announce them on our Web site rather than in the annual rulemaking.
    For CY 2017, we are proposing to reduce the CPI-U update of 1.7 
percent by the MFP adjustment of 0.5 percentage point, resulting in an 
MFP-adjusted CPI-U update factor of 1.2 percent for ASCs meeting the 
quality reporting requirements. Therefore, we are proposing to apply a 
1.2 percent MFP-adjusted CPI-U update factor to the CY 2016 ASC 
conversion factor for ASCs meeting the quality reporting requirements. 
The ASCQR Program affected payment rates beginning in CY 2014 and, 
under this program, there is a 2.0 percentage point reduction to the 
CPI-U for ASCs that fail to meet the ASCQR Program requirements. We are 
proposing to reduce the CPI-U update of 1.7 percent by 2.0 percentage 
points for ASCs that do not meet the quality reporting requirements and 
then apply the 0.5 percentage point MFP reduction. Therefore, we are 
proposing to apply a -0.8 percent quality reporting/MFP-adjusted CPI-U 
update factor to the CY 2016 ASC conversion factor for ASCs not meeting 
the quality reporting requirements. We also are proposing that if more 
recent data are subsequently available (for example, a more recent 
estimate of the CY 2017 CPI-U update and MFP adjustment), we would use 
such data, if appropriate, to determine the CY 2017 ASC update for the 
final rule with comment period.
    For CY 2017, we are proposing to adjust the CY 2016 ASC conversion 
factor ($44.190) by the proposed wage index budget neutrality factor of 
0.9992 in addition to the MFP-adjusted CPI-U update factor of 1.2 
percent discussed above, which results in a proposed CY 2017 ASC 
conversion factor of $44.684 for ASCs meeting the quality reporting 
requirements. For ASCs not meeting the quality reporting requirements, 
we are proposing to adjust the CY 2016 ASC conversion factor ($44.190) 
by the proposed wage index budget neutrality factor of 0.9992 in 
addition to the quality reporting/MFP-adjusted CPI-U update factor of -
0.8 percent discussed above, which results in a proposed CY 2017 ASC 
conversion factor of $43.801.
    We are inviting public comments on these proposals.
3. Display of Proposed CY 2017 ASC Payment Rates
    Addenda AA and BB to this proposed rule (which are available via 
the Internet on the CMS Web site) display the proposed updated ASC 
payment rates for CY 2017 for covered surgical procedures and covered 
ancillary services, respectively. For those covered surgical procedures 
and covered ancillary services where the payment rate is the lower of 
the proposed rates under the ASC standard ratesetting methodology and 
the MPFS proposed rates, the proposed payment indicators and rates set 
forth in this proposed rule are based on a comparison using the 
proposed MPFS rates that would be effective January 1, 2017. For a 
discussion of the MPFS rates, we refer

[[Page 45709]]

readers to the CY 2017 MPFS proposed rule.
    The proposed payment rates included in these addenda reflect the 
full ASC payment update and not the reduced payment update used to 
calculate payment rates for ASCs not meeting the quality reporting 
requirements under the ASCQR Program. These addenda contain several 
types of information related to the proposed CY 2017 payment rates. 
Specifically, in Addendum AA, a ``Y'' in the column titled ``Proposed 
to be Subject to Multiple Procedure Discounting'' indicates that the 
surgical procedure would be subject to the multiple procedure payment 
reduction policy. As discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66829 through 66830), most covered surgical 
procedures are subject to a 50-percent reduction in the ASC payment for 
the lower-paying procedure when more than one procedure is performed in 
a single operative session.
    Display of the comment indicator ``CH'' in the column titled 
``Comment Indicator'' indicates a change in payment policy for the item 
or service, including identifying discontinued HCPCS codes, designating 
items or services newly payable under the ASC payment system, and 
identifying items or services with changes in the ASC payment indicator 
for CY 2017. Display of the comment indicator ``NI'' in the column 
titled ``Comment Indicator'' indicates that the code is new (or 
substantially revised) and that comments will be accepted on the 
interim payment indicator for the new code. Display of the comment 
indicator ``NP'' in the column titled ``Comment Indicator'' indicates 
that the code is new (or substantially revised) and that comments will 
be accepted on the proposed ASC payment indicator assignments for the 
new code.
    The values displayed in the column titled ``Proposed CY 2017 
Payment Weight'' are the proposed relative payment weights for each of 
the listed services for CY 2017. The proposed relative payment weights 
for all covered surgical procedures and covered ancillary services 
where the ASC payment rates are based on OPPS relative payment weights 
were scaled for budget neutrality. Therefore, scaling was not applied 
to the device portion of the device-intensive procedures, services that 
are paid at the MPFS nonfacility PE RVU-based amount, separately 
payable covered ancillary services that have a predetermined national 
payment amount, such as drugs and biologicals and brachytherapy sources 
that are separately paid under the OPPS, or services that are 
contractor-priced or paid at reasonable cost in ASCs.
    To derive the proposed CY 2017 payment rate displayed in the 
``Proposed CY 2017 Payment Rate'' column, each ASC payment weight in 
the ``Proposed CY 2017 Payment Weight'' column was multiplied by the 
proposed CY 2017 conversion factor of $44.684. The proposed conversion 
factor includes a budget neutrality adjustment for changes in the wage 
index values and the annual update factor as reduced by the 
productivity adjustment (as discussed in section XII.G.2.b. of this 
proposed rule).
    In Addendum BB, there are no relative payment weights displayed in 
the ``Proposed CY 2017 Payment Weight'' column for items and services 
with predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Proposed CY 2017 Payment'' column displays 
the proposed CY 2017 national unadjusted ASC payment rates for all 
items and services. The proposed CY 2017 ASC payment rates listed in 
Addendum BB for separately payable drugs and biologicals are based on 
ASP data used for payment in physicians' offices in April 2016.
    Addendum EE provides the HCPCS codes and short descriptors for 
surgical procedures that are proposed to be excluded from payment in 
ASCs for CY 2017. We are inviting public comment on these proposals.

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

A. Background

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

[[Page 45710]]

2. Statutory History of the Hospital OQR Program
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72064 through 72065) for a detailed discussion of the 
statutory history of the Hospital OQR Program.

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality 
Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74458 through 74460) for a detailed discussion of the 
priorities we consider for the Hospital OQR Program quality measure 
selection. We are not proposing any changes to our measure selection 
policy.
2. Retention of Hospital OQR Program Measures Adopted in Previous 
Payment Determinations
    We previously adopted a policy to retain measures from the previous 
year's Hospital OQR Program measure set for subsequent years' measure 
sets in the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68471). Quality measures adopted in a previous year's rulemaking are 
retained in the Hospital OQR Program for use in subsequent years unless 
otherwise specified. We refer readers to that rule for more 
information. We are not proposing any changes to our retention policy 
for previously adopted measures.
3. Removal of Quality Measures From the Hospital OQR Program Measure 
Set
a. Considerations in Removing Quality Measures From the Hospital OQR 
Program
    In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863), for the 
Hospital IQR Program, we finalized a process for immediate retirement, 
which we later termed ``removal,'' of Hospital IQR Program measures 
based on evidence that the continued use of the measure as specified 
raised patient safety concerns. We adopted the same immediate measure 
retirement policy for the Hospital OQR Program in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60634 through 60635). We refer 
readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68472 through 68473) for a discussion of our reasons for changing the 
term ``retirement'' to ``removal'' in the Hospital OQR Program. We are 
not proposing any changes to our policy to immediately remove measures 
as a result of patient safety concerns.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized a set of criteria for determining whether to remove measures 
from the Hospital OQR Program. We refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68472 through 68473) for a 
discussion of our policy on removal of quality measures from the 
Hospital OQR Program. The benefits of removing a measure from the 
Hospital OQR Program will be assessed on a case-by-case basis (79 FR 
66941 through 66942). We note that, under this case-by-case approach, a 
measure will not be removed solely on the basis of meeting any specific 
criterion. We refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68472 through 68473) for our list of factors 
considered in removing measures from the Hospital OQR Program.
    We are not proposing any changes to our measure removal policy.
b. Criteria for Removal of ``Topped-Out'' Measures
    We refer readers to CY 2015 OPPS/ASC final rule with comment period 
where we finalized our proposal to refine the criteria for determining 
when a measure is ``topped-out'' (79 FR 66942). We are not proposing 
any changes to our ``topped-out'' criteria policy.
4. Hospital OQR Program Quality Measures Adopted in Previous Rulemaking
    We refer readers to the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70516) for the previously finalized measure set for the 
Hospital OQR Program CY 2019 payment determination and subsequent 
years. These measures also are listed below.

   Hospital OQR Program Measure Set Previously Adopted for the CY 2019
               Payment Determination and Subsequent Years
------------------------------------------------------------------------
         NQF No.                            Measure name
------------------------------------------------------------------------
0287.....................  OP-1: Median Time to Fibrinolysis.[dagger]
0288.....................  OP-2: Fibrinolytic Therapy Received Within 30
                            Minutes of ED Arrival.
0290.....................  OP-3: Median Time to Transfer to Another
                            Facility for Acute Coronary Intervention.
0286.....................  OP-4: Aspirin at Arrival.[dagger]
0289.....................  OP-5: Median Time to ECG.[dagger]
0514.....................  OP-8: MRI Lumbar Spine for Low Back Pain.
N/A......................  OP-9: Mammography Follow-up Rates.
N/A......................  OP-10: Abdomen CT--Use of Contrast Material.
0513.....................  OP-11: Thorax CT--Use of Contrast Material.
N/A......................  OP-12: The Ability for Providers with HIT to
                            Receive Laboratory Data Electronically
                            Directly into their ONC-Certified EHR System
                            as Discrete Searchable Data.
0669.....................  OP-13: Cardiac Imaging for Preoperative Risk
                            Assessment for Non-Cardiac, Low-Risk
                            Surgery.
N/A......................  OP-14: Simultaneous Use of Brain Computed
                            Tomography (CT) and Sinus Computed
                            Tomography (CT).
0491.....................  OP-17: Tracking Clinical Results between
                            Visits.[dagger]
0496.....................  OP-18: Median Time from ED Arrival to ED
                            Departure for Discharged ED Patients.
N/A......................  OP-20: Door to Diagnostic Evaluation by a
                            Qualified Medical Professional.
0662.....................  OP-21: Median Time to Pain Management for
                            Long Bone Fracture.
0499.....................  OP-22: ED--Left Without Being Seen.[dagger]
0661.....................  OP-23: Head CT or MRI Scan Results for Acute
                            Ischemic Stroke or Hemorrhagic Stroke who
                            Received Head CT or MRI Scan Interpretation
                            Within 45 minutes of ED Arrival.
N/A......................  OP-25: Safe Surgery Checklist Use.
N/A......................  OP-26: Hospital Outpatient Volume on Selected
                            Outpatient Surgical Procedures.*
0431.....................  OP-27: Influenza Vaccination Coverage among
                            Healthcare Personnel.
0658.....................  OP-29: Appropriate Follow-Up Interval for
                            Normal Colonoscopy in Average Risk
                            Patients.**
0659.....................  OP-30: Colonoscopy Interval for Patients with
                            a History of Adenomatous Polyps--Avoidance
                            of Inappropriate Use.**
1536.....................  OP-31: Cataracts--Improvement in Patient's
                            Visual Function within 90 Days Following
                            Cataract Surgery.***
2539.....................  OP-32: Facility 7-Day Risk-Standardized
                            Hospital Visit Rate after Outpatient
                            Colonoscopy.

[[Page 45711]]

 
1822.....................  OP-33: External Beam Radiotherapy for Bone
                            Metastases.
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** We note that measure name was revised to reflect NQF title.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
  through 66947).

5. Proposed New Hospital OQR Program Quality Measures for the CY 2020 
Payment Determinations and Subsequent Years
    In this proposed rule, for the CY 2020 payment determination and 
subsequent years, we are proposing a total of seven new measures--two 
of which are claims-based measures and five of which are Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures. The claims-based measures 
are: (1) OP-35: Admissions and Emergency Department Visits for Patients 
Receiving Outpatient Chemotherapy; and (2) OP-36: Hospital Visits after 
Hospital Outpatient Surgery (NQF #2687). The OAS CAHPS Survey-based 
measures are: (1) OP-37a: OAS CAHPS--About Facilities and Staff; (2) 
OP-37b: OAS CAHPS--Communication About Procedure; (3) OP-37c: OAS 
CAHPS--Preparation for Discharge and Recovery; (4) OP-37d: OAS CAHPS--
Overall Rating of Facility; and (5) OP-37e: OAS CAHPS--Recommendation 
of Facility. We discuss these measures in detail below.
a. OP-35: Admissions and Emergency Department (ED) Visits for Patients 
Receiving Outpatient Chemotherapy Measure
(1) Background
    Cancer care is a priority area for outcome measurement, because 
cancer is an increasingly prevalent condition associated with 
considerable morbidity and mortality. In 2015, there were more than 1.6 
million new cases of cancer in the United States.\5\ Each year, about 
22 percent of cancer patients receive chemotherapy,\6\ with Medicare 
payments for cancer treatment totaling $34.4 billion in 2011, almost 10 
percent of Medicare fee-for-service (FFS) dollars.\7\ With an 
increasing number of cancer patients receiving chemotherapy in a 
hospital outpatient department,\8\ a growing body of peer-reviewed 
literature identifies unmet needs in the care provided to these 
patients. This gap in care may be due to reasons including: (1) The 
large burden and delayed onset of chemotherapy side effects that 
patients must manage at home; (2) patients' assumption that little can 
be done about their symptoms, which leads to them to not seek medical 
assistance; and (3) limited access to providers who can tailor care to 
the individual.\9\ As a result, cancer patients who receive 
chemotherapy in a hospital outpatient department require more frequent 
acute care in the hospital setting and experience more adverse events 
than cancer patients who are not receiving chemotherapy.\10\ \11\ \12\
---------------------------------------------------------------------------

    \5\ American Cancer Society. ``Cancer Facts & Figures 2015.'' 
Available at: http://www.cancer.org/acs/groups/content/@editorial/documents/document/acspc-044552.pdf.
    \6\ Klodziej, M., J.R. Hoverman, J.S. Garey, J. Espirito, S. 
Sheth, A. Ginsburg, M.A. Neubauer, D. Patt, B. Brooks, C. White, M. 
Sitarik, R. Anderson, and R. Beveridgel. ``Benchmarks for Value in 
Cancer Care: An Analysis of a Large Commercial Population.'' Journal 
of Oncology Practice, Vol. 7, 2011, pp. 301-306.
    \7\ Sockdale, H., K. Guillory. ``Lifeline: Why Cancer Patients 
Depend on Medicare for Critical Coverage.'' Available at: http://www.acscan.org/content/wp-content/uploads/2013/06/2013-Medicare-Chartbook-Online-Version.pdf.
    \8\ Vandervelde, Aaron, Henry Miller, and JoAnna Younts. 
``Impact on Medicare Payments of Shift in Site of Care for 
Chemotherapy Administration.'' Washington, DC: Berkeley Research 
Group, June 2014. Available at: http://www.communityoncology.org/UserFiles/BRG_340B_SiteofCare_ReportF_6-9-14.pdf. Accessed September 
16, 2015.
    \9\ McKenzie, H., L. Hayes, K. White, K. Cox, J. Fethney, M. 
Boughton, and J. Dunn. ``Chemotherapy Outpatients' Unplanned 
Presentations to Hospital: A Retrospective Study.'' Supportive Care 
in Cancer, Vol. 19, No. 7, 2011, pp. 963-969.
    \10\ Sadik, M., K. Ozlem, M. Huseyin, B. AliAyberk, S. Ahmet, 
and O. Ozgur. ``Attributes of Cancer Patients Admitted to the 
Emergency Department in One Year.'' World Journal of Emergency 
Medicine, Vol. 5, No. 2, 2014, pp. 85-90. Available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4129880/#ref4.
    \11\ Hassett, M.J., J. O'Malley, J.R. Pakes, J.P. Newhouse, and 
C.C. Earle. ``Frequency and Cost of Chemotherapy-Related Serious 
Adverse Effects in a Population Sample of Women with Breast 
Cancer.'' Journal of the National Cancer Institute, Vol. 98, No. 16, 
2006, pp. 1108-1117.
    \12\ Foltran, L., G. Aprile, F.E. Pisa, P. Ermacora, N. Pella, 
E. Iaiza, E. Poletto, SE. Lutrino, M. Mazzer, M. Giovannoni, G.G. 
Cardellino, F. Puglisi, and G. Fasola. ``Risk of Unplanned Visits 
for Colorectal Cancer Outpatients Receiving Chemotherapy: A Case-
Crossover Study.'' Supportive Care in Cancer, Vol. 22, No. 9, 2014, 
pp. 2527-2533.
---------------------------------------------------------------------------

    Hospital admissions and ED visits among cancer patients receiving 
chemotherapy often are caused by predictable, and manageable, side 
effects from treatment. Recent studies of patients receiving 
chemotherapy in the outpatient setting show the most commonly cited 
symptoms and reasons for hospital visits are pain, anemia, fatigue, 
nausea and/or vomiting, fever and/or febrile neutropenia, shortness of 
breath, dehydration, diarrhea, and anxiety/depression.\13\ These 
hospital visits may be due to conditions related to the cancer itself 
or to side effects of chemotherapy. However, treatment plans and 
guidelines exist to support the management of these conditions. 
Hospitals that provide outpatient chemotherapy should proactively 
implement appropriate care to minimize the need for acute hospital care 
for these adverse events. Guidelines from the American Society of 
Clinical Oncology, the National Comprehensive Cancer Network, the 
Oncology Nursing Society, the Infectious Diseases Society of America, 
and other professional societies recommend evidence-based interventions 
to prevent and treat common side effects and complications of 
chemotherapy.\14\ Appropriate

[[Page 45712]]

outpatient care should curb potentially avoidable hospital admissions 
and ED visits for these issues and improve cancer patients' quality of 
life. We believe that including a measure monitoring admissions and ED 
visits for patients that receive outpatient chemotherapy in the 
Hospital OQR Program and publicly reporting results would encourage 
providers to improve their quality of care and lower rates of adverse 
events that lead to hospital admissions or ED visits after outpatient 
chemotherapy.
---------------------------------------------------------------------------

    \13\ Hassett, M.J., J. O'Malley, J.R. Pakes, J.P. Newhouse, and 
C.C. Earle. ``Frequency and Cost of Chemotherapy-Related Serious 
Adverse Effects in a Population Sample of Women with Breast 
Cancer.'' Journal of the National Cancer Institute, Vol. 98, No. 16, 
2006, pp. 1108-1117.
    \14\ Several evidence-based guidelines and interventions exist 
across professional societies. Here we provide three example 
citations: (1) National Comprehensive Cancer Network. ``NCCN 
Clinical Practice Guidelines in Oncology Version 2.2016. Cancer- and 
Chemotherapy-Induced Anemia.'' Fort Washington, PA: NCCN, 2015; (2) 
Oncology Nursing Society. ``Evidence-Based Interventions to Prevent, 
Manage, and Treat Chemotherapy-Induced Nausea and Vomiting.'' 
Available at http://www.ons.org/Research/PEP/Nausea; (3) Freifeld, 
A.G., E.J. Bow, K.A. Sepkowitz, M.J. Boeckh, J.I. Ito, C.A. Mullen, 
I.I. Raad, K.V. Rolston, J.H. Young, and J.R. Wingard. ``Clinical 
Practice Guideline for the Use of Antimicrobial Agents in 
Neutropenic Patients with Cancer: 2010 Update by the Infections 
Diseases Society of America.'' Clinical Infectious Diseases, vol. 
52, no. 4: 2011, pp. e56-e93.
---------------------------------------------------------------------------

(2) Overview of Measure
    We believe it is important to reduce adverse patient outcomes 
associated with chemotherapy treatment in the hospital outpatient 
setting. Therefore, we are proposing to adopt OP-35: Admissions and 
Emergency Department (ED) Visits for Patients Receiving Outpatient 
Chemotherapy in the Hospital OQR Program for the CY 2020 payment 
determination and subsequent years. This measure aims to assess the 
care provided to cancer patients and encourage quality improvement 
efforts to reduce the number of potentially avoidable inpatient 
admissions and ED visits among cancer patients receiving chemotherapy 
in a hospital outpatient setting. Improved hospital management of these 
potentially preventable symptoms--including anemia, dehydration, 
diarrhea, emesis, fever, nausea, neutropenia, pain, pneumonia, or 
sepsis--can reduce admissions and ED visits for these conditions. 
Measuring potentially avoidable admissions and ED visits for cancer 
patients receiving outpatient chemotherapy will provide hospitals with 
an incentive to improve the quality of care for these patients by 
taking steps to prevent and better manage side effects and 
complications from treatment.
    In addition, this measure addresses the National Quality Strategy 
priority of ``promoting the most effective prevention and treatment 
practices'' for the leading causes of mortality. We expect the measure 
would promote improvement in patient care over time because measuring 
this area, coupled with transparency in publicly reporting scores, will 
make potentially preventable hospital inpatient admissions and ED 
visits following chemotherapy more visible to providers and patients 
and will encourage providers to incorporate quality improvement 
activities in order to reduce these visits. This risk-standardized 
quality measure will address an existing information gap and promote 
quality improvement by providing feedback to hospitals and physicians, 
as well as transparency for patients on the rates and variation across 
hospitals in these potentially preventable admissions and ED visits 
following chemotherapy.
    The measure is well-defined, precisely specified, and allows for 
valid comparisons of quality among hospitals. The measure includes only 
outcome conditions demonstrated in the literature as being potentially 
preventable in this patient population, is important to patients, is 
specified to attribute an outcome to other hospital(s) that provided 
outpatient chemotherapy in the 30 days preceding the outcome, and is 
risk-adjusted for patient demographics, cancer type, clinical 
comorbidities, and treatment exposure. Validity testing demonstrated 
that the measure data elements produce measure scores that correctly 
reflect the quality of care provided and adequately identify 
differences in quality. We conducted additional assessments to 
determine the impact of including sociodemographic status (SDS) factors 
in the risk-adjustment model, and NQF will review our methodology and 
findings under the NQF trial period described below.
    Section 1890A(a)(2) of the Act outlines the prerulemaking process 
established under section 1890A of the Act, which requires the 
Secretary to make available to the public, by December 1 of each year, 
a list of quality and efficiency measures that the Secretary is 
considering. This measure (MUC ID: 15-951) was included on a publicly 
available document titled ``List of Measures under Consideration for 
December 1, 2015'' on the CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/Downloads/2015-Measures-Under-Consideration-List.pdf in 
compliance with section 1890A(a)(2) of the Act.
    The Measure Applications Partnership (MAP), which represents 
stakeholder groups, conditionally supported the measure recommending 
that it be submitted for National Quality Forum (NQF) endorsement with 
a special consideration for SDS adjustments and the selection of 
exclusions. MAP members noted the potential for the measure to increase 
care coordination and spur patient activation. We refer readers to the 
Spreadsheet of MAP 2016 Final Recommendations available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    We understand the important role that SDS plays in the care of 
patients. However, we continue to have concerns about holding hospitals 
to different standards for the outcomes of their patients of diverse 
SDS because we do not want to mask potential disparities or minimize 
incentives to improve the outcomes of disadvantaged populations. We 
routinely monitor the impact of SDS on hospitals' results on our 
measures.
    The NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for SDS factors is appropriate. For 2 
years, NQF will conduct a trial of temporarily allowing inclusion of 
SDS factors in the risk-adjustment approach for some performance 
measures. At the conclusion of the trial, NQF will issue 
recommendations on future permanent inclusion of SDS factors. During 
the trial, measure developers are expected to submit information such 
as analyses and interpretations as well as performance scores with and 
without SDS factors in the risk-adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of SDS 
on quality measures, resource use, and other measures under the 
Medicare program as directed by the IMPACT Act. We will closely examine 
the findings of the ASPE reports and related Secretarial 
recommendations and consider how they apply to our quality programs at 
such time as they are available.
    In addition, several MAP members noted the alignment of this 
measure concept with other national priorities, such as improving 
patient experience, and other national initiatives to improve cancer 
care, as well as the importance of this measure to raise awareness and 
create a feedback loop for providers (meeting transcript available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81391). As required under section 
1890A(a)(4) of the Act, we considered the input and recommendations 
provided by the MAP in selecting measures to propose for the Hospital 
OQR Program.
    Section 1833(t)(17)(C)(i) of the Act requires the Secretary, except 
as the Secretary may otherwise provide, to develop measures appropriate 
for the measurement of the quality of care furnished by hospitals in 
outpatient settings that reflect consensus among affected parties, and 
to the extent feasible and practicable, that include measures set forth 
by one or more national consensus building entities. However, we note 
that section 1833(i)(17)(C)(i) of the Act does not require that each 
measure we adopt for

[[Page 45713]]

the Hospital OQR Program be endorsed by a national consensus building 
entity, or by the NQF specifically. As stated in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74465 and 74505), we believe that 
consensus among affected parties can be reflected through means other 
than NQF endorsement, including consensus achieved during the measure 
development process, consensus shown through broad acceptance and use 
of measures, and consensus through public comment.
    We believe that this proposed measure reflects consensus among the 
affected parties, because the MAP, which represents stakeholder groups, 
reviewed and conditionally supported the measure for use in the 
program. Further, the measure was subject to public input during the 
MAP and measure development processes, with some public commenters 
agreeing with the MAP's conclusions on the measure (MUC ID: 15-951; 
Spreadsheet of MAP 2016 Final Recommendations available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369). We also 
note that we submitted this measure to NQF as part of the NQF Cancer 
Consensus Development Project in March 2016, and it is currently 
undergoing review.
    Currently, there are no publicly available quality of care reports 
for providers or hospitals that provide outpatient chemotherapy 
treatment. Thus, adoption of this measure would provide an opportunity 
to enhance the information available to patients choosing among 
providers who offer outpatient chemotherapy. We believe this measure 
would reduce adverse patient outcomes after outpatient chemotherapy by 
capturing and making more visible to providers and patients hospital 
admissions and emergency department visits for symptoms that are 
potentially preventable through high quality outpatient care. Further, 
providing outcome rates to providers will make visible to clinicians, 
meaningful quality differences and encourage improvement.
(3) Data Sources
    The proposed OP-35: Admissions and Emergency Department (ED) Visits 
for Patients Receiving Outpatient Chemotherapy measure is a claims-
based measure. It uses Medicare Part A and Part B administrative claims 
data from Medicare FFS beneficiaries receiving chemotherapy treatment 
in a hospital outpatient setting. The performance period for the 
measure is 1 year (that is, the measure calculation includes eligible 
patients receiving outpatient chemotherapy during a 1-year timeframe). 
For example, for the CY 2020 payment determination, the performance 
period would be CY 2018 (that is, January 1, 2018 through December 31, 
2018).
(4) Measure Calculation
    The OP-35 measure involves calculating two mutually exclusive 
outcomes: (1) One or more inpatient admissions; or (2) one or more ED 
visits for any of the following diagnoses--anemia, dehydration, 
diarrhea, emesis, fever, nausea, neutropenia, pain, pneumonia, or 
sepsis--within 30 days of chemotherapy treatment among cancer patients 
receiving treatment in a hospital outpatient setting. These 10 
conditions are potentially preventable through appropriately managed 
outpatient care. Therefore, two scores will be reported for this 
measure. A patient can only be counted for any measured outcome once, 
and those who experience both an inpatient admission and an ED visit 
during the performance period are counted towards the inpatient 
admission outcome. These two distinct rates provide complementary and 
comprehensive performance estimates of quality of care following 
hospital-based outpatient chemotherapy treatment. We calculate the 
rates separately, because the severity and cost of an inpatient 
admission is different from that of an ED visit, but both adverse 
events are important signals of quality and represent patient-important 
outcomes of care.
    The measure derives and reports the two separate scores, one for 
each mutually exclusive outcome, (also referred to as the hospital-
level risk-standardized admission rate (RSAR) and risk-standardized ED 
visit rate (RSEDR)), each calculated as the ratio of the number of 
``predicted'' to the number of ``expected'' outcomes (inpatient 
admissions or ED visits, respectively), multiplied by the national 
observed rate (of inpatient admissions or ED visits). For the RSAR and 
RSEDR, the numerator of the ratio is the number of patients predicted 
to have the measured adverse outcome (an inpatient admission for RSAR 
or ED visit for RSEDR with one or more of the 10 diagnoses described 
above within 30 days) based on the hospital's performance with its 
observed case-mix. The denominator for each ratio is the number of 
patients expected to have the measured adverse outcome based on the 
average national performance and the hospital's observed case-mix. The 
national observed rate is the national unadjusted number of patients 
who have the adverse outcome among all qualifying patients who had at 
least one chemotherapy treatment in a hospital.
    We define the window for identifying the outcomes of admissions and 
ED visits as 30 days after hospital outpatient chemotherapy treatment, 
as existing literature suggests the vast majority of adverse events 
occur within that timeframe.\15\ \16\ \17\ Limiting the window to 30 
days after each outpatient chemotherapy treatment also: (1) Helps link 
patients' experiences to the hospitals that provided their recent 
treatment, while accounting for variations in duration between 
outpatient treatments; (2) supports the idea that the admission is 
related to the management of side effects of treatment and ongoing 
care, as opposed to progression of the disease or other unrelated 
events; and (3) is a clinically reasonable timeframe to observe related 
side effects. For additional details on how the measure is calculated, 
we refer readers to: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \15\ Aprile, G., F.E. Pisa, A. Follador, L. Foltran, F. De 
Pauli, M. Mazzer, S. Lutrino, C.S. Sacco, M. Mansutti, and G. 
Fasola. ``Unplanned Presentations of Cancer Outpatients: A 
Retrospective Cohort Study.'' Supportive Care in Cancer, Vol. 21, 
No. 2, 2013, pp. 397-404.
    \16\ Foltran, L., G. Aprile, F.E. Pisa, P. Ermacora, N. Pella, 
E. Iaiza, E. Poletto, SE. Lutrino, M. Mazzer, M. Giovannoni, G.G. 
Cardellino, F. Puglisi, and G. Fasola. ``Risk of Unplanned Visits 
for Colorectal Cancer Outpatients Receiving Chemotherapy: A Case-
Crossover Study.'' Supportive Care in Cancer, Vol. 22, No. 9, 2014, 
pp. 2527-2533.
    \17\ McKenzie, H., L. Hayes, K. White, K. Cox, J. Fethney, M. 
Boughton, and J. Dunn. ``Chemotherapy Outpatients' Unplanned 
Presentations to Hospital: A Retrospective Study.'' Supportive Care 
in Cancer, Vol. 19, No. 7, 2011, pp. 963-969.
---------------------------------------------------------------------------

(5) Cohort
    The cohort includes Medicare FFS patients ages 18 years and older 
as of the start of the performance period with a diagnosis of any 
cancer (except leukemia) who received at least one hospital outpatient 
chemotherapy treatment at a reporting hospital during the performance 
period. Based on discussions with clinical and technical panel experts, 
the measure excludes cancer patients with a diagnosis of leukemia at 
any time during the performance period due to the high toxicity of 
treatment and recurrence of disease. Therefore, admissions for leukemia 
patients may not reflect poorly managed outpatient care, but rather 
disease progression and relapse. The measure also excludes patients who 
were not enrolled in Medicare FFS Parts A and B in the year before the 
first

[[Page 45714]]

outpatient chemotherapy treatment during the performance period, 
because the risk-adjustment model (explained further below) uses claims 
data for the year before the first chemotherapy treatment during the 
performance period to identify comorbidities. Lastly, the measure 
excludes patients who do not have at least one outpatient chemotherapy 
treatment followed by continuous enrollment in Medicare FFS Parts A and 
B in the 30 days after the procedure, to ensure all patients have 
complete data available for outcome assessment.
(6) Risk Adjustment
    Since the measure has two mutually exclusive outcomes (qualifying 
inpatient admissions and qualifying ED visits), we developed two risk-
adjustment models. The only differences between the two models are the 
clinically relevant demographic, comorbidity, and cancer type variables 
used for risk adjustment. The statistical risk-adjustment model for 
inpatient admissions includes 20 demographic and clinically relevant 
risk-adjustment variables that are strongly associated with risk of one 
or more hospital admissions within 30 days following chemotherapy in a 
hospital outpatient setting. On the other hand, the statistical risk-
adjustment model for ED visits include 15 demographic and clinically 
relevant risk-adjustment variables that are strongly associated with 
risk of one or more ED visits within 30 days following chemotherapy in 
a hospital outpatient setting. For additional methodology details, 
including the complete list of risk-adjustment variables, we refer 
readers to: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    We are inviting public comments on our proposal to adopt the OP-35: 
Admissions and Emergency Department (ED) Visits for Patients Receiving 
Outpatient Chemotherapy measure to the Hospital OQR Program for the CY 
2020 payment determination and subsequent years as discussed above.
b. OP-36: Hospital Visits After Hospital Outpatient Surgery Measure 
(NQF #2687)
(1) Background
    Outpatient same-day surgery is common in the United States. Nearly 
70 percent of all surgeries in the United States are now performed in 
the outpatient setting, with most performed as same-day surgeries at 
hospitals.\18\ Same-day surgery offers significant patient benefits as 
compared with inpatient surgery, including shorter waiting times, 
avoidance of hospitalizations, and rapid return home.\19\ Furthermore, 
same-day surgery costs significantly less than an equivalent inpatient 
surgery, and therefore, presents a significant cost saving opportunity 
to the health system.\20\ With the ongoing shift towards outpatient 
surgery, assessing the quality of surgical care provided by hospitals 
has become increasingly important. While most outpatient surgery is 
safe, there are well-described and potentially preventable adverse 
events that occur after outpatient surgery, such as uncontrolled pain, 
urinary retention, infection, bleeding, and venous thromboembolism, 
which can result in unanticipated hospital visits. Similarly, direct 
admissions after surgery that are primarily caused by nonclinical 
patient considerations (such as lack of transport home upon discharge) 
or facility logistical issues (such as delayed start of surgery) are 
common causes of unanticipated yet preventable hospital admissions 
following same-day surgery. Hospital utilization following same-day 
surgery is an important and accepted patient-centered outcome reported 
in the literature. National estimates of hospital visit rates following 
surgery vary from 0.5 to 9.0 percent based on the type of surgery, 
outcome measured (admissions alone or admissions and ED visits), and 
timeframe for measurement after 
surgery.21 22 23 24 25 26 27 28 Furthermore, hospital visit 
rates vary among hospitals,\29\ suggesting variation in surgical and 
discharge care quality. However, providers (hospitals and surgeons) are 
often unaware of their patients' hospital visits after surgery because 
patients often present to the ED or to different hospitals.\30\ This 
risk-standardized measure would provide the opportunity for providers 
to improve the quality of care and to lower the rate of preventable 
adverse events that occur after outpatient surgery.
---------------------------------------------------------------------------

    \18\ Cullen KA, Hall MJ, Golosinskiy A. Ambulatory surgery in 
the United States, 2006. National health statistics reports. Jan 28 
2009(11):1-25.
    \19\ International Association for Ambulatory Surgery. Day 
Surgery: Development and Practice. International Association for 
Ambulatory Surgery (IASS); 2006. Available at: http://www.iaas-med.com/files/historical/DaySurgery.pdf.
    \20\ Majholm B, Engbaek J, Bartholdy J, et al. Is day surgery 
safe? A Danish multicentre study of morbidity after 57,709 day 
surgery procedures. Acta anaesthesiologica Scandinavica. Mar 2012; 
56(3):323-331.
    \21\ Ibid.
    \22\ Linares-Gil MJ, Pelegri-Isanta MD, Pi-Siqu[eacute]s F, 
Amat-Rafols S, Esteva-Oll[eacute] MT, Gomar C. Unanticipated 
admissions following ambulatory surgery. Ambulatory Surgery. 1997; 
5(4):183-188.
    \23\ Fleisher LA, Pasternak LR, Herbert R, Anderson GF. 
Inpatient hospital admission and death after outpatient surgery in 
elderly patients: Importance of patient and system characteristics 
and location of care. Archives of surgery (Chicago, Ill.: 1960). Jan 
2004;139(1):67-72.
    \24\ Coley KC, Williams BA, DaPos SV, Chen C, Smith RB. 
Retrospective evaluation of unanticipated admissions and 
readmissions after same day surgery and associated costs. Journal of 
Clinical Anesthesia. Aug 2002; 14(5):349-353.
    \25\ Hollingsworth JM, Saigal CS, Lai JC, Dunn RL, Strope SA, 
Hollenbeck BK. Surgical quality among Medicare beneficiaries 
undergoing outpatient urological surgery. The Journal of Urology. 
Oct 2012; 188(4):1274-1278.
    \26\ Bain J, Kelly H, Snadden D, Staines H. Day surgery in 
Scotland: patient satisfaction and outcomes. Quality in health care: 
QHC. Jun 1999; 8(2):86-91.
    \27\ Fortier J, Chung F, Su J. Unanticipated admission after 
ambulatory surgery--a prospective study. Canadian journal of 
anaesthesia = Journal Canadien d'Anesthesie. Jul 1998; 45(7):612-
619.
    \28\ Aldwinckle RJ, Montgomery JE. Unplanned admission rates and 
postdischarge complications in patients over the age of 70 following 
day case surgery. Anaesthesia. Jan 2004; 59(1):57-59.
    \29\ Bain J, Kelly H, Snadden D, Staines H. Day surgery in 
Scotland: Patient satisfaction and outcomes. Quality in health care: 
QHC. Jun 1999; 8(2):86-91.
    \30\ Mezei G, Chung F. Return hospital visits and hospital 
readmissions after ambulatory surgery. Annals of surgery. Nov 1999; 
230(5):721-727.
---------------------------------------------------------------------------

(2) Overview of Measure
    We believe it is important to reduce adverse patient outcomes 
associated with preparation for surgery, the procedure itself, and 
follow-up care. Therefore, we are proposing to include OP-36: Hospital 
Visits after Hospital Outpatient Surgery in the Hospital OQR Program 
for the CY 2020 payment determination and subsequent years.
    We expect that the measure would promote improvement in patient 
care over time because measuring this area, coupled with transparency 
in publicly reporting scores, will make patient unplanned hospital 
visits (ED visits, observation stays, or unplanned inpatient 
admissions) after surgery more visible to providers and patients and 
encourage providers to engage in quality improvement activities in 
order to reduce these visits. This measure meets the National Quality 
Strategy priority of ``promoting effective communication and 
coordination of care.'' Many providers are unaware of the post-surgical 
hospital visits that occur because patients often present to the ED or 
to different hospitals. Reporting this outcome will illuminate problems 
that may not currently be visible. In addition, the outcome of 
unplanned hospital visits is a broad, patient-centered outcome that 
reflects the full

[[Page 45715]]

range of reasons leading to hospitalization among patients undergoing 
same-day surgery. This risk-standardized quality measure would address 
this information gap and promote quality improvement by providing 
feedback to facilities and physicians, as well as transparency for 
patients on the rates and variation across facilities in unplanned 
hospital visits after outpatient same-day surgery.
    Currently, there are no publicly available quality of care reports 
for providers or facilities that conduct same-day surgery in the 
hospital outpatient setting. Thus, this measure addresses an important 
quality measurement gap, and there is an opportunity to enhance the 
information available to patients choosing among hospitals that provide 
same-day outpatient surgery. Furthermore, providing outcome rates to 
hospitals will make visible to clinicians, meaningful quality 
differences and incentivize improvement.
    This measure (MUC ID: 15-982) was included on a publicly available 
document titled ``MAP 2016 Considerations for Implementing Measures in 
Federal Programs: Hospitals'' on the NQF Web site at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81688 (formerly referred to as the 
``list of Measures Under Consideration'') in compliance with section 
1890A(a)(2) of the Act.
    The measure received NQF endorsement on September 3, 2015.\31\ In 
addition, the MAP supported the measure for program use citing the 
vital importance of measures that help facilities reduce unnecessary 
hospital visits.\32\ Some members cautioned that because the measure 
was endorsed by NQF before the start of the SDS trial period, the 
measure should be reexamined during maintenance to determine whether 
SDS adjustments are needed.\33\
---------------------------------------------------------------------------

    \31\ MAP 2016 Considerations for Implementing Measures in 
Federal Programs: Hospitals. Final Report. February 15, 2016. 
Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81688.
    \32\ Spreadsheet of MAP 2016 Final Recommendations. February 1, 
2016. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \33\ Ibid.
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    We believe that this proposed measure reflects consensus among the 
affected parties because the measure was subject to public comment 
during the MAP and measure development processes, with public 
commenters agreeing with the MAP's conclusions on the measure.\34\ As 
stated above, this measure also was endorsed by the NQF.
---------------------------------------------------------------------------

    \34\ MAP 2016 Considerations for Implementing Measures in 
Federal Programs: Hospitals. Final Report. February 15, 2016. 
Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81688.
---------------------------------------------------------------------------

    We understand the important role that sDS plays in the care of 
patients. However, we continue to have concerns about holding hospitals 
to different standards for the outcomes of their patients of diverse 
SDS because we do not want to mask potential disparities or minimize 
incentives to improve the outcomes of disadvantaged populations. We 
routinely monitor the impact of SDS on hospitals' results on our 
measures.
    The NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is 
appropriate. For 2 years, NQF will conduct a trial of temporarily 
allowing inclusion of sociodemographic factors in the risk-adjustment 
approach for some performance measures. At the conclusion of the trial, 
NQF will issue recommendations on future permanent inclusion of 
sociodemographic factors. During the trial, measure developers are 
expected to submit information such as analyses and interpretations as 
well as performance scores with and without sociodemographic factors in 
the risk adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of SDS 
on quality measures, resource use, and other measures under the 
Medicare program as directed by the IMPACT Act. We will closely examine 
the findings of the ASPE reports and related Secretarial 
recommendations and consider how they apply to our quality programs at 
such time as they are available.
(3) Data Sources
    The proposed OP-36: Hospital Visits after Hospital Outpatient 
Surgery measure is a claims-based measure. It uses Part A and Part B 
Medicare administrative claims data from Medicare FFS beneficiaries 
with outpatient same-day surgery. The performance period for the 
measure is 1 year (that is, the measure calculation includes eligible 
outpatient same-day surgeries occurring within a one-year timeframe). 
For example, for the FY 2020 payment determination, the performance 
period would be CY 2018 (that is, January 1, 2018 through December 31, 
2018).
(4) Measure Calculation
    The measure outcome is any of the following hospital visits: (1) An 
inpatient admission directly after the surgery; or (2) an unplanned 
hospital visit (ED visits, observation stays, or unplanned inpatient 
admissions) occurring after discharge and within 7 days of the surgery. 
If more than one unplanned hospital visit occurs, only the first 
hospital visit within the outcome timeframe is counted in the outcome.
    The facility-level measure score is a ratio of the predicted to 
expected number of post-surgical hospital visits among the hospital's 
patients. The numerator of the ratio is the number of hospital visits 
predicted for the hospital's patients accounting for its observed rate, 
the number of surgeries performed at the hospital, the case-mix, and 
the surgical procedure mix. The denominator of the ratio is the 
expected number of hospital visits given the hospital's case mix and 
surgical procedure mix. A ratio of less than one indicates the 
hospital's patients were estimated as having fewer post-surgical visits 
than expected compared to hospitals with similar surgical procedures 
and patients; and a ratio of greater than one indicates the hospital's 
patients were estimated as having more visits than expected.
    In order to ensure the accuracy of the algorithm for attributing 
claims data and the comprehensive capture of hospital surgeries 
potentially affected by the CMS 3-day payment window policy, we 
identified physician claims for same-day surgeries in the hospital 
setting from the Medicare Part B Standard Analytical Files (SAF) with 
an inpatient admission within 3 days and lacking a corresponding 
hospital facility claim. We then attribute the surgery identified as 
affected by this policy to the appropriate hospital facility using the 
facility provider identification from the inpatient claim.
    For additional methodology details, we refer readers to the 
documents posted at: http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/Measure-Methodology.html under ``Hospital Outpatient Surgery.''
(5) Cohort
    The measure includes Medicare FFS patients aged 65 years and older 
undergoing same-day surgery (except eye surgeries) in hospitals.
    ``Same-day surgeries'' are substantive surgeries and procedures 
listed on Medicare's list of covered ASC procedures. Medicare developed 
this

[[Page 45716]]

list to identify surgeries that can be safely performed as same-day 
surgeries and do not typically require an overnight stay. Surgeries on 
the ASC list of covered procedures do not involve or require major or 
prolonged invasion of body cavities, extensive blood loss, major blood 
vessels, or care that is either emergent or life-threatening.
    Although Medicare developed this list of surgeries for ASCs, we use 
it for this hospital outpatient measure for two reasons. First, it 
aligns with our target cohort of surgeries that have a low to moderate 
risk profile and are safe to be performed as same-day surgeries. By 
only including surgeries on this list in the measure, we effectively do 
not include surgeries performed at hospitals that typically require an 
overnight stay which are more complex, higher risk surgeries. Second, 
we use this list of surgeries because it is annually reviewed and 
updated by Medicare, and includes a transparent public comment 
submission and review process for addition and/or removal of procedures 
codes. The list for 2016 is posted at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices-Items/CMS-1633-FC.html?DLPage=1&DLEntries=10&DLSort=2&DLSortDir=descending (refer to 
Addendum AA on the CMS Web site).
    The measure cohort excludes eye surgeries. Although eye surgery is 
considered a substantive surgery, its risk profile is more 
representative of ``minor'' surgery, in that it is characterized by 
high volume and a low outcome ratio. The measure cohort also excludes 
procedures for patients who lack continuous enrollment in Medicare FFS 
Parts A and B in the 7 days after the procedure to ensure all patients 
have complete data available for outcome assessment.
(6) Risk Adjustment
    The statistical risk-adjustment model includes 25 clinically 
relevant risk-adjustment variables that are strongly associated with 
risk of hospital visits within 7 days following outpatient surgery. The 
measure risk adjusts for surgical procedure complexity using two 
variables. First, it adjusts for surgical procedure complexity using 
the Work Relative Value Units (RVUs).\35\ Work RVUs are assigned to 
each CPT procedure code and approximate procedure complexity by 
incorporating elements of physician time and effort. Second, it 
classifies each surgery into an anatomical body system group using the 
Agency for Healthcare Research and Quality (AHRQ) Clinical 
Classification System (CCS),\36\ to account for organ-specific 
differences in risk and complications, which are not adequately 
captured by the Work RVU alone.
---------------------------------------------------------------------------

    \35\ S. Coberly. The Basics; Relative Value Units (RVUs). 
National Health Policy Forum. January 12, 2015. Available at: http://www.nhpf.org/library/the-basics/Basics_RVUs_01-12-15.pdf.
    \36\ HCUP Clinical Classifications Software for Services and 
Procedures. Healthcare Cost and Utilization Project (HCUP). 2008. 
Agency for Healthcare Research and Quality, Rockville, MD http://www.hcup-us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp, 
2014.
---------------------------------------------------------------------------

    We are inviting public comment on our proposal to adopt the OP-36 
Hospital Visits after Hospital Outpatient Surgery measure (NQF #2687) 
to the Hospital OQR Program for the CY 2020 payment determination and 
subsequent years as discussed above.
c. OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey Measures
(1) Background
    Currently, there is no standardized survey available to collect 
information on the patient's overall experience for surgeries or 
procedures performed within a hospital outpatient department. Some 
hospital outpatient departments are conducting their own surveys and 
reporting these results on their Web sites, but there is not one 
standardized survey in use to assess patient experiences with care in 
hospital outpatient departments that would allow valid comparisons 
across hospital outpatient departments. Patient-centered experience 
measures are a component of the 2016 CMS Quality Strategy, which 
emphasizes patient-centered care by rating patient experience as a 
means for empowering patients and improving the quality of their 
care.\37\ In addition, information on patient experience with care at a 
provider/facility is an important quality indicator to help providers 
and facilities improve services furnished to their patients and to 
assist patients in choosing a provider/facility at which to seek care.
---------------------------------------------------------------------------

    \37\ CMS National Quality Strategy 2016. Available at: https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
---------------------------------------------------------------------------

(2) Overview of Measures
    The Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey was developed as 
part of the U.S. Department of Health and Human Services' (HHS) 
Transparency Initiative to measure patient experiences with hospital 
outpatient care.\38\ In 2006, CMS implemented the Hospital CAHPS 
(HCAHPS) Survey, which collects data from hospital inpatients about 
their experience with hospital inpatient care (71 FR 48037 through 
48039). The HCAHPS Survey, however, is limited to data from patients 
who receive inpatient care for specific diagnosis-related groups for 
medical, surgical, and obstetric services; it does not include patients 
who received outpatient surgical care or procedures from ASCs or 
hospitals. We note that the OAS CAHPS Survey was developed to assess 
patients' experience of care following a procedure or surgery in a 
hospital outpatient department; therefore, the survey does not apply to 
emergency departments. Throughout the development of the OAS CAHPS 
Survey, CMS considered the type of data collected for HCAHPS and other 
existing CAHPS surveys as well as the terminology and question wording 
to maximize consistency across CAHPS surveys. CMS has developed similar 
surveys for other settings of care that are currently used in other 
quality reporting and value-based purchasing programs, such as the 
Hospital IQR Program (71 FR 68203 through 68204), the Hospital VBP 
Program (76 FR 26497, 26502 through 26503, and 26510), the ESRD QIP (76 
FR 70269 through 70270), the HH QRP (80 FR 68709 through 68710), and 
the HQRP (80 FR 47141 through 47207).
---------------------------------------------------------------------------

    \38\ U.S. Department of Health and Human Services. HHS Strategic 
Plan, Strategic Goal 4: Ensure Efficiency, Transparency, 
Accountability, and Effectiveness of HHS Programs. Feb. 2016. 
Available at: http://www.hhs.gov/about/strategic-plan/strategic-goal-4/index.html.
---------------------------------------------------------------------------

    The OAS CAHPS Survey contains 37 questions that cover topics such 
as access to care, communications, experience at the facility, and 
interactions with facility staff. The survey also contains two global 
rating questions and asks for self-reported health status and basic 
demographic information (race/ethnicity, educational attainment level, 
languages spoken at home, among others). The basic demographic 
information is captured in the OAS CAHPS Survey through standard AHRQ 
questions used to develop case-mix adjustment models for the survey. 
Furthermore, the survey development process followed the principles and 
guidelines outlined by AHRQ and its CAHPS Consortium[supreg]. The OAS 
CAHPS Survey received the registered CAHPS trademark in April 2015. OAS 
CAHPS Survey questions can be found at https://oascahps.org/

[[Page 45717]]

Survey-Materials under ``Questionnaire.''
    We are proposing to adopt five survey-based measures derived from 
the OAS CAHPS Survey for the CY 2020 payment determination and 
subsequent years--three OAS CAHPS composite survey-based measures and 
two global survey-based measures (discussed below). We believe that 
these survey-based measures will be useful to assess aspects of care 
where the patient is the best or only source of information, and to 
enable objective and meaningful comparisons between hospital outpatient 
departments. We note that we are making similar proposals in the ASCQR 
Program in section XIV.B.4.c. of this proposed rule. The three OAS 
CAHPS composite survey-based measures are:
     OP-37a: OAS CAHPS--About Facilities and Staff;
     OP-37b: OAS CAHPS--Communication About Procedure; and
     OP-37c: OAS CAHPS--Preparation for Discharge and Recovery.
    Each of the three OAS CAHPS composite survey-based measures 
consists of six or more questions.
    Furthermore, the two global survey-based measures are:
     OP-37d: OAS CAHPS--Overall Rating of Facility; and
     OP-37e: OAS CAHPS--Recommendation of Facility.
    The two global survey-based measures are comprised of a single 
question each and ask the patient to rate the care provided by the 
hospital and their willingness to recommend the hospital to family and 
friends. More information about these measures can be found at the OAS 
CAHPS Survey Web site (https://oascahps.org).
    The five survey-based measures (MUC IDs: X3697; X3698; X3699; 
X3702; and X3703) we are proposing were included on the CY 2014 MUC 
list,\39\ and reviewed by the MAP.\40\ The MAP encouraged continued 
development of these survey-based measures; however, we note that these 
measures had not been fully specified by the time of submission to the 
MUC List.\41\ The MAP stated that these are high impact measures that 
will improve both quality and efficiency of care and be meaningful to 
consumers.\42\ Further, the MAP stated that given that these measures 
are also under consideration for the ASCQR Program, they help to 
promote alignment across care settings.\43\ It also stated that these 
measures would begin to fill a gap MAP has previously identified for 
this program including patient reported outcomes and patient and family 
engagement.\44\ Several MAP workgroup members noted that CMS should 
consider how these measures are related to other existing ambulatory 
surveys to ensure that patients and facilities are not 
overburdened.\45\
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    \39\ National Quality Forum. List of Measures under 
Consideration for December 1, 2014. National Quality Forum, Dec. 
2014. Available at: https://www.qualityforum.org/Setting_Priorities/Partnership/Measures_Under_Consideration_List_2014.aspx.
    \40\ National Quality Forum. MAP 2015 Final Recommendations to 
HHS and CMS. Rep. National Quality Forum, Jan. 2015. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \41\ Ibid.
    \42\ Ibid.
    \43\ Ibid.
    \44\ Ibid.
    \45\ Ibid.
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    These measures have been fully developed since being submitted to 
the MUC List. The survey development process followed the principles 
and guidelines outlined by the AHRQ \46\ and its CAHPS Consortium \47\ 
in developing a patient experience of care survey, such as: Reporting 
on actual patient experiences; standardization across the survey 
instrument; administration protocol; data analysis and reporting; and 
extensive testing with consumers. Development also included: Reviewing 
surveys submitted under a public call for measures; reviewing existing 
literature; conducting focus groups with patients who had recent 
outpatient surgery; conducting cognitive interviews with patients to 
assess their understanding and ability to answer survey questions; 
obtaining stakeholder input on the draft survey and other issues that 
may affect implementation; and conducting a field test.
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    \46\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys''. Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \47\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://cahps.ahrq.gov/about-cahps/cahps-program/index.html.
---------------------------------------------------------------------------

    In addition, we received public input from several modes. We 
published a request for information on January 25, 2013 (78 FR 5460) 
requesting information regarding publicly available surveys, survey 
questions, and measures indicating patient experience of care and 
patient-reported outcomes from surgeries or other procedures for 
consideration in developing a standardized survey to evaluate the care 
received in these facilities from the patient's perspective. 
Stakeholder input was also obtained through communications with a 
Technical Expert Panel (TEP) comprised of experts on outpatient 
surgery, including clinicians, providers, patient advocates, and 
accreditation organizations. The TEP provided input and guidance on 
issues related to survey development, and reviewed drafts of the survey 
throughout development.
    After we determined that the survey instrument was near a final 
form, we tested the effect of various data collection modes (that is, 
mail-only, telephone-only, or mail with telephone follow-up of non-
respondents) on survey responses. In addition, we began voluntary 
national implementation of the OAS CAHPS Survey in January 2016.\48\
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    \48\ Outpatient and Ambulatory Surgery CAHPS Survey: ``National 
Implementation.'' Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    In addition, while the proposed OAS CAHPS Survey-based measures are 
not currently NQF-endorsed, they will be submitted to the NQF for 
endorsement under an applicable call for measures in the near future.
    In section XIX. of this proposed rule, the Hospital VBP Program is 
proposing to remove the HCAHPS Pain Management dimension (which 
consists of three questions) in the Patient- and Caregiver-Centered 
Experience of Care/Care Coordination domain due to confusion about the 
intent of these questions and the public health concern about the 
ongoing prescription opioid overdose epidemic. For more information 
about the pain management questions captured in the HCAHPS Survey and 
their use in the Hospital VBP Program, we refer readers to section 
XIX.B.3. of this proposed rule.
    The OAS CAHPS Survey also contains two questions regarding pain 
management. We believe pain management is an important dimension of 
quality, but realize that there are concerns about these types of 
questions. We refer readers to section XIX. of this proposed rule for 
more information on stakeholders' concerns. However, the pain 
management questions in the OAS CAHPS Survey are very different from 
those contained in the HCAHPS Survey because they focus on 
communication regarding pain management rather than pain control. 
Specifically, the OAS CAHPS Survey pain management communication 
questions read:
    Q: Some ways to control pain include prescription medicine, over-
the-counter pain relievers or ice packs. Did your doctor or anyone from 
the facility give you information about what to do if you had pain as a 
result of your procedure?

[ballot] A1: Yes, definitely.
[ballot] A2: Yes, somewhat.
[ballot] A3: No.


[[Page 45718]]


    Q: At any time after leaving the facility, did you have pain as a 
result of your procedure? \49\
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    \49\ We note that this question is a control question only used 
to determine if the facility should have given a patient additional 
guidance on how to handle pain after leaving the facility. The 
facility is not scored based on this question.

[ballot] A1: Yes.
[ballot] A2: No.

    Unlike the HCAHPS pain management questions, which directly address 
the adequacy of the hospital's pain management efforts, such as 
prescribing opioids, the OAS CAHPS pain management communication 
questions focus on the information provided to patients regarding pain 
management following discharge from a hospital. We continue to believe 
that pain control is an appropriate part of routine patient care that 
hospitals should manage and is an important concern for patients, their 
families, and their caregivers. We also note that appropriate pain 
management includes communication with patients about pain-related 
issues, setting expectations about pain, shared decision-making, and 
proper prescription practices. In addition, we note that, unlike in the 
Hospital VBP Program, there is no link between scoring well on the 
questions and higher hospital payments. However, we also recognize that 
questions remain about the ongoing prescription opioid epidemic. For 
these reasons, we are proposing to adopt the OAS CAHPS Survey measures 
as described in this section, including the pain management 
communication questions, but will continue to evaluate the 
appropriateness and responsiveness of these questions to patient 
experience of care and public health concerns. We also welcome feedback 
on these pain management communication questions for use in future 
revisions of the OAS CAHPS Survey.
(3) Data Sources
    As discussed in the Protocols and Guidelines Manual for the OAS 
CAHPS Survey (https://oascahps.org/Survey-Materials), the survey has 
three administration methods: Mail-only; telephone-only; and mixed mode 
(mail with telephone follow-up of non-respondents). We refer readers to 
section XIII.D.4. of this proposed rule for an in-depth discussion of 
the data submission requirements associated with the proposed OAS CAHPS 
Survey measures. To summarize, to meet the OAS CAHPS Survey 
requirements for the Hospital OQR Program, we are proposing that 
hospitals contract with a CMS-approved vendor to collect survey data 
for eligible patients at the hospitals on a monthly basis and report 
that data to CMS on the hospital's behalf by the quarterly deadlines 
established for each data collection period. Hospitals may elect to add 
up to 15 supplemental questions to the OAS CAHPS Survey. These could be 
questions hospitals develop or use from an existing survey. All 
supplemental questions must be placed after the core OAS CAHPS Survey 
questions (Q1-Q24). The list of approved vendors is available at: 
https://oascahps.org. We also are proposing to codify the OAS CAHPS 
Survey administration requirements for hospitals and vendors under the 
Hospital OQR Program at 42 CFR 419.46(g), and refer readers to section 
XIII.D.4. of this proposed rule for more details. It should be noted 
that nondiscrimination requirements for effective communication with 
persons with disabilities and language access for persons with limited 
English proficiency should be considered in administration of the 
surveys. For more information, we refer readers to http://www.hhs.gov/civil-rights.
    We are proposing that the data collection period for the OAS CAHPS 
Survey measures would be the calendar year 2 years prior to the 
applicable payment determination year. For example, for the CY 2020 
payment determination, hospitals would be required to collect data on a 
monthly basis, and submit this collected data on a quarterly basis, for 
January 1, 2018--December 31, 2018 (CY 2018).
    We are further proposing that, as discussed in more detail below, 
hospitals will be required to survey a random sample of eligible 
patients on a monthly basis. A list of acceptable sampling methods can 
be found in the OAS CAHPS Protocols and Guidelines Manual (https://oascahps.org/Survey-Materials). We are also proposing that hospitals 
would be required to collect at least 300 completed surveys over each 
12-month reporting period (an average of 25 completed surveys per 
month). We acknowledge that some smaller hospitals may not be able to 
collect 300 completed surveys during a 12-month period; therefore, we 
are proposing an exemption for facilities with lower patient censuses. 
Hospitals would have the option to submit a request to be exempted from 
performing the OAS CAHPS Survey-based measures if they treat fewer than 
60 survey-eligible patients during the year preceding the data 
collection period. We refer readers to section XIII.B.5.c.(6) for 
details on this proposal. However, we believe it is important to 
capture patients' experience of care at hospitals. Therefore, except as 
discussed in section XIII.B.5.c.(6) of this proposed rule below, we 
also are proposing that smaller hospitals that cannot collect 300 
completed surveys over a 12-month reporting period will only be 
required to collect as many completed surveys as possible, during that 
same time period, with surveying all eligible patients (that is, no 
sampling). For more information regarding these survey administration 
requirements, we refer readers to the OAS CAHPS Survey Protocols and 
Guidelines Manual (https://oascahps.org/Survey-Materials).
    Furthermore, we are proposing that hospital eligibility to perform 
the OAS CAHPS Survey would be determined at the individual Medicare 
participating hospital level. In other words, all data collection and 
submission, and ultimately, also public reporting, for the OAS CAHPS 
Survey measures would be at the Medicare participating hospital level 
as identified by the hospital's CCN. Therefore, the reporting for a CCN 
would include all eligible patients from all eligible hospital 
locations of the Medicare participating hospital that is identified by 
the CCN.
(4) Measure Calculations
    As noted above, we are proposing to adopt three composite OAS CAHPS 
Survey-based measures (OP-37a, OP-37b, and OP-37c) and two global OAS 
CAHPS Survey-based measures (OP-37d and OP-37e). As with the other 
measures adopted for the Hospital OQR Program, a hospital's performance 
for a given payment determination year will be based upon the 
successful submission of all required data in accordance with the 
administrative, form, manner and timing requirements established for 
the Hospital OQR Program. Our proposals for OAS CAHPS data submission 
requirements are discussed in section XIII.D.4. of this proposed rule. 
Therefore, hospitals' scores on the OAS CAHPS Survey-based measures, 
discussed below, will not affect whether they are subject to the 2.0 
percentage point payment reduction for hospitals that fail to report 
data required to be submitted on the measures selected by the 
Secretary, in the form and manner, and at a time, specified by the 
Secretary. These measure calculations will be used for public reporting 
purposes only.
(A) Composite Survey-Based Measures
    Hospital rates on each composite OAS CAHPS Survey-based measure 
would be calculated by determining the proportion of ``top-box'' 
responses (that is ``Yes'' or ``Yes Definitely'') for each question 
within the composite and

[[Page 45719]]

averaging these proportions over all questions in the composite 
measure. For example, to assess hospital performance on the composite 
measure OP-37a: OAS CAHPS--About Facilities and Staff, we would 
calculate the proportion of top-box responses for each of the measure's 
six questions, add those proportions together, and divide by the number 
of questions in the composite measure (that is, six).
    As a specific example, we take a hospital that had 50 surveys 
completed and received the following proportions of ``top-box'' 
responses through sample calculations:

 25 ``top-box'' responses out of 50 total responses on Question 
One
 40 ``top-box'' responses out of 50 total responses on Question 
Two
 50 ``top-box'' responses out of 50 total responses on Question 
Three
 35 ``top-box'' responses out of 50 total responses on Question 
Four
 45 ``top-box'' responses out of 50 total responses on Question 
Five
 40 ``top-box'' responses out of 50 total responses on Question 
Six

Based on the above responses, we would calculate that hospital's 
measure score for public reporting as follows:
[GRAPHIC] [TIFF OMITTED] TP14JY16.000

This calculation would give this example hospital a raw score of 0.78 
or 78 percent for the OP-37a measure for purposes of public reporting. 
We note that each percentage would then be adjusted for differences in 
the characteristics of patients across hospitals as described in 
XIII.B.5.c.(7) of this proposed rule, below. As a result, the final 
percentages may vary from the raw percentage as calculated in the 
example above.
(B) Global Survey-Based Measures
    We are proposing to adopt two global OAS CAHPS Survey measures. OP-
37d asks the patient to rate the care provided by the hospital on a 
scale of 0 to 10, and OP-37e asks about the patient's willingness to 
recommend the hospital to family and friends on a scale of ``Definitely 
No'' to ``Definitely Yes.'' Hospital performance on each of the two 
global OAS CAHPS Survey-based measures would be calculated by 
proportion of respondents providing high-value responses (that is, a 9-
10 rating or ``Definitely Yes'') to the survey questions over the total 
number of respondents. For example, if a hospital received 45 9- and 
10-point ratings out of 50 responses, this hospital would receive a 0.9 
or 90 percent raw score, which would then be adjusted for differences 
in the characteristics of patients across hospitals as described in 
section XIII.B.5.c.(7) below, for purposes of public reporting.
(5) Cohort
    The OAS CAHPS Survey is administered to all eligible patients--or a 
random sample thereof--who had at least one outpatient surgery/
procedure during the applicable month. Eligible patients, regardless of 
insurance or method of payment, can participate.
    For purposes of each survey-based measures captured in the OAS 
CAHPS Survey, an ``eligible patient'' is a patient 18 years or older:
     Who had an outpatient surgery or procedure in a hospital, 
as defined in the OAS CAHPS Survey Protocols and Guidelines Manual 
(https://oascahps.org/Survey-Materials);
     Who does not reside in a nursing home;
     Who was not discharged to hospice care following their 
surgery;
     Who is not identified as a prisoner; and
     Who did not request that hospitals not release their name 
and contact information to anyone other than hospital personnel.
    There are a few categories of otherwise eligible patients who are 
excluded from the measure as follows:
     Patients whose address is not a U.S. domestic address;
     Patients who cannot be surveyed because of State 
regulations;
     Patient's surgery or procedure does not meet the 
eligibility CPT or G-codes as defined in the OAS CAHPS Protocols and 
Guidelines Manual (https://oascahps.org/Survey-Materials); and
     Patients who are deceased.
(6) Exemption
    We understand that hospitals with lower patient censuses may be 
disproportionately impacted by the burden associated with administering 
the survey and the resulting public reporting of OAS CAHPS Survey 
results. Therefore, we are proposing that hospitals may submit a 
request to be exempted from participating in the OAS CAHPS Survey-based 
measures if they treat fewer than 60 survey-eligible patients during 
the ``eligibility period,'' which is the calendar year before the data 
collection period. All exemption requests will be reviewed and 
evaluated by CMS. For example, for the CY 2020 payment determination, 
this exemption request would be based on treating fewer than 60 survey-
eligible patients in CY 2017, which is the calendar year before the 
data collection period (CY 2018) for the CY 2020 payment determination.
    To qualify for the exemption, hospitals must submit a participation 
exemption request form, which will be made available on the OAS CAHPS 
Survey Web site (https://oascahps.org) on or before May 15 of the data 
collection calendar year. For example, the deadline for submitting an 
exemption request form for the CY 2020 payment determination would be 
May 15, 2018. We determined the May 15 deadline in order to align with 
the deadline for submitting Web-based measures, and because we believe 
this deadline provides hospitals with sufficient time to review the 
previous years' patient lists and determine whether they are eligible 
for an exemption based on patient population size.
    In addition, as discussed above, hospital eligibility to perform 
the OAS CAHPS Survey would be determined at the individual Medicare 
participating hospital level; therefore, an individual hospital that 
meets the exemption criteria outlined above may submit a participation 
exemption request form. CMS will then assess that hospital's 
eligibility for a participation exemption due to facility size. 
However, no matter the number of hospital locations of the Medicare 
participating hospital, all data collection and submission, and 
ultimately, also public reporting, for the OAS CAHPS Survey measures 
would be at the Medicare participating hospital level, as identified by 
its CCN. Therefore, the reporting for a CCN would include all eligible 
patients from all locations of the eligible Medicare participating 
hospital as identified by its CCN.
(7) Risk Adjustment
    In order to achieve the goal of fair comparisons across all 
hospitals, we believe it is necessary and appropriate to adjust for 
factors that are not directly

[[Page 45720]]

related to hospital performance, such as patient case-mix, for these 
OAS CAHPS Survey measures. The survey-based measures are adjusted for 
patient characteristics such as age, education, overall health status, 
overall mental health status, type of surgical procedure, and how well 
the patient speaks English. These factors influence how patients 
respond to the survey but are beyond the control of the hospital and 
are not directly related to hospital performance. For more information 
about patient-mix adjustment for these measures, we refer readers to 
https://oascahps.org/General-Information/Mode-Experiment.
(8) Public Reporting
    We will propose a format and timing for public reporting of OAS 
CAHPS Survey data in future rulemaking prior to implementation of the 
measures. Because CY 2016 is the first year of voluntary national 
implementation for the OAS CAHPS Survey, and we believe using data from 
this voluntary national implementation will help inform the displays 
for public reporting of OAS CAHPS Survey data for the Hospital OQR 
Program, we are not proposing a format or timing for public reporting 
of OAS CAHPS Survey data at this time.
    As currently proposed, hospital locations that are part of the same 
Medicare participating hospital (operates under one Medicare provider 
agreement and one CCN) must combine data for collection and submission 
for the OAS CAHPS Survey across their multiple facilities. These 
results from multiple locations of the Medicare participating hospital 
would then be combined and publicly reported on the Hospital Compare 
Web site for the single Medicare participating hospital. To increase 
transparency in public reporting and improve the usefulness of the 
Hospital Compare Web site, we intend to note on the Web site instances 
where publicly reported measures combine results from two or more 
locations of a single multi-location Medicare participating hospital.
    We are inviting public comments on our proposals as discussed above 
to adopt, for the CY 2020 payment determination and subsequent years, 
the five survey-based measures: (1) OP-37a: Outpatient and Ambulatory 
Surgery Consumer Assessment of Healthcare Providers and Systems (OAS 
CAHPS)--About Facilities and Staff; (2) OP-37b: OAS CAHPS--
Communication About Procedure; (3) OP-37c: OAS CAHPS--Preparation for 
Discharge and Recovery; (4) OP-37d: OAS CAHPS--Overall Rating of 
Facility; and (5) OP-37e: OAS CAHPS--Recommendation of Facility.
d. Summary of Previously Adopted and Newly Proposed Hospital OQR 
Program Measures for the CY 2020 Payment Determinations and Subsequent 
Years
    The table below outlines the proposed Hospital OQR Program measure 
set for the CY 2020 payment determination and subsequent years, and 
includes both previously adopted measures and measures newly proposed 
in this proposed rule.

 Proposed and Previously Finalized Hospital OQR Program Measure Set for
         the CY 2020 Payment Determination and Subsequent Years
------------------------------------------------------------------------
         NQF No.                            Measure name
------------------------------------------------------------------------
0287.....................  OP-1: Median Time to Fibrinolysis.[dagger]
0288.....................  OP-2: Fibrinolytic Therapy Received Within 30
                            Minutes of ED Arrival.
0290.....................  OP-3: Median Time to Transfer to Another
                            Facility for Acute Coronary Intervention.
0286.....................  OP-4: Aspirin at Arrival.[dagger]
0289.....................  OP-5: Median Time to ECG.[dagger]
0514.....................  OP-8: MRI Lumbar Spine for Low Back Pain.
N/A......................  OP-9: Mammography Follow-up Rates.
N/A......................  OP-10: Abdomen CT--Use of Contrast Material.
0513.....................  OP-11: Thorax CT--Use of Contrast Material.
N/A......................  OP-12: The Ability for Providers with HIT to
                            Receive Laboratory Data Electronically
                            Directly into their ONC-Certified EHR System
                            as Discrete Searchable Data.
0669.....................  OP-13: Cardiac Imaging for Preoperative Risk
                            Assessment for Non-Cardiac, Low-Risk
                            Surgery.
N/A......................  OP-14: Simultaneous Use of Brain Computed
                            Tomography (CT) and Sinus Computed
                            Tomography (CT).
0491.....................  OP-17: Tracking Clinical Results between
                            Visits.[dagger]
0496.....................  OP-18: Median Time from ED Arrival to ED
                            Departure for Discharged ED Patients.
N/A......................  OP-20: Door to Diagnostic Evaluation by a
                            Qualified Medical Professional.
0662.....................  OP-21: Median Time to Pain Management for
                            Long Bone Fracture.
0499.....................  OP-22: ED--Left Without Being Seen.[dagger]
0661.....................  OP-23: Head CT or MRI Scan Results for Acute
                            Ischemic Stroke or Hemorrhagic Stroke who
                            Received Head CT or MRI Scan Interpretation
                            Within 45 minutes of ED Arrival.
N/A......................  OP-25: Safe Surgery Checklist Use.
N/A......................  OP-26: Hospital Outpatient Volume on Selected
                            Outpatient Surgical Procedures.*
0431.....................  OP-27: Influenza Vaccination Coverage among
                            Healthcare Personnel.
0658.....................  OP-29: Appropriate Follow-Up Interval for
                            Normal Colonoscopy in Average Risk
                            Patients.**
0659.....................  OP-30: Colonoscopy Interval for Patients with
                            a History of Adenomatous Polyps--Avoidance
                            of Inappropriate Use.***
1536.....................  OP-31: Cataracts--Improvement in Patient's
                            Visual Function within 90 Days Following
                            Cataract Surgery.***
2539.....................  OP-32: Facility 7-Day Risk-Standardized
                            Hospital Visit Rate after Outpatient
                            Colonoscopy.
1822.....................  OP-33: External Beam Radiotherapy for Bone
                            Metastases.
N/A......................  OP-35: Admissions and Emergency Department
                            (ED) Visits for Patients Receiving
                            Outpatient Chemotherapy.****
2687.....................  OP-36: Hospital Visits after Hospital
                            Outpatient Surgery.****
N/A......................  OP-37a: OAS CAHPS--About Facilities and
                            Staff.****
N/A......................  OP-37b: OAS CAHPS--Communication About
                            Procedure.****
N/A......................  OP-37c: OAS CAHPS--Preparation for Discharge
                            and Recovery.****
N/A......................  OP-37d: OAS CAHPS--Overall Rating of
                            Facility.****
N/A......................  OP-37e: OAS CAHPS--Recommendation of
                            Facility.****
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** We note that measure name was revised to reflect NQF title.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
  through 66947).
**** New measure proposed for the CY 2020 payment determination and
  subsequent years.


[[Page 45721]]

6. Hospital OQR Program Measures and Topics for Future Consideration
    In this proposed rule, we are seeking public comment on future 
measure topics generally, electronic clinical quality (eCQM) measures 
implementation, and specifically the future measure concept, Safe Use 
of Opioids-Concurrent Prescribing eCQM, for future consideration in the 
Hospital OQR Program. These are discussed in detail below.
a. Future Measure Topics
    We seek to develop a comprehensive set of quality measures to be 
available for widespread use for informed decision-making and quality 
improvement in the hospital outpatient setting. The current measure set 
for the Hospital OQR Program includes measures that assess process of 
care, imaging efficiency patterns, care transitions, ED throughput 
efficiency, the use of Health Information Technology (health IT), care 
coordination, patient safety, and volume. Through future rulemaking, we 
intend to propose new measures that help us further our goal of 
achieving better health care and improved health for Medicare 
beneficiaries who receive health care in hospital outpatient settings, 
while aligning quality measures across the Medicare program.
    We are inviting public comments on possible measure topics for 
future consideration in the Hospital OQR Program. We are moving towards 
the use of outcome measures and away from the use of clinical process 
measures across the Medicare program. We specifically request comment 
on any outcome measures that would be useful to add to the Hospital OQR 
Program as well as any clinical process measures that should be 
eliminated from the Hospital OQR Program
b. Electronic Clinical Quality Measures
    We are working toward incorporating electronic clinical quality 
measures (eCQMs) in the Hospital OQR Program in the future. We believe 
automated electronic extraction and reporting of clinical quality data, 
potentially including measure results calculated automatically by 
appropriately certified health IT, would significantly reduce the 
administrative burden on hospitals under the Hospital OQR Program. We 
recognize that considerable work needs to be done by measure stewards 
and developers to make this possible with respect to the clinical 
quality measures targeted for electronic specifications (e-
specifications) for the outpatient setting. This includes completing e-
specifications for measures, pilot testing, reliability and validity 
testing, submitting for endorsement of e-specified version (if 
applicable) and implementing such specifications into certified EHR 
technology to capture and calculate the results, and implementing the 
systems. We continue to work to ensure that eCQMs will be smoothly 
incorporated into the Hospital OQR Program.
    We are inviting public comments on future implementation of eCQMs 
as well as specific future eCQMs for the Hospital OQR Program.
c. Possible Future eCQM: Safe Use of Opioids-Concurrent Prescribing
    Unintentional opioid overdose fatalities have become an epidemic in 
the last 20 years and a major public health concern in the United 
States.\50\ HHS has made addressing opioid misuse, dependence, and 
overdose a priority. HHS is implementing evidence-based initiatives 
focused on informing prescribing practices to combat misuse and 
overdose deaths.\51\ Several other organizations, including the Centers 
for Disease Control and Prevention (CDC), the Federal Interagency 
Workgroup for Opioid Adverse Drug Events, the National Action Plan for 
Adverse Drug Event Prevention, and the Substance Abuse and Mental 
Health Administration, have joined the effort.
---------------------------------------------------------------------------

    \50\ Rudd, R., Aleshire, N., Zibbell, J., et al. ``Increases in 
Drug and Opioid Overdose Deaths--United States, 2000-2014''. MMWR, 
Jan 2016. 64(50);1378-82. Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6450a3.htm.
    \51\ United States Department of Health and Human Services 
``ASPE Issue Brief: Opioid Abuse in the U.S. and HHS Actions to 
Address Opioid-Drug Related Overdoses and Deaths''. March 2015. 
Available at: https://aspe.hhs.gov/sites/default/files/pdf/107956/ib_OpioidInitiative.pdf.
---------------------------------------------------------------------------

    Prescribing opioids to patients already using an opioid or patients 
using benzodiazepines (sedation-inducing central nervous system 
depressant) increases their risk of respiratory depression and 
death.\52\ These prescribing scenarios can occur in any setting 
including: Inpatient hospital; outpatient hospital practices; 
outpatient emergency departments; and other urgent care settings. With 
a limited evaluation focused on the patient's acute condition, the 
clinician in these settings may not know the patient's full medical 
history.\53\ An analysis of national prescribing patterns shows that 
more than half of patients who received an opioid prescription in 2009 
had filled another opioid prescription within the previous 30 days.\54\ 
Studies of multiple claims and prescription databases have shown that 
between 5 and 15 percent of patients receive overlapping opioid 
prescriptions and 5 to 20 percent of patients receive overlapping 
opioid and benzodiazepine prescriptions across all 
settings.55 56 57
---------------------------------------------------------------------------

    \52\ Dowell, D., Haegerich, T., Chou, R. ``CDC Guideline for 
Prescribing Opioids for Chronic Pain--United States, 2016''. MMWR 
Recomm Rep 2016;65. Available at: http://www.cdc.gov/media/dpk/2016/dpk-opioid-prescription-guidelines.html.
    \53\ Governale, Laura. ``Outpatient Prescription Opioid 
Utilization in the U.S., Years 2000-2009.'' 2010. Drug Utilization 
Data Analysis Team Leader, Division of Epidemiology, Office of 
Surveillance and Epidemiology. Presentation for U.S. Food and Drug 
Administration. Available at: http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AnestheticAndLifeSupportDrugsAdvisoryCommittee/UCM220950.pdf.
    \54\ National Institute on Drug Abuse. ``Analysis of opioid 
prescription practices finds areas of concern''. April 2011. 
Available at: https://www.drugabuse.gov/news-events/news-releases/2011/04/analysis-opioid-prescription-practices-finds-areas-concern.
    \55\ Liu, Y., Logan, J., Paulozzi, L., et al. ``Potential Misuse 
and Inappropriate Prescription Practices Involving Opioid 
Analgesics''. Am J Manag Care. 2013 Aug;19(8):648-65.
    \56\ Mack, K., Zhang, K., et al. ``Prescription Practices 
involving Opioid Analgesics among Americans with Medicaid, 2010,'' J 
Health Care Poor Underserved. 2015 Feb; 26(1): 182-198. Available 
at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4365785/.
    \57\ Jena, A., et al. ``Opioid prescribing by multiple providers 
in Medicare: Retrospective observational study of insurance 
claims,'' BMJ 2014; 348:g1393 doi: 10.1136/bmj.g1393. Available at: 
http://www.bmj.com/content/348/bmj.g1393.
---------------------------------------------------------------------------

    The 2016 CDC Guideline for Prescribing Opioids for Chronic Pain 
\58\ recommends that providers avoid concurrently prescribing opioids 
and benzodiazepines because rates of fatal overdose are ten times 
higher in patients who are co-dispensed opioid analgesics and 
benzodiazepines than opioids alone \59\ and concurrent use of 
benzodiazepines with opioids was prevalent in 31 percent to 51 percent 
of fatal overdoses.\60\ ED visit rates involving both opioid analgesics 
and benzodiazepines increased from 11.0 in 2004 to 34.2 per 100,000 
population in 2011.\61\ Opioid overdose events

[[Page 45722]]

resulting in ED use can cost the United States approximately $800 
million per year.\62\
---------------------------------------------------------------------------

    \58\ Dowell D, Haegerich TM, Chou R. CDC Guideline for 
Prescribing Opioids for Chronic Pain -- United States, 2016. MMWR 
Recomm Rep 2016;65:1-49. DOI: http://dx.doi.org/10.15585/mmwr.rr6501e1.
    \59\ Dasgupta, N., et al. ``Cohort Study of the Impact of High-
dose Opioid Analgesics on Overdose Mortality,'' Pain Medicine, Wiley 
Periodicals, Inc., 2015.
    \60\ Dowell, D., Haegerich, T., Chou, R. ``CDC Guideline for 
Prescribing Opioids for Chronic Pain--United States, 2016.'' MMWR 
Recomm Rep 2016;65. Available at: http://www.cdc.gov/media/dpk/2016/dpk-opioid-prescription-guidelines.html.
    \61\ Jones, CM., McAninch, JK. ``Emergency Department Visits and 
Overdose Deaths From Combined Use of Opioids and Benzodiazepines''. 
Am J Prev Med. 2015 Oct;49(4):493-501. doi: 10.1016/
j.amepre.2015.03.040. Epub 2015 Jul 3. Available at: http://www.ncbi.nlm.nih.gov/pubmed/26143953.
    \62\ Inocencio, TJ., et al. ``The economic burden of opioid-
related poisoning in the United States,'' October 2013. Available 
at: http://www.ncbi.nlm.nih.gov/pubmed/23841538.
---------------------------------------------------------------------------

    To address concerns associated with overlapping or concurrent 
prescribing of opioids or opioids and benzodiazepines, we are in early 
development of a new electronic clinical quality measure for the 
Hospital IQR and OQR Programs that would capture the proportion of 
patients 18 years of age and older who have an active prescription for 
an opioid and have an additional opioid or benzodiazepine prescribed to 
them during the qualifying care encounter. This measure is being 
designed to reduce preventable deaths as well as reduce costs 
associated with the treatment of opioid-related ED use by encouraging 
providers to identify patients at high risk for overdose due to 
respiratory depression or other adverse drug events.
    We are requesting public comments on this future measure concept 
specifically for the Hospital OQR Program setting.
    In addition, in order to solicit further public comment from a wide 
variety of stakeholders, we will also post this measure concept to the 
CMS Measures Management System (MMS) Call for Public Comment Web page, 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/CallforPublicComment.html. Readers can 
subscribe to receive updates through the MMS Listserv at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Listserv.html.
7. Maintenance of Technical Specifications for Quality Measures
    CMS maintains technical specifications for previously adopted 
Hospital OQR Program measures. These specifications are updated as we 
continue to develop the Hospital OQR Program measure set. The manuals 
that contain specifications for the previously adopted measures can be 
found on the QualityNet Web site at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68469 through 68470), for a discussion of our policy for 
updating Hospital OQR Program measures, the same policy we adopted for 
updating Hospital IQR Program measures, which includes the 
subregulatory process for making updates to the adopted measures (77 FR 
53504 through 53505). This policy expanded upon the subregulatory 
process for updating measures that we finalized in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68766 through 68767). We are not 
proposing any changes to our technical specifications policies.
8. Public Display of Quality Measures
    Section 1833(t)(17)(E) of the Act, requires that the Secretary 
establish procedures to make data collected under the Hospital OQR 
Program available to the public. It also states that such procedures 
must ensure that a hospital has the opportunity to review the data that 
are to be made public, with respect to the hospital prior to such data 
being made public. In this proposed rule, we are formalizing our 
current public display practices regarding timing of public display and 
the preview period, as discussed in more detail below. We are also 
proposing how we will announce the preview period timeframes.
    In the CY 2014 OPPS/ASC proposed rule and final rule with comment 
period (78 FR 43645 and 78 FR 75092), we stated that we generally 
strive to display hospital quality measures data on the Hospital 
Compare Web site as soon as possible after measure data have been 
submitted to CMS. However, if there are unresolved display issues or 
pending design considerations, we may make the data available on other, 
non-interactive, CMS Web sites (78 FR 43645). Patient-level data that 
is chart-abstracted are updated on Hospital Compare quarterly, while 
data from claims-based measures and measures that are submitted using a 
Web-based tool are updated annually. Historically, preview for the 
April Hospital Compare data release typically occurs in January, 
preview for the July Hospital Compare data release typically occurs in 
April, preview for the October Hospital Compare data release typically 
occurs in July, and the preview for the December Hospital Compare data 
release typically occurs in October. During the preview period, 
hospitals have generally had approximately 30 days to preview their 
data.
    In this proposed rule, therefore, we are proposing to publicly 
display data on the Hospital Compare Web site, or other CMS Web site, 
as soon as possible after measure data have been submitted to CMS, 
consistent with current practice. In addition, we are proposing that 
hospitals will generally have approximately 30 days to preview their 
data, also consistent with current practice. Lastly, moving forward, we 
are proposing to announce the timeframes for the preview period 
starting with the CY 2018 payment determination on a CMS Web site and/
or on our applicable listservs.
    We are inviting public comments on our public display proposals as 
discussed above.

C. Administrative Requirements

1. QualityNet Account and Security Administrator
    The QualityNet security administrator requirements, including 
setting up a QualityNet account and the associated timelines, are 
unchanged from those adopted in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75108 through 75109). In that final rule with 
comment period, we codified these procedural requirements at 42 CFR 
419.46(a). We are not proposing any changes to these requirements.
2. Requirements Regarding Participation Status
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75108 through 75109) and the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70519) for requirements for participation 
and withdrawal from the Hospital OQR Program. We also codified 
procedural requirements at 42 CFR 419.46(b). We are not proposing any 
changes to our requirements regarding participation status.

D. Form, Manner, and Timing of Data Submitted for the Hospital OQR 
Program

1. Hospital OQR Program Annual Payment Determinations
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75110 
through 75111) and the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70519 through 70520), we specified our data submission 
deadlines. We also codified our submission requirements at 42 CFR 
419.46(c).
    We also refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70519 through 70520), where we finalized our 
proposal to shift the quarters upon which the Hospital OQR Program 
payment determinations are based. Those finalized deadlines for the CY 
2017 payment determination and CY 2018 payment determination and 
subsequent years are illustrated in the tables below.

[[Page 45723]]



                      CY 2017 Payment Determination
                           [Transition period]
------------------------------------------------------------------------
                                                           Clinical data
                Patient encounter quarter                   submission
                                                             deadline
------------------------------------------------------------------------
Q3 2015 (July 1-September 30)...........................        2/1/2016
Q4 2015 (October 1-December 31).........................        5/1/2016
Q1 2016 (January 1-March 31)............................        8/1/2016
------------------------------------------------------------------------


           CY 2018 Payment Determination and Subsequent Years
------------------------------------------------------------------------
                                                           Clinical data
                Patient encounter quarter                   submission
                                                             deadline
------------------------------------------------------------------------
Q2 2016 (April 1-June 30)...............................       11/1/2016
Q3 2016 (July 1-September 30)...........................        2/1/2017
Q4 2016 (October 1-December 31).........................        5/1/2017
Q1 2017 (January 1-March 31)............................        8/1/2017
------------------------------------------------------------------------

    We are not proposing any changes to these policies.
2. Requirements for Chart-Abstracted Measures Where Patient-Level Data 
Are Submitted Directly to CMS for the CY 2019 Payment Determination and 
Subsequent Years
    The following previously finalized Hospital OQR Program chart-
abstracted measures require patient-level data to be submitted for the 
CY 2019 payment determination and subsequent years:
     OP-1: Median Time to Fibrinolysis (NQF #0287);
     OP-2: Fibrinolytic Therapy Received Within 30 Minutes of 
ED Arrival (NQF #0288);
     OP-3: Median Time to Transfer to Another Facility for 
Acute Coronary Intervention (NQF #0290);
     OP-4: Aspirin at Arrival (NQF #0286);
     OP-5: Median Time to ECG (NQF #0289);
     OP-18: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (NQF #0496);
     OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional;
     OP-21: ED--Median Time to Pain Management for Long Bone 
Fracture (NQF #0662); and
     OP-23: ED--Head CT Scan Results for Acute Ischemic Stroke 
or Hemorrhagic Stroke Patients who Received Head CT Scan Interpretation 
Within 45 Minutes of ED Arrival (NQF #0661).
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68481 through 68484) for a discussion of the form, 
manner, and timing for data submission requirements of these measures 
for the CY 2014 payment determination and subsequent years.
    We are not proposing any changes to our policies regarding the 
submission of chart abstracted measure data where patient-level data 
are submitted directly to CMS.
3. Claims-Based Measure Data Requirements for the CY 2019 Payment 
Determination and Subsequent Years and CY 2020 Payment Determination 
and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75111 through 75112), for a discussion of the general 
claims-based measure data submission requirements for the CY 2015 
payment determination and subsequent years. We are not proposing any 
changes to these policies for the CY 2019 payment determination.
    However, in sections XIII.B.5.a. and b. of this proposed rule, we 
are proposing to adopt two claims-based measures beginning with the CY 
2020 payment determination: OP-35: Admissions and Emergency Department 
Visits for Patients Receiving Outpatient Chemotherapy; and OP-36: 
Hospital Visits after Hospital Outpatient Surgery. The previously 
adopted submission requirements would also apply to these proposed 
measures, if they are adopted.
    If these proposals are adopted, there will be a total of nine 
claims-based measures for the CY 2020 payment determination and 
subsequent years:
     OP-8: MRI Lumbar Spine for Low Back Pain (NQF #0514);
     OP-9: Mammography Follow-Up Rates;
     OP-10: Abdomen CT--Use of Contrast Material;
     OP-11: Thorax CT--Use of Contrast Material (NQF #0513);
     OP-13: Cardiac Imaging for Preoperative Risk Assessment 
for Non-Cardiac, Low Risk Surgery (NQF #0669);
     OP-14: Simultaneous Use of Brain Computed Tomography (CT) 
and Sinus Computed Tomography (CT);
     OP-32: Facility 7-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy (NQF #2539);
     OP-35: Admissions and Emergency Department Visits for 
Patients Receiving Outpatient Chemotherapy; and
     OP-36: Hospital Visits after Hospital Outpatient Surgery 
(NQF #2687).
    We are not proposing any changes to our claims-based measures 
submission policies for the CY 2020 payment determination and 
subsequent years.
4. Proposed Data Submission Requirements for the Proposed OP- 37a-e: 
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare 
Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 
Payment Determination and Subsequent Years
    As discussed in section XIII.B.5.c. of this proposed rule, we are 
proposing to adopt five survey-based measures derived from the OAS 
CAHPS Survey for the CY 2020 payment determination and subsequent 
years--three OAS CAHPS composite survey-based measures and two global 
survey-based measures. In this section, we are proposing requirements 
related to survey administration, vendors, and oversight activities. We 
note that we are making similar proposals in the ASCQR Program in 
section XIV.D.5. of this proposed rule.
a. Survey Requirements
    The proposed survey has three administration methods: Mail-only; 
telephone-only; and mixed mode (mail with telephone follow-up of non-
respondents). We refer readers to the Protocols and Guidelines Manual 
for the OAS CAHPS Survey (https://oascahps.org/Survey-Materials) for 
materials for each mode of survey administration.
    For all three modes of administration, we are proposing that data 
collection must be initiated no later than 21 days after the month in 
which a patient has a surgery or procedure at a hospital, and completed 
within 6 weeks (42 days) after initial contact of eligible patients 
begins. We are proposing that hospitals, via their CMS-approved vendors 
(discussed below), must make multiple attempts to contact eligible 
patients unless the patient refuses or the hospital/vendor learns that 
the patient is ineligible to participate in the survey. In addition, we 
are proposing that hospitals, via their CMS-approved survey vendor, 
collect survey data for all eligible patients using the timeline 
established above and report that data to CMS by the quarterly 
deadlines established for each data collection period unless the 
hospital has been exempted from the OAS CAHPS Survey requirements under 
the low volume exemption discussed in section XIII.B.5.c.(6) of this 
proposed rule, above. These submission deadlines would be posted on the 
OAS CAHPS Survey Web site (https://oascahps.org). Late submissions 
would not be accepted.
    As discussed in more detail below, compliance with the OAS CAHPS

[[Page 45724]]

Survey protocols and guidelines, including this monthly reporting 
requirement, will be overseen by CMS or its contractor that will 
receive approved vendors' monthly submissions, review the data, and 
analyze the results. As stated previously, all data collection and 
submission for the OAS CAHPS Survey measures is done at the Medicare 
participating hospital level, as identified by its CCN. All locations, 
that offer outpatient services, of each eligible Medicare participating 
hospital would be required to participate in the OAS CAHPS Survey. 
Therefore, the survey data reported using a Medicare participating 
hospital's CCN must include all eligible patients from all outpatient 
locations (whether the hospital outpatient department is on campus or 
off campus) of eligible Medicare participating hospital. Survey vendors 
acting on behalf of hospitals must submit data by the specified data 
submission deadlines. If a hospital's data are submitted after the data 
submission deadline, it will not fulfill the OAS CAHPS quality 
reporting requirements. We therefore strongly encourage hospitals to be 
fully appraised of the methods and actions of their survey vendors--
especially the vendors' full compliance with OAS CAHPS Survey 
administration protocols--and to carefully inspect all data warehouse 
reports in a timely manner.
    We note that the use of predictive or auto dialers in telephonic 
survey administration is governed by the Telephone Consumer Protection 
Act (TCPA) (47 U.S.C. 227) and subsequent regulations promulgated by 
the Federal Communications Commission (FCC) (47 CFR 64.1200) and 
Federal Trade Commission. We refer readers to the FCC's declaratory 
ruling released on July 10, 2015 further clarifying the definition of 
an auto dialer, available at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf. In the telephone-only and mixed mode 
survey administration methods, HOPDs and vendors must comply with the 
regulations discussed above, and any other applicable regulations. To 
the extent that any existing CMS technical guidance conflicts with the 
TCPA or its implementing regulations regarding the use of predictive or 
auto dialers, or any other applicable law, CMS expects vendors to 
comply with applicable law.
b. Vendor Requirements
    To ensure that patients respond to the survey in a way that 
reflects their actual experiences with outpatient surgical care, and is 
not influenced by the hospital, we are proposing that hospitals must 
contract with a CMS-approved OAS CAHPS Survey vendor to conduct or 
administer the survey. We believe that a neutral third-party should 
administer the survey for hospitals, and it is our belief that an 
experienced survey vendor will be best able to ensure reliable results. 
CAHPS survey approved vendors are also already used or required in the 
following CMS quality programs: The Hospital IQR Program (71 FR 68203 
through 68204); the Hospital VBP Program (76 FR 26497, 26502 through 
26503, and 26510); the ESRD QIP (76 FR 70269 through 70270); the HH QRP 
(80 FR 68709 through 68710); and the HQRP (80 FR 47141 through 47207).
    Information about the list of approved survey vendors and how to 
authorize a vendor to collect data on a hospital's behalf is available 
through the OAS CAHPS Survey Web site at: https://oascahps.org. The Web 
portal has both public and secure (restricted access) sections to 
ensure the security and privacy of selected interactions. Hospitals 
will need to register on the OAS CAHPS Survey Web site (https://oascahps.org) in order to authorize the CMS-approved vendor to 
administer the survey and submit data on their behalf. Each hospital 
must then administer (via its vendor) the survey to all eligible 
patients treated during the data collection period on a monthly basis 
according to the guidelines in the Protocols and Guidelines Manual 
(https://oascahps.org) and report the survey data to CMS on a quarterly 
basis by the deadlines posted on the OAS CAHPS Survey Web site as 
stated above.
    Moreover, we are proposing to codify these OAS CAHPS Survey 
administration requirements for hospitals and survey vendors under the 
Hospital OQR Program at 42 CFR 419.46(g).
    As stated previously, we encourage hospitals to participate in 
voluntary national implementation of the OAS CAHPS Survey that began in 
January 2016. This will provide hospitals the opportunity to gain 
first-hand experience collecting and transmitting OAS CAHPS data 
without the public reporting of results or Hospital OQR Program payment 
implications. For additional information, we refer readers to https://oascahps.org/General-Information/National-Implementation.
    We are inviting public comments on our proposals for the data 
submission requirements for the five proposed OAS CAHPS Survey measures 
for the CY 2020 payment determination and subsequent years as discussed 
above.
5. Data Submission Requirements for Previously Finalized Measures for 
Data Submitted Via a Web-Based Tool for the CY 2019 Payment 
Determination and Subsequent Years
    The following Web-based quality measures previously finalized and 
retained in the Hospital OQR Program require data to be submitted via a 
Web-based tool (CMS' QualityNet Web site or CDC's NHSN Web site) for 
the CY 2018 payment determination and subsequent years:
     OP-12: The Ability for Providers with HIT to Receive 
Laboratory Data Electronically Directly into their ONC-Certified EHR 
System as Discrete Searchable Data (via CMS' QualityNet Web site);
     OP-17: Tracking Clinical Results between Visits (NQF 
#0491) (via CMS' QualityNet Web site);
     OP-22: ED--Left Without Being Seen (NQF #0499) (via CMS' 
QualityNet Web site);
     OP-25: Safe Surgery Checklist Use (via CMS' QualityNet Web 
site);
     OP-26: Hospital Outpatient Volume on Selected Outpatient 
Surgical Procedures (via CMS' QualityNet Web site);
     OP-27: Influenza Vaccination Coverage among Healthcare 
Personnel (via the CDC NHSN Web site) (NQF #0431);
     OP-29: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients (NQF #0658) (via CMS' QualityNet 
Web site);
     OP-30: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF #1536) (via 
CMS' QualityNet Web site); and
     OP-33: External Beam Radiotherapy (EBRT) for Bone 
Metastases (NQF #1822) (via CMS' QualityNet Web site).
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75112 through 75115) and the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70521) and the CMS QualityNet Web site 
(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1205442125082) for a discussion of the requirements for measure data submitted 
via the CMS QualityNet Web site for the CY 2017 payment determination 
and subsequent years. In addition, we refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75097 through 75100) for 
a discussion of the requirements for measure data

[[Page 45725]]

(specifically, the Influenza Vaccination Coverage Among Healthcare 
Personnel measure (NQF #0431)) submitted via the CDC NHSN Web site.
    We are not proposing any changes to our policies regarding the 
submission of measure data submitted via a Web-based tool.
6. Population and Sampling Data Requirements for the CY 2019 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74482 through 74483) for discussions of our 
policy that hospitals may voluntarily submit aggregate population and 
sample size counts for Medicare and non-Medicare encounters for the 
measure populations for which chart-abstracted data must be submitted. 
We are not proposing any changes to our population and sampling 
requirements.
7. Hospital OQR Program Validation Requirements for Chart-Abstracted 
Measure Data Submitted Directly to CMS for the CY 2019 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68484 through 68487) and the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66964 through 66965) for a discussion of 
finalized policies regarding our validation requirements. We also refer 
readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68486 through 68487), for a discussion of finalized policies regarding 
our medical record validation procedure requirements. We codified these 
policies at 42 CFR 419.46(e). For the CY 2018 payment determination and 
subsequent years, validation is based on four quarters of data 
((validation quarter 1 (January 1-March 31), validation quarter 2 
(April 1-June 30), validation quarter 3 (July 1-September 30), and 
validation quarter 4 (October 1-December 31)) (80 FR 70524).
    We are not proposing any changes to our validation requirements.
8. Proposed Extension or Exemption Process for the CY 2019 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75119 through 75120), the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66966), the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70524), and 42 CFR 419.46(d) for a complete 
discussion of our extraordinary circumstances extension or exception 
process under the Hospital OQR Program.
    In this proposed rule, we are proposing to update our extraordinary 
circumstances exemption (ECE) policy to extend the ECE request deadline 
for both chart-abstracted and Web-based measures from 45 days following 
an event causing hardship to 90 days following an event causing 
hardship. This proposal would become effective with ECEs requested on 
or after January 1, 2017. In the past, we have allowed hospitals to 
submit an ECE request form for measures within 45 days following an 
event that causes hardship and prevents them from providing data for 
measures (76 FR 74478 through 74479). In certain circumstances, 
however, it may be difficult for hospitals to timely evaluate the 
impact of certain extraordinary events within 45 days. We believe that 
extending the deadline to 90 days would allow hospitals more time to 
determine whether it is necessary and appropriate to submit an ECE 
request and to provide a more comprehensive account of the 
extraordinary circumstance in their ECE request form to CMS. For 
example, if a hospital has suffered damage due to a hurricane on 
January 1, it would have until March 31 to submit an ECE form via the 
QualityNet Secure Portal, mail, email, or secure fax as instructed on 
the ECE form.
    This timeframe (90 calendar days) also aligns with the ECE request 
deadlines for the Hospital VBP Program (78 FR 50706), the Hospital-
Acquired Condition Reduction Program (80 FR 49580), and the Hospital 
Readmissions Reduction Program (80 FR 49542 through 49543). We note 
that in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25205; 25233 
through 25234), we proposed deadlines of 90 days following an event 
causing hardship for the Hospital IQR Program (in non-eCQM 
circumstances) and for the LTCH QRP Program. In section XIV.D.6. of 
this proposed rule, we also are proposing a deadline of 90 days 
following an event causing hardship for the ASCQR Program.
    We are inviting public comments on our proposal to extend the 
submission deadline for an extraordinary circumstances extension or 
exemption to within 90 days of the date that the extraordinary 
circumstance occurred, effective January 1, 2017, for the CY 2019 
payment determination and subsequent years, as discussed above.
9. Hospital OQR Program Reconsideration and Appeals Procedures for the 
CY 2019 Payment Determination and Subsequent Years--Clarification
    We are making one clarification to our reconsideration and appeals 
procedures. We refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68487 through 68489), the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75118 through 75119), and the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70524) for a discussion 
of our reconsideration and appeals procedures. Currently, a hospital 
must submit a reconsideration request to CMS via the QualityNet Web 
site no later than the first business day of the month of February of 
the affected payment year (78 FR 75118 through 75119). A hospital that 
is dissatisfied with a decision made by CMS on its reconsideration 
request may file an appeal with the Provider Reimbursement Review Board 
(78 FR 75118 through 75119). Beginning with the CY 2018 payment 
determination, however, hospitals must submit a reconsideration request 
to CMS via the QualityNet Web site by no later than the first business 
day on or after March 17 of the affected payment year (80 FR 70524). We 
codified the process by which participating hospitals may submit 
requests for reconsideration at 42 CFR 419.46(f). We also codified 
language at Sec.  419.46(f)(3) regarding appeals with the Provider 
Reimbursement Review Board.
    In this proposed rule, we are clarifying our policy regarding 
appeals procedures. Specifically, if a hospital fails to submit a 
timely reconsideration request to CMS via the QualityNet Web site by 
the applicable deadline, then the hospital will not subsequently be 
eligible to file an appeal with the Provider Reimbursement Review 
Board. This clarification will be effective January 1, 2017 for the CY 
2017 payment determination and subsequent years.

E. Proposed Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2017 Payment Determination

1. Background
    Section 1833(t)(17) of the Act, which applies to subsection (d) 
hospitals (as defined under section 1886(d)(1)(B) of the Act), states 
that hospitals that fail to report data required to be submitted on the 
measures selected by the Secretary, in the form and manner, and at a 
time, specified by the Secretary will incur a 2.0 percentage point 
reduction to their

[[Page 45726]]

Outpatient Department (OPD) fee schedule increase factor; that is, the 
annual payment update factor. Section 1833(t)(17)(A)(ii) of the Act 
specifies that any reduction applies only to the payment year involved 
and will not be taken into account in computing the applicable OPD fee 
schedule increase factor for a subsequent payment year.
    The application of a reduced OPD fee schedule increase factor 
results in reduced national unadjusted payment rates that apply to 
certain outpatient items and services provided by hospitals that are 
required to report outpatient quality data in order to receive the full 
payment update factor and that fail to meet the Hospital OQR Program 
requirements. Hospitals that meet the reporting requirements receive 
the full OPPS payment update without the reduction. For a more detailed 
discussion of how this payment reduction was initially implemented, we 
refer readers to the CY 2009 OPPS/ASC final rule with comment period 
(73 FR 68769 through 68772).
    The national unadjusted payment rates for many services paid under 
the OPPS equal the product of the OPPS conversion factor and the scaled 
relative payment weight for the APC to which the service is assigned. 
The OPPS conversion factor, which is updated annually by the OPD fee 
schedule increase factor, is used to calculate the OPPS payment rate 
for services with the following status indicators (listed in Addendum B 
to this proposed rule, which is available via the Internet on the CMS 
Web site): ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' 
``T,'' ``V,'' or ``U.'' Payment for all services assigned to these 
status indicators will be subject to the reduction of the national 
unadjusted payment rates for hospitals that fail to meet Hospital OQR 
Program requirements, with the exception of services assigned to New 
Technology APCs with assigned status indicator ``S'' or ``T.'' We refer 
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68770 through 68771) for a discussion of this policy.
    The OPD fee schedule increase factor is an input into the OPPS 
conversion factor, which is used to calculate OPPS payment rates. To 
reduce the OPD fee schedule increase factor for hospitals that fail to 
meet reporting requirements, we calculate two conversion factors--a 
full market basket conversion factor (that is, the full conversion 
factor), and a reduced market basket conversion factor (that is, the 
reduced conversion factor). We then calculate a reduction ratio by 
dividing the reduced conversion factor by the full conversion factor. 
We refer to this reduction ratio as the ``reporting ratio'' to indicate 
that it applies to payment for hospitals that fail to meet their 
reporting requirements. Applying this reporting ratio to the OPPS 
payment amounts results in reduced national unadjusted payment rates 
that are mathematically equivalent to the reduced national unadjusted 
payment rates that would result if we multiplied the scaled OPPS 
relative payment weights by the reduced conversion factor. For example, 
to determine the reduced national unadjusted payment rates that applied 
to hospitals that failed to meet their quality reporting requirements 
for the CY 2010 OPPS, we multiplied the final full national unadjusted 
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule 
with comment period by the CY 2010 OPPS final reporting ratio of 0.980 
(74 FR 60642).
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 
through 68772), we established a policy that the Medicare beneficiary's 
minimum unadjusted copayment and national unadjusted copayment for a 
service to which a reduced national unadjusted payment rate applies 
would each equal the product of the reporting ratio and the national 
unadjusted copayment or the minimum unadjusted copayment, as 
applicable, for the service. Under this policy, we apply the reporting 
ratio to both the minimum unadjusted copayment and national unadjusted 
copayment for services provided by hospitals that receive the payment 
reduction for failure to meet the Hospital OQR Program reporting 
requirements. This application of the reporting ratio to the national 
unadjusted and minimum unadjusted copayments is calculated according to 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  419.43(h). Beneficiaries and secondary payers thereby share in 
the reduction of payments to these hospitals.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68772), we established the policy that all other applicable adjustments 
to the OPPS national unadjusted payment rates apply when the OPD fee 
schedule increase factor is reduced for hospitals that fail to meet the 
requirements of the Hospital OQR Program. For example, the following 
standard adjustments apply to the reduced national unadjusted payment 
rates: The wage index adjustment; the multiple procedure adjustment; 
the interrupted procedure adjustment; the rural sole community hospital 
adjustment; and the adjustment for devices furnished with full or 
partial credit or without cost. Similarly, OPPS outlier payments made 
for high cost and complex procedures will continue to be made when 
outlier criteria are met. For hospitals that fail to meet the quality 
data reporting requirements, the hospitals' costs are compared to the 
reduced payments for purposes of outlier eligibility and payment 
calculation. We established this policy in the OPPS beginning in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a 
complete discussion of the OPPS outlier calculation and eligibility 
criteria, we refer readers to section II.G. of this proposed rule.
2. Proposed Reporting Ratio Application and Associated Adjustment 
Policy for CY 2017
    We are proposing to continue our established policy of applying the 
reduction of the OPD fee schedule increase factor through the use of a 
reporting ratio for those hospitals that fail to meet the Hospital OQR 
Program requirements for the full CY 2017 annual payment update factor. 
For the CY 2017 OPPS, the proposed reporting ratio is 0.980, calculated 
by dividing the proposed reduced conversion factor of 73.411 by the 
proposed full conversion factor of 74.909. We are proposing to continue 
to apply the reporting ratio to all services calculated using the OPPS 
conversion factor. For the CY 2017 OPPS, we are proposing to apply the 
reporting ratio, when applicable, to all HCPCS codes to which we have 
proposed status indicator assignments of ``J1,'' ``J2,'' ``P,'' ``Q1,'' 
``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``V,'' and ``U'' (other 
than new technology APCs to which we have proposed status indicator 
assignment of ``S'' and ``T''). We are proposing to continue to exclude 
services paid under New Technology APCs. We are proposing to continue 
to apply the reporting ratio to the national unadjusted payment rates 
and the minimum unadjusted and national unadjusted copayment rates of 
all applicable services for those hospitals that fail to meet the 
Hospital OQR Program reporting requirements. We also are proposing to 
continue to apply all other applicable standard adjustments to the OPPS 
national unadjusted payment rates for hospitals that fail to meet the 
requirements of the Hospital OQR Program. Similarly, we are proposing 
to continue to calculate OPPS outlier eligibility and outlier payment 
based on the reduced payment rates for those hospitals that fail to 
meet the reporting requirements.

[[Page 45727]]

    We are inviting public comments on these proposals.

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

A. Background

1. Overview
    We refer readers to section XIII.A.1. of this proposed rule for a 
general overview of our quality reporting programs.
2. Statutory History of the ASCQR Program
    We refer readers to section XIV.K.1. of the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74492 through 74494) for a detailed 
discussion of the statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR Program
    We refer readers to section XV.A.3. of the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75122), section XIV.4. of the CY 2015 
OPPS/ASC final rule with comment period (79 FR 66966 through 66987), 
and section XIV. of the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70526 through 70537) for an overview of the regulatory history 
of the ASCQR Program.

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68493 through 68494) for a detailed discussion of the 
priorities we consider for ASCQR Program quality measure selection. We 
are not proposing any changes to this policy.
2. Policies for Retention and Removal of Quality Measures From the 
ASCQR Program
    We previously adopted a policy that quality measures adopted for an 
ASCQR Program measure set for a previous payment determination year be 
retained in the ASCQR Program for measure sets for subsequent payment 
determination years, except when they are removed, suspended, or 
replaced as indicated (76 FR 74494 and 74504; 77 FR 68494 through 
68495; 78 FR 75122; 79 FR 66967 through 66969). We are not proposing 
any changes to this policy.
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66967 through 66969) and 42 CFR 416.320 for a detailed 
discussion of the process for removing adopted measures from the ASCQR 
Program. We are not proposing any changes to this process.
3. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 
through 74517), we implemented the ASCQR Program effective with the CY 
2014 payment determination. In the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74496 through 74511), we adopted five claims-
based measures for the CY 2014 payment determination and subsequent 
years, two measures with data submission directly to CMS via an online 
Web-based tool for the CY 2015 payment determination and subsequent 
years, and one process of care, preventive service measure submitted 
via an online, Web-based tool to CDC's National Health Safety Network 
(NHSN) for the CY 2017 payment determination and subsequent years. In 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 
through 75130), we adopted three chart-abstracted measures with data 
submission to CMS via an online Web-based tool for the CY 2017 payment 
determination and subsequent years. In the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66984 through 66985), we excluded one of 
these measures, ASC-11: Cataracts: Improvement in Patient's Visual 
Function within 90 Days Following Cataract Surgery (NQF #1536), from 
the CY 2017 payment determination measure set and allowed for voluntary 
data collection and reporting for the CY 2017 payment determination and 
subsequent years. In the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66970 through 66979), we adopted one additional claims-
based measure for the CY 2018 payment determination and subsequent 
years. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70526 through 70537), we did not adopt any additional measures for the 
CY 2019 payment determination and subsequent years.
    The previously finalized measure set for the ASCQR Program for the 
CY 2019 payment determination and subsequent years is listed below.

 ASCQR Program Measure Set Previously Finalized for the CY 2019 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
        ASC No.                  NQF No.               Measure name
------------------------------------------------------------------------
ASC-1..................  0263...................  Patient Burn.
ASC-2..................  0266...................  Patient Fall.
ASC-3..................  0267...................  Wrong Site, Wrong
                                                   Side, Wrong Patient,
                                                   Wrong Procedure,
                                                   Wrong Implant.
ASC-4..................  0265 [dagger]..........  All-Cause Hospital
                                                   Transfer/Admission.
ASC-5..................  0264 [dagger]..........  Prophylactic
                                                   Intravenous (IV)
                                                   Antibiotic Timing.
ASC-6..................  N/A....................  Safe Surgery Checklist
                                                   Use.
ASC-7..................  N/A....................  ASC Facility Volume
                                                   Data on Selected ASC
                                                   Surgical Procedures.*
ASC-8..................  0431...................  Influenza Vaccination
                                                   Coverage Among
                                                   Healthcare Personnel.
ASC-9..................  0658...................  Endoscopy/Polyp
                                                   Surveillance:
                                                   Appropriate Follow-Up
                                                   Interval for Normal
                                                   Colonoscopy in
                                                   Average Risk
                                                   Patients.
ASC-10.................  0659...................  Endoscopy/Polyp
                                                   Surveillance:
                                                   Colonoscopy Interval
                                                   for Patients with a
                                                   History of
                                                   Adenomatous Polyps-
                                                   Avoidance of
                                                   Inappropriate Use.
ASC-11.................  1536...................  Cataracts: Improvement
                                                   in Patient's Visual
                                                   Function within 90
                                                   Days Following
                                                   Cataract Surgery.**
ASC-12.................  2539...................  Facility 7-Day Risk-
                                                   Standardized Hospital
                                                   Visit Rate after
                                                   Outpatient
                                                   Colonoscopy.
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* Procedure categories and corresponding HCPCS codes are located at:
  http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
** Measure voluntarily collected effective beginning with the CY 2017
  payment determination as set forth in section XIV.E.3.c. of the CY
  2015 OPPS/ASC final rule with comment period (79 FR 66984 through
  66985).


[[Page 45728]]

4. Proposed ASCQR Program Quality Measures for the CY 2020 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75124) for a detailed discussion of our approach to 
measure selection for the ASCQR Program. In this proposed rule, we are 
proposing to adopt a total of seven measures for the CY 2020 payment 
determination and subsequent years: two measures collected via a CMS 
Web-based tool and five Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based 
measures. The two measures that require data to be submitted directly 
to CMS via a Web-based tool are: (1) ASC-13: Normothermia Outcome; and 
(2) ASC-14: Unplanned Anterior Vitrectomy. The five proposed survey-
based measures (ASC-15a-e) are collected via the OAS CAHPS Survey. 
These measures are discussed in detail below.
a. ASC-13: Normothermia Outcome
(1) Background
    Impairment of thermoregulatory control due to anesthesia may result 
in perioperative hypothermia. Perioperative hypothermia is associated 
with numerous adverse outcomes, including: cardiac complications; \63\ 
surgical site infections; \64\ impaired coagulation; \65\ and 
colligation of drug effects; \66\ as well as post-anesthetic shivering 
and thermal discomfort. When intraoperative normothermia is maintained, 
patients experience fewer adverse outcomes and their overall care costs 
are lower.\67\ Several methods to maintain normothermia are available. 
While there is no literature currently available on variation in rates 
of normothermia among ASC facilities, variability in maintaining 
normothermia has been demonstrated in other clinical care settings.\68\ 
This measure provides the opportunity for ASCs to improve quality of 
care and lower the rates of anesthesia-related complications in the ASC 
setting.
---------------------------------------------------------------------------

    \63\ Frank SM, Fleisher LA, Breslow MJ, et al. Perioperative 
maintenance of normothermia reduces the incidence of morbid cardiac 
events: A randomized clinical trial. JAMA. 1997;277(14): 1127-1134.
    \64\ Kurz A, Sessler DI, Lenhardt R. Perioperative normothermia 
to reduce the incidence of surgical-wound infection and shorten 
hospitalization: Study of wound infection and temperature group. N 
Engl J Med. 1996;334(19): 1209-1215.
    \65\ Rajagopalan S, Mascha E, Na J, Sessler DI. The effects of 
mild hypothermia on blood loss and transfusion requirements during 
total hip arthroplasty. Lancet. 1996;347(8997):289-292.
    \66\ Kurz A. Physiology of thermoregulation. Best Pract Res Clin 
Anaesthesiol.2008;22(4):627-644.
    \67\ Mahoney CB, Odom J. Maintaining intraoperative 
normothermia: A meta-analysis of outcomes with costs. AANA Journal. 
1999;67(2): 155-164.
    \68\ Frank SM, Beattie C, Christopherson R, et al. Unintentional 
Hypothermia is associated with Postoperative Myocardial Ischemia: 
The Perioperative Ischemia Randomized Anesthesia Trial Study Group. 
Anesthesiology 1993;78(3):468-476.
---------------------------------------------------------------------------

(2) Overview of Measure
    We believe it is important to monitor the rate of anesthesia-
related complications in the ASC setting because many surgical 
procedures performed at ASCs involve anesthesia. Therefore, we are 
proposing to adopt the ASC-13: Normothermia Outcome measure, which is 
based on aggregate measure data collected by the ASC and submitted via 
a CMS Web-based tool (QualityNet), in the ASCQR Program for the CY 2020 
payment determination and subsequent years. We expect the measure would 
promote improvement in patient care over time, because measurement 
coupled with transparency in publicly reporting of measure information 
would make patient outcomes following procedures performed under 
general or neuraxial anesthesia more visible to ASCs and patients and 
incentivize ASCs to incorporate quality improvement activities to 
reduce perioperative hypothermia and associated complications where 
necessary.
    Section 1890A of the Act requires the Secretary to establish a 
prerulemaking process with respect to the selection of certain 
categories of quality and efficiency measures. Under section 
1890A(a)(2) of the Act, the Secretary must make available to the public 
by December 1 of each year a list of quality and efficiency measures 
that the Secretary is considering for the Medicare program. The 
proposed ASC-13 measure was included on a publicly available document 
entitled ``List of Measures under Consideration for December 1, 2014.'' 
\69\ The MAP reviewed the measure (MUC ID: X3719) and conditionally 
supported it for the ASCQR Program, pending completion of reliability 
testing and NQF review and endorsement.\70\ The MAP agreed that this 
measure is highly impactful and meaningful to patients. It stated that 
anesthetic-induced thermoregulatory impairment may cause perioperative 
hypothermia, which is associated with adverse outcomes including 
significant morbidity (decrease in tissue metabolic rate, myocardial 
ischemia, surgical site infections, bleeding diatheses, prolongation of 
drug effects) and mortality. As an intermediate outcome measure, the 
workgroup agreed that this measure moves towards an outcome measure 
that fills the workgroup identified gap of anesthesia-related 
complications.\71\
---------------------------------------------------------------------------

    \69\ National Quality Forum. List of Measures under 
Consideration for December 1, 2014.National Quality Forum, Dec. 
2014. Available at: https://www.qualityforum.org/Setting_Priorities/Partnership/Measures_Under_Consideration_List_2014.aspx.
    \70\ National Quality Forum. MAP 2015 Final Recommendations to 
HHS and CMS. Rep. National Quality Forum, Jan. 2015. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \71\ Ibid.
---------------------------------------------------------------------------

    Furthermore, sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the 
Act, when read together, require the Secretary, except as the Secretary 
may otherwise provide, to develop measures appropriate for the 
measurement of the quality of care furnished by ASCs that reflect 
consensus among affected parties and, to the extent feasible and 
practicable, that include measures set forth by one or more national 
consensus building entities. However, we note that section 
1833(i)(7)(B) of the Act does not require that each measure we adopt 
for the ASCQR Program be endorsed by a national consensus building 
entity, or by the NQF specifically. Further, under section 
1833(i)(7)(B) of the Act, section 1833(t)(17)(C)(i) of the Act applies 
to the ASCQR Program, except as the Secretary may otherwise provide. 
Under this provision, the Secretary has further authority to adopt non-
endorsed measures. As stated in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74465 and 74505), we believe that consensus among 
affected parties can be reflected through means other than NQF 
endorsement, including consensus achieved during the measure 
development process, consensus shown through broad acceptance and use 
of measures, and consensus through public comment. We believe this 
proposed measure meets these statutory requirements.
    The proposed ASC-13 measure is not NQF-endorsed. However, this 
measure is maintained by the ASC Quality Collaboration,\72\ an entity 
recognized within the community as an expert in measure development for 
the ASC setting. We believe that this measure is appropriate for the 
measurement of quality care furnished by ASCs, because procedures using 
anesthesia are commonly performed in ASCs and, as discussed above, 
maintenance of perioperative normothermia can signify

[[Page 45729]]

important issues in the care being provided by ASCs. While the 
Normothermia Outcome measure is not NQF-endorsed, we believe this 
measure reflects consensus among affected parties, because the MAP, 
which represents stakeholder groups, reviewed and conditionally 
supported the measure for use in the ASCQR Program. The MAP agreed that 
this measure ``is highly impactful and meaningful to patients'' and 
that, as an intermediate outcome measure, the Normothermia Outcome 
measure moves towards an outcome measure that fills the workgroup-
identified gap of anesthesia-related complications. Moreover, we 
believe this measure is reliable because reliability testing completed 
by the measure steward comparing ASC-reported normothermia rates and 
re-abstracted normothermia rates found the difference from originally 
submitted and re-abstracted normothermia rates ranged from -1.6 percent 
to 0.9 percent, with a 95 percent confidence interval of -0.9 percent, 
0.5 percent. Because this confidence interval includes zero, there is 
no evidence that the submitted and abstracted rates are statistically 
different at the p = 0.05 level. Therefore, we believe there is strong 
evidence that the Normothermia Outcome measure is reliable.
---------------------------------------------------------------------------

    \72\ ASC Quality Collaboration. ``ASC Quality Collaboration.'' 
Available at: http://www.ascquality.org/.
---------------------------------------------------------------------------

(3) Data Sources
    This measure is based on aggregate measure data collected via 
chart-abstraction by the ASC and submitted via a CMS Web-based tool 
(that is, QualityNet).
    We are proposing that the data collection period for the proposed 
ASC-13 measure would be the calendar years 2 years prior to the 
applicable payment determination year. For example, for the CY 2020 
payment determination, the data collection period would be CY 2018. We 
also are proposing that ASCs submit these data to CMS during the time 
period of January 1 to May 15 in the year prior to the affected payment 
determination year. For example, for the CY 2020 payment determination, 
the submission period would be January 1, 2019 to May 15, 2019. We 
refer readers to section XIV.D.3.b. of this proposed rule for a more 
detailed discussion of the requirements for data submitted via a CMS 
online data submission tool.
(4) Measure Calculation
    The outcome measured in the proposed ASC-13 measure is the 
percentage of patients having surgical procedures under general or 
neuraxial anesthesia of 60 minutes or more in duration who are 
normothermic within 15 minutes of arrival in the post-anesthesia care 
unit (PACU). The numerator is the number of surgery patients with a 
body temperature equal to or greater than 96.8 degrees Fahrenheit/36 
degrees Celsius recorded within 15 minutes of arrival in the PACU. The 
denominator is all patients, regardless of age, undergoing surgical 
procedures under general or neuraxial anesthesia of greater than or 
equal to 60 minutes in duration.
(5) Cohort
    The measure includes all patients, regardless of age, undergoing 
surgical procedures under general or neuraxial anesthesia of greater 
than or equal to 60 minutes' duration.
    The measure excludes: Patients who did not have general or 
neuraxial anesthesia; patients whose length of anesthesia was less than 
60 minutes; and patients with physician/advanced practice nurse/
physician assistant documentation of intentional hypothermia for the 
procedure performed. Additional methodology and measure development 
details are available at: http://www.ascquality.org/qualitymeasures.cfm 
under ``ASC Quality Collaboration Measures Implementation Guide.''
(6) Risk Adjustment
    The measure is not risk-adjusted.
    We are inviting public comments on our proposal to adopt the ASC-
13: Normothermia Outcome measure for the CY 2020 payment determination 
and subsequent years as discussed above.
b. ASC-14: Unplanned Anterior Vitrectomy
(1) Background
    An unplanned anterior vitrectomy is performed when vitreous 
inadvertently prolapses into the anterior segment of the eye during 
cataract surgery. Cataracts are a leading cause of blindness in the 
United States, with 24.4 million cases in 2010.\73\ Each year, 
approximately 1.5 million patients undergo cataract surgery to improve 
their vision.\74\ While unplanned anterior vitrectomy rates are 
relatively low, this procedure complication may result in poor visual 
outcomes and other complications, including retinal detachment.\75\ 
Cataract surgery is the most common surgery performed in ASCs; 
therefore, this measure is of interest to the ASC Program.\76\
---------------------------------------------------------------------------

    \73\ National Eye Institute. ``Cataracts.'' Cataracts. National 
Institutes of Health, n.d. Available at: https://www.nei.nih.gov/eyedata/cataract#1.
    \74\ ``Measure Application Partnership Hospital Workgroup'', 
National Quality Forum. Dec. 2014, Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \75\ Chen M, Lamattina KC, Patrianakos T, Dwarakanathan S. 
Complication rate of posterior capsule rupture with vitreous loss 
during phacoemulsification at a Hawaiian cataract surgical center: A 
clinical audit. Clin Ophthamlol. 2014 Feb 5;8:375-378.
    \76\ ``Measure Application Partnership Hospital Workgroup'', 
National Quality Forum. Dec. 2014, Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
---------------------------------------------------------------------------

(2) Overview of Measure
    Based on the prevalence of cataract surgery in the ASC setting, we 
believe it is important to minimize adverse patient outcomes associated 
with cataract surgery. Therefore, we are proposing to adopt the ASC-14: 
Unplanned Anterior Vitrectomy measure in the ASCQR Program for the CY 
2020 payment determination and subsequent years. We expect the measure 
would promote improvement in patient care over time, because 
measurement coupled with transparency in publicly reporting measure 
information would make the rate of this unplanned procedure at ASCs 
more visible to both ASCs and patients and would incentivize ASCs to 
incorporate quality improvement activities to reduce the occurrence of 
unplanned anterior vitrectomies. The measure also addresses the MAP-
identified priority measure area of procedure complications for the 
ASCQR Program.\77\
---------------------------------------------------------------------------

    \77\ National Quality Forum. MAP 2015 Considerations for 
Selection of Measures for Federal Programs: Hospitals. Rep. National 
Quality Forum, Feb. 2015. Available at: http://www.qualityforum.org/Publications/2015/02/MAP_Hospital_Programmatic_Deliverable_-_Final_Report.aspx.
---------------------------------------------------------------------------

    The ASC-14 measure we are proposing was included on a publicly 
available document entitled ``List of Measures under Consideration for 
December 1, 2014.'' \78\ The MAP reviewed this measure (MUC ID: X3720) 
and conditionally supported it for the ASCQR Program, pending 
completion of reliability testing and NQF review and endorsement.\79\ 
The MAP agreed that this measure is highly impactful and meaningful to 
patients.\80\ It stated that according to the National Eye Institute 
report in 2002, more than half of U.S.

[[Page 45730]]

residents over 65 years have a cataract.\81\ Furthermore, cataracts are 
a leading cause of blindness, with more than 1.5 million cataract 
surgeries performed annually to improve the vision of those with 
cataracts.\82\ Unplanned anterior vitrectomy is a recognized adverse 
intraoperative event during cataract surgery occurring in two to four 
percent of all cases,\83\ with some research showing that rates of 
unplanned anterior vitrectomy are higher among less experienced 
surgeons.\84\ The MAP continued to state that an anterior vitrectomy, 
the repair of a rupture in a mainly liquid portion of the eye, is 
generally an unplanned complication of a cataract surgery.\85\ The MAP 
agreed that this is an outcome measure that fills the workgroup 
identified priority gap of procedure complications.\86\
---------------------------------------------------------------------------

    \78\ National Quality Forum. List of Measures under 
Consideration for December 1, 2014.National Quality Forum, Dec. 
2014. Available at: https://www.qualityforum.org/Setting_Priorities/Partnership/Measures_Under_Consideration_List_2014.aspx.
    \79\ National Quality Forum. MAP 2015 Final Recommendations to 
HHS and CMS. Rep. National Quality Forum, Jan. 2015. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \80\ Ibid.
    \81\ Ibid.
    \82\ Ibid.
    \83\ Schein OD, Steinberg EP, Javitt JC, et al. Variation in 
cataract surgery practice and clinical outcomes. Ophthalmology 
1994;101:1142-1152; Tan JHY and Karawatowski. Phacoemulsification 
cataract surgery and unplanned anterior vitrectomy--is it bad news?. 
Eye. 2002 March;16:117-120.
    \84\ Tan JHY and Karawatowski. Phacoemulsification cataract 
surgery and unplanned anterior vitrectomy--is it bad news?. Eye. 
2002 March;16:117-120.
    \85\ National Quality Forum. MAP 2015 Final Recommendations to 
HHS and CMS. Rep. National Quality Forum, Jan. 2015. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \86\ Ibid.
---------------------------------------------------------------------------

    The proposed ASC-14 measure is not NQF-endorsed. However, this 
measure is maintained by the ASC Quality Collaboration,\87\ an entity 
recognized within the community as an expert in measure development for 
the ASC setting of care. We believe that this measure is appropriate 
for the measurement of quality care furnished by ASCs, because cataract 
surgery is commonly performed in ASCs and, as discussed above, 
complications such as unplanned anterior vitrectomy can signify 
important issues in the care being provided by ASCs. While the 
Unplanned Anterior Vitrectomy measure is not NQF endorsed, we believe 
this measure reflects consensus among affected parties, because the 
MAP, which represents stakeholder groups, reviewed and conditionally 
supported the measure for use in the ASCQR Program. The MAP stated that 
the Unplanned Anterior Vitrectomy measure is ``highly impactful and 
meaningful to patients'' because cataracts are a leading cause of 
blindness among Americans and an unplanned anterior vitrectomy is a 
generally unplanned complication of the surgery intended to help 
restore patients' vision. Furthermore, we believe the measure is 
reliable because reliability testing performed by the measure steward 
found that the difference from originally submitted and re-abstracted 
vitrectomy rates was zero for 92 percent of ASCs reviewed. Therefore, 
we believe there is strong evidence that the Unplanned Anterior 
Vitrectomy measure is reliable.
---------------------------------------------------------------------------

    \87\ ASC Quality Collaboration. ``ASC Quality Collaboration.'' 
Available at: http://www.ascquality.org/.
---------------------------------------------------------------------------

(3) Data Sources
    This measure is based on aggregate measure data collected via 
chart-abstraction by the ASC and submitted via a CMS Web-based tool 
(that is, QualityNet).
    We are proposing that the data collection period for the proposed 
ASC-14 measure would be the calendar years 2 years prior to the 
applicable payment determination year. For example, for the CY 2020 
payment determination, the data collection period would be CY 2018. We 
also are proposing that ASCs submit these data to CMS during the time 
period of January 1 to May 15 in the year prior to the affected payment 
determination year. For example, for the CY 2020 payment determination, 
the submission period would be January 1, 2019 to May 15, 2019. We 
refer readers to section XIV.D.3.b. of this proposed rule for a more 
detailed discussion of the requirements for data submitted via a CMS 
online data submission tool.
(4) Measure Calculation
    The outcome measured in the proposed ASC-14 measure is the 
percentage of cataract surgery patients who have an unplanned anterior 
vitrectomy. The numerator for this measure is all cataract surgery 
patients who had an unplanned anterior vitrectomy. The denominator is 
all cataract surgery patients.
(5) Cohort
    There are no additional inclusion or exclusion criteria for the 
proposed ASC-14 measure. Additional methodology and measure development 
details are available at: http://www.ascquality.org/qualitymeasures.cfm, under ``ASC Quality Collaboration Measures 
Implementation Guide.''
(6) Risk Adjustment
    This measure is not risk-adjusted.
    We are inviting public comments on our proposal to adopt the ASC-
14: Unplanned Anterior Vitrectomy measure for the CY 2020 payment 
determination and subsequent years as discussed above.
c. ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of 
Healthcare Providers and Systems (OAS CAHPS) Survey Measures
(1) Background
    Currently, there is no standardized survey available to collect 
information on the patient's overall experience for surgeries or 
procedures performed within an ASC. Some ASCs are conducting their own 
surveys and reporting these results on their Web sites, but there is 
not one standardized survey in use to assess patient experiences with 
care in ASCs that would allow valid comparisons across ASCs. Patient-
centered experience of care measures are a component of the 2016 CMS 
Quality Strategy, which emphasizes patient-centered care by rating 
patient experience as a means for empowering patients and improving the 
quality of their care.\88\ In addition, information on patient 
experience with care at a provider/facility is an important quality 
indicator to help providers and facilities improve services furnished 
to their patients and to assist patients in choosing a provider/
facility at which to seek care.
---------------------------------------------------------------------------

    \88\ CMS National Quality Strategy 2016. Available at: https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
---------------------------------------------------------------------------

(2) Overview of Measures
    The OAS CAHPS Survey was developed as part HHS' Transparency 
Initiative to measure patient experiences with ASC care.\89\ In 2006, 
CMS implemented the Hospital CAHPS (HCAHPS) Survey, which collects data 
from hospital inpatients about their experience with hospital inpatient 
care (71 FR 48037 through 48039). The HCAHPS Survey, however, is 
limited to data from patients who receive inpatient care for specific 
diagnosis-related groups for medical, surgical, and obstetric services; 
it does not include patients who received outpatient surgical care from 
ASCs or HOPDs. Throughout the development of the OAS CAHPS Survey, CMS 
considered the type of data collected for HCAHPS and other existing 
CAHPS surveys as well as the terminology and question wording to 
maximize consistency across

[[Page 45731]]

CAHPS surveys. CMS has developed similar surveys for other settings of 
care that are currently used in other quality reporting and value-based 
purchasing programs, such as the Hospital IQR Program (71 FR 68203 
through 68204), the Hospital VBP Program (76 FR 26497, 26502 through 
26503, and 26510), the ESRD QIP (76 FR 70269 through 70270), the HH QRP 
(80 FR 68709 through 68710), and the HQRP (80 FR 47141 through 47207).
---------------------------------------------------------------------------

    \89\ U.S. Department of Health and Human Services. HHS Strategic 
Plan, Strategic Goal 4: Ensure Efficiency, Transparency, 
Accountability, and Effectiveness of HHS Programs. Feb. 2016. 
Available at: http://www.hhs.gov/about/strategic-plan/strategic-goal-4/index.html.
---------------------------------------------------------------------------

    The OAS CAHPS Survey contains 37 questions that cover topics such 
as access to care, communications, experience at the facility, and 
interactions with facility staff. The survey also contains two global 
rating questions and asks for self-reported health status and basic 
demographic information (race/ethnicity, educational attainment level, 
languages spoken at home, among others). The basic demographic 
information captured in the OAS CAHPS Survey are standard AHRQ 
questions used to develop case mix adjustment models for the survey. 
Furthermore, the survey development process followed the principles and 
guidelines outlined by the AHRQ and its CAHPS[supreg] Consortium. The 
OAS CAHPS Survey received the registered CAHPS trademark in April 2015. 
OAS CAHPS Survey questions can be found at https://oascahps.org/Survey-Materials under ``Questionnaire.''
    We are proposing to adopt five survey-based measures derived from 
the OAS CAHPS Survey for the CY 2020 payment determination and 
subsequent years: three OAS CAHPS composite survey-based measures and 
two global survey-based measures (discussed below). We believe that 
these survey-based measures will be useful to assess aspects of care 
where the patient is the best or only source of information, and to 
enable objective and meaningful comparisons between ASCs. We note that 
we are making similar proposals in the Hospital OQR Program in section 
XIII.B.5.c. of this proposed rule. The three OAS CAHPS composite 
survey-based measures are:
     ASC-15a: OAS CAHPS--About Facilities and Staff;
     ASC-15b: OAS CAHPS--Communication About Procedure; and
     ASC-15c: OAS CAHPS--Preparation for Discharge and 
Recovery.
    Each of the three OAS CAHPS composite survey-based measures 
consists of six or more questions. Furthermore, the two global survey-
based measures are:
     ASC-15d: OAS CAHPS--Overall Rating of Facility; and
     ASC-15e: OAS CAHPS--Recommendation of Facility.
    The two global survey-based measures are comprised of a single 
question each and ask the patient to rate the care provided by the ASC 
and their willingness to recommend the ASC to family and friends. More 
information about these measures can be found at the OAS CAHPS Survey 
Web site (https://oascahps.org).
    The five survey-based measures (MUC IDs: X3697; X3698; X3699; 
X3702; and X3703) we are proposing were included on the CY 2014 MUC 
list,\90\ and reviewed by the MAP.\91\ The MAP encouraged continued 
development of these survey-based measures; however, we note that these 
measures had not been fully specified by the time of submission to the 
MUC List.\92\ The MAP stated that these are high impact measures that 
will improve both quality and efficiency of care and be meaningful to 
consumers.\93\ Further, the MAP stated that given that these measures 
are also under consideration for the Hospital OQR Program, they help to 
promote alignment across care settings.\94\ It also stated that these 
measures would begin to fill a gap MAP has previously identified for 
this program including patient reported outcomes and patient and family 
engagement.\95\ Several MAP workgroup members noted that CMS should 
consider how these measures are related to other existing ambulatory 
surveys to ensure that patients and facilities aren't overburdened.\96\
---------------------------------------------------------------------------

    \90\ National Quality Forum. List of Measures under 
Consideration for December 1, 2014. National Quality Forum, Dec. 
2014. Available at: https://www.qualityforum.org/Setting_Priorities/Partnership/Measures_Under_Consideration_List_2014.aspx.
    \91\ National Quality Forum. MAP 2015 Final Recommendations to 
HHS and CMS. Rep. National Quality Forum, Jan. 2015. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \92\ Ibid.
    \93\ Ibid.
    \94\ Ibid.
    \95\ Ibid.
    \96\ Ibid.
---------------------------------------------------------------------------

    These measures have been fully developed since submission to the 
MUC List. The survey development process followed the principles and 
guidelines outlined by the AHRQ \97\ and its CAHPS[supreg] Consortium 
\98\ in developing a patient experience of care survey, such as: 
reporting on actual patient experiences; standardization across the 
survey instrument, administration protocol, data analysis, and 
reporting; and extensive testing with consumers. Development also 
included: reviewing surveys submitted under a public call for measures; 
reviewing existing literature; conducting focus groups with patients 
who had recent outpatient surgery; conducting cognitive interviews with 
patients to assess their understanding and ability to answer survey 
questions; obtaining stakeholder input on the draft survey and other 
issues that may affect implementation; and conducting a field test.
---------------------------------------------------------------------------

    \97\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys.'' Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \98\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://cahps.ahrq.gov/about-cahps/cahps-program/index.html.
---------------------------------------------------------------------------

    In addition, we received public input from several modes. We 
published a request for information on January 25, 2013 (78 FR 5460) 
requesting information regarding publicly available surveys, survey 
questions, and measures indicating patient experience of care and 
patient-reported outcomes from surgeries or other procedures for 
consideration in developing a standardized survey to evaluate the care 
received in these facilities from the patient's perspective. 
Stakeholder input was also obtained through communications with a TEP 
comprised of experts on outpatient surgery, including clinicians, 
providers, patient advocates, and accreditation organizations. The TEP 
provided input and guidance on issues related to survey development, 
and reviewed drafts of the survey throughout development.
    After we determined that the survey instrument was near a final 
form, we tested the effect of various data collection modes (that is, 
mail-only, telephone-only, or mail with telephone follow-up of 
nonrespondents) on survey responses. We began voluntary national 
implementation of the OAS CAHPS Survey in January 2016.\99\
---------------------------------------------------------------------------

    \99\ Outpatient and Ambulatory Surgery CAHPS Survey. ``National 
Implementation'' Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    In addition, while the proposed OAS CAHPS Survey-based measures are 
not currently NQF-endorsed, they will be submitted to the NQF for 
endorsement under an applicable call for measures in the near future.
    In section XIX. of this proposed rule, the Hospital VBP Program is 
proposing to remove the three Pain Management dimension questions of 
the HCAHPS Survey from the total Hospital VBP Program performance score 
due to confusion about the intent of these questions and the public 
health concern about the ongoing prescription opioid overdose epidemic. 
For more information about the pain management questions captured in 
the HCAHPS Survey and their use in the Hospital

[[Page 45732]]

VBP Program, we refer readers to section XIX.B.3. of this proposed 
rule.
    The OAS CAHPS Survey also contains two questions regarding pain 
management. We believe pain management is an important dimension of 
quality, but realize that there are concerns about these types of 
questions. However, the pain management questions in the OAS CAHPS 
Survey are very different from those contained in the HCAHPS Survey 
because they focus on communication regarding pain management rather 
than pain control. Specifically, the OAS CAHPS Survey pain management 
communication questions read:
    Q: Some ways to control pain include prescription medicine, over-
the-counter pain relievers or ice packs. Did your doctor or anyone from 
the facility give you information about what to do if you had pain as a 
result of your procedure?

[ballot] A1: Yes, definitely.
[ballot] A2: Yes, somewhat.
[ballot] A3: No.

    Q: At any time after leaving the facility, did you have pain as a 
result of your procedure? \100\
---------------------------------------------------------------------------

    \100\ We note that this question is a control question only used 
to determine if the facility should have given a patient additional 
guidance on how to handle pain after leaving the facility. The 
facility is not scored based on this question.

[ballot] A1: Yes.
[ballot] A2: No.

    Unlike the HCAHPS pain management questions, which directly address 
the adequacy of the hospital's pain management efforts, such as 
prescribing opioids, the OAS CAHPS pain management communication 
questions focus on the information provided to patients regarding pain 
management following discharge from an ASC. We continue to believe that 
pain control is an appropriate part of routine patient care that ASCs 
should manage and is an important concern for patients, their families, 
and their caregivers. We also note that appropriate pain management 
includes communication with patients about pain-related issues, setting 
expectations about pain, shared decision-making, and proper 
prescription practices. In addition, we note that, unlike the Hospital 
VBP Program, there is no link between scoring well on the questions and 
higher hospital payments. However, we also recognize that questions 
remain about the ongoing prescription opioid epidemic. For these 
reasons, we are proposing to adopt the OAS CAHPS Survey measures as 
described in this section, including the pain management communication 
questions, but will continue to evaluate the appropriateness and 
responsiveness of these questions to patient experience of care and 
public health concerns. We also welcome feedback on these pain 
management communication questions for use in future revisions of the 
OAS CAHPS Survey.
(3) Data Sources
    As discussed in the Protocols and Guidelines Manual for the OAS 
CAHPS Survey (https://oascahps.org/Survey-Materials), the survey has 
three administration methods: mail-only; telephone-only; and mixed mode 
(mail with telephone follow-up of non-respondents). We refer readers to 
section XIV.D.5. of this proposed rule for an in-depth discussion of 
the data submission requirements associated with the proposed OAS CAHPS 
Survey measures. To summarize, to meet the OAS CAHPS Survey 
requirements for the ASCQR Program, we are proposing that ASCs contract 
with a CMS-approved vendor to collect survey data for eligible patients 
at the ASCs on a monthly basis and report that data to CMS on the ASC's 
behalf by the quarterly deadlines established for each data collection 
period. ASCs may elect to add up to 15 supplemental questions to the 
OAS CAHPS Survey. These could be questions ASCs develop or use from an 
existing survey. All supplemental questions must be placed after the 
core OAS CAHPS Survey questions (Q1-Q24). The list of approved vendors 
is available at: https://oascahps.org.
    We also are proposing to codify the OAS CAHPS Survey administration 
requirements for ASCs and vendors under the ASCQR Program at 42 CFR 
416.310(e), and refer readers to section XIV.D.5. of this proposed rule 
for more details. It should be noted that non-discrimination 
requirements for effective communication with persons with disabilities 
and language access for persons with limited English proficiency should 
be considered in administration of the surveys. For more information, 
see http://www.hhs.gov/civil-rights.
    We are proposing that the data collection period for the OAS CAHPS 
Survey measures would be the calendar year 2 years prior to the 
applicable payment determination year. For example, for the CY 2020 
payment determination, ASCs would be required to collect data on a 
monthly basis, and submit this collected data on a quarterly basis, for 
January 1, 2018-December 31, 2018 (CY 2018).
    We are further proposing that, as discussed in more detail below, 
ASCs will be required to survey a random sample of eligible patients on 
a monthly basis. A list of acceptable random sampling methods can be 
found in the OAS CAHPS Protocols and Guidelines Manual (https://oascahps.org/Survey-Materials). We are also proposing that ASCs would 
be required to collect at least 300 completed surveys over each 12-
month reporting period(an average of 25 completed surveys per month). 
We acknowledge that some smaller ASCs may not be able to collect 300 
completed surveys during a 12-month period; therefore, we are proposing 
an exemption for facilities with lower patient censuses. ASCs would 
have the option to submit a request to be exempted from performing the 
OAS CAHPS Survey if they treat fewer than 60 survey-eligible patients 
during the year preceding the data collection period. We refer readers 
to section XIV.B.4.c.(6) of this proposed rule for details on this 
proposal. However, we believe it is important to capture patients' 
experience of care at ASCs. Therefore, except as discussed in section 
XIV.B.4.c.(6) of this proposed rule below, we also are proposing that 
smaller ASCs that cannot collect 300 completed surveys over a 12-month 
reporting period will only be required to collect as many completed 
surveys as possible during that same time period, with surveying all 
eligible patients (that is, no sampling). For more information 
regarding these survey administration requirements, we refer readers to 
the OAS CAHPS Survey Protocols and Guidelines Manual (https://oascahps.org/Survey-Materials).
    Furthermore, we are proposing that ASC eligibility to perform the 
OAS CAHPS Survey would be determined at the individual ASC level. In 
other words, an individual ASC that meets the exemption criteria 
outlined in section XIV.B.4.c.(6) of this proposed rule, below, may 
submit a participation exemption request form, regardless of whether it 
operates under an independent CCN or shares a CCN with other 
facilities. CMS will then assess that ASC's eligibility for a 
participation exemption due to facility size independent of any other 
facilities sharing its CCN. However, all data collection and 
submission, and ultimately, also public reporting, for the OAS CAHPS 
Survey measures would be at the CCN level. Therefore, the reporting for 
a CCN would include all eligible patients from all eligible ASCs 
covered by the CCN.
(4) Measure Calculations
    As noted above, we are proposing to adopt three composite OAS CAHPS 
Survey-based measures (ASC-15a, ASC-15b, and ASC-15c) and two global

[[Page 45733]]

survey-based measures (ASC-15d and ASC-15e). An ASC's performance for a 
given payment determination year will be based upon the successful 
submission of all required data in accordance with the data submission 
requirements discussed in section XIV.D.5 of this proposed rule. 
Therefore, ASCs' scores on the OAS CAHPS Survey-based measures, 
discussed below, will not affect whether they are subject to the 2.0 
percentage point payment reduction for ASCs that fail to meet the 
reporting requirements of the ASCQR Program. These measure calculations 
will be used for public reporting purposes only.
(A) Composite Survey-Based Measures
    ASC rates on each composite OAS CAHPS Survey-based measure would be 
calculated by determining the proportion of ``top-box'' responses (that 
is, ``Yes'' or ``Yes Definitely'') for each question within the 
composite and averaging these proportions over all questions in the 
composite measure. For example, to assess ASC performance on the 
composite measure ASC-15a: OAS CAHPS--About Facilities and Staff, we 
would calculate the proportion of top-box responses for each of the 
measure's six questions, add those proportions together, and divide by 
the number of questions in the composite measure (that is, six).
    As a specific example, we take an ASC that had 50 surveys completed 
and received the following proportions of ``top-box'' responses through 
sample calculations:

 25 ``top-box'' responses out of 50 total responses on Question 
One
 40 ``top-box'' responses out of 50 total responses on Question 
Two
 50 ``top-box'' responses out of 50 total responses on Question 
Three
 35 ``top-box'' responses out of 50 total responses on Question 
Four
 45 ``top-box'' responses out of 50 total responses on Question 
Five
 40 ``top-box'' responses out of 50 total responses on Question 
Six

Based on the above responses, we would calculate that facility's 
measure score for public reporting as follows:
[GRAPHIC] [TIFF OMITTED] TP14JY16.001

This calculation would give this example ASC a raw score of 0.78 or 78 
percent for the ASC-15a measure for purposes of public reporting. We 
note that each percentage would then be adjusted for differences in the 
characteristics of patients across ASCs as described in section 
XIV.B.4.c.(7) of this proposed rule. As a result, the final ASC 
percentages may vary slightly from the raw percentage as calculated in 
the example above.
(B) Global Survey-Based Measures
    We also are proposing to adopt two global OAS CAHPS Survey 
measures. ASC-15d asks the patient to rate the care provided by the 
HOPD on a scale of 0 to 10, and ASC-15e asks about the patient's 
willingness to recommend the HOPD to family and friends on a scale of 
``Definitely No'' to ``Definitely Yes.''
    ASC performance on each of the two global OAS CAHPS Survey-based 
measures would be calculated by proportion of respondents providing 
high-value responses (that is, a 9-10 rating or ``Definitely Yes'') to 
the survey questions over the total number of respondents. For example, 
if an ASC received 45 9- and 10-point ratings out of 50 responses, this 
ASC would receive a 0.9 or 90 percent raw score, which would then be 
adjusted for differences in the characteristics of patients across ASCs 
as described in section XIV.B.4.c.(7) of this proposed rule, below, for 
purposes of public reporting.
(5) Cohort
    The OAS CAHPS Survey is administered to all eligible patients--or a 
random sample thereof--who had at least one outpatient surgery/
procedure during the applicable month. Eligible patients, regardless of 
insurance or method of payment, can participate.
    For purposes of each survey-based measure captured in the OAS CAHPS 
Survey, an ``eligible patient'' is a patient 18 years or older:
     Who had an outpatient surgery or procedure in an ASC, as 
defined in the OAS CAHPS Survey administration manual (https://oascahps.org/Survey-Materials);
     Who does not reside in a nursing home;
     Who was not discharged to hospice care following their 
surgery;
     Who is not identified as a prisoner; and
     Who did not request that ASCs not release their name and 
contact information to anyone other than ASC personnel.
    There are a few categories of otherwise eligible patients who are 
excluded from the measure as follows:
     Patients whose address is not a U.S. domestic address;
     Patients who cannot be surveyed because of state 
regulations;
     Patient's surgery or procedure does not meet the 
eligibility CPT or G-codes as defined in the OAS CAHPS Survey 
administration manual (https://oascahps.org/Survey-Materials); and
     Patients who are deceased.
(6) Exemption
    We understand that facilities with lower patient censuses may be 
disproportionately impacted by the burden associated with administering 
the survey and the resulting public reporting of OAS CAHPS Survey 
results. Therefore, we are proposing that ASCs may submit a request to 
be exempted from performing the OAS CAHPS Survey-based measures if they 
treat fewer than 60 survey-eligible patients during the ``eligibility 
period,'' which is the calendar year before the data collection period. 
For example, for the CY 2020 payment determination, this exemption 
request would be based on treating fewer than 60 survey-eligible 
patients in CY 2017, which is the calendar year before the data 
collection period (CY 2018) for the CY 2020 payment determination. All 
exemption requests will be reviewed and evaluated by CMS.
    To qualify for the exemption, we are proposing that ASCs must 
submit a participation exemption request form, which will be made 
available on the OAS CAHPS Survey Web site (https://oascahps.org) on or 
before May 15 of the data collection year. For example, the deadline 
for submitting an exemption request form for the CY 2020 payment 
determination would be May 15, 2018. We determined the May 15 deadline 
in order to align with the deadline for submitting Web-based measures, 
and because we believe this deadline provides ASCs with sufficient time 
to review the previous years' patient lists and determine whether they 
are eligible for an exemption based on patient population size.
    We note that ASCs with fewer than 240 Medicare claims (Medicare 
primary and secondary payer) per year during an

[[Page 45734]]

annual reporting period for a payment determination year are not 
required to participate in the ASCQR Program for the subsequent annual 
reporting period for that subsequent payment determination year (42 CFR 
416.305(c)). For example, an ASC as identified by NPI with fewer than 
240 Medicare claims in CY 2017 (for the CY 2019 payment determination 
year) would not be required to participate in the ASCQR Program in CY 
2018 (for the CY 2020 payment determination year).
    In addition, as discussed above, while ASC eligibility to perform 
the OAS CAHPS Survey would be determined at the individual ASC level. 
In other words, an individual ASC that meets the exemption criteria 
outlined in section XIV.B.4.c.(6) of this proposed rule, below, may 
submit a participation exemption request form, regardless of whether it 
operates under an independent CCN or shares a CCN with other 
facilities. However, all data collection and submission, and 
ultimately, also public reporting, for the OAS CAHPS Survey measures 
would be at the CCN level. Therefore, the reporting for a CCN would 
include all eligible patients from all eligible ASCs covered by the 
CCN.
(7) Risk Adjustment
    In order to achieve the goal of fair comparisons across all ASCs, 
we believe it is necessary and appropriate to adjust for factors that 
are not directly related to ASC performance, such as patient case-mix, 
for these OAS CAHPS Survey measures. The survey-based measures are 
adjusted for patient characteristics such as age, education, overall 
health status, overall mental health status, type of surgical 
procedure, and how well the patient speaks English. These factors 
influence how patients respond to the survey, but are beyond the 
control of the ASC and are not directly related to ASC performance. For 
more information about risk adjustment for these measures, we refer 
readers to: https://oascahps.org/General-Information/Mode-Experiment.
(8) Public Reporting
    We will propose a format and timing for public reporting of OAS 
CAHPS Survey data in future rulemaking prior to implementation of the 
measures. Because CY 2016 is the first year of voluntary national 
implementation for the OAS CAHPS Survey, and we believe using data from 
this voluntary national implementation will help inform the displays 
for public reporting of OAS CAHPS Survey data for the ASCQR Program, we 
are not proposing a format or timing for public reporting of OAS CAHPS 
Survey data at this time.
    As currently proposed, ASCs that share the same CCN must combine 
data for collection and submission for the OAS CAHPS Survey across 
their multiple facilities. These results would then be publicly 
reported on the Hospital Compare Web site as if they apply to a single 
ASC. To increase transparency in public reporting and improve the 
usefulness of the Hospital Compare Web site, we intend to note on the 
Web site instances where publicly reported measures combine results 
from two or more ASCs.
    We are inviting public comments on our proposals as discussed above 
to adopt for the CY 2020 payment determination and subsequent years, 
the five survey-based measures: (1) ASC-15a: Outpatient and Ambulatory 
Surgery Consumer Assessment of Healthcare Providers and Systems (OAS 
CAHPS)--About Facilities and Staff; (2) ASC-15b: OAS CAHPS--
Communication About Procedure; (3) ASC-15c: OAS CAHPS--Preparation for 
Discharge and Recovery; (4) ASC-15d: OAS CAHPS--Overall Rating of 
Facility; and (5) ASC-15e: OAS CAHPS--Recommendation of Facility.
    If these proposals are finalized, the measure set for the ASCQR 
Program CY 2020 payment determination and subsequent years would be as 
listed below.

 ASCQR Program Measure Set Previously Finalized and Proposed for the CY
             2020 Payment Determination and Subsequent Years
------------------------------------------------------------------------
        ASC No.                  NQF No.               Measure name
------------------------------------------------------------------------
ASC-1..................  0263...................  Patient Burn.
ASC-2..................  0266...................  Patient Fall.
ASC-3..................  0267...................  Wrong Site, Wrong
                                                   Side, Wrong Patient,
                                                   Wrong Procedure,
                                                   Wrong Implant.
ASC-4..................  0265 [dagger]..........  All-Cause Hospital
                                                   Transfer/Admission.
ASC-5..................  0264 [dagger]..........  Prophylactic
                                                   Intravenous (IV)
                                                   Antibiotic Timing.
ASC-6..................  N/A....................  Safe Surgery Checklist
                                                   Use.
ASC-7..................  N/A....................  ASC Facility Volume
                                                   Data on Selected ASC
                                                   Surgical Procedures.*
ASC-8..................  0431...................  Influenza Vaccination
                                                   Coverage among
                                                   Healthcare Personnel.
ASC-9..................  0658...................  Endoscopy/Polyp
                                                   Surveillance:
                                                   Appropriate Follow-Up
                                                   Interval for Normal
                                                   Colonoscopy in
                                                   Average Risk
                                                   Patients.
ASC-10.................  0659...................  Endoscopy/Polyp
                                                   Surveillance:
                                                   Colonoscopy Interval
                                                   for Patients with a
                                                   History of
                                                   Adenomatous Polyps-
                                                   Avoidance of
                                                   Inappropriate Use.
ASC-11.................  1536...................  Cataracts: Improvement
                                                   in Patient's Visual
                                                   Function within 90
                                                   Days Following
                                                   Cataract Surgery.**
ASC-12.................  2539...................  Facility 7-Day Risk-
                                                   Standardized Hospital
                                                   Visit Rate after
                                                   Outpatient
                                                   Colonoscopy.
ASC-13.................  N/A....................  Normothermia
                                                   Outcome.***
ASC-14.................  N/A....................  Unplanned Anterior
                                                   Vitrectomy.***
ASC-15a................  N/A....................  OAS CAHPS--About
                                                   Facilities and
                                                   Staff.***
ASC-15b................  N/A....................  OAS CAHPS--
                                                   Communication About
                                                   Procedure.***
ASC-15c................  N/A....................  OAS CAHPS--Preparation
                                                   for Discharge and
                                                   Recovery.***
ASC-15d................  N/A....................  OAS CAHPS--Overall
                                                   Rating of
                                                   Facility.***
ASC-15e................  N/A....................  OAS CAHPS--
                                                   Recommendation of
                                                   Facility.***
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* Procedure categories and corresponding HCPCS codes are located at:
  http://qualitynet.org/docs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2QnetTier2&cid=1228772475754 475754.
** Measure voluntarily collected effective beginning with the CY 2017
  payment determination as set forth in section XIV.E.3.c. of the CY
  2015 OPPS/ASC final rule with comment period (79 FR 66984 through
  66985).
*** New measure proposed for the CY 2020 payment determination and
  subsequent years.


[[Page 45735]]

5. ASCQR Program Measures for Future Consideration
    In the CY 2013 OPPS/ASC final rule with comment period, we set 
forth our considerations in the selection of ASCQR Program quality 
measures (77 FR 68493 through 68494). We seek to develop a 
comprehensive set of quality measures to be available for widespread 
use for making informed decisions and quality improvement in the ASC 
setting (77 FR 68496). We also seek to align these quality measures 
with the National Quality Strategy (NQS), the CMS Strategic Plan (which 
includes the CMS Quality Strategy), and our other quality reporting and 
value-based purchasing (VBP) programs, as appropriate. Accordingly, as 
we stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66979), in considering future ASCQR Program measures, we are focusing 
on the following NQS and CMS Quality Strategy measure domains: Make 
care safer by reducing harm caused in the delivery of care; strengthen 
person and family engagement as partners in their care; promote 
effective communication and coordination of care; promote effective 
prevention and treatment of chronic disease; work with communities to 
promote best practices of healthy living; and make care affordable.
    In this proposed rule, we are inviting public comments on one 
measure developed by the ASC Quality Collaboration for potential 
inclusion in the ASCQR Program in future rulemaking: the Toxic Anterior 
Segment Syndrome (TASS) measure.
    TASS, an acute, noninfectious inflammation of the anterior segment 
of the eye, is a complication of anterior segment eye surgery that 
typically develops within 24 hours after surgery.\101\ The TASS measure 
assesses the number of ophthalmic anterior segment surgery patients 
diagnosed with TASS within 2 days of surgery. Although most cases of 
TASS can be treated, the inflammatory response associated with TASS can 
cause serious damage to intraocular tissues, resulting in vision 
loss.\102\ Prevention requires careful attention to solutions, 
medications, and ophthalmic devices and to cleaning and sterilization 
of surgical equipment because of the numerous potential 
etiologies.\103\ Despite a recent focus on prevention, cases of TASS 
continue to occur, sometimes in clusters.\104\ With millions of 
anterior segment surgeries being performed in the United States each 
year, measurement and public reporting have the potential to serve as 
an additional tool to drive further preventive efforts.
---------------------------------------------------------------------------

    \101\ Centers for Disease Control and Prevention. Toxic Anterior 
Segment Syndrome after Cataract Surgery--Maine, 2006. MMWR Morb 
Mortal Wkly Rep. 2007 Jun 29;56(25):629-630.
    \102\ Breebaart AC, Nuyts RM, Pels E, Edelhauser HF, Verbraak 
FD. Toxic Endothelial Cell Destruction of the Cornea after Routine 
Extracapsular Cataract Surgery. Arch Ophthalmol 1990; 108:1121-1125.
    \103\ Hellinger WC, Bacalis LP, Erdhauser HF, Mamalis N, 
Milstein B, Masket S. ASCRS Ad Hoc Task Force on Cleaning and 
Sterilization of Intraocular Instruments: Recommended Practices for 
Cleaning and Sterilizing Intraocular Surgical Instruments. J 
Cataract Refract Surg. 2007 Jun;33(6):1095-1100.
    \104\ Moyle W, Yee RD, Burns JK, Biggins T. Two Consecutive 
Clusters of Toxic Anterior Segment Syndrome. Optom Vis Sci. 2013 
Jan;90(1):e11-23.
---------------------------------------------------------------------------

    This issue is of interest to the ASCQR Program because cataract 
surgery is an anterior segment surgery commonly performed at ASCs. In 
addition, the TASS measure addresses the MAP-identified priority 
measure area of procedure complications for the ASCQR Program.
    The TASS measure was included on the 2015 MUC list \105\ and 
reviewed by the MAP. The MAP conditionally supported the measure (MUC 
ID: 15-1047), noting the high value and urgency of this measure, given 
many new entrants to the ambulatory surgical center space, as well as 
the clustering outbreaks of TASS. The MAP cautioned that the measure 
should be reviewed and endorsed by NQF before adoption into the ASCQR 
Program, so that a specialized standing committee can evaluate the 
measure for scientific acceptability.\106\ A summary of the MAP 
recommendations can be found at: http://www.qualityforum.org/Projects/i-m/MAP/2016_Final_Recommendations.aspx.
---------------------------------------------------------------------------

    \105\ http://www.qualityforum.org/2015_Measures_Under_Consideration.aspx, under ``2015 Measures Under 
Consideration List (PDF).''
    \106\ https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    The TASS measure is used to assess the number of ophthalmic 
anterior segment surgery patients diagnosed with TASS within 2 days of 
surgery. The numerator for this measure is all anterior segment surgery 
patients diagnosed with TASS within 2 days of surgery. The denominator 
for this measure is all anterior segment surgery patients. The 
specifications for this measure for the ASC setting can be found at: 
http://ascquality.org/documents/ASC%20QC%20Implementation%20Guide%203.2%20October%202015.pdf.
    We are inviting public comments on the possible inclusion of this 
measure in the ASCQR Program measure set in the future.
6. Maintenance of Technical Specifications for Quality Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74513 through 74514), where we finalized our proposal to 
follow the same process for updating the ASCQR Program measures that we 
adopted for the Hospital OQR Program measures, including the 
subregulatory process for making updates to the adopted measures. In 
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68496 
through 68497), the CY 2014 OPPS/ASC final rule with comment period (78 
FR 75131), and the CY 2015 OPPS/ASC final rule with comment period (79 
FR 66981), we provided additional clarification regarding the ASCQR 
Program policy in the context of the previously finalized Hospital OQR 
Program policy, including the processes for addressing nonsubstantive 
and substantive changes to adopted measures. In the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70531), we provided clarification 
regarding our decision to not display the technical specifications for 
the ASCQR Program on the CMS Web site, but stated that we will continue 
to display the technical specifications for the ASCQR Program on the 
QualityNet Web site. In addition, our policies regarding the 
maintenance of technical specifications for the ASCQR Program are 
codified at 42 CFR 416.325. We are not proposing any changes to our 
policies regarding the maintenance of technical specifications for the 
ASCQR Program.
7. Public Reporting of ASCQR Program Data
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 
through 74515), we finalized a policy to make data that an ASC 
submitted for the ASCQR Program publicly available on a CMS Web site 
after providing an ASC an opportunity to review the data to be made 
public. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70531 through 70533), we finalized our policy to publicly display data 
by the National Provider Identifier (NPI) when the data are submitted 
by the NPI and to publicly display data by the CCN when the data are 
submitted by the CCN. In addition, we codified our policies regarding 
the public reporting of ASCQR Program data at 42 CFR 416.315 (80 FR 
70533). In this proposed rule, we are formalizing our current public 
display practices regarding timing of public display and the

[[Page 45736]]

preview period, as discussed in more detail below and proposing how we 
will announce the preview period timeframes.
    Our regulations at 42 CFR 416.315 state that data that an ASC 
submits for the ASCQR Program will be made publicly available on a CMS 
Web site. We currently make the data available on at least a yearly 
basis and strive to publicly display data as soon as possible. 
Furthermore, as previously stated in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74514 through 74515), we are required to 
give ASCs an opportunity to preview their data before it is made 
public. Historically, preview for the April Hospital Compare data 
release typically occurs in January, preview for the July Hospital 
Compare data release typically occurs in April, preview for the October 
Hospital Compare data release typically occurs in July, and the preview 
for the December Hospital Compare data release typically occurs in 
October. During the preview period, ASCs have generally had 
approximately 30 days to preview their data.
    In this proposed rule, therefore, we are proposing to publicly 
display data on the Hospital Compare Web site, or other CMS Web site, 
as soon as possible after measure data have been submitted to CMS, 
consistent with current practice. In addition, we are proposing that 
ASCs will generally have approximately 30 days to preview their data, 
also consistent with current practice.
    Lastly, moving forward, we are proposing to announce the timeframes 
for each preview period starting with the CY 2018 payment determination 
on a CMS Web site and/or on our applicable listservs.
    We are inviting public comments on our proposals regarding the 
timing of public display and the preview period as discussed above.

C. Administrative Requirements

1. Requirements Regarding QualityNet Account and Security Administrator
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75132 through 75133) for a detailed discussion of the 
QualityNet security administrator requirements, including setting up a 
QualityNet account, and the associated timelines, for the CY 2014 
payment determination and subsequent years. In the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70533), we codified the 
administrative requirements regarding maintenance of a QualityNet 
account and security administrator for the ASCQR Program at 42 CFR 
416.310(c)(1)(i). We are not proposing any changes to these policies.
2. Requirements Regarding Participation Status
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75133 through 75135) for a complete discussion of the 
participation status requirements for the CY 2014 payment determination 
and subsequent years. In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70534), we codified these requirements regarding 
participation status for the ASCQR Program at 42 CFR 416.305. We are 
not proposing any changes to these policies.

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

1. Requirements Regarding Data Processing and Collection Periods for 
Claims-Based Measures Using Quality Data Codes (QDCs)
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75135) for a complete summary of the data processing and 
collection periods for the claims-based measures using QDCs for the CY 
2014 payment determination and subsequent years. In the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70534), we codified the 
requirements regarding data processing and collection periods for 
claims-based measures using QDCs for the ASCQR Program at 42 CFR 
416.310(a)(1) and (2). We are not proposing any changes to these 
requirements.
2. Minimum Threshold, Minimum Case Volume, and Data Completeness for 
Claims-Based Measures Using QDCs
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75135 through 75137) for a complete discussion of the 
minimum thresholds, minimum case volume, and data completeness for 
successful reporting for the CY 2014 payment determination and 
subsequent years. In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 75035), we codified our policies regarding the minimum 
threshold and data completeness for claims-based measures using QDCs 
for the ASCQR Program at 42 CFR 416.310(a)(3). We also codified our 
policy regarding the minimum case volume at 42 CFR 416.305(c). We are 
not proposing any changes to these policies.
3. Requirements for Data Submitted via an Online Data Submission Tool
    In this proposed rule, we are proposing changes to requirements for 
data submitted via a CMS online data submission tool (QualityNet.org). 
We are not proposing any changes to our policies regarding data 
submitted via a non-CMS online data submission tool (CDC NHSN Web 
site), but are summarizing those policies for context below.
a. Requirements for Data Submitted via a Non-CMS Online Data Submission 
Tool
    We refer readers to CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75139 through 75140) and CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66985 through 66986) for our requirements 
regarding data submitted via a non-CMS online data submission tool (CDC 
NHSN Web site). We codified our existing policies regarding the data 
collection time periods for measures involving online data submission 
and the deadline for data submission via a non-CMS online data 
submission tool at 42 CFR 416.310(c)(2). Currently, we only have one 
measure (ASC-8: Influenza Vaccination Coverage among Healthcare 
Personnel) that is submitted via a non-CMS online data submission tool.
    In the CY 2015 OPPS/ASC final rule with comment period, we 
finalized a submission deadline of May 15 of the year when the 
influenza season ends for ASC-8: Influenza Vaccination Coverage among 
Healthcare Personnel (79 FR 66985 through 66986). We are not proposing 
any changes to these requirements.
b. Requirements for Data Submitted via a CMS Online Data Submission 
Tool
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75137 through 75139) for our requirements regarding data 
submitted via a CMS online data submission tool. We are currently using 
the QualityNet Web site as our CMS online data submission tool: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetHomepage&cid=1120143435383.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75137 
through 75139), we finalized the data collection time period for 
quality measures for which data are submitted via a CMS online data 
submission tool to cover services furnished during the calendar year 2 
years prior to the payment determination year. We also

[[Page 45737]]

finalized our policy that these data will be submitted during the time 
period of January 1 to August 15 in the year prior to the affected 
payment determination year. In the CY 2016 OPPS/ASC final rule with 
comment period, we codified our existing policies regarding the data 
collection time periods for measures involving online data submission 
and the deadline for data submission via a CMS online data submission 
tool at 42 CFR 416.310(c)(1)(ii).
    In this proposed rule, we are proposing to change the submission 
deadline from August 15 in the year prior to the affected payment 
determination year to May 15 in the year prior to the affected payment 
determination year for all data submitted via a CMS Web-based tool in 
the ASCQR Program for the CY 2019 payment determination and subsequent 
years. We are also proposing to make a corresponding change to the 
regulation text at Sec.  416.310(c)(1)(ii) to reflect this policy.
    We previously proposed a similar policy to adopt a May 15 
submission deadline for all data submitted via a CMS Web-based tool in 
the CY 2016 OPPS/ASC proposed rule (80 FR 38345). However, we did not 
finalize that proposal due to public comments received indicating that 
a May 15 deadline would increase ASC administrative burden by giving 
ASCs less time to collect and report data, and noting previous 
technical issues with data submission that required extension of the 
data submission deadline (80 FR 70535).
    However, we believe the May 15 data submission deadline would align 
the ASCQR Program with the Hospital OQR Program submission deadline (80 
FR 70521 through 70522) for data submitted via a CMS Web-based tool. 
Furthermore, the proposed submission deadlines for measures submitted 
via a CMS Web-based tool would align the above-listed measures with the 
submission deadline for ASC-8, resulting in a single deadline for all 
data submitted via a Web-based tool by ASCs (via CMS and non-CMS Web-
based tools). We believe this single deadline would reduce the 
administrative burden associated with submitting and tracking multiple 
data submission deadlines for the ASCQR Program. In addition, we 
believe implementing the proposed May 15 deadline will enable public 
reporting of these data by December of the same year, thereby enabling 
us to provide the public with more up-to-date information for use in 
making decisions about their care. Thus, we believe the benefits of 
implementing the proposed May 15 submission deadline for data submitted 
via a CMS Web-based tool outweigh previously stated stakeholder 
concerns with this deadline.
    Therefore, we are proposing that data collected for a quality 
measure for which data are submitted via a CMS online data submission 
tool must be submitted during the time period of January 1 to May 15 in 
the year prior to the payment determination year for the CY 2019 
payment determination and subsequent years. For example, for the CY 
2017 data collection period, ASCs have January 1, 2018 through May 15, 
2018 to submit their data for the CY 2019 payment determination.
    This proposal would apply to the following measures for the CY 2019 
payment determination and subsequent years:
     ASC-6: Safe Surgery Checklist Use;
     ASC-7: ASC Facility Volume Data on Selected ASC Surgical 
Procedures;
     ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up 
Interval for Normal Colonoscopy in Average Risk Patients (NQF #0658);
     ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps-Avoidance of 
Inappropriate Use (NQF #0659); and
     ASC-11: Cataracts: Improvement in Patient's Visual 
Function within 90 Days Following Cataract Surgery (NQF #1536).\107\
---------------------------------------------------------------------------

    \107\ We note that ASC-11 is a voluntary measure for the CY 2017 
payment determination and subsequent years. This proposal would mean 
that ASCs that choose to submit data for this measure also would 
need to submit such data between January 1 and May 15 for the CY 
2018 payment determination and subsequent years.
---------------------------------------------------------------------------

    In addition, this proposal would apply to the following proposed 
measures should they be finalized for the CY 2020 payment determination 
and subsequent years:
     ASC-13: Normothermia Outcome, and
     ASC-14: Unplanned Anterior Vitrectomy.
    Lastly, we also are proposing to make corresponding changes to the 
regulation at 42 CFR 416.310(c)(1)(ii) to replace the date ``August 
15'' with the date ``May 15.''
    We are inviting public comments on our proposals to change the data 
submission time period and make corresponding changes to the regulation 
text for data submitted via a CMS online data submission tool as 
discussed above.
4. Claims-Based Measure Data Requirements for the CY 2019 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66985) and the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70536) for our previously adopted policies regarding data 
processing and collection periods for claims-based measures for the CY 
2018 payment determination and subsequent years. In addition, in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70536), we codified 
these policies at 42 CFR 416.310(b). We are not proposing any changes 
to these requirements.
5. Proposed Data Submission Requirements for the Proposed ASC-15a-e: 
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare 
Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 
Payment Determination and Subsequent Years
    As discussed in section XIV.B.4.c. of this proposed rule, above, we 
are proposing to adopt five survey-based measures derived from the OAS 
CAHPS Survey for the CY 2020 payment determination and subsequent 
years: Three OAS CAHPS composite survey-based measures and two global 
survey-based measures. In this section, we are proposing requirements 
related to survey administration, vendors, and oversight activities. We 
note that we are making similar proposals in the Hospital OQR Program 
in section XIII.B.5.c. of this proposed rule.
a. Survey Requirements
    The proposed survey has three administration methods: Mail-only; 
telephone-only; and mixed mode (mail with telephone follow-up of non-
respondents). We refer readers to the Protocols and Guidelines Manual 
for the OAS CAHPS Survey (https://oascahps.org/Survey-Materials) for 
materials for each mode of survey administration.
    For all three modes of administration, we are proposing that data 
collection must be initiated no later than 21 days after the month in 
which a patient has a surgery or procedure at an ASC and completed 
within 6 weeks (42 days) after initial contact of eligible patients 
begins. We are proposing that ASCs, via their CMS-approved vendors 
(discussed below), must make multiple attempts to contact eligible 
patients unless the patient refuses or the ASC/vendor learns that the 
patient is ineligible to participate in the survey. In addition, we are 
proposing that ASCs, via their CMS-approved survey vendor, collect 
survey data for all eligible patients--or a random sample thereof--
using the timeline established above and report that data to CMS by the 
quarterly

[[Page 45738]]

deadlines established for each data collection period unless the ASC 
has been exempted from the OAS CAHPS Survey requirements under the low 
volume exemption discussed in section XIV.B.4.c.(6) of the proposed 
rule, above. These submission deadlines will be posted on the OAS CAHPS 
Survey Web site (https://oascahps.org). Late submissions will not be 
accepted.
    As discussed in more detail below, compliance with the OAS CAHPS 
Survey protocols and guidelines, including this monthly reporting 
requirement, will be overseen by CMS or its contractor that will 
receive approved vendors' monthly submissions, review the data, and 
analyze the results. As stated previously, all data collection and 
submission for the OAS CAHPS Survey measures is done at the CCN level, 
and all eligible ASCs in a CCN would be required to participate in the 
OAS CAHPS Survey. Therefore, the survey data reported for a CCN must 
include all eligible patients from all eligible ASCs covered by the 
CCN. Survey vendors acting on behalf of ASCs must submit data by the 
specified data submission deadlines. If an ASC's data are submitted 
after the data submission deadline, it will not fulfill the OAS CAHPS 
quality reporting requirements. We, therefore, strongly encourage ASCs 
to be fully appraised of the methods and actions of their survey 
vendors--especially the vendors' full compliance with OAS CAHPS Survey 
Administration protocols--and to carefully inspect all data warehouse 
reports in a timely manner.
    We note that the use of predictive or auto dialers in telephonic 
survey administration under certain circumstances is governed by the 
Telephone Consumer Protection Act (TCPA) (47 U.S.C. 227) and subsequent 
regulations promulgated by the Federal Communications Commission (FCC) 
(47 CFR 64.1200) and Federal Trade Commission. We refer readers to the 
FCC's declaratory ruling released on July 10, 2015 further clarifying 
the definition of an auto dialer, available at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf. In the telephone-only and 
mixed mode survey administration methods, ASCs and vendors must comply 
with the regulations discussed above, and any other applicable 
regulations. To the extent that any existing CMS technical guidance 
conflicts with the TCPA or its implementing regulations regarding the 
use of predictive or auto dialers, or any other applicable law, CMS 
expects vendors to comply with applicable law.
b. Vendor Requirements
    To ensure that patients respond to the survey in way that reflects 
their actual experiences with outpatient surgical care, and are not 
influenced by the ASC, we are proposing that ASCs must contract with a 
CMS-approved OAS CAHPS Survey vendor to conduct or administer the 
survey. We believe that a neutral third-party should administer the 
survey for ASCs and it is our belief that an experienced survey vendor 
will be best able to ensure reliable results. OAS CAHPS Survey-approved 
vendors are also already used or required in the following CMS quality 
programs: The Hospital IQR Program (71 FR 68203 through 68204), the 
Hospital VBP Program (76 FR 26497, 26502 through 26503, and 26510), the 
ESRD QIP (76 FR 70269 through 70270), the HH QRP (80 FR 68709 through 
68710), and the HQRP (70 FR 47141 through 47207).
    Information about the list of approved survey vendors and how to 
authorize a vendor to collect data on an ASC's behalf is available 
through the OAS CAHPS Survey Web site at: https://oascahps.org. The Web 
portal has both public and secure (restricted access) sections to 
ensure the security and privacy of selected interactions. ASCs will 
need to register on the OAS CAHPS Survey Web site (https://oascahps.org) in order to authorize the CMS-approved vendor to 
administer the survey and submit data on their behalf. Each ASC must 
then administer (via its vendor) the survey to all eligible patients 
treated during the data collection period on a monthly basis according 
to the guidelines in the Protocols and Guidelines Manual (https://oascahps.org/Survey-Materials) and report the survey data to CMS on a 
quarterly basis by the deadlines posted on the OAS CAHPS Survey Web 
site as stated above.
    Moreover, we also are proposing to codify these OAS CAHPS Survey 
administration requirements for ASCs and survey vendors under the ASCQR 
Program at 42 CFR 416.310(e).
    As stated previously, we encourage ASCs to participate in voluntary 
national implementation of the OAS CAHPS Survey that began in January 
2016. This will provide ASCs the opportunity to gain first-hand 
experience collecting and transmitting OAS CAHPS data without the 
public reporting of results or ASCQR Program payment implications. For 
additional information, we refer readers to https://oascahps.org/General-Information/National-Implementation.
    We are inviting public comments on our proposals for the data 
submission requirements for the five proposed OAS CAHPS Survey-based 
measures for the CY 2020 payment determination and subsequent years as 
discussed above.
6. Extraordinary Circumstances Extensions or Exemptions for the CY 2019 
Payment Determination and Subsequent Years
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75140 through 75141) for a complete discussion of the 
ASCQR Program's procedures for extraordinary circumstance extensions or 
exemptions (ECE) requests for the submission of information required 
under the ASCQR Program.\108\ In the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70537), we codified our policies regarding 
extraordinary circumstances extensions or exemptions at 42 CFR 
416.310(d).
---------------------------------------------------------------------------

    \108\ In the CY 2015 OPPS/ASC final rule with comment period (79 
FR 66987), we stated that we will refer to the process as the 
``Extraordinary Circumstances Extensions or Exemptions'' process 
rather than the ``Extraordinary Circumstances Extensions or 
Waivers'' process.
---------------------------------------------------------------------------

    We are proposing one modification to the ASCQR Program's 
extraordinary circumstances extensions or exemptions policy for the CY 
2019 payment determination and subsequent years. Specifically, we are 
proposing to extend the time to submit a request form from within 45 
days of the date that the extraordinary circumstance occurred to within 
90 days of the date that the extraordinary circumstance occurred. We 
believe this extended deadline is necessary, because in certain 
circumstances it may be difficult for ASCs to timely evaluate the 
impact of an extraordinary event within 45 calendar days. We believe 
that extending the deadline to 90 calendar days will allow ASCs more 
time to determine whether it is necessary and appropriate to submit an 
ECE request and to provide a more comprehensive account of the 
``event'' in their forms to CMS. For example, if an ASC has suffered 
damage due to a hurricane on January 1, it would have until March 31 
(90 days) to submit an ECE form via the QualityNet Secure Portal, mail, 
email, or secure fax as instructed on the ECE form. This proposed 
timeframe (90 calendar days) also aligns with the ECE request deadlines 
for the Hospital VBP Program (78 FR 50706), the HAC Reduction Program 
(80 FR 49580), and the Hospital Readmissions Reduction Program (80 FR 
48542). We note that, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 
25205; 25233 through

[[Page 45739]]

25234), we proposed a deadline of 90 days following an event causing 
hardship for the Hospital IQR Program (in non-eCQM circumstances) and 
for the LTCH QRP Program. In section XIII.D.8. of this proposed rule, 
we also are proposing a similar deadline of 90 days following an event 
causing hardship for the Hospital OQR Program.
    In addition, we are proposing to make a corresponding change to the 
regulation text at 42 CFR 416.310(d)(1). Specifically, we are proposing 
to state that ASCs may request an extension or exemption within 90 days 
of the date that the extraordinary circumstance occurred.
    We are inviting public comments on our proposals to extend the 
submission deadline for an extraordinary circumstances extension or 
exemption and make corresponding changes to the regulation text to 
reflect this policy as discussed above.
7. ASCQR Program Reconsideration Procedures
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53643 through 53644) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75141) for a complete discussion of the ASCQR Program's 
requirements for an informal reconsideration process. In the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70537), we finalized one 
modification to these requirements: That ASCs must submit a 
reconsideration request to CMS by no later than the first business day 
on or after March 17 of the affected payment year. We codified this 
policy at 42 CFR 416.330. We are not proposing any changes to this 
policy.

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

1. Statutory Background
    We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75131 through 75132) for a detailed 
discussion of the statutory background regarding payment reductions for 
ASCs that fail to meet the ASCQR Program requirements.
2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the 
ASCQR Program Requirements for a Payment Determination Year
    The national unadjusted payment rates for many services paid under 
the ASC payment system equal the product of the ASC conversion factor 
and the scaled relative payment weight for the APC to which the service 
is assigned. Currently, the ASC conversion factor is equal to the 
conversion factor calculated for the previous year updated by the 
multifactor productivity (MFP)-adjusted CPI-U update factor, which is 
the adjustment set forth in section 1833(i)(2)(D)(v) of the Act. The 
MFP-adjusted CPI-U update factor is the Consumer Price Index for all 
urban consumers (CPI-U), which currently is the annual update for the 
ASC payment system, minus the MFP adjustment. As discussed in the CY 
2011 MPFS final rule with comment period (75 FR 73397), if the CPI-U is 
a negative number, the CPI-U would be held to zero. Under the ASCQR 
Program, any annual update will be reduced by 2.0 percentage points for 
ASCs that fail to meet the reporting requirements of the ASCQR Program. 
This reduction applied beginning with the CY 2014 payment rates. For a 
complete discussion of the calculation of the ASC conversion factor, we 
refer readers to section XII.G. of this proposed rule.
    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 
through 68500), in order to implement the requirement to reduce the 
annual update for ASCs that fail to meet the ASCQR Program 
requirements, we finalized our proposal that we would calculate two 
conversion factors: A full update conversion factor and an ASCQR 
Program reduced update conversion factor. We finalized our proposal to 
calculate the reduced national unadjusted payment rates using the ASCQR 
Program reduced update conversion factor that would apply to ASCs that 
fail to meet their quality reporting requirements for that calendar 
year payment determination. We finalized our proposal that application 
of the 2.0 percentage point reduction to the annual update may result 
in the update to the ASC payment system being less than zero prior to 
the application of the MFP adjustment.
    The ASC conversion factor is used to calculate the ASC payment rate 
for services with the following payment indicators (listed in Addenda 
AA and BB to this proposed rule, which are available via the Internet 
on the CMS Web site): ``A2,'' ``G2,'' ``P2,'' ``R2,'' and ``Z2,'' as 
well as the service portion of device-intensive procedures identified 
by ``J8.'' We finalized our proposal that payment for all services 
assigned the payment indicators listed above would be subject to the 
reduction of the national unadjusted payment rates for applicable ASCs 
using the ASCQR Program reduced update conversion factor.
    The conversion factor is not used to calculate the ASC payment 
rates for separately payable services that are assigned status 
indicators other than payment indicators ``A2,'' ``G2,'' ``J8,'' 
``P2,'' ``R2,'' and ``Z2.'' These services include separately payable 
drugs and biologicals, pass-through devices that are contractor-priced, 
brachytherapy sources that are paid based on the OPPS payment rates, 
and certain office-based procedures, certain radiology services and 
diagnostic tests where payment is based on the MPFS nonfacility PE RVU-
based amount, and a few other specific services that receive cost-based 
payment. As a result, we also finalized our proposal that the ASC 
payment rates for these services would not be reduced for failure to 
meet the ASCQR Program requirements because the payment rates for these 
services are not calculated using the ASC conversion factor and, 
therefore, not affected by reductions to the annual update.
    Office-based surgical procedures (performed more than 50 percent of 
the time in physicians' offices) and separately paid radiology services 
(excluding covered ancillary radiology services involving certain 
nuclear medicine procedures or involving the use of contrast agents) 
are paid at the lesser of the MPFS nonfacility PE RVU-based amounts or 
the amount calculated under the standard ASC ratesetting methodology. 
Similarly, in section XII.D.2.b. of the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66933 through 66934), we finalized our 
proposal that payment for the new category of covered ancillary 
services (that is, certain diagnostic test codes within the medical 
range of CPT codes for which separate payment is allowed under the OPPS 
and when they are integral to an ASC covered surgical procedure) will 
be at the lesser of the MPFS nonfacility PE RVU-based amounts or the 
rate calculated according to the standard ASC ratesetting methodology. 
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68500), 
we finalized our proposal that the standard ASC ratesetting methodology 
for this type of comparison would use the ASC conversion factor that 
has been calculated using the full ASC update adjusted for 
productivity. This is necessary so that the resulting ASC payment 
indicator, based on the comparison, assigned to these procedures or 
services is consistent for each HCPCS code, regardless of whether 
payment is based on the full update conversion factor or the reduced 
update conversion factor.
    For ASCs that receive the reduced ASC payment for failure to meet 
the ASCQR Program requirements, we believe that it is both equitable 
and appropriate that a reduction in the

[[Page 45740]]

payment for a service should result in proportionately reduced 
coinsurance liability for beneficiaries. Therefore, in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68500), we finalized our 
proposal that the Medicare beneficiary's national unadjusted 
coinsurance for a service to which a reduced national unadjusted 
payment rate applies will be based on the reduced national unadjusted 
payment rate.
    In that final rule with comment period, we finalized our proposal 
that all other applicable adjustments to the ASC national unadjusted 
payment rates would apply in those cases when the annual update is 
reduced for ASCs that fail to meet the requirements of the ASCQR 
Program (77 FR 68500). For example, the following standard adjustments 
would apply to the reduced national unadjusted payment rates: The wage 
index adjustment; the multiple procedure adjustment; the interrupted 
procedure adjustment; and the adjustment for devices furnished with 
full or partial credit or without cost. We believe that these 
adjustments continue to be equally applicable to payment for ASCs that 
do not meet the ASCQR Program requirements.
    In the CY 2014, CY 2015, and CY 2016 OPPS/ASC final rules with 
comment periods (78 FR 75132; 79 FR 66981 through 66982; and 80 FR 
70537 through 70538, respectively), we did not make any changes to 
these policies.
    In this CY 2017 OPPS/ASC proposed rule, we are not proposing any 
changes to these policies.

XV. Transplant Outcomes: Restoring the Tolerance Range for Patient and 
Graft Survival

A. Background

    Solid organ transplant programs in the United States are subject to 
a specialized system of oversight that includes: (1) An organized 
national system of organ donation and allocation, including a national 
database that allows for the tracking of transplants and transplant 
outcomes; (2) formalized policy development, program inspection, and 
peer review processes under the aegis of the Organ Procurement and 
Transplantation Network (OPTN); (3) Medicare Conditions of 
Participation (CoPs) that hold transplant programs accountable for 
patient and graft (organ) survival for at least 1 year after each 
recipient's transplant; and (4) a CMS system of onsite survey and 
certification for Medicare-participating transplant centers. These 
features mean that transplant programs have been in the vanguard of 
efforts to hold health care providers accountable not only for 
acceptable processes, but for patient outcomes as well.
    Congress established the framework for a national organ 
transplantation system in 1984, and the Health Resources and Services 
Administration (HRSA) and CMS then operationalized the system as a 
national model of accountable care in the area of solid organ 
transplantation.\109\ The 1984 National Organ and Transplantation Act 
(NOTA) \110\ created the OPTN and Organ Procurement Organizations 
(OPOs), amongst other provisions. NOTA also required the establishment 
of a registry that includes such information respecting patients and 
transplant procedures as the Secretary deems necessary to an ongoing 
evaluation of the scientific and clinical status of organ 
transplantation.\111\ The Scientific Registry of Transplant Recipients 
(SRTR) has served this purpose since 1987. The registry supports the 
ongoing evaluation of the scientific and clinical status of solid organ 
transplantation, including kidney, heart, liver, lung, intestine, and 
pancreas. Data in the SRTR are collected by the OPTN from hospitals and 
OPOs. The SRTR contains current and past information about the full 
continuum of transplant activity related to organ donation and wait-
list candidates, transplant recipients, and survival statistics. This 
information is used to help develop evidence-based policy, to support 
analysis of transplant programs and OPOs, and to encourage research on 
issues of importance to the transplant community.\112\
---------------------------------------------------------------------------

    \109\ Hamilton, T.E. 2009, ``Accountability in Health Care--
Transplant Community Offers Leadership,'' American Journal of 
Transplantation, Vol. 9, pp. 1287-1293.
    \110\ National Organ Transplant Act (NOTA; Pub. L. 98-507), 
codified at 42 U.S.C. 274, ``Organ procurement and transplantation 
network.''
    \111\ 42 U.S.C. 274a, ``Scientific registry.''
    \112\ Available at: http://srtr.org/who.aspx.
---------------------------------------------------------------------------

    The SRTR contains detailed information regarding: (1) Donor 
characteristics (for example, age, hypertension, diabetes, stroke, and 
body mass index); (2) organ characteristics (for example, both warm and 
cold ischemic time); and (3) recipient characteristics (for example, 
age, race, gender, body mass index, and hypertension status). The SRTR 
is administered by the Chronic Disease and Research Group of the 
Minneapolis Medical Research Foundation under a contract with HRSA. The 
SRTR data are then used to construct the risk profile of a transplant 
program's organ transplants. The risk models allow the SRTR to 
calculate an expected survival rate for both patients and grafts 
(organs) over various periods of time.
    Every 6 months, the SRTR publishes a Program Specific Report (PSR) 
for each transplant program. Each report covers a rolling, 
retrospective, 2.5-year period. For example, the PSR reports the 
aggregate number of patient deaths and graft failures that occurred 
within 1 year after each transplant patient's receipt of an organ. The 
PSR also compares the actual number of such events with the risk-
adjusted number that would be expected, and reports the resulting ratio 
of observed to expected events (O/E). An observed/expected ratio of 
1.0, for example, means that the transplant program's outcomes were 
equal to the national outcomes for a patient, donor, and organ risk 
profile that reasonably matched the risk profile of that particular 
transplant program, for the time period under consideration. An O/E 
ratio of 1.5 means that the patient deaths or graft failures were 150 
percent of the risk-adjusted expected number.\113\
---------------------------------------------------------------------------

    \113\ Dickinson, D.M., Arrington, C.J., et al., 2008, ``SRTR 
program-specific reports on outcomes: A guide for the new reader,'' 
American Journal of Transplantation, Vol. 8 (4 PART 2), pp. 1012-
1026.
---------------------------------------------------------------------------

    On March 30, 2007, we issued a final rule, setting out CoPs for 
solid organ transplant programs (``Medicare Program: Hospital 
Conditions of Participation: Requirements for Approval and Re-approval 
of Transplant Centers to Perform Organ Transplants'' (72 FR 15198)). 
The CoPs for data submission, clinical experience, and outcome 
requirements are codified at 42 CFR 482.80 and 482.82. The regulations 
specified that a program would not be in compliance with the CoPs for 
patient and graft survival if three thresholds were all crossed: (1) 
The O/E ratio exceeded 1.5; (2) the results were statistically 
significant (p<.05); and (3) the results were numerically meaningful 
(that is, the number of observed events minus the expected number is 
greater than 3). If all three thresholds were crossed over in a single 
SRTR report, the program was determined to not be in compliance with 
the CMS standard.
    The above three criteria were the same as those used at that time 
by the OPTN to ``flag'' programs that the OPTN considered to merit 
deeper inquiry with regard to transplant program performance. However, 
we implemented the Medicare outcomes requirements in a manner that 
would assure that a flagged transplant program would first have an 
opportunity to become engaged with the OPTN peer review process, and 
improve outcomes, before there was significant CMS involvement. We did 
so by classifying

[[Page 45741]]

outcomes that crossed over all three thresholds in a single (most 
recent) SRTR report (that is, a ``single flag'') as a lower level 
deficiency (that is, a ``standard-level'' deficiency in CMS terms). A 
standard-level deficiency requires a hospital to undertake improvement 
efforts, but continued Medicare participation is not at risk solely due 
to a single standard-level deficiency. Only programs flagged twice (in 
two SRTR reports, including the most recent report) within a 2.5-year 
period have been cited for a ``condition-level'' deficiency where 
Medicare termination is at risk. Approximately 79 (29.3 percent) of the 
270 transplant programs (of all types of solid organs) that were 
flagged once in the 8-year period from the July 2007 SRTR report 
through the July 2015 report were not flagged again within a 2.5-year 
period. The CMS ``two-flag'' approach for citation of a condition-level 
deficiency allowed an opportunity for the OPTN to take timely action 
after the first time a program was flagged, and allowed the transplant 
programs some time to work with the OPTN peer review process and 
possibly improve outcomes quickly. As a result, almost a third of 
flagged programs (29.3 percent) did not require any significant CMS 
involvement because they were not flagged a second time within a 
rolling 2.5 year period.
    We also determined to make quality improvement the cornerstone of 
the CMS' enforcement of the outcomes standard.\114\ Through the 
``mitigating factors'' provisions in the regulations for transplant 
programs at 42 CFR 488.61(g), we allowed a 210-day period for 
transplant programs with a condition-level outcomes deficiency to 
implement substantial improvements and demonstrate compliance with more 
recent data than the data in the available SRTR reports. Further, for 
programs that were unable to demonstrate compliance by the end of the 
210-day period, but were on the right track and had strong 
institutional support from the hospital to make the necessary 
improvements for achieving compliance, we generally offered to enter 
into a voluntary ``Systems Improvement Agreement'' (SIA) with that 
hospital. An SIA provides a transplant program with additional time 
(generally 12 months) during which the hospital engages in a structured 
regimen of quality improvement. The transplant program also had an 
opportunity to demonstrate compliance with the CMS outcomes 
requirements before the end of the SIA period. In the FY 2015 IPPS/LTCH 
PPS final rule (79 FR 50334 through 50344 and 50359 through 50361), we 
further defined the mitigating factors and SIA processes at 42 CFR 
488.61(f), (g), and (h). (We note that, in section XVII.B. of this 
proposed rule, we discuss a proposal to make additional revisions to 
Sec.  488.61(h)(2) to clarify provisions relating to a signed SIA 
remaining in force.)
---------------------------------------------------------------------------

    \114\ Hamilton, T.E. 2008, ``Improving Organ Transplantation in 
the U.S.--A Regulatory Perspective,'' American Journal of 
Transplantation. Vol. 8 (12), pp. 2404-2405.
---------------------------------------------------------------------------

    Through July 2015, we completed the mitigating factors review 
process for 145 programs that had been cited for condition-level 
patient or graft volume or outcome requirements that fell below the 
relevant CMS standards. Of that number, 83 programs (57.2 percent) were 
approved by the end of the 210-day review process on the basis of 
program improvements, combined with recent outcomes from which CMS 
concluded that the program was in present-day compliance. Another 45 
programs (31.0 percent) were offered and completed a year-long SIA, 
while 17 programs (11.7 percent) terminated Medicare participation. CMS 
tracking data indicate that approximately 90 percent of programs that 
engaged in an SIA were able to complete the quality improvement regimen 
and continue Medicare participation after the end of the SIA period.
    One-year post-transplant outcomes have improved since 2007 for all 
organ types. We believe this is partly due to the improvement efforts 
of both high-performing and low-performing transplant programs, and 
efforts of the larger transplant community itself, whose members have 
demonstrated a track record of consistent improvement, innovation, and 
research. Such community-wide endeavors, combined with OPTN and CMS 
work with the lowest-performing transplant centers, have resulted in 1-
year post-transplant survival rates that are among the highest in U.S. 
history for all types of solid organs. For adult kidneys, 1-year graft 
survival increased nationally from 92.9 percent in CY 2007 to 94.8 
percent in 2014, while 1-year patient survival increased nationally 
from 96.4 percent to 96.9 percent. During this time, 1-year patient 
survival increased nationally for heart recipients from 88.5 percent to 
89.5 percent, for liver recipients from 87.7 percent to 90.8 percent, 
and for lung recipients from 80.4 percent to 85.7 percent.
    Because the CMS outcomes requirement is based on a transplant 
program's outcomes in relation to the risk-adjusted national average, 
as national outcomes have improved, it has become much more difficult 
for an individual transplant program to meet the CMS outcomes standard. 
This is explained in more detail later in this proposed rule. We are 
concerned that transplant programs may elect not to use certain 
available organs out of fear that such use would adversely affect their 
outcome statistics. We observed, for example, that the percent of adult 
kidneys donated and recovered--but not used--increased from 16.6 
percent in CY 2006 to 18.3 percent in CY 2007 to 18.7 percent in CY 
2014 and 19.3 percent in CY 2015. Even if the number of recovered adult 
kidneys had remained the same, these percentages of unused kidneys 
would be of concern. However, the number of recovered kidneys is also 
increasing, thereby enlarging the impact of the discard rate. The 
combined effect of (a) more recoveries and (b) a higher percent of 
unused organs means that the absolute number of recovered but unused 
adult kidneys increased from 2,632 in CY 2007, for example, to 2,888 in 
CY 2014 and to 3,159 in CY 2015.
    We appreciate that some of the single-year sharp increase in the 
percent of unused adult kidneys that occurred between CY 2006 and CY 
2007 (from a previously consistent 16.6 percent rate in the 3 years 
prior to 2007, to 18.3 percent in 2007) may have been due to many 
factors, and not just any potential impact that the new CMS outcomes 
CoP may have had. The CMS regulation, for example, was gradually phased 
in. The regulation did not take effect until June 28, 2007, and 
transplant programs had until December 26, 2007 to register with CMS 
for certification under the new regulation. Other changes also occurred 
in 2007 that may have had a substantial impact.
    In particular, in December 2006, the UNOS, under contract with 
HRSA, made a new OPTN organ donor data collection and matching system 
available for voluntary use and improved the data in the system. The 
OPTN voted to make such use mandatory effective April 30, 2007. The 
stated goal of the system was to ``facilitate and expedite organ 
placement.'' \115\ The system provided for a national list to be 
generated for each organ, with offers made to patients at transplant 
centers based on the order of patients on this list. The design of the 
system made it possible to send multiple offers simultaneously to 
different transplant progrms, in priority order. As the authors of a 
later study

[[Page 45742]]

concluded, ``This initially led to an extraordinary increase in the 
volume of unwanted offers to many centers'' \116\
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    \115\ Massie AB, Zeger SL, Montgomery RA, Segev DL. The effects 
of DonorNet 2007 on kidney distribution equity and efficiency. 
American Journal of Transplantation, Vol. 9, pp. 1550-1557.
    \116\ Gerber DA., Arrington CJ, Taranto SE., Baker T, Sung RS. 
DonorNet and the Potential Effects on Organ Utilization. American 
Journal of Transplantation, Vol. 10, pp. 1081-1089. Article first 
published online: 22 MAR 2010. DOI: 10.1111/j.1600-
6143.2010.03036.x.
---------------------------------------------------------------------------

    However, with substantial feedback from transplant programs, the 
system was improved and provided transplant programs with much more 
information regarding the available organs and donor characteristics. 
For example, the system allowed for programs to add more screening 
criteria, such as differentiation between local and import (for 
example, national) values, and screening for donors after cardiac death 
(DCD) with differentiation between local and import offers. In 2008, 
additional screening features were added, such as maximum acceptable 
cold ischemic time (CIT), maximum donor body mass index (BMI), and 
donor history of hypertension, diabetes, coronary artery disease, among 
others. Such improvements were designed to allow centers to restrict 
organ offers to those individuals who the program was most likely to 
accept. After the introduction of such additional system improvements, 
the percent of adult kidneys from deceased donors, that were not used, 
held at an average of 18.2 percent over the next 4 years. More 
recently, however, the average discard rate has resumed an upward 
trend, rising to 18.7 percent in CY 2014 and 19.3 percent in CY 2015. 
We are not aware of any studies that have specifically examined 
transplant program organ acceptance and discard patterns in relation to 
their perceptions regarding the CMS organ transplant CoPs. However, we 
believe that the increased percent of unused adult kidneys, combined 
with an increase in the number of recovered organs, creates an 
imperative to action, given the lifesaving benefits of organ 
transplantation.
    Further concerns arise when we examine the use of what historically 
have been known as ``expanded criteria donor (ECD)'' organs. ECD organs 
are organs that are deemed transplantable but experience lower rates of 
functional longevity compared to most other organs. Characteristics 
that historically defined an ECD kidney include age of donor at or 
greater than 60 years, or organs from donors who were aged 50-59 years 
who also had experienced two of the following: Cerebrovascular accident 
as the cause of death; preexisting hypertension; or terminal serum 
creatinine greater than 1.5 mg/dl.
    Although the SRTR risk-adjustment methods take into account the 
factors that comprise an ECD designation, ECD kidneys have been the 
only category of adult kidneys that experienced a decline in the number 
that were recovered for organ transplantation, from 3,249 in CY 2007 to 
2,833 in CY 2015. Acceptance rates for ECD kidneys also declined, from 
56.2 percent in CY 2007 to 51.0 percent in CY 2015. There is some 
evidence that this decline is influenced by other factors, such as the 
higher costs to the hospital that are associated with ECD organ use. 
ECD organ selection also requires greater sophistication on the part of 
a transplant program to be able, in a timely manner, to distinguish 
between the finer features of an ECD organ that might be appropriate to 
use compared with one that involves too much risk. Therefore, ECD organ 
use may have been a particularly sensitive indicator of risk aversion. 
We note that, in 2014, the OPTN replaced the ECD organ designations and 
implemented a more sophisticated system of adult kidney classification 
(the kidney donor profile index, KDPI). We believe this new system 
should help in the decision-making process for organ acceptance, but 
may have limited effect on undue risk aversion.

B. Proposed Revisions to Performance Thresholds

    For the reasons described above, we are proposing to change the 
performance threshold at Sec. Sec.  482.80(c)(2)(ii)(C) and 
482.82(c)(2(ii)(C) from 1.5 to 1.85. We stated in the preamble of the 
March 30, 2007 final rule (72 FR 15220) that ``If we determine in the 
future that any of the three thresholds is too low or too high, we will 
propose changes in the threshold through the rulemaking process.'' In 
this proposed rule, we are following through on that commitment.
    The current relevant standard specifies that outcomes would not be 
acceptable if the ratio of observed patient deaths or graft failures 
divided by the risk-adjusted expected number, or ``O/E,'' exceeds 1.5. 
The expected number is based on the national average, adjusted for the 
patient, organ, and donor risk profile of a transplant program's actual 
clientele for individuals who received a transplant in the 2.5-year 
period under consideration in each SRTR report. As the national 
performance has improved, it has become more difficult for transplant 
programs to maintain compliance with this CoP. In 2007, for example, an 
adult kidney transplant program was in compliance with the CMS outcomes 
standard if there were no more than 10.7 graft losses within one year 
out of 100 transplants. By 2014, that number had decreased to 7.9, a 
26-percent reduction in graft losses 7 years later. Similarly, the 
number of patient deaths that could occur while maintaining compliance 
with the CoP declined from 5.4 to 4.6 out of every 100 adult kidney 
transplant recipients. We believe that a change in the threshold from 
1.5 to 1.85 would restore the approximate compliance levels for adult 
kidney transplants that were allowed in 2007 when national performance 
was not so high. More specifically, a 1.85 threshold would mean that up 
to 9.7 graft losses out of 100 transplants (within 1 year of 
transplant) would remain within the new CMS outcomes range (which is 
slightly fewer than the 10.7 allowed in 2007 but more than the 7.9 
allowed in 2015), and up to 5.7 patient deaths out of 100 transplants 
(within one year of transplant) would remain within the CMS range 
(compared to 5.4 in 2007 and 4.6 in 2015). Through restoring rough 
parity to 2007 graft failure rates, we hope to encourage transplant 
centers to use more of the increasing number of viable organs.
    For consistency and to avoid unneeded complexity, we are proposing 
to use the same 1.85 threshold for all organ types and for both graft 
and patient survival. We appreciate that a case could instead be made 
for having different thresholds for different organ types, or a 
different threshold for graft versus patient survival. For example, if 
the only consideration was to restore the 2007 effective impact, the 
threshold for patient survival on the part of heart transplant 
recipients would be changed to 1.63, while the liver and lung threshold 
would be 2.00. Similarly, the new threshold for adult kidney graft 
survival would be 2.02 but for adult kidney patient survival a new 
threshold would be 1.77. Arguments also may be made for a variety of 
other thresholds, such as keeping the 1.5 threshold for heart, liver, 
and lung, on the grounds that there is more statistical room for 
improvement in outcomes for those types of organs compared to rates for 
adult kidney survival (which are already quite high). However, instead 
of a myriad of thresholds, we are proposing to adopt a consistent 1.85 
threshold for all organ types, and for both graft and patient survival. 
This is a number that is approximately mid-range between the number 
that would restore the adult kidney graft tolerance range to the 2007 
level, and the number that would do so for adult kidney patient 
survival. We believe this approach is less confusing than the 
alternatives, and that it would

[[Page 45743]]

be advisable to implement the new 1.85 threshold now in a consistent 
and clear manner, and then to study the effects, before proceeding 
further. For future consideration, we also may explore other approaches 
that are aimed at optimizing the effective use of available organs 
instead of adjusting the CMS outcomes threshold further, such as the 
potential that a balancing measure (focused specifically on effective 
use of organs) may be appropriate (which we discuss in section XXIII. 
(Economic Analyses) of this proposed rule).
    We also note that the OPTN is examining its own flagging criteria 
under its new Bayesian methodology, out of concern that the OPTN may be 
flagging an excessive number of programs for review and contributing to 
undue risk aversion. The OPTN Bayesian methodology has resulted in more 
programs being flagged than are cited by CMS. We view this as a 
purposeful and desirable positioning of CMS as a backstop to the OPTN. 
We believe that our proposed change in this proposed rule would help 
ensure that, if OPTN also changed its criteria for outcomes review and 
as a result flagged fewer programs, those programs that are then 
flagged would still have the opportunity to first engage with the peer 
review process of the OPTN and might never be in a situation of being 
cited by CMS.
    We are inviting public comment on this issue. Specifically, we are 
inviting comment on whether this proposal is effectively balancing our 
dual goals of improved beneficiary outcomes and increased beneficiary 
access. We also reiterate our statement from the March 30, 2007 final 
rule, that if we find that the thresholds are too low or too high, we 
will propose changes in future rulemaking.

XVI. Organ Procurement Organizations (OPOs): Changes to Definitions; 
Outcome Measures; and Documentation Requirements

A. Background

1. Organ Procurement Organizations (OPOs)
    Organ procurement organizations (OPOs) are vital partners in the 
procurement, distribution, and transplantation of human organs in a 
safe and equitable manner for all potential transplant recipients. The 
role of OPOs is critical to ensuring that the maximum possible number 
of transplantable human organs are available to seriously ill patients 
who are on a waiting list for an organ transplant. OPOs are responsible 
for the identification of eligible donors, recovering organs from 
deceased donors, reporting information to the UNOS and OPTN, and 
compliance with all CMS outcome and process performance measures.
2. Statutory Provisions
    Section 1138(b) of the Act provides the statutory qualifications 
and requirements that an OPO must meet in order for organ procurement 
costs to be paid under the Medicare program or the Medicaid program. 
Among other provisions, section 1138(b) of the Act also specifies that 
an OPO must operate under a grant made under section 371(a) of the 
Public Health Service Act (PHS Act) or must be certified or recertified 
by the Secretary as meeting the standards to be a qualified OPO within 
a certain time period. Congress has provided that payment may be made 
for organ procurement cost ``only if'' the OPO meets the performance 
related standards prescribed by the Secretary. Under these authorities, 
we established Conditions for Coverage (CfCs) for OPOs that are 
codified at 42 CFR part 486 and set forth the certification and 
recertification processes for OPOs.
    Section 1102 of the Act gives the Secretary the authority to make 
and publish such rules and regulations as may be necessary to the 
efficient administration of the functions that she is charged with 
performing under the Act. Moreover, section 1871 of the Act gives the 
Secretary broad authority to establish regulations that are necessary 
to carry out the administration of the Medicare program.
3. HHS Initiatives Related to OPO Services
    The Advisory Committee on Organ Transplantation (ACOT) was 
established under the authority of section 222 of the PHS Act, as 
amended, and regulations under 42 CFR 121.12. A 2012 recommendation by 
ACOT stated: ``ACOT recognizes that the current CMS and HRSA/OPTN 
structure creates unnecessary burdens and inconsistent requirements on 
transplant centers (TCs) and organ procurement organizations (OPOs) and 
that the current system lacks responsiveness to advances in TC and OPO 
performance metrics. The ACOT recommends that the Secretary direct CMS 
and HRSA to confer with the OPTN, SRTR, the OPO community, and TC 
representatives to conduct a comprehensive review of regulatory and 
other requirements, and to promulgate regulatory and policy changes to 
requirements for OPOs and TCs that unify mutual goals of increasing 
organ donation, improving recipient outcomes, and reducing organ 
wastage and administrative burden on TCs and OPOs. These revisions 
should include, but not be limited to, improved risk adjustment 
methodologies for TCs and a statistically sound method for yield 
measures for OPOs.'' \117\
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    \117\ Available at: http://www.organdonor.gov/legislation/acotrecs55.html.
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4. Requirements for OPOs
    To be an OPO, an entity must meet the applicable requirements of 
both the Social Security Act and the PHS Act. Among other requirements, 
the OPO must be certified or recertified by the Secretary as an OPO. To 
receive payment from the Medicare and Medicaid programs for organ 
procurement costs, the entity must have an agreement with the 
Secretary. In addition, under section 1138(b) of the Act, an OPO must 
meet performance standards prescribed and designated by the Secretary. 
Among other things, the Secretary is required to establish outcome and 
process performance measures based on empirical evidence, obtained 
through reasonable efforts, of organ donor potential and other related 
factors in each service area of the qualified OPO. An OPO must be a 
member of and abide by the rules and requirements of the OPTN that have 
been approved by the Secretary (section 1138(b)(1)(D) of the Act; 42 
CFR 486.320).

B. Proposed Provisions

1. Definition of ``Eligible Death''
    OPOs submit donor data to the SRTR on a continuous basis. The OPTN 
establishes the types and frequencies of the data to be submitted by 
the OPOs to the SRTR through its policies. The OPTN and SRTR collect 
and analyze the data pursuant to the HRSA mission to increase organ 
donation and transplantation. Periodically, the OPTN revises its OPO 
data reporting policies based on methodologies and clinical practice 
improvements that enable them to draw more accurate conclusions about 
donor and organ suitability for transplantation. When the CMS OPO 
regulations were published on May 31, 2006, the definition for 
``eligible death'' at Sec.  486.302 was in alignment with the OPTN 
definitions at that time. This ``eligible death'' definition has been 
used by CMS since May 31, 2006 to calculate and determine compliance 
with the OPO outcomes measures at Sec.  486.318.
    The OPTN has approved a change to its ``eligible death'' 
definition, which is scheduled to go into effect on January 1, 2017. 
The changes to the OPTN

[[Page 45744]]

definition \118\ are predicted to increase the availability of 
transplantable organs by: Increasing the maximum age for donation from 
70 years of age to 75; replacing the automatic exclusion of patients 
with Multi-System Organ Failure (MSOF) with clinical criteria for each 
organ type that specifies such type's suitability for procurement; and 
implementing policies allowing recovery and transplantation of organs 
from an HIV positive donor into an HIV positive recipient, consistent 
with the Hope Act.\119\
---------------------------------------------------------------------------

    \118\ Alcorn, James B. (2013). ``Summary of actions taken at 
OPTN/UNOS Board of Directors Meeting: June 24-25, 2013.'' Available 
at: https://optn.transplant.hrsa.gov/media/1277/policynotice_20130701.pdf.
    \119\ HIV Organ Policy Equity Act, Public Law 113-51 (November 
21, 2013).
---------------------------------------------------------------------------

    The existing definition of ``eligible death'' under the May 31, 
2006 CfCs (71 FR 31046 through 31047; 42 CFR 486.302) would not be 
consistent with this OPTN revised definition. Existing Sec.  486.302 
defines this term as ``the death of a patient 70 years old or younger, 
who ultimately is legally declared brain dead according to hospital 
policy, independent of family decision regarding donation or 
availability of next-of-kin, independent of medical examiner or coroner 
involvement in the case, and independent of local acceptance criteria 
or transplant center practice . . . ,'' and who does not exhibit active 
infections or other conditions, including HIV. The definition also sets 
out several additional general exclusion criteria, including MSOF. If 
there are inconsistent definitions, the resultant changes in data 
reported to the OPTN by the OPOs, would inhibit the SRTR's ability to 
produce the data required by CMS to evaluate OPO conformance with Sec.  
486.318.
    Therefore, in order to ensure more consistent requirements, we are 
proposing to replace the current definition for ``eligible death'' at 
Sec.  486.302 with the upcoming revised OPTN definition of ``eligible 
death.'' The CMS definition would be revised to include donors up to 
the age of 75 and replace the automatic exclusion of potential donors 
with MSOF with the clinical criteria listed in the definition, that 
specify the suitability for procurement. We request public comments on 
our proposed definition. If, as a result of the public comments we 
receive on this proposal, additional changes are necessary to this 
definition, we will work with the OPTN to harmonize the definition.
2. Aggregate Donor Yield for OPO Outcome Performance Measures
    At the time of publication of the May 31, 2006 OPO regulations, 
outcome measures specified at Sec. Sec.  486.318(a)(3)(i) and (ii) and 
Sec. Sec.  486.318(b)(3)(i) and (ii) were consistent with yield 
calculations then utilized by the SRTR. These CMS standards measure the 
number of organs transplanted per standard criteria donor and expanded 
criteria donor (donor yield). We have received feedback that the use of 
this measure has created a hesitancy on the part of OPOs to pursue 
donors for only one organ due to the impact on the CMS yield measure.
    In 2014, the SRTR, based upon the use of empirical data, changed 
the way it calculates aggregate donor yield after extensive research 
and changes to risk-adjustment criteria. The revised metric, currently 
in use by the OPTN/SRTR, risk-adjusts based on 29 donor medical 
characteristics and social complexities. We believe the OPTN/SRTR yield 
metric accurately predicts the number of organs that may be procured 
per donor, and each OPO is measured based on the donor pool in its DSA. 
This methodology is a more accurate measure for organ yield performance 
and accounts for differences between donor case-mixes across DSAs.
    Therefore, we are proposing to revise our regulations at Sec.  
486.318(a)(3) and Sec.  486.318(b)(3) to be consistent with the current 
OPTN/SRTR aggregate donor yield metric. We also intend to revisit and 
revise the other OPO measures at a future date.
3. Organ Preparation and Transport-Documentation With the Organ
    We are proposing to revise Sec.  486.346(b), which currently 
requires that an OPO send complete documentation of donor information 
to the transplant center along with the organ. The regulation 
specifically lists documents that must be copied and sent by the OPO to 
include: Donor evaluations; the complete record of the donor's 
management; documentation of consent; documentation of the 
pronouncement of death; and documentation for determining organ 
quality. This requirement has resulted in an extremely large volume of 
donor record materials being copied and sent to the transplant centers 
by the OPOs with the organ. However, all these data can now be accessed 
by the transplant center electronically. The OPOs utilize an 
intercommunicative Web-based system to enter data that may be received 
and reviewed electronically by transplant centers.
    Therefore, we are proposing to revise Sec.  486.346(b) to no longer 
require that paper documentation, with the exception of blood typing 
and infectious disease information, be sent with the organ to the 
receiving transplant center. We also are proposing a revision to Sec.  
486.346(b) to make it consistent with current OPTN policy at 
16.5.A,\120\ which requires that blood type source documentation and 
infectious disease testing results be physically sent in hard copy with 
the organ. The reduction in the amount of hard copy documentation that 
is packaged and shipped with each organ would increase OPO transplant 
coordinators' time, allowing them to focus on donor management and 
organ preparation. This proposal would not restrict the necessary donor 
information sent to transplant hospitals because all other donor 
information can be accessed electronically by the transplant center.
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    \120\ OPTN Policies. Policy Number 16.5.A. Organ Documentation. 
Effective date 4/14/2016: Page 200. Available at: https://optn.transplant.hrsa.gov/governance/policies/.
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XVII. Transplant Enforcement Technical Corrections and Proposals

A. Technical Correction to Transplant Enforcement Regulatory References

    We are proposing a technical correction to preamble and regulatory 
language we recently adopted regarding enforcement provisions for organ 
transplant centers. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 
50338), we inadvertently made a typographical error in the final 
citations in a response to a commenter and stated, ``[i]n the final 
regulation, at Sec.  488.61(f)(1) and elsewhere, we therefore limit the 
mitigating factors provision to deficiencies cited for noncompliance 
with the data submission, clinical experience, or outcomes requirements 
specified at Sec.  488.80 and Sec.  488.82.'' However, the transplant 
center data submission, clinical experience, and outcomes requirements 
are actually specified at 42 CFR 482.80 and 482.82, and not within part 
488; moreover, part 488 does not contain a Sec.  488.80 or Sec.  
488.82. We wish to correct this typographical error; the response 
should read as follows: ``In the final regulation, at Sec.  
488.61(f)(1) and elsewhere, we therefore limit the mitigating factors 
provision to deficiencies cited for noncompliance with the data 
submission, clinical experience, or outcomes requirements specified at 
Sec.  482.80 and Sec.  482.82.''
    We also are proposing to amend Sec.  488.61(f)(1) which was added 
in that final rule (79 FR 50359) to correct the same incorrect 
citations.

[[Page 45745]]

B. Other Proposed Revisions to Sec.  488.61

    Under current Sec.  488.61(f)(3), transplant programs must notify 
CMS of their intent to request mitigating factors approval within 10 
days and the time period for submission of mitigating factor materials 
is 120 days. Current Sec.  488.61(f)(3) does not specify how these time 
periods are to be computed.
    We are proposing to amend Sec.  488.61(f)(3) to extend the due date 
for programs to notify CMS of their intent to request mitigating 
factors approval from 10 days to 14 calendar days, and to clarify that 
the time period for submission of the mitigating factors information is 
calculated in calendar days (that is, 120 calendar days).
    In addition, as part of our improvement efforts, in this proposed 
rule, we are proposing to revise Sec.  488.61(h)(2) to clarify that a 
signed SIA with a transplant program remains in force even if a 
subsequent SRTR report indicates that the transplant program has 
restored compliance with the Medicare CoPs, except that CMS, in its 
sole discretion, may shorten the timeframe or allow modification to any 
portion of the elements of the SIA in such a case.

XVIII. Proposed Changes to the Medicare and Medicaid Electronic Health 
Record (EHR) Incentive Programs

A. Background

    The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 
111-5), which included the Health Information Technology for Economic 
and Clinical Health Act (HITECH Act), amended Titles XVIII and XIX of 
the Act to authorize incentive payments and Medicare payment 
adjustments for eligible professionals (EPs), eligible hospitals, 
critical access hospitals (CAHs), and Medicare Advantage (MA) 
organizations to promote the adoption and meaningful use of certified 
EHR technology (CEHRT). Sections 1848(o), 1853(l) and (m), 1886(n), and 
1814(l) of the Act provide the statutory basis for the Medicare 
incentive payments made to meaningful EHR users. These provisions 
govern EPs, MA organizations (for certain qualifying EPs and hospitals 
that meaningfully use CEHRT), subsection (d) hospitals and CAHs 
respectively. Sections 1848(a)(7), 1853(l) and (m), 1886(b)(3)(B), and 
1814(l) of the Act also establish downward payment adjustments, 
beginning with calendar or fiscal year 2015, for EPs, MA organizations, 
subsection (d) hospitals, and CAHs that are not meaningful users of 
CEHRT for certain associated EHR reporting periods. For a more detailed 
explanation of the statutory basis for the Medicare and Medicaid EHR 
Incentive Programs, we refer readers to the July 28, 2010 Stage 1 final 
rule titled, ``Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program; Final Rule'' (75 FR 44316 through 44317).
    In the October 16, 2015 Federal Register, we published a final rule 
titled ``Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program--Stage 3 and Modifications to Meaningful Use in 2015 
Through 2017'' (80 FR 62761 through 62955), hereinafter referred to as 
the ``2015 EHR Incentive Programs Final Rule.'' \121\ That final rule 
in part aligned the Modified Stage 2 measures with Stage 3 measures, 
aligned EHR reporting periods with the calendar year, and aligned 
aspects of the EHR Incentive Programs with other CMS quality reporting 
programs.
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    \121\ We also published two correction notices for the 2015 EHR 
Incentive Programs Final Rule, making corrections and correcting 
amendments (81 FR 11447 through 11449; 81 FR 34908 through 34909).
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    In the May 9, 2016 Federal Register, we published the ``Medicare 
Program; Merit-Based Incentive Payment System (MIPS) and Alternative 
Payment Model (APM) Incentive under the Physician Fee Schedule, and 
Criteria for Physician-Focused Payment Models'' proposed rule (81 FR 
28161 through 28586), hereinafter referred to as the ``2016 MIPS and 
APMs Proposed Rule,'' which included proposals under which the use of 
CEHRT by MIPS eligible clinicians would be evaluated under the 
advancing care information performance category of the MIPS as required 
by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (81 
FR 28215 through 28233). If these proposals were to be finalized, the 
requirements for MIPS eligible clinician EHR use and reporting for the 
advancing care information performance category for MIPS would be 
different from the requirements of meaningful use for eligible 
hospitals and CAHs as established in the 2015 EHR Incentive Programs 
Final Rule. For a full discussion of our proposals for MIPS and its 
impacts on requirements for MIPS eligible clinicians relating to EHR 
use and reporting, we refer readers to the 2016 MIPS and APMs Proposed 
Rule (81 FR 28215 through 28233).

B. Summary of Proposals Included in This Proposed Rule

    We are proposing to eliminate the Clinical Decision Support (CDS) 
and Computerized Provider Order Entry (CPOE) objectives and measures 
for eligible hospitals and CAHs attesting under the Medicare EHR 
Incentive Program for Modified Stage 2 and Stage 3 for 2017 and 
subsequent years. We are also proposing to reduce the thresholds of a 
subset of the remaining objectives and measures in Modified Stage 2 for 
2017 and in Stage 3 for 2017 and 2018 for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program, as described in 
section XVIII.C. of this proposed rule. These proposed changes would 
not apply to eligible hospitals and CAHs that attest to meaningful use 
under their State's Medicaid EHR Incentive Program. These eligible 
hospitals and CAHs would continue to attest to their State Medicaid 
agencies on the measures and objectives finalized in the 2015 EHR 
Incentive Programs Final Rule. We have chosen to limit these proposed 
changes to Medicare only because we are concerned that States would 
have to implement major process changes within a short period of time 
if the changes were to apply to Medicaid, including the burden of 
updating technology and reporting systems, which would incur both 
additional cost and time.
    We are proposing to change the EHR reporting period in 2016 for all 
returning EPs, eligible hospitals and CAHs that have previously 
demonstrated meaningful use in the Medicare and Medicaid EHR Incentive 
Programs as described in section XVIII.D. of this proposed rule.
    We are proposing to require EPs, eligible hospitals and CAHs that 
have not successfully demonstrated meaningful use in a prior year and 
are seeking to demonstrate meaningful use for the first time in 2017 to 
avoid the 2018 payment adjustment by attesting by October 1, 2017 to 
attest to the Modified Stage 2 objectives and measures as described in 
section XVIII.E. of this proposed rule.
    We are proposing a one-time significant hardship exception from the 
2018 payment adjustment for certain EPs who are new participants in the 
EHR Incentive Program in 2017 and are transitioning to MIPS in 2017, as 
well as an application process, as described in section XVIII.F. of 
this proposed rule.
    We are proposing to change the policy on measure calculations for 
actions outside the EHR reporting period for the Medicare and Medicaid 
EHR Incentive Programs as described in section XVIII.G. of this 
proposed rule. Specifically, for all meaningful use measures, unless 
otherwise specified, we are proposing that actions included in the 
numerator must occur within the EHR reporting period if that period is 
a full calendar year, or if it is less than a

[[Page 45746]]

full calendar year, within the calendar year in which the EHR reporting 
period occurs.
    We believe that these proposals would result in continued 
advancement of certified EHR technology utilization, particularly among 
those EPs, eligible hospitals and CAHs that have not previously 
achieved meaningful use, and result in a program more focused on 
supporting interoperability and data sharing for all participants under 
the Medicare and Medicaid EHR Incentive Programs. We discuss these 
proposals in detail in the following sections.

C. Proposed Revisions to Objectives and Measures for Eligible Hospitals 
and CAHs

    We are making two proposals regarding the objectives and measures 
of meaningful use for eligible hospitals and CAHs attesting under the 
Medicare EHR Incentive Program. One of these proposals would eliminate 
the Clinical Decision Support (CDS) and Computerized Provider Order 
Entry (CPOE) objectives and measures for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program for 2017 and 
subsequent years in an effort to reduce reporting burden for eligible 
hospitals and CAHs. The second proposal would reduce the reporting 
thresholds for a subset of the remaining Modified Stage 2 objectives 
and measures for 2017 and Stage 3 objectives and measures for 2017 and 
2018 to Modified Stage 2 thresholds. We note that the Stage 3 Request/
Accept Patient Care Record Measure under the Health Information 
Exchange objective is a new measure in Stage 3, therefore the proposed 
reduction in the threshold is not based on Modified Stage 2 thresholds.
    In this proposed rule, our goal is to propose changes to the 
objectives and measures of meaningful use that we expect would reduce 
administrative burden and enable hospitals and CAHs to focus more on 
patient care.
1. Removal of the Clinical Decision Support (CDS) and Computerized 
Provider Order Entry (CPOE) Objectives and Measures for Eligible 
Hospitals and CAHs
    We are proposing to amend 42 CFR 495.22 (by revising section 
495.22(e) and by adding a new section 495.22(f)) and by revising 42 CFR 
495.24) to eliminate the CDS and CPOE objectives and associated 
measures (currently found at 42 CFR 495.22(e)(2)(iii) and (e)(3)(iii)) 
and 42 CFR 495.24(d)(3)(ii) and (d)(4)(ii)) for eligible hospitals and 
CAHs attesting under the Medicare EHR Incentive Program beginning with 
the EHR reporting period in calendar year 2017. For the reasons stated 
above, this proposal would not apply to eligible hospitals and CAHs 
attesting under a State's Medicaid EHR Incentive Program. In the 2015 
EHR Incentive Programs Final Rule (80 FR 62782 through 62783) we 
finalized a methodology for evaluating whether objectives and measures 
have become topped out and, if so, whether a particular objective or 
measure should be considered for removal from the EHR Incentive 
Program. We apply the following two criteria, which are similar to the 
criteria used in the Hospital IQR and Hospital VBP Programs (79 FR 
50203): (1) Statistically indistinguishable performance at the 75th and 
99th percentile, and (2) performance distribution curves at the 25th, 
50th, and 75th percentiles as compared to the required measure 
threshold. In applying these criteria to the objectives and measures 
for Modified Stage 2 and Stage 3, we have determined that the CPOE 
objective and measures are topped out. We performed a significance test 
using 2015 attestation data to determine the performance rate at the 
75th and 99th percentile. The result of this statistical analysis 
proved that the performance for this objective and the associated 
measures were over 90 percent. Using the same attestation data, we 
performed an analysis at the 25th, 50th, and 75th percentiles to 
determine the distribution regarding the percentage above the required 
thresholds attested by eligible hospitals and CAHs. Eligible hospitals 
and CAHs at the 25th percentile have attested to performance rates of 
over 75 percent for the measures associated with this objective. 
Eligible hospitals and CAHs at the 50th percentile have attested to 
performance rates of over 87 percent for the measures associated with 
this objective. Eligible hospitals and CAHs at the 75th percentile have 
attested to performance rates of over 95 percent for the measures 
associated with this objective. Therefore, based on these criteria, we 
consider the CPOE objective and measures topped out. Based on the 2015 
attestation data, we believe that these objectives and measures have 
widespread adoption among eligible hospitals and CAHs and we are 
proposing to remove them from the Medicare EHR Incentive Program to 
reduce hospital administrative burden.
    We also are proposing to remove the CDS objective and its 
associated measures for eligible hospitals and CAHs; however, these 
measures do not have percentage-based thresholds (hospitals attest 
``yes/no'' to these measures) and thus do not have performance 
distribution that can be measured by statistical analysis. For these 
measures, we note that 99 percent of eligible hospitals and CAHs have 
attested ``yes'' to meeting these measures based on attestation data 
for 2015. We believe that the high level of successful attestation 
indicates achievement of widespread adoption of this objective and 
measures among eligible hospitals and CAHs, and that the objective and 
measures are no longer useful in gauging performance. Therefore, we 
consider this objective and measures to be ``topped out'' and are 
proposing to remove them from the Medicare EHR Incentive Program to 
reduce hospital administrative burden. In addition, eligible hospitals 
and CAHs may continue to independently measure and track activities 
related to the CDS objective and measures for their own quality 
improvement goals or preferences as the functionality will continue as 
part of the 2015 Edition of CEHRT. For more information on the 
performance data used to determine the topped out measures we refer 
readers to the EHR Incentive Programs Objective and Measure Performance 
Report by Percentile available at: http://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/DataAndReports.html.
    In the 2015 EHR Incentive Programs Final Rule, we also established 
that, for measures that were removed, the technology requirements would 
still be a part of the definition of CEHRT. For example, in the 2015 
EHR Incentive Programs Final Rule, the Stage 1 Objective to Record 
Demographics was removed, but the technology and standard for this 
function in the EHR is still required (80 FR 62784) as a part of CEHRT. 
We note that the CDS and CPOE objectives and associated measures that 
we are proposing to remove for eligible hospitals and CAHs would still 
be required as part of the eligible hospital or CAH's CEHRT. However, 
eligible hospitals and CAHs attesting to meaningful use under Medicare 
would not be required to report on those measures under this proposal.
    We are inviting public comments on our proposals.
2. Reduction of Measure Thresholds for Eligible Hospitals and CAHs for 
2017 and 2018
    In the 2015 EHR Incentive Programs Final Rule (80 FR 62762 through 
62955), we finalized certain thresholds for the objectives and measures 
adopted for eligible hospitals and CAHs. In this proposed rule, we are 
proposing to

[[Page 45747]]

reduce a subset of the thresholds for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program for EHR reporting 
periods in calendar year 2017 for Modified Stage 2 and in calendar year 
2017 and 2018 for Stage 3. For the reasons stated above, this proposal 
would not apply to eligible hospitals and CAHs attesting under a 
State's Medicaid EHR Incentive Program. We believe this proposal would 
reduce the hospital and CAH reporting burden, allowing eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program 
to focus more on providing quality patient care, as well as focus on 
updating and optimizing CEHRT functionalities to sufficiently meet the 
requirements of the EHR Incentive Program and prepare for Stage 3 of 
meaningful use. We have received correspondence from numerous hospital 
associations and health systems after the publication of the 2015 EHR 
Incentive Programs Final Rule specifically expressing concerns that 
they have had to resort to workarounds and processes that they believe 
do not add value for their patients in order to meet the current 
objective and measure thresholds. In the measure specifications 
outlined below, we are proposing to reduce a subset of the reporting 
thresholds to the Modified Stage 2 thresholds, as previously stated. 
For example, in the 2015 EHR Incentive Programs Final Rule, we 
finalized a threshold of more than 35 percent for the Stage 3 Patient 
Specific Education measure (42 CFR 495.24(d)(5)(ii)(B)(2)). In this 
proposed rule, we are proposing to reduce that threshold for 2018 for 
eligible hospitals and CAHs attesting under the Medicare EHR Incentive 
Program to more than 10 percent (proposed 42 CFR 495.24(c)(5)(ii)(B), 
which aligns with the Modified Stage 2 threshold for this same measure.
    We note that section 1886(n)(3)(A) of the Act requires the 
Secretary to seek to improve the use of EHRs and health care quality 
over time by requiring more stringent measures of meaningful use. We 
intend to adopt more stringent measures in future rulemaking and will 
continue to evaluate the program requirements and seek input from 
eligible hospitals and CAHs on how the measures could be made more 
stringent in future years of the EHR Incentive Programs. However, for 
the reasons discussed in further detail below, at this time we believe 
reducing the thresholds of certain existing measures would reduce 
unnecessary reporting burden and enable eligible hospitals and CAHs to 
focus more on patient care.
a. Proposed Changes to the Objectives and Measures for Modified Stage 2 
(42 CFR 495.22) in 2017
    For EHR reporting periods in calendar year 2017, we are proposing 
to modify the threshold of the Modified Stage 2 View, Download, 
Transmit (VDT) measure under the Patient Electronic Access objective 
established in the 2015 EHR Incentive Programs Final Rule (80 FR 62846 
through 62848), and this proposed modification would apply to eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program. 
We also are proposing to update the Modified Stage 2 measures with a 
new naming convention to allow for easier reference to a given measure, 
and to align with the measure nomenclature proposed for the MIPS. For 
the reasons stated above, these proposals would not apply to eligible 
hospitals and CAHs attesting under a State's Medicaid EHR Incentive 
Program.
    Specifically, we are proposing to revise section 495.22(e) to 
specify that the current Modified Stage 2 meaningful use objectives and 
measures apply for EPs for 2015 through 2017, for eligible hospitals 
and CAHs attesting under a State's Medicaid EHR Incentive Program for 
2015 through 2017, and for eligible hospitals and CAHs attesting under 
the Medicare EHR Incentive Program for 2015 and 2016. We are proposing 
to add a new section 495.22(f) that includes the meaningful use 
objectives and measures with the proposed modifications discussed below 
that would be applicable only to eligible hospitals and CAHs attesting 
under the Medicare EHR Incentive Program for an EHR reporting period in 
calendar year 2017. We are also proposing a new naming convention for 
certain measures (shown in the table summarizing the Proposed Modified 
Stage 2 Objectives and Measures in 2017 for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program, below) as well as 
minor conforming changes to sections 495.22(a), (c)(1), and (d)(1).
Patient Electronic Access (VDT) (Proposed 42 CFR 495.22(f)(8)(ii)(B))
    View Download Transmit (VDT) Measure: At least 1 patient (or 
patient-authorized representative) who is discharged from the inpatient 
or emergency department (POS 21 or 23) of an eligible hospital or CAH 
during the EHR reporting period views, downloads or transmits to a 
third party his or her health information during the EHR reporting 
period.
     Denominator: Number of unique patients discharged from the 
inpatient or emergency department (POS 21 or 23) of the eligible 
hospital or CAH during the EHR reporting period.
     Numerator: The number of patients (or patient-authorized 
representatives) in the denominator who view, download, or transmit to 
a third party their health information.
     Threshold: The numerator and denominator must be reported 
and the numerator must be equal to or greater than 1.
     Exclusion: Any eligible hospital or CAH that is located in 
a county that does not have 50 percent or more of its housing units 
with 4Mbps broadband availability according to the latest information 
available from the FCC on the first day of the EHR reporting period.
     Proposed Modification to the VDT Measure Threshold.
    For eligible hospitals and CAHs attesting under the Medicare EHR 
Incentive Program, we are proposing to reduce the threshold of the VDT 
Measure from more than 5 percent to at least one patient. We are 
proposing to reduce the threshold because we have heard from 
stakeholders including hospitals and hospital associations that they 
have faced significant challenges in implementing the objectives and 
measures that require patient action. These challenges include, but are 
not limited to, patients who have limited knowledge of, proficiency 
with, and access to information technology, as well as patients 
declining to access the portals provided by the eligible hospital or 
CAH to view, download, and transmit their health information via this 
platform. We recognize that eligible hospitals and CAHs may need 
additional time to educate patients on how to use health information 
technology and believe that reducing the threshold for 2017 would 
provide additional time for eligible hospitals and CAHs to determine 
the best ways to communicate the importance for patients to access 
their medical information. We believe that with time patients will 
become more willing to use the technology to access their health 
records.

[[Page 45748]]



  Proposed Modified Stage 2 Objectives and Measures in 2017 for Eligible Hospitals and CAHs Attesting Under the
                                         Medicare EHR Incentive Program
----------------------------------------------------------------------------------------------------------------
                                       Previous measure  name/
              Objective                       reference               Measure name        Threshold  requirement
----------------------------------------------------------------------------------------------------------------
Protect Patient Health Information...  Measure................  Security Risk Analysis   Yes/No attestation.
                                                                 Measure.
CDS (Clinical Decision Support) *....  Measure 1..............  Clinical Decision        Five CDS.
                                                                 Support Interventions
                                                                 Measure.
                                       Measure 2..............  Drug Interaction and     Yes/No.
                                                                 Drug-Allergy Checks
                                                                 Measure.
CPOE (Computerized Provider Order      Measure 1..............  Medication Orders        >60%.
 Entry).*                                                        Measure.
                                       Measure 2..............  Laboratory Orders        >30%.
                                                                 Measure.
                                       Measure 3..............  Radiology Orders         >30%.
                                                                 Measure.
eRx (electronic prescribing).........  Measure................  e-Prescribing..........  >10%.
Health Information Exchange..........  Measure................  Health Information       >10%.
                                                                 Exchange Measure.
Patient Specific Education...........  Eligible Hospital/CAH    Patient-Specific         >10%.
                                        Measure.                 Education Measure.
Medication Reconciliation............  Measure................  Medication               >50%.
                                                                 Reconciliation Measure.
Patient Electronic Access............  Eligible Hospital/CAH    Patient Access Measure.  >50%.
                                        Measure 1.
                                       Eligible Hospital/CAH    View Download Transmit   At least 1 patient.
                                        Measure 2.               (VDT) Measure.**
Public Health Reporting..............  Immunization Reporting.  Immunization Measure...  Public Health Reporting
                                                                                          to 3 Registries.
                                       Syndromic Surveillance   Syndromic Surveillance
                                        Reporting.               Measure.
                                       Specialized Registry     Specialized Registry
                                        Reporting.               Measure.
                                       Electronic Reportable    Electronic Reportable
                                        Laboratory Result        Laboratory Result
                                        Reporting.               Reporting Measure.
----------------------------------------------------------------------------------------------------------------
* We note that we are proposing to remove CDS and CPOE for eligible hospitals and CAHs attesting under the
  Medicare EHR Incentive Program in section XVIII.C.1. of this proposed rule.
** We note that we are proposing to reduce the threshold for the VDT measure.

    We are seeking public comments on the proposed changes.
b. Proposed Changes to the Objectives and Measures for Stage 3 (42 CFR 
495.24) in 2017 and 2018
    For EHR reporting periods in 2017 and 2018, we are proposing to 
modify a subset of the Stage 3 measure thresholds established in the 
2015 EHR Incentive Programs Final Rule (80 FR 62829 through 62871) that 
are currently codified at 42 CFR 495.24, and these proposed 
modifications would apply to eligible hospitals and CAHs attesting 
under the Medicare EHR Incentive Program. For the reasons stated above, 
these proposed modifications would not apply to eligible hospitals and 
CAHs attesting under a State's Medicaid EHR Incentive Program. We also 
are proposing, beginning in 2017, in proposed 42 CFR 495.24(c) and (d), 
to update the measures for EPs, eligible hospitals and CAHs with a new 
naming convention to allow for easier reference to a given measure, and 
to align with the measure nomenclature proposed for the MIPS (see the 
table summarizing Proposed Stage 3 Objectives and Measures for 2017 and 
2018 for eligible hospitals and CAHs attesting under the Medicare EHR 
Incentive Program, below).
(1) Objective: Patient Electronic Access to Health Information 
(Proposed 42 CFR 495.24(c)(5))
    Objective: The eligible hospital or CAH provides patients (or 
patient-authorized representative) with timely electronic access to 
their health information and patient-specific education.
    Patient Access Measure: For more than 50 percent of all unique 
patients discharged from the eligible hospital or CAH inpatient or 
emergency department (POS 21 or 23): (1) The patient (or the patient-
authorized representative) is provided timely access to view online, 
download, and transmit his or her health information; and (2) the 
provider ensures the patient's health information is available for the 
patient (or patient-authorized representative) to access using any 
application of their choice that is configured to meet the technical 
specifications of the application programming interfaces (APIs) in the 
provider's CEHRT.
     Denominator: The number of unique patients discharged from 
an eligible hospital or CAH inpatient or emergency department (POS 21 
or 23) during the EHR reporting period.
     Numerator: The number of patients in the denominator (or 
patient-authorized representatives) who are provided timely access to 
health information to view online, download, and transmit to a third 
party and to access using an application of their choice that is 
configured meet the technical specifications of the API in the 
provider's CEHRT.
     Threshold: The resulting percentage must be more than 50 
percent in order for a provider to meet this measure.
     Exclusion: Any eligible hospital or CAH that is located in 
a county that does not have 50 percent or more of its housing units 
with 4Mbps broadband availability according to the latest information 
available from the FCC on the first day of the EHR reporting period.
     Proposed Modification to the Patient Access Measure 
Threshold for Eligible Hospitals and CAHs Attesting Under the Medicare 
EHR Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(5)(ii)(A), to reduce 
the threshold for the Patient Access measure for eligible hospitals and 
CAHs attesting under the Medicare EHR Incentive Program from more than 
80 percent to more than 50 percent. In the 2015 EHR Incentive Programs 
Final Rule (80 FR 62846), we finalized that providers in Stage 3 would 
be required to offer all four functionalities (view, download, transmit 
and access through an API) to their patients.

[[Page 45749]]

    We continue to hear from health IT vendors through correspondence 
regarding concerns about the implementation of APIs for Stage 3, 
indicating, in part that application development is in a fledgling 
state, and thus it might be very difficult for hospitals to be ready to 
achieve the 80 percent threshold by the time Stage 3 is required 
starting in January 2018. Additional concerns were stated by vendors 
through written correspondence to CMS that stated in part that API 
requirements outlined in the 2015 EHR Incentive Programs Final Rule 
could place an excessive burden on hospitals because application 
development has not been entirely market tested and widely accepted 
amongst the entire industry. They went on further to provide that it 
will likely be difficult for hospitals to achieve the threshold of 80 
percent at the implementation of Stage 3. Vendors have also expressed 
concerns around the likely issues surrounding compatibility and varying 
API interface functionalities that could possibly hinder 
interoperability among certified EHR technology. We are proposing to 
reduce the threshold based on the concerns voiced by these vendors and 
believe the Modified Stage 2 threshold of more than 50 percent is 
reasonable.
    Patient-Specific Education Measure: The eligible hospital or CAH 
must use clinically relevant information from CEHRT to identify 
patient-specific educational resources and provide electronic access to 
those materials to more than 10 percent of unique patients discharged 
from the eligible hospital or CAH inpatient or emergency department 
(POS 21 or 23) during the EHR reporting period.
     Denominator: The number of unique patients discharged from 
an eligible hospital or CAH inpatient or emergency department (POS 21 
or 23) during the EHR reporting period.
     Numerator: The number of patients in the denominator who 
were provided electronic access to patient-specific educational 
resources using clinically relevant information identified from CEHRT 
during the EHR reporting period.
     Threshold: The resulting percentage must be more than 10 
percent in order for a provider to meet this measure.
     Exclusions: Any eligible hospital or CAH will be excluded 
from the measure if it is located in a county that does not have 50 
percent or more of their housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
at the start of the EHR reporting period.
     Proposed Modification to the Patient Specific Education 
Measure Threshold for Eligible Hospitals and CAHs Attesting Under the 
Medicare EHR Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(5)(ii)(B), to reduce 
the threshold for the Patient-Specific Education measure for eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program 
from more than 35 percent to more than 10 percent. We continue to 
receive written correspondences from hospitals and hospital 
associations expressing their concerns that the vast majority of 
patients ask for and are given patient education materials at the time 
of discharge, usually in print form. These stakeholders have indicated 
that they believe patients benefit from this information at the time of 
their interaction with the health care professionals in the inpatient 
or emergency department settings of the hospital. Requiring hospitals 
to make patient education materials available electronically, which 
would be accessed after the patient is discharged, requires hospitals 
to set up a process and workflow that these stakeholders describe as 
administratively burdensome and the benefit would be diminished for 
patients who have limited knowledge of, proficiency with or access to 
information technology or patients who request paper based educational 
resources.
(2) Objective: Coordination of Care Through Patient Engagement 
(Proposed 42 CFR 495.24(c)(6))
    Objective: Use CEHRT to engage with patients or their authorized 
representatives about the patient's care.
    As finalized in the 2015 EHR Incentive Programs Final Rule (80 FR 
62861), we maintain that providers must attest to the numerator and 
denominator for all three measures, but would only be required to 
successfully meet the threshold for two of the three measures to meet 
the Coordination of Care through Patient Engagement Objective.
    View, Download, Transmit (VDT) Measure: During the EHR reporting 
period, at least one unique patient (or their authorized 
representatives) discharged from the eligible hospital or CAH inpatient 
or emergency department (POS 21 or 23) actively engage with the 
electronic health record made accessible by the provider and one of the 
following: (1) View, download or transmit to a third party their health 
information; or (2) access their health information through the use of 
an API that can be used by applications chosen by the patient and 
configured to the API in the provider's CEHRT; or (3) a combination of 
(1) and (2).
     Denominator: The number of unique patients discharged from 
an eligible hospital or CAH inpatient or emergency department (POS 21 
or 23) during the EHR reporting period.
     Numerator: The number of unique patients (or their 
authorized representatives) in the denominator who have viewed online, 
downloaded, or transmitted to a third party the patient's health 
information during the EHR reporting period and the number of unique 
patients (or their authorized representatives) in the denominator who 
have accessed their health information through the use of an API during 
the EHR reporting period.
     Threshold: The numerator must be at least one patient in 
order for an eligible hospital or CAH to meet this measure.
     Exclusion: Any eligible hospital or CAH will be excluded 
from the measure if it is located in a county that does not have 50 
percent or more of their housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
at the start of the EHR reporting period.
     Proposed Modification to the View, Download, Transmit 
(VDT) Threshold
    As discussed above, under the Modified Stage 2 Objectives and 
Measures, we are proposing to reduce the threshold of the View, 
Download Transmit (VDT) measure for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program from more than 5 
percent to at least one patient. We are proposing, in proposed 42 CFR 
495.24(c)(6)(ii)(A), to reduce the threshold for Stage 3 because we 
have heard from stakeholders including hospitals and hospital 
associations that they have faced significant challenges in 
implementing the objectives and measures that require patient action. 
These challenges include but are not limited to, patients who have 
limited knowledge of, proficiency with and access to information 
technology as well as patients declining to access the portals provided 
by the eligible hospital or CAH to view, download, and transmit their 
health information via this platform. We recognize that eligible 
hospitals and CAHs may need additional time to educate patients on how 
to use health information technology and believe that reducing the 
threshold for 2017 and 2018 would provide additional time for eligible 
hospitals and CAHs to determine the best ways to communicate the 
importance for patients to access their medical information. We believe 
with time patients will become more willing

[[Page 45750]]

to use the technology to access their health records.
    Secure Messaging: For more than 5 percent of all unique patients 
discharged from the eligible hospital or CAH inpatient or emergency 
department (POS 21 or 23) during the EHR reporting period, a secure 
message was sent using the electronic messaging function of CEHRT to 
the patient (or the patient-authorized representative), or in response 
to a secure message sent by the patient (or the patient-authorized 
representative).
     Denominator: The number of unique patients discharged from 
an eligible hospital or CAH inpatient or emergency department (POS 21 
or 23) during the EHR reporting period.
     Numerator: The number of patients in the denominator for 
whom a secure electronic message is sent to the patient (or patient-
authorized representative) or in response to a secure message sent by 
the patient (or patient-authorized representative), during the EHR 
reporting period.
     Threshold: The resulting percentage must be more than 5 
percent in order for an eligible hospital or CAH to meet this measure.
     Exclusion: Any eligible hospital or CAH will be excluded 
from the measure if it is located in a county that does not have 50 
percent or more of their housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
at the start of the EHR reporting period.
     Proposed Modification to the Secure Messaging Threshold 
for Eligible Hospitals and CAHs Attesting Under the Medicare EHR 
Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(6)(ii)(B), to reduce 
the threshold of the Secure Messaging measure for eligible hospitals 
and CAHs attesting under the Medicare EHR Incentive Program from more 
than 25 percent to more than 5 percent.
    We are proposing to reduce the threshold because we have heard from 
stakeholders including hospitals and hospital associations that for 
patients who are in the hospital for an isolated incident the hospital 
may not have significant reason for a follow up secure message. In 
addition, we have heard concerns from these same stakeholders that 
these same patients may decline to access the messages received through 
this platform. They have expressed concern over not being able meet 
this threshold as a result of their patients' limited knowledge of, 
proficiency with, and access to information technology. We understand 
that hospitals have faced challenges meeting this measure. We believe 
the goal of this measure is to leverage HIT solutions to enhance 
patient and provider engagement. This type of platform is also meant to 
be of value for communication between multiple providers in the care 
team and patient which could promote care coordination and better 
outcomes for the patient. Therefore we would like to provide eligible 
hospitals and CAHs additional time to determine the best ways to relay 
the importance for patients to use secure messaging as a communication 
tool with their healthcare provider. We do believe that with time 
patients will become more willing to use secure messages as a means to 
communicate with their health care provider.
(3) Objective: Health Information Exchange (HIE) (Proposed 42 CFR 
495.24(c)(7))
    Objective: The eligible hospital or CAH provides a summary of care 
record when transitioning or referring their patient to another setting 
of care, receives or retrieves a summary of care record upon the 
receipt of a transition or referral or upon the first patient encounter 
with a new patient, and incorporates summary of care information from 
other providers into their EHR using the functions of CEHRT.
    As finalized in the 2015 EHR Incentive Programs Final Rule (80 FR 
62861), we maintain that providers must attest to the numerator and 
denominator for all three measures, but would only be required to 
successfully meet the threshold for two of the three measures to meet 
the Health Information Exchange Objective.
    Patient Care Record Exchange Measure: For more than 10 percent of 
transitions of care and referrals, the eligible hospital or CAH that 
transitions or refers their patient to another setting of care or 
provider of care: (1) Creates a summary of care record using CEHRT; and 
(2) electronically exchanges the summary of care record.
     Denominator: Number of transitions of care and referrals 
during the EHR reporting period for which the eligible hospital or CAH 
inpatient or emergency department (POS 21 or 23) was the transferring 
or referring provider.
     Numerator: The number of transitions of care and referrals 
in the denominator where a summary of care record was created using 
certified EHR technology and exchanged electronically.
     Threshold: The percentage must be more than 10 percent in 
order for an eligible hospital or CAH to meet this measure.
     Exclusion: Any eligible hospital or CAH will be excluded 
from the measure if it is located in a county that does not have 50 
percent or more of their housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
at the start of the EHR reporting period.
     Proposed Modification to the Patient Care Record Exchange 
Measure for Eligible Hospitals and CAHs Attesting Under the Medicare 
EHR Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(7)(ii)(A), to reduce 
the threshold for the Patient Care Record Exchange measure for eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program 
from more than 50 percent to more than 10 percent.
    Hospital and hospital association feedback on the 2015 EHR 
Incentive Programs Final Rule, as well as recent reports and surveys of 
hospital participants show that there are still challenges to achieving 
wide scale interoperable health information exchange.\122\ 
Specifically, more than 50 percent of hospital stakeholders identified 
a lack of health IT adoption to support electronic exchange among 
trading partners as a key barrier, especially for provider types and 
settings of care where wide spread adoption may be slower. For example, 
reports note that adoption of health IT may be less extensive among 
common hospital trading partners such as occupational and physical 
therapists, behavioral health providers, and long term post-acute care 
facilities. Stakeholders have emphasized that while the majority of 
hospitals are now engaging in health IT supported health information 
exchange, achieving high performance will require further saturation of 
these health IT supports throughout the industry. We believe the 
threshold of more than 10 percent for exchange of summary of care is 
reasonable, and could likely be raised over time as providers gain 
experience with health IT supported information exchange and as 
barriers to interoperability are lessened.
---------------------------------------------------------------------------

    \122\ ONC Data Brief: No. 36--May 2016 https://www.healthit.gov/sites/default/files/briefs/onc_data_brief_36_interoperability.pdf.
---------------------------------------------------------------------------

    Request/Accept Patient Care Record Measure: For more than 10 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH incorporates into the patient's EHR an 
electronic summary of care document.
     Denominator: Number of patient encounters during the EHR 
reporting

[[Page 45751]]

period for which an eligible hospital or CAH was the receiving party of 
a transition or referral or has never before encountered the patient 
and for which an electronic summary of care record is available.
     Numerator: Number of patient encounters in the denominator 
where an electronic summary of care record received is incorporated by 
the provider into the certified EHR technology.
     Threshold: The percentage must be more than 10 percent in 
order for an eligible hospital or CAH to meet this measure.
     Exclusions:
     Any eligible hospital or CAH for whom the total of 
transitions or referrals received and patient encounters in which the 
provider has never before encountered the patient, is fewer than 100 
during the EHR reporting period is excluded from this measure.
     Any eligible hospital or CAH will be excluded from 
the measure if it is located in a county that does not have 50 percent 
or more of their housing units with 4Mbps broadband availability 
according to the latest information available from the FCC at the start 
of the EHR reporting period.
     Proposed Modification to the Request/Accept Patient Care 
Record Threshold for Eligible Hospitals and CAHs Attesting Under the 
Medicare EHR Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(7)(ii)(B), to reduce 
the threshold for eligible hospitals and CAHs attesting under the 
Medicare EHR Incentive Program for the Request/Accept Patient Care 
Record Measure from more than 40 percent to more than 10 percent. 
Hospital and hospital association feedback on the 2015 EHR Incentive 
Programs Final Rule, as well as recent reports and surveys of hospital 
participants show that there are still challenges to achieving wide 
scale interoperable health information exchange.\123\ Specifically, 
more than 50 percent of hospital stakeholders identified a lack of 
health IT adoption to support electronic exchange among trading 
partners as a key barrier, especially for provider types and settings 
of care where wide spread adoption may be slower. For example, reports 
note that adoption of health IT may be less extensive among common 
hospital trading partners such as occupational and physical therapists, 
behavioral health providers, and long term post-acute care facilities. 
Stakeholders have emphasized that while the majority of hospitals are 
now engaging in health IT supported health information exchange, 
achieving high performance will require further saturation of these 
health IT supports throughout the industry. We believe the threshold of 
more than 10 percent for request/accept patient care record measure is 
appropriate, and could likely be raised over time as providers gain 
experience with health IT supported information exchange and as 
barriers to interoperability are lessened.
---------------------------------------------------------------------------

    \123\ Ibid.
---------------------------------------------------------------------------

    Clinical Information Reconciliation Measure: For more than 50 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH performs a clinical information 
reconciliation. The provider must implement clinical information 
reconciliation for the following three clinical information sets: (1) 
Medication. Review of the patient's medication, including the name, 
dosage, frequency, and route of each medication; (2) Medication 
allergy. Review of the patient's known allergic medications; and (3) 
Current Problem list. Review of the patient's current and active 
diagnoses.
     Denominator: Number of transitions of care or referrals 
during the EHR reporting period for which the eligible hospital or CAH 
inpatient or emergency department (POS 21 or 23) was the recipient of 
the transition or referral or has never before encountered the patient.
     Numerator: The number of transitions of care or referrals 
in the denominator where the following three clinical information 
reconciliations were performed: Medication list; medication allergy 
list; and current problem list.
     Threshold: The resulting percentage must be more than 50 
percent in order for an eligible hospital or CAH to meet this measure.
     Exclusions: Any eligible hospital or CAH for whom the 
total of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, is fewer 
than 100 during the EHR reporting period is excluded from this measure.
     Proposed Modification to the Clinical Information 
Reconciliation Threshold for Eligible Hospitals and CAHs Attesting 
Under the Medicare EHR Incentive Program
    We are proposing, in proposed 42 CFR 495.24(c)(7)(ii)(C), to reduce 
the threshold for eligible hospitals and CAHs attesting under the 
Medicare EHR Incentive Program for the Clinical Information 
Reconciliation Measure from more than 80 percent to more than 50 
percent. As mentioned in both the Patient Care Record Exchange measure 
and the Request/Accept Patient Care Record measure, there are 
challenges to achieving wide scale interoperable health information 
exchange. Specifically, more than 50 percent of hospital stakeholders 
identified a lack of health IT adoption to support electronic exchange 
among trading partners as a key barrier, especially for provider types 
and settings of care where wide spread adoption may be slower. We 
believe the threshold of more than 50 percent for clinical information 
reconciliation is reasonable, and could likely be raised over time as 
providers gain experience with health IT supported information exchange 
and as barriers to interoperability are lessened. We will continue to 
review adoption and performance and consider increasing the threshold 
in future rulemaking.
(4) Objective: Public Health and Clinical Data Registry Reporting 
(Proposed 42 CFR 495.24(c)(8))
    Objective: The eligible hospital or CAH is in active engagement 
with a public health agency (PHA) or clinical data registry (CDR) to 
submit electronic public health data in a meaningful way using CEHRT, 
except where prohibited, and in accordance with applicable law and 
practice.

Immunization Registry Reporting Measure (proposed 42 CFR 
495.24(c)(8)(A))
Syndromic Surveillance Reporting Measure (proposed 42 CFR 
495.24(c)(8)(B))
Electronic Case Reporting Measure (proposed 42 CFR 495.24(c)(8)(C))
Public Health Registry Reporting Measure (proposed 42 CFR 
495.24(c)(8)(D))
Clinical Data Registry Reporting Measure (proposed 42 CFR 
495.24(c)(8)(E))
Electronic Reportable Laboratory Result Reporting Measure (proposed 42 
CFR 495.24(c)(8)(F))

     Proposed Modification to the Public Health and Clinical 
Data Registry Reporting Requirements for Eligible Hospitals and CAHs 
Attesting Under the Medicare EHR Incentive Program
    We are proposing to reduce the reporting requirement for eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program 
for Public Health and Clinical Data Registry Reporting, in proposed 42 
CFR 495.24(c)(8)(ii), to the Modified Stage 2 requirement of any 
combination of three measures from any combination of six measures in 
alignment with Modified Stage 2 requirements (80 FR 62870). We

[[Page 45752]]

received written correspondence from hospitals and hospital 
associations indicating that it is often difficult to find registries 
that are able to accept data that will allow them successfully attest. 
Hospitals and hospital associations have indicated that it is 
administratively burdensome to seek out registries in their 
jurisdiction, contact the registries to determine if they are accepting 
data in the standards required, then determine if they meet the 
exclusion criteria if they are unable to send data to a registry. In 
addition, we have received written correspondence from hospitals 
indicating that in some instances additional technologies were required 
to transmit data, which prevented them from doing so. Because of these 
concerns, we believe that reducing the reporting requirements to any 
combination of three measures would still add value while minimizing 
the administrative burden.

 Proposed Stage 3 Objectives and Measures for 2017 and 2018 for Eligible Hospitals and CAHs Attesting Under the
                                         Medicare EHR Incentive Program
----------------------------------------------------------------------------------------------------------------
                                       Previous measure  name/
              Objective                       reference               Measure name        Threshold requirement
----------------------------------------------------------------------------------------------------------------
Protect Patient Health Information...  Measure................  Security Risk Analysis   Yes/No attestation.
                                                                 Measure.
eRx (electronic prescribing).........  Eligible hospital/CAH    e-Prescribing..........  >25%.
                                        Measure.
CDS (Clinical Decision Support) *....  Measure 1..............  Clinical Decision        Five CDS.
                                                                 Support Interventions
                                                                 Measure.
                                       Measure 2..............  Drug Interaction and     Yes/No.
                                                                 Drug-Allergy Checks
                                                                 Measure.
CPOE (Computerized Provider Order      Measure 1..............  Medication Orders        >60%.
 Entry).*                                                        Measure.
                                       Measure 2..............  Laboratory Orders        >60%.
                                                                 Measure.
                                       Measure 3..............  Diagnostic Imaging       >60%.
                                                                 Orders Measure.
Patient Electronic Access to Health    Measure 1..............  Patient Access Measure   >50%.
 Information.                                                    **.
                                       Measure 2..............  Patient-Specific         >10%.
                                                                 Education Measure.**
Coordination of Care through Patient   Measure 1..............  View, Download Transmit  >At least 1 patient.
 Engagement.                                                     (VDT) Measure.**
                                       Measure 2..............  Secure Messaging **....  >5%.
                                       Measure 3..............  Patient Generated        >5%.
                                                                 Health Data Measure.
Health Information Exchange..........  Measure 1..............  Patient Care Record      >10%.
                                                                 Exchange Measure.**
                                       Measure 2..............  Request/Accept Patient   >10%.
                                                                 Care Record Measure.**
                                       Measure 3..............  Clinical Information     >50%.
                                                                 Reconciliation
                                                                 Measure.**
Public Health and Clinical Data        Immunization Registry    Immunization Registry    Report to 3 Registries
 Registry Reporting.                    Reporting Syndromic      Reporting Measure        or claim exclusions.
                                        Surveillance Reporting   Syndromic Surveillance
                                        Case Reporting Public    Reporting Measure Case
                                        Health Registry          Reporting Measure
                                        Reporting Clinical       Public Health Registry
                                        Data Registry            Reporting Measure
                                        Reporting Electronic     Clinical Data Registry
                                        Reportable Laboratory    Reporting Measure
                                        Result Reporting.        Electronic Reportable
                                                                 Laboratory Result
                                                                 Reporting Measure.
----------------------------------------------------------------------------------------------------------------
* We note that we are proposing to remove CDS and CPOE for eligible hospitals and CAHs attesting under the
  Medicare EHR Incentive Program in section XVIII.C.1. of this proposed rule. These objectives are included in
  the table to demonstrate what their measures and thresholds would be if we were not to finalize our proposal
  to remove them.
** We note that we are proposing to reduce the thresholds for these measures.

    We are inviting public comments on our proposals. We also are 
seeking public comments on how measures of meaningful use under the EHR 
Incentive Program can be made more stringent in future years, 
consistent with the requirements of section 1886(n)(3)(A) of the Act. 
For example, we welcome comments on the proposed thresholds or whether 
different thresholds would be more appropriate. In addition, we are 
seeking public comments on new and more stringent measures for future 
years of the EHR Incentive Program. We will consider these comments for 
future enhancements of the EHR Incentive Program in future rulemaking. 
We intend to reevaluate the objectives, measures, and other program 
requirements for Stage 3 in 2019 and subsequent years. We note that our 
proposed revisions to the regulation text at 495.24 would only include 
objectives and measures for eligible hospitals and CAHs for Stage 3 in 
2017 and 2018. We request comments on any changes that hospitals and 
other stakeholders believe should be made to the objectives and 
measures for Stage 3 in 2019 and subsequent years.
    As stated in the previous sections, we are not proposing any 
changes to the objectives and measures for Modified Stage 2 for 2017 or 
Stage 3 for 2017 and 2018 for eligible hospitals and CAHs that attest 
under a State's Medicaid EHR Incentive Program. We considered proposing 
the same changes for both Medicare and Medicaid, but based upon our 
concerns that States would incur additional cost and time burdens in 
having to update their technology and reporting systems within a short 
period of time, we are proposing these changes only for eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program. 
We request comments on whether these proposed

[[Page 45753]]

changes should also apply for eligible hospitals and CAHs attesting 
under a State's Medicaid EHR Incentive Program. Specifically, whether 
the proposed changes to eliminate the CPOE and CDS objectives and 
measures and reduce a subset of the measure thresholds for Modified 
Stage 2 in 2017 and Stage 3 in 2017 and 2018 should also apply for 
eligible hospitals and CAHs that seek to qualify for an incentive 
payment for meaningful use under Medicaid. We request comments from 
State Medicaid agencies concerning our assumptions about the additional 
cost and time burdens they would face in accommodating these changes, 
and whether those burdens would exist for both 2017 and 2018.

D. Proposed Revisions to the EHR Reporting Period in 2016 for EPs, 
Eligible Hospitals and CAHs

1. Definition of ``EHR Reporting Period'' and ``EHR Reporting Period 
for a Payment Adjustment Year''
    In the 2015 EHR Incentive Programs Final Rule, we finalized the EHR 
reporting periods in 2015, 2016, 2017, 2018, and subsequent years for 
the incentive payments under Medicare and Medicaid (80 FR 62776 through 
62781) and the downward payment adjustments under Medicare (80 FR 62904 
through 62910), and made corresponding revisions to the definitions of 
``EHR reporting period'' and ``EHR reporting period for a payment 
adjustment year'' under 42 CFR 495.4. For 2016, the EHR reporting 
period is any continuous 90-day period in CY 2016 for EPs, eligible 
hospitals, and CAHs that have not successfully demonstrated meaningful 
use in a prior year (new participants) and the full CY 2016 for EPs, 
eligible hospitals, and CAHs that have successfully demonstrated 
meaningful use in a prior year (returning participants). For the 
payment adjustments for EPs and eligible hospitals that are new 
participants, the EHR reporting period is any continuous 90-day period 
in CY 2016 and applies for the 2017 payment adjustment year and 2018 
payment adjustment year; and for EPs and eligible hospitals that are 
returning participants, the EHR reporting period is the full CY 2016 
and applies for the 2018 payment adjustment year. For the payment 
adjustments for CAHs that are new participants, the EHR reporting 
period is any continuous 90-day period in CY 2016 and applies for the 
2016 payment adjustment year; and for CAHs that are returning 
participants, the EHR reporting period is the full CY 2016 and applies 
for the 2016 payment adjustment year. Certain attestation deadlines and 
other program requirements must be satisfied in order for an EP, 
eligible hospital, or CAH to avoid a payment adjustment for a 
particular year.
    In the 2015 EHR Incentive Programs Final Rule (80 FR 62778 through 
62779), we noted that many commenters overwhelmingly supported a 90-day 
EHR reporting period in 2015, while several commenters recommended a 
90-day EHR reporting period for all providers in 2016 and subsequent 
years. In that rule, we explained a 90-day EHR reporting period in 2015 
will allow providers additional time to address any remaining issues 
with the implementation of EHR technology certified to the 2014 Edition 
and to accommodate the proposed changes to the objectives and measures 
of meaningful use for 2015. We declined to extend the 90-day EHR 
reporting period beyond 2015 for returning participants because, in 
2012 and 2013, thousands of returning providers successfully attested 
to program requirements for an EHR reporting period of one full 
calendar year and hardship exceptions may be available for providers 
experiencing extreme and uncontrollable circumstances.
    Following the publication of the 2015 EHR Incentive Programs Final 
Rule, we received additional feedback from hospitals, hospital 
associations, eligible professionals and other clinical associations 
stating concerns regarding the finalized requirements. We now 
understand from those stakeholders that more time is needed to 
accommodate some of the updates from the 2015 EHR Incentive Programs 
Final Rule. These updates include, but are not limited to, system 
changes to the CEHRT, including implementation of an API which is a 
unique user interface that allows patients, through an application of 
their choice (including third-party applications), to pull certain 
components of their unique health data directly from the provider's 
CEHRT. We understand from hospitals and EHR vendors that APIs require a 
great deal of time to configure the software to accommodate such 
changes, including the user interface. We also received correspondence 
from eligible professionals expressing concern related to the 
requirements under MIPS and their transition to that program, and have 
shared interest in ensuring their readiness to report under the MIPS 
program in 2017. We believe this proposal is responsive to additional 
stakeholder feedback received through both correspondence and in-person 
meetings which requested that we allow a 90-day EHR reporting period in 
2016 in order to reduce the reporting burden and increase flexibility 
in the program.
    Therefore, we are proposing to change the EHR reporting periods in 
2016 for returning participants from the full CY 2016 to any continuous 
90-day period within CY 2016. This would mean that all EPs, eligible 
hospitals and CAHs may attest to meaningful use for an EHR reporting 
period of any continuous 90-day period from January 1, 2016 through 
December 31, 2016. The applicable incentive payment year and payment 
adjustment years for the EHR reporting period in 2016, as well as the 
deadlines for attestation and other related program requirements, would 
remain the same as established in prior rulemaking. We are proposing 
corresponding changes to the definition of ``EHR reporting period'' 
``and EHR reporting period for a payment adjustment year'' at 42 CFR 
495.4.
    We are inviting public comments on our proposal.
2. Clinical Quality Measurement
    In connection with our proposal to establish a 90-day EHR reporting 
period in 2016, and for the reasons discussed in the preceding section, 
we also are proposing a 90-day reporting period for clinical quality 
measures (CQMs) for all EPs, eligible hospitals, and CAHs that choose 
to report CQMs by attestation in 2016. We note that this proposal would 
have no impact on the requirements for CQM data that are electronically 
reported as established in prior rulemaking. In 2016, we are proposing 
that providers may:
     Report CQM data by attestation for any continuous 90-day 
period during calendar year 2016 through the Medicare EHR Incentive 
Program registration and attestation site; or
     Electronically report CQM data in accordance with the 
requirements established in prior rulemaking.
    We note that, for EPs, eligible hospitals and CAHs, CQM data 
submitted via attestation can be submitted for a different 90-day 
period than the EHR reporting period for the meaningful use objectives 
and measures.
    We are inviting public comment on our proposal.

E. Proposal To Require Modified Stage 2 for New Participants in 2017

    In the 2015 EHR Incentive Programs Final Rule (80 FR 62873), we 
outlined the requirements for EPs, eligible hospitals, and CAHs using 
CEHRT in 2017 as it relates to the objectives and measures they select 
to report. Specifically, we stated that:

[[Page 45754]]

     A provider that has technology certified to the 2015 
Edition may attest to Stage 3 or to the Modified Stage 2 requirements.
     A provider that has technology certified to a combination 
of 2015 Edition and 2014 Edition may attest to: (1) The Modified Stage 
2 requirements; or (2) potentially to the Stage 3 requirements if the 
mix of certified technologies would not prohibit them from meeting the 
Stage 3 measures.
     A provider that has technology certified to the 2014 
Edition only may attest to the Modified Stage 2 requirements and may 
not attest to Stage 3.
    After the publication of the 2015 EHR Incentive Programs Final 
Rule, we determined that, due to cost and time limitation concerns 
related specifically to 2015 Edition CEHRT updates in the EHR Incentive 
Program Registration and Attestation System, it is not technically 
feasible for EPs, eligible hospitals, and CAHs that have not 
successfully demonstrated meaningful use in a prior year (new 
participants) to attest to the Stage 3 objectives and measures in 2017 
in the EHR Incentive Program Registration and Attestation System. For 
this reason, we are proposing that any EP or eligible hospital new 
participant seeking to avoid the 2018 payment adjustment by attesting 
for an EHR reporting period in 2017 through the EHR Incentive Program 
Registration and Attestation system, or any CAH new participant seeking 
to avoid the FY 2017 payment adjustment by attesting for an EHR 
reporting period in 2017 through the EHR Incentive Program Registration 
and Attestation System, would be required to attest to the Modified 
Stage 2 objectives and measures. This proposal does not apply to EPs, 
eligible hospitals, and CAHs that have successfully demonstrated 
meaningful use in a prior year (returning participants) attesting for 
an EHR reporting period in 2017. In early 2018, these returning 
eligible hospitals and CAHs will be transitioned to other reporting 
systems to attest for 2017, such as the Hospital IQR Program reporting 
portal. Eligible professionals who have successfully demonstrated 
meaningful use in a prior year would not be attesting under the 
Medicare EHR Incentive Program for 2017, because the applicable EHR 
reporting period for the 2018 payment adjustment is in 2016 (80 FR 
62906), and 2016 is also the final year of the incentive payment under 
section 1848(o)(1)(A)(ii) of the Act.
    We further note that providers using 2014 Edition, 2015 Edition, or 
any combination of 2014 and 2015 Edition certified EHR technology in 
2017 would have the necessary technical capabilities to attest to the 
Modified Stage 2 objectives and measures.
    We are proposing corresponding revisions to the regulations at 
proposed 42 CFR 495.40(a)(2)(i)(F) and 42 CFR 495.40(b)(2)(i)(F) to 
require new participants to attest to the Modified Stage 2 objectives 
and measures for 2017.
    We note that we also are proposing an editorial correction to the 
introductory language to 42 CFR 495.40(b), to correct the inadvertent 
omission of the word ``satisfy'' after the term ``CAH must.''
    We are inviting public comments on our proposals.

F. Proposed Significant Hardship Exception for New Participants 
Transitioning to MIPS in 2017

    In the September 4, 2012 Stage 2 final rule (77 FR 54093 through 
54097), we finalized that eligible professionals (EPs) who have not 
successfully demonstrated meaningful use in a prior year (new 
participants) in the EHR Incentive Program may attest by October 1 to 
avoid a payment adjustment under section 1848(a)(7)(A) of the Act in 
the subsequent year. We note that these new participants are not 
necessarily newly enrolled in Medicare, but have been enrolled and have 
not previously attested to meaningful use for the EHR Incentive 
Program.
    In the MIPS and APMs Proposed Rule (81 FR 28161 through 28586), we 
proposed calendar year 2017 as the first MIPS performance period. As 
established in the 2015 EHR Incentive Programs Final Rule (80 FR 62904 
through 62908)), 2017 is also the last year in which new participants 
may attest to meaningful use (for a 90-day EHR reporting period in 
2017) to avoid the 2018 payment adjustment. For example, an EP could 
use a 90-day reporting period from June through August 2017 to report 
under the Medicare EHR Incentive Program and, in the same time period, 
collect data for reporting under the Advancing Care Information 
performance category in MIPS. We understand that this overlap of 
reporting and performance periods in 2017 could be confusing to EPs who 
are new participants in the EHR Incentive Program and are also making 
the transition to MIPS because although both programs require the use 
of certified EHR technology, the measures and other requirements for 
meaningfully using that technology under the EHR Incentive Program are 
different from the measures and other requirements proposed under the 
advancing care information performance category of the MIPS. In 
addition, there are also different systems in which participants will 
have to register and attest. We also understand that these EPs, being 
new participants and likely new to EHR use and measurement, may be 
actively working with their vendors to build out their EHR technology 
and day-to-day EHR functions to align with the various and different 
requirements of the EHR Incentive Program and MIPS.
    For these reasons, we are proposing to allow certain EPs to apply 
for a significant hardship exception from the 2018 payment adjustment 
as authorized under section 1848(a)(7)(B) of the Act. We are limiting 
this proposal only to EPs who have not successfully demonstrated 
meaningful use in a prior year, intend to attest to meaningful use for 
an EHR reporting period in 2017 by October 1, 2017 to avoid the 2018 
payment adjustment, and intend to transition to MIPS and report on 
measures specified for the advancing care information performance 
category under the MIPS in 2017. This proposed significant hardship 
exception is based upon our proposal in the MIPS and APMs Proposed Rule 
to establish 2017 as the first performance period of the MIPS. In the 
event we decide not to finalize that proposal, and instead adopt a 
different performance period for the MIPS that does not coincide with 
the final year for EPs to attest to meaningful use under the Medicare 
EHR Incentive Program, we may determine that this proposed significant 
hardship exception is not necessary.
    To apply for this significant hardship exception, an EP would 
submit an application by October 1, 2017 (or a later date specified by 
CMS) to CMS that includes sufficient information to show that they are 
eligible to apply for this particular category of significant hardship 
exception. The application must also explain why, based on their 
particular circumstances, demonstrating meaningful use for the first 
time in 2017 under the EHR Incentive Program and also reporting on 
measures specified for the advancing care information performance 
category under the MIPS in 2017 would result in a significant hardship. 
EPs should retain all relevant documentation of this hardship for six 
years post attestation.
    We believe this new category of significant hardship exception 
would allow the EPs who are new to certified EHR technology to focus on 
their transition to MIPS, and allow them to work with their EHR vendor 
to build out an EHR system focused on the goals of patient engagement 
and interoperability, which are important pillars of patient-centered 
care and expected to be highly emphasized under the MIPS APMs

[[Page 45755]]

Proposed Rule. It would also allow EPs to identify which objectives and 
measures are most meaningful to their practice which is a key feature 
of the proposed MIPS advancing care information performance category. 
We are also proposing to amend the regulations by adding new section 
495.102(d)(4)(v) to include this new category of significant hardship 
exception.
    We are inviting public comment on our proposal.

G. Proposed Modifications To Measure Calculations for Actions Outside 
the EHR Reporting Period

    In the 2015 EHR Incentive Programs Final Rule (80 FR 62808), we 
referenced FAQ 8231(https://questions.cms.gov/faq.php?isDept=0&search=8231&searchType=faqId&submitSearch=1&id=5005) 
which states that for all meaningful use measures, unless otherwise 
specified, actions may fall outside the EHR reporting period timeframe 
but must take place no earlier than the start of the reporting year and 
no later than the date of attestation. We realize this open-ended 
timeframe could be confusing to providers and could vary widely among 
providers as their date of attestation could fall anywhere from January 
1 through February 28 (or other date specified by CMS) after the year 
in which their EHR reporting period occurs. For these reasons, and to 
be consistent with incorporation of data from one EHR reporting period 
we are proposing that, for all meaningful use measures, unless 
otherwise specified, actions included in the numerator must occur 
within the EHR reporting period if that period is a full calendar year, 
or if it is less than a full calendar year, within the calendar year in 
which the EHR reporting period occurs. For example, if the EHR 
reporting period is any continuous 90-day period within CY 2017, the 
action must occur between January 1 and December 31, 2017, but does not 
have to occur within the 90-day EHR reporting period timeframe.
    We note that FAQ 8231 was intended to help providers who initiate 
an action in their EHR after December 31 that is related to a patient 
encounter that occurred during the year of the EHR reporting period. We 
understand that a small number of actions may occur after December 31 
of the year in which the EHR reporting period occurs. However, we 
believe that the reduced measure thresholds proposed in this proposed 
rule would significantly reduce the impact that these actions would 
have on performance. In addition, we note that actions occurring after 
December 31 of the reporting year would count toward the next calendar 
year's EHR reporting period.
    We are inviting public comment on our proposal.

XIX. Proposed Additional Hospital Value-Based Purchasing (VBP) Program 
Policies

A. Background

    Section 1886(o) of the Act, as added by section 3001(a)(1) of the 
Affordable Care Act, requires the Secretary to establish a hospital 
value-based purchasing program (the Hospital Value-Based Purchasing 
(VBP) Program) under which value-based incentive payments are made in a 
fiscal year to hospitals that meet performance standards established 
for a performance period for such fiscal year. Both the performance 
standards and the performance period for a fiscal year are to be 
established by the Secretary. We refer readers to the FY 2017 IPPS/LTCH 
PPS proposed rule for a full discussion of the Hospital VBP Program and 
its proposed policies (81 FR 25099 through 25117).

B. Proposed Removal of the HCAHPS Pain Management Dimension From the 
Hospital VBP Program

1. Background of the HCAHPS Survey in the Hospital VBP Program
    Section 1886(o)(2)(A) of the Act requires the Secretary to select 
for the Hospital VBP Program measures, other than readmission measures, 
for purposes of the program. CMS partnered with the Agency for 
Healthcare Research and Quality (AHRQ) to develop the Hospital Consumer 
Assessment of Healthcare Providers and Systems (HCAHPS) patient 
experience of care survey (NQF #0166) (hereinafter referred to as the 
HCAHPS Survey). We adopted the HCAHPS Survey in the Hospital VBP 
Program beginning with the FY 2013 program year (76 FR 26510), and we 
added the 3-Item Care Transition Measure (CTM-3) (NQF #0228) as the 
ninth dimension in the HCAHPS Survey beginning with the FY 2018 program 
year (80 FR 49551 through 49553). The HCAHPS Survey scores for the 
Hospital VBP Program are the basis for the Patient- and Caregiver-
Centered Experience of Care/Care Coordination domain.
    The HCAHPS Survey is the first national, standardized, publicly 
reported survey of patients' experience of hospital care. The HCAHPS 
Survey asks discharged patients 32 questions about their recent 
hospital stay. Survey results are used to score nine dimensions of the 
patient's experience of care for the Hospital VBP Program, as the table 
below illustrates.

          HCAHPS Survey Dimensions for the FY 2018 Program Year
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Communication with Nurses.
Communication with Doctors.
Responsiveness of Hospital Staff.
Pain Management.
Communication About Medicines.
Hospital Cleanliness & Quietness.
Discharge Information.
3-Item Care Transition.
Overall Rating of Hospital.
------------------------------------------------------------------------

    The HCAHPS Survey is administered to a random sample of adult 
patients who receive medical, surgical, or maternity care between 48 
hours and 6 weeks (42 calendar days) after discharge and is not 
restricted to Medicare beneficiaries. Hospitals must survey patients 
throughout each month of the year. The HCAHPS Survey is available in 
official English, Spanish, Chinese, Russian, Vietnamese, and Portuguese 
versions. The HCAHPS Survey and its protocols for sampling, data 
collection and coding, and file submission can be found in the current 
HCAHPS Quality Assurance Guidelines, which is available on the official 
HCAHPS Web site at: http://www.hcahpsonline.org/qaguidelines.aspx. AHRQ 
carried out a rigorous, scientific process to develop and test the 
HCAHPS instrument. This process entailed multiple steps, including: A 
public call for measures; literature reviews; cognitive interviews; 
consumer focus groups; multiple opportunities for additional 
stakeholder input; a 3-State pilot test; small-scale field tests; and 
notice-and-comment rulemaking. In May 2005, the HCAHPS Survey was 
endorsed by the NQF.
2. Background of the Patient- and Caregiver-Centered Experience of 
Care/Care Coordination Domain Performance Scoring Methodology
    As finalized beginning with the FY 2018 program year (80 FR 49565 
through 49566), for each of the 9 dimensions of the HCAHPS Survey that 
we have adopted for the Hospital VBP Program, we calculate Achievement 
Points (0 to 10 points) and Improvement Points (0 to 9 points), the 
larger of which is summed across the nine dimensions to create a 
prenormalized HCAHPS Base Score (0 to 90 points). The prenormalized 
HCAHPS Base Score is then multiplied by 8/9 (0.88888) and rounded 
according to standard rules (values of 0.5 and higher are rounded up; 
values below 0.5 are rounded down) to create the normalized HCAHPS Base 
Score. Each of the nine dimensions is

[[Page 45756]]

weighted equally, so that the normalized HCAHPS Base Score would range 
from 0 to 80 points. HCAHPS Consistency Points are then calculated and 
range from 0 to 20 points. The Consistency Points consider scores 
across all nine of the dimensions. The final element of the scoring 
formula is the sum of the HCAHPS Base Score and the HCAHPS Consistency 
Points, and that sum will range from 0 to 100 points. The Patient- and 
Caregiver-Centered Experience of Care/Care Coordination domain accounts 
for 25 percent of a hospital's Total Performance Score (TPS) for the FY 
2018 program year (80 FR 49561).
3. Proposed Removal of the HCAHPS Pain Management Dimension From the 
Hospital VBP Program Beginning With the FY 2018 Program Year
    As noted above, one of the HCAHPS Survey dimensions that we have 
adopted for the Hospital VBP Program is Pain Management. Three survey 
questions are used to construct this dimension,\124\ as follows:
---------------------------------------------------------------------------

    \124\ Available at: http://www.hcahpsonline.org/surveyinstrument.aspx.
---------------------------------------------------------------------------

     12. During this hospital stay, did you need medicine for 
pain?

[ballot] Yes
[ballot] No (If No, Go to Question 15)

     13. During this hospital stay, how often was your pain 
well controlled?

[ballot] Never
[ballot] Sometimes
[ballot] Usually
[ballot] Always

     14. During this hospital stay, how often did the hospital 
staff do everything they could to help you with your pain?

[ballot] Never
[ballot] Sometimes
[ballot] Usually
[ballot] Always

    We have received feedback that some stakeholders are concerned 
about the Pain Management dimension questions being used in a program 
where there is any link between scoring well on the questions and 
higher hospital payments. Some stakeholders believe that the linkage of 
the Pain Management dimension questions to the Hospital VBP Program 
payment incentives creates pressure on hospital staff to prescribe more 
opioids in order to achieve higher scores on this dimension. Many 
factors outside the control of CMS quality program requirements may 
contribute to the perception of a link between the Pain Management 
dimension and opioid prescribing practices, including misuse of the 
survey (such as using it for outpatient emergency room care instead of 
inpatient care, or using it for determining individual physician 
performance) and failure to recognize that the HCAHPS Survey excludes 
certain populations from the sampling frame (such as those with a 
primary substance use disorder diagnosis).
    Because some hospitals have identified patient experience as a 
potential source of competitive advantage, we have heard that some 
hospitals may be disaggregating their raw HCAHPS data to compare, 
assess, and incentivize individual physicians, nurses, and other 
hospital staff. Some hospitals also may be using the HCAHPS Survey to 
assess their emergency and outpatient departments. The HCAHPS Survey 
was never intended to be used in these ways.\125\
---------------------------------------------------------------------------

    \125\ L. Tefera, W.G. Lehrman, and P. Conway. ``Measurement of 
the Patient Experience: Clarifying Facts, Myths, and Approaches.'' 
Journal of the American Medical Association. Published online, 3-10-
16. http://jama.jamanetwork.com/article.aspx?articleid=2503222.
---------------------------------------------------------------------------

    We continue to believe that pain control is an appropriate part of 
routine patient care that hospitals should manage and is an important 
concern for patients, their families, and their caregivers. It is 
important to note that the HCAHPS Survey does not specify any 
particular type of pain control method. In addition, appropriate pain 
management includes communication with patients about pain-related 
issues, setting expectations about pain, shared decision-making, and 
proper prescription practices. Although we are not aware of any 
scientific studies that support an association between scores on the 
Pain Management dimension questions and opioid prescribing practices, 
we are developing alternative questions for the Pain Management 
dimension in order to remove any potential ambiguity in the HCAHPS 
Survey. We are following our standard survey development processes, 
which include drafting alternative questions, cognitive interviews and 
focus group evaluation, field testing, statistical analysis, 
stakeholder input, the Paperwork Reduction Act, and NQF endorsement. 
HHS is also conducting further research to help better understand these 
stakeholder concerns and determine if there are any unintended 
consequences that link the Pain Management dimension questions to 
opioid prescribing practices. In addition, we are in the early stages 
of developing an electronically specified process measure for the 
inpatient and outpatient hospital settings that would measure 
concurrent prescribing of an opioid and benzodiazepine. We also are in 
the early stages of developing a process measure that would assess 
whether inpatient psychiatric facilities are regularly monitoring for 
adverse drug events of opioid and psychotropic drugs. The measure 
specifications will be posted on the CMS Web page and the public will 
have an opportunity to provide feedback before we make any proposal to 
adopt it for quality reporting purposes.
    Due to some potential confusion about the appropriate use of the 
Pain Management dimension questions in the Hospital VBP Program and the 
public health concern about the ongoing prescription opioid overdose 
epidemic, while we await the results of our ongoing research and the 
above-mentioned modifications to the Pain Management dimension 
questions, we are proposing to remove the Pain Management dimension of 
the HCAHPS Survey in the Patient- and Caregiver-Centered Experience of 
Care/Care Coordination domain beginning with the FY 2018 program year. 
The FY 2018 program year uses HCAHPS performance period data from 
January 1, 2016 to December 31, 2016 to calculate each hospital's TPS, 
which affects FY 2018 payments. When modified Pain Management questions 
for the HCAHPS Survey become available for use in the Hospital VBP 
Program, we intend to propose to adopt them in future rulemaking.
    If our proposal to remove the Pain Management dimension is 
finalized, this would leave eight dimensions in the HCAHPS Survey for 
use in the Hospital VBP Program, as the table below illustrates.

     Proposed HCAHPS Survey Dimensions for the FY 2018 Program Year
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Communication with Nurses.
Communication with Doctors.
Responsiveness of Hospital Staff.
Communication About Medicines.
Hospital Cleanliness & Quietness.
Discharge Information.
3-Item Care Transition.
Overall Rating of Hospital.
------------------------------------------------------------------------

    In order to adjust for the removal of the HCAHPS Pain Management 
dimension from the Hospital VBP Program, we are proposing to continue 
to assign Achievement Points (0 to 10 points) and Improvement Points (0 
to 9 points) to each of the remaining eight dimensions in order to 
create the HCAHPS Base Score (0 to 80 points). Each of the remaining 
eight dimensions would be of equal weight, so that the

[[Page 45757]]

HCAHPS Base Score would range from 0 to 80 points. HCAHPS Consistency 
Points would then be calculated, and would range from 0 to 20 points. 
The Consistency Points would consider scores across the remaining eight 
dimensions, and would not include the Pain Management dimension. The 
final element of the scoring formula would be the sum of the HCAHPS 
Base Score and the HCAHPS Consistency Points and would range from 0 to 
100 points.
    For the FY 2018 program year, we finalized performance standards 
for the HCAHPS measures in the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49566). In this proposed rule, we are proposing to remove the Pain 
Management dimension of the HCAHPS Survey in the calculation of the 
Patient- and Caregiver-Centered Experience of Care/Care Coordination 
domain score beginning with the FY 2018 program year. The performance 
standards for the other eight dimensions would remain unchanged, as the 
table below illustrates.

                           Proposed Performance Standards for the FY 2018 Program Year
----------------------------------------------------------------------------------------------------------------
                                                                                    Achievement
                     HCAHPS survey dimension                          Floor *      threshold **    Benchmark ***
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Communication with Nurses.......................................           55.27           78.52           86.68
Communication with Doctors......................................           57.39           80.44           88.51
Responsiveness of Hospital Staff................................           38.40           65.08           80.35
Pain Management.................................................             N/A             N/A             N/A
Communication about Medicines...................................           43.43           63.37           73.66
Hospital Cleanliness & Quietness................................           40.05           65.60           79.00
Discharge Information...........................................           62.25           86.60           91.63
3-Item Care Transition..........................................           25.21           51.45           62.44
Overall Rating of Hospital......................................           37.67           70.23           84.58
----------------------------------------------------------------------------------------------------------------
* Floor is defined as the 0th percentile of the baseline (76 FR 26519).
** Achievement threshold is defined as the 50th percentile of hospital performance in the baseline period (76 FR
  26519).
*** Benchmark is defined as the mean of the top decile of hospital performance on each dimension (76 FR 26517).

    For the FY 2019 program year, we proposed performance standards in 
the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25114). We are proposing 
to remove the Pain Management dimension of the HCAHPS Survey in the 
calculation of the Patient- and Caregiver-Centered Experience of Care/
Care Coordination domain score beginning with the FY 2018 program year. 
(In section IV.H.3.b. of that proposed rule, we also proposed to change 
the name of this domain to Person and Community Engagement domain 
beginning with the FY 2019 program year (81 FR 25100 through 25101).) 
The proposed performance standards for the other eight dimensions would 
remain unchanged, as the table below illustrates.

                           Proposed Performance Standards for the FY 2019 Program Year
----------------------------------------------------------------------------------------------------------------
                                                                                    Achievement
                     HCAHPS survey dimension                          Floor *      threshold **    Benchmark ***
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Communication with Nurses.......................................           16.32           78.59           86.81
Communication with Doctors......................................           22.56           80.33           88.55
Responsiveness of Hospital Staff................................           21.91           65.00           80.27
Pain Management.................................................             N/A             N/A             N/A
Communication about Medicines...................................            6.19           63.18           73.51
Hospital Cleanliness & Quietness................................           13.78           65.64           79.12
Discharge Information...........................................           60.58           86.88           91.73
3-Item Care Transition..........................................            4.26           51.35           62.73
Overall Rating of Hospital......................................           30.52           70.58           84.68
----------------------------------------------------------------------------------------------------------------
* Floor is defined as the 0th percentile of the baseline (76 FR 26519).
** Achievement threshold is defined as the 50th percentile of hospital performance in the baseline period (76 FR
  26519).
*** Benchmark is defined as the mean of the top decile of hospital performance on each dimension (76 FR 26517).

    We are inviting public comments on these proposals.

XXI. Files Available to the Public via the Internet

    The Addenda to the OPPS/ASC proposed rules and the final rules with 
comment period are published and available only via the Internet on the 
CMS Web site. To view the Addenda to this proposed rule pertaining to 
proposed CY 2017 payments under the OPPS, we refer readers to the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; select ``1656-P'' from the list of regulations. All OPPS 
Addenda to this proposed rule are contained in the zipped folder 
entitled ``Proposed 2017 OPPS 1656-P Addenda'' at the bottom of the 
page. To view the Addenda to this proposed rule pertaining to the 
proposed CY 2017 payments under the ASC payment system, we refer 
readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; 
select ``1656-P'' from the list of regulations. All ASC Addenda to this 
proposed rule are contained in the zipped folders entitled ``Addendum 
AA, BB, DD1, DD2, and EE''.

[[Page 45758]]

XXII. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

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

B. ICRs for the Hospital OQR Program

1. Background
    As we stated in section XIV. of the CY 2012 OPPS/ASC final rule 
with comment period, the Hospital OQR Program has been generally 
modeled after the quality data reporting program for the Hospital IQR 
Program (76 FR 74451). We refer readers to the CY 2011 through CY 2016 
OPPS/ASC final rules with comment periods (75 FR 72111 through 72114; 
76 FR 74549 through 74554; 77 FR 68527 through 68532; 78 FR 75170 
through 75172; 79 FR 67012 through 67015; and 80 FR 70580 through 
70582, respectively) for detailed discussions of Hospital OQR Program 
information collection requirements we have previously finalized. The 
information collection requirements associated with the Hospital OQR 
Program are currently approved under OMB control number 0938-1109.
    Below we discuss only the changes in burden resulting from the 
provisions in this proposed rule.
2. Estimated Burden of Hospital OQR Program Proposals for the CY 2018 
Payment Determination and Subsequent Years
    In section XIII.B.8. of this proposed rule, we are proposing to 
publicly display data on the Hospital Compare Web site, or other CMS 
Web site, as soon as possible after measure data have been submitted to 
CMS. In addition, we are proposing that hospitals will generally have 
approximately 30 days to preview their data. Both of these proposals 
are consistent with current practice. Lastly, we are proposing to 
announce the timeframes for the preview period starting with the CY 
2018 payment determination on a CMS Web site and/or on our applicable 
listservs. We do not anticipate additional burden to hospitals as a 
result of these proposed changes to the public display policies because 
hospitals would not be required to submit additional data or forms to 
CMS.
3. Estimated Burden of Hospital OQR Program Proposals for the CY 2019 
Payment Determination and Subsequent Years
a. Extraordinary Circumstances Extension or Exemptions Process
    In section XIII.D.8. of this proposed rule, we are proposing to 
extend the submission deadline for requests under our ``Extraordinary 
Circumstances Extension or Exemptions'' (ECE) process from 45 days from 
the date that the extraordinary circumstance occurred to 90 days from 
the date that the extraordinary circumstance occurred. For a complete 
discussion of our ECE process under the Hospital OQR Program, we refer 
readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75119 through 75120), the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66966), and the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70524).
    We believe that the proposed updates to the ECE deadlines will have 
no effect on burden for hospitals, because we are not making any 
changes that will increase the amount of time necessary to complete the 
form. We do not anticipate that there would be any additional burden as 
the materials to be submitted related to an ECE request are unchanged 
and the deadline does not result in a change in time to submit an 
extension or exemption request. The burden associated with submitting 
an Extraordinary Circumstances Extension/Exemption Request is accounted 
for in OMB Control Number 0938-1022.
b. Reconsideration and Appeals
    In section XIII.D.9. of this proposed rule, we are proposing a 
clarification to our reconsideration and appeals procedures. While 
there is a burden associated with filing a reconsideration request, 5 
CFR 1320.4 of OMB's implementing regulations for the Paperwork 
Reduction Act of 1995 excludes collection activities during the conduct 
of administrative actions such as reconsiderations.
4. Estimated Burden of Hospital OQR Program Proposals for the CY 2020 
Payment Determination and Subsequent Years
    In sections XIII.B.5.a. and XIII.B.5.b. of this proposed rule, we 
are proposing two new claims-based measures for the CY 2020 payment 
determination and subsequent years: (1) OP-35: Admissions and Emergency 
Department Visits for Patients Receiving Outpatient Chemotherapy; and 
(2) OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF 
#2687). In section XIII.B.5.c. of this proposed rule, we also are 
proposing five new Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based 
measures for the CY 2020 payment determination and subsequent years: 
(1) OP-37a: OAS CAHPS--About Facilities and Staff; (2) OP-37b: OAS 
CAHPS--Communication About Procedure; (3) OP-37c: OAS CAHPS--
Preparation for Discharge and Recovery; (4) OP-37d: OAS CAHPS--Overall 
Rating of Facility; and (5) OP-37e: OAS CAHPS--Recommendation of 
Facility.
    The data used to calculate scores on the proposed OP-35 or OP-36 
measures are derived from Medicare FFS claims. As noted in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68530), we calculate the 
claims-based measures using Medicare FFS claims data that do not 
require additional hospital data submissions. As a result, we do not 
anticipate that the proposed OP-35 or OP-36 measures would create any 
additional burden to hospital outpatient departments for the CY 2020 
payment determination and subsequent years.
    The information collection requirements associated with the five 
OAS CAHPS Survey-based measures (proposed OP-37a, OP-37b, OP-37c, OP-
37d, and OP-37e) are currently approved under OMB Control Number 0938-
1240. For this reason, we are not providing an independent estimate of 
the burden associated with OAS CAHPS Survey-based measures for the 
Hospital OQR Program. We refer readers to the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70580 through 70582) for burden 
information already discussed.

[[Page 45759]]

    We are inviting public comment on the burden associated with these 
proposed information collection requirements.

C. ICRs for the ASCQR Program

1. Background
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53672), and the CY 2013, CY 2014, CY 2015 and CY 2016 OPPS/ASC final 
rules with comment periods (77 FR 68532 through 68533; 78 FR 75172 
through 75174; 79 FR 67015 through 67016; and 80 FR 70582 through 
70584, respectively) for detailed discussions of the ASCQR Program 
information collection requirements we have previously finalized. The 
information collection requirements associated with the ASCQR Program 
are currently approved under OMB control number 0938-1270.
    Below we discuss only the changes in burden that would result from 
the provisions in this proposed rule.
2. Proposed Changes in Burden Calculation for the ASCQR Program
    To better align this program with our other quality reporting and 
value-based purchasing programs, we are proposing to update our burden 
calculation methodology to standardize elements within our burden 
calculation. Specifically, we are proposing to utilize: (1) A standard 
estimate of the time required for abstracting chart data for measures 
based on historical data from other quality reporting programs; and (2) 
a standard hourly labor cost for chart abstraction activities.
a. Estimate of Time Required to Chart-Abstract Data
    In the past, we have used 35 minutes as the time required to chart-
abstract and report data for each chart-abstracted Web-based measure in 
the ASCQR Program (76 FR 74554). However, we have studied other 
programs' estimates for this purpose and believe that 15 minutes is a 
more reasonable number. Specifically, the Hospital IQR Program 
possesses historical data from its data validation contractor. This 
contractor chart-abstracts each measure set when charts are sent to CMS 
for validation. Based on this contractor's validation activities, we 
believe that the average time required to chart-abstract data for each 
measure is approximately 15 minutes. We believe that this estimate is 
reasonable because the ASCQR Program uses measures similar to those of 
the Hospital IQR Program, such as the surgery safety measures and 
immunization measures. Accordingly, we are proposing to use 15 minutes 
in calculating the time required to chart-abstract data, unless we have 
historical data that indicate that this approximation is not accurate.
b. Hourly Labor Cost
    Previously, we used $30 as our hourly labor cost in calculating the 
burden associated with chart-abstraction activities. This labor cost is 
different from those used in other quality reporting and value-based 
purchasing programs, and we do not believe there is a justification for 
these different numbers given the similarity in quality measures and 
required staff. Therefore, we are proposing to align these numbers and 
use one hourly labor cost across programs for purposes of burden 
calculations. Specifically, we are proposing to use an hourly labor 
cost (hourly wage plus fringe and overhead, as discussed below) of 
$32.84. This labor cost is based on the BLS wage for a Medical Records 
and Health Information Technician. The BLS is ``the principal Federal 
agency responsible for measuring labor market activity, working 
conditions, and price changes in the economy.'' \126\ Acting as an 
independent agency, the BLS provides objective information for not only 
the government, but also for the public. The BLS describes Medical 
Records and Health Information Technicians as those responsible for 
organizing and managing health information data. Therefore, we believe 
it is reasonable to assume that these individuals would be tasked with 
abstracting clinical data for these measures. According to the BLS, the 
median pay for Medical Records and Health Information Technicians is 
$16.42 per hour.\127\
---------------------------------------------------------------------------

    \126\ http://www.bls.gov/bls/infohome.htm.
    \127\ http://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

    However, obtaining data on other overhead costs is challenging 
because overhead costs may vary greatly across ASCs. In addition, the 
precise cost elements assigned as ``indirect'' or ``overhead'' costs, 
as opposed to direct costs or employee wages, are subject to some 
interpretation at the facility level. Therefore, we are proposing to 
calculate the cost over overhead at 100 percent of the mean hourly 
wage. This is necessarily a rough adjustment, both because fringe 
benefits and overhead costs vary significantly from employer to 
employer. Nonetheless, there is no practical alternative, and we 
believe that doubling the hourly wage to estimate total cost is a 
reasonably accurate estimation method. We note that in the FY 2017 
IPPS/LTCH PPS proposed rule (81 FR 25251 through 25152, 25256, and 
25319) we are using a similar adjustment for several other quality 
reporting programs. Therefore, we are proposing to apply an hourly 
labor cost of $32.84 ($16.42 base salary + $16.42 fringe and overhead) 
to our burden calculations.
3. Estimated Burden of ASCQR Program Proposals for the CY 2018 Payment 
Determination
    For the CY 2018 payment determination and subsequent years, we are 
making one new proposal. In section XIV.B.7 of this proposed rule, we 
are proposing publicly display data on the Hospital Compare Web site, 
or other CMS Web site, as soon as possible after measure data have been 
submitted to CMS. In addition, we are proposing that ASCs will 
generally have approximately 30 days to preview their data. Both of 
these proposals are consistent with current practice. Lastly, we are 
proposing to announce the timeframes for the preview period starting 
with the CY 2018 payment determination on a CMS Web site and/or on our 
applicable listservs. We believe that these proposed changes to the 
ASCQR Program public reporting policies will have no effect on burden 
for ASCs because these changes would not require participating ASCs to 
submit additional data to CMS.
4. Estimated Burden of ASCQR Program Proposals for the CY 2019 Payment 
Determination
    For the CY 2019 payment determination and subsequent years, we are 
making two new proposals. In section XIV.D.3. of this proposed rule, we 
are proposing to implement a submission deadline with an end date of 
May 15 for all data submitted via a Web-based tool (CMS or non-CMS) 
beginning with the CY 2019 payment determination. We do not anticipate 
additional burden as the data collection and submission requirements 
have not changed; only the deadline would be moved to a slightly 
earlier date that we anticipate would alleviate burden by aligning data 
submission deadlines. We also are proposing to make corresponding 
changes to the regulations at 42 CFR 416.310(c)(1)(ii). We do not 
anticipate any additional burden to ASCs as a result of codifying this 
policy.
    In addition, in section XIV.D.6. of this proposed rule, we are 
proposing to extend the time for filing an Extraordinary Circumstance 
Exception or Exemption from within 45 days of the date that the 
extraordinary circumstance

[[Page 45760]]

occurred to within 90 days of the date that the extraordinary 
circumstance occurred. We do not anticipate that there would be any 
additional burden as the materials to be submitted are unchanged and 
the deadline does not result in reduced time to submit an extension or 
exemption. We also are proposing to make corresponding changes to the 
regulations at 42 CFR 416.310(d)(1). We do not anticipate any 
additional burden to ASCs as a result of codifying this policy.
5. Estimated Burden of ASCQR Program Proposals for the CY 2020 Payment 
Determination
    For the CY 2020 payment determination and subsequent years, we are 
proposing to add two new measures collected via a CMS online data 
submission tool and five survey-based measures to the ASCQR Program 
measure set. In section XIV.B.4. of this proposed rule, we are 
proposing the following measures collected via a CMS online data 
submission tool: ASC-13: Normothermia Outcome and ASC-14: Unplanned 
Anterior Vitrectomy. In the same section, we are proposing to adopt the 
following survey-based measures: (1) ASC-15a: OAS CAHPS--About 
Facilities and Staff; (2) ASC-15b: OAS CAHPS--Communication About 
Procedure; (3) ASC-15c: OAS CAHPS--Preparation for Discharge and 
Recovery; (4) ASC-15d: OAS CAHPS--Overall Rating of Facility; and (5) 
ASC-15e: OAS CAHPS--Recommendation of Facility.
    We believe ASCs would incur a financial burden associated with 
abstracting numerators, denominators, and exclusions for the two 
proposed measures collected and reported via a CMS online data 
submission tool (proposed ASC-13 and ASC-14). Using the proposed burden 
estimate values for chart-abstracted measures discussed in section 
XXI.C.2. of this proposed rule, we estimate that each participating ASC 
would spend 15 minutes per case to collect and submit the data, making 
the total estimated burden for all ASCs with a single case per ASC of 
1,315 hours (5,260 ASCs x 0.25 hours per case per ASC), and 82,845 
hours for each measure across all ASCS based on a historic average of 
63 cases. Therefore, we estimate that the reporting burden for all ASCs 
with a single case per ASC for proposed ASC-13 and ASC-14 would be 
1,315 hours and $42,185 (1,315 hours x $32.84 per hour), and 82,845 
hours (1,315 x 63 cases) and $2,720,630 (82,845 hours x $32.84 per 
hour) for each measure across all ASCs based on an historic average of 
63 cases for the CY 2020 payment determination. The additional burden 
associated with these requirements is available for review and comment 
under OMB Control Number 0938-1270.
    The information collection requirements associated with the five 
proposed OAS CAHPS Survey-based measures (proposed ASC-15a, ASC-15b, 
ASC-15c, ASC-15d, and ASC-15e) are currently approved under OMB Control 
Number 0938-1240. For this reason, we are not providing an independent 
estimate of the burden associated with OAS CAHPS Survey administration 
for the ASCQR Program. We refer readers to the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70582 through 70584) for burden 
information already discussed.
6. Reconsideration
    For a complete discussion of the ASCQR Program's reconsideration 
processes, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 
FR 53643 through 53644), the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75141), and the CY 2016 final rule with comment period 
(80 FR 75141). We are not proposing to make any changes to this 
process.
    While there is burden associated with filing a reconsideration 
request, 5 CFR 1320.4 of OMB's implementing regulations for the 
Paperwork Reduction Act of 1995 excludes collection activities during 
the conduct of administrative actions such as reconsiderations.
    We are inviting public comment on the burden associated with these 
information collection requirements.

D. ICRs Relating to Proposed Changes in Transplant Enforcement 
Performance Thresholds

    In section XV. of this proposed rule, we discuss proposed changes 
to the enforcement performance thresholds relating to patient and graft 
survival outcomes. The proposed revisions would impose no new burdens 
on transplant programs. These proposals do not impose any new 
information collection or recordkeeping requirements. Consequently, 
review by the Office of Management and Budget under the authority of 
the Paperwork Reduction Act of 1995 is not required.

E. ICRs for Proposed Changes Relating to Organ Procurement 
Organizations (OPOs)

    In section XVI. of this proposed rule, we are proposing several 
changes to definitions, outcome measures and documentation requirements 
for OPOs. In section XVI.B.1. of this proposed rule, we are proposing a 
revision to the definition of ``eligible death.'' In section XVI.B.2 of 
this proposed rule, we are proposing to adjust the outcome performance 
yield measure to align CMS with the SRTR yield metric. In section 
XVI.B.3. of this proposed rule, we are proposing to reduce the amount 
of hard copy documentation that is packaged and shipped with each 
organ. These proposals do not impose any new information collection or 
recordkeeping requirements. Consequently, review by the Office of 
Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 is not required.
    Finally, in section XVII. of this proposed rule, we are proposing 
to make a technical correction to the enforcement provisions for 
transplant centers and to clarify our policy regarding SIAs. These 
proposals do not impose information collection and recordkeeping 
requirements. Consequently, review by the Office of Management and 
Budget under the authority of the Paperwork Reduction Act of 1995 is 
not required.

F. ICRs Relating to Proposed Changes to the Electronic Health Record 
(EHR) Incentive Program

    In section XVIII. of this proposed rule, we discuss our proposals 
for eligible hospitals and CAHs attesting under the Medicare EHR 
Incentive Program for Modified Stage 2 and Stage 3 to: Eliminate the 
Clinical Decision Support (CDS) and Computerized Provider Order Entry 
(CPOE) objectives and measures; and reduce the reporting thresholds for 
a subset of the remaining objectives and measures, generally to the 
Modified Stage 2 thresholds. We believe that there will be a reduction 
in burden by not reporting for the CDS (1 minute) and CPOE (10 minutes) 
objectives and measures. This would reduce the total burden associated 
with these measures by a total of 11 minutes. This would reduce the 
time to attest to objectives and measures for Modified Stage 2 (495.22) 
from 6 hours and 48 minutes to 6 hours and 37 minutes and for the Stage 
3 from 6 hours and 52 minutes to 6 hours and 41 minutes. We refer 
readers to the 2015 EHR Incentive Programs Final Rule for the detailed 
analysis of the burden associated with the objectives and measures (80 
FR 62916 through 62924).
    While we do believe that eliminating requirements would decrease 
the associated information collection burden, we believe that the 
reduction detailed below falls within an acceptable margin of error and 
therefore we will not be revising the information collection request 
currently approved under 0938-1158.

[[Page 45761]]

    We discuss our proposals to change the EHR reporting period in 2016 
from the full CY 2016 to any continuous 90-day period within CY 2016 
for all returning EPs, eligible hospitals and CAHs in the Medicare and 
Medicaid EHR Incentive Programs; require new participants in 2017 who 
are seeking to avoid the 2018 payment adjustment by attestation by 
October 1, 2017 to the Modified Stage 2 objectives and measures. We do 
not believe that modifying the EHR reporting period would cause an 
increase in burden as the reporting requirements for a 90 day reporting 
period are the same for a full calendar year reporting period. Instead, 
the burden is associated with data capture and measure calculations on 
the objectives and measures not the reporting period to which one will 
attest for.
    We discuss our proposals to allow for a one-time significant 
hardship exception from the 2018 payment adjustment for certain EPs who 
are new participants in the EHR Incentive Program in 2017 and are 
transitioning to MIPS in 2017. The hardship exception process involves 
participants completing an application form for an exception. While the 
form is standardized, we believe it is exempt from the PRA. The form is 
structured as an attestation. Therefore, we believe it is exempt under 
5 CFR 1320.3(h)(1) of the implementing regulations of the PRA. The form 
is an attestation that imposes no burden beyond what is required to 
provide identifying information and to attest to the applicable 
information.

G. ICRs Relating to Proposed Additional Hospital VBP Program Policies

    In section XIX. of this proposed rule, we discuss proposed changes 
in the requirements for the Hospital VBP Program. Specifically, we are 
proposing to change the scoring methodology for the Patient- and 
Caregiver-Centered Experience of Care/Care Coordination domain by 
removing the HCAHPS Pain Management dimension. As required under 
section 1886(o)(2)(A) of the Act, the HCAHPS Survey is used in the 
Hospital IQR Program. Therefore, its inclusion in the Hospital VBP 
Program does not result in any additional burden because the Hospital 
VBP Program uses data that are required for the Hospital IQR Program. 
The proposed change to the scoring methodology for the Patient- and 
Caregiver-Centered Experience of Care/Care Coordination domain in the 
Hospital VBP Program also would not result in any additional reporting 
burden.

H. ICRs for Payment for Off-Campus Provider-Based Departments Proposals 
for CY 2017

    In section X.A. of this proposed rule, we discuss proposals for the 
implementation of section 603 of the Bipartisan Budget Act of 2015. The 
proposals would impose no new burdens on hospitals or providers. These 
proposals do not impose any new information collection or recordkeeping 
requirements for CY 2017. Consequently, review by the Office of 
Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 is not required.
    We are inviting public comments on the burden associated with these 
information collection requirements.

XXIII. Response to Comments

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

XXIV. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this proposed rule, as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social 
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 
(UMRA) (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999), and the Contract with America Advancement 
Act of 1996 (Pub. L. 104-121) (5 U.S.C. 804(2)). This section of the 
proposed rule contains the impact and other economic analyses for the 
provisions that we are proposing for CY 2017.
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This proposed rule has been designated as an economically 
significant rule under section 3(f)(1) of Executive Order 12866 and a 
major rule under the Contract with America Advancement Act of 1996 
(Pub. L. 104-121). Accordingly, this proposed rule has been reviewed by 
the Office of Management and Budget. We have prepared a regulatory 
impact analysis that, to the best of our ability, presents the costs 
and benefits of this proposed rule. We are soliciting comments on the 
regulatory impact analysis in this proposed rule, and we will address 
the public comments we receive in the final rule with comment period as 
appropriate.
2. Statement of Need
    This proposed rule is necessary to propose updates to the Medicare 
hospital OPPS rates. It is necessary to make proposed changes to the 
payment policies and rates for outpatient services furnished by 
hospitals and CMHCs in CY 2017. We are required under section 
1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion 
factor used to determine the payment rates for APCs. We also are 
required under section 1833(t)(9)(A) of the Act to review, not less 
often than annually, and revise the groups, the relative payment 
weights, and the wage and other adjustments described in section 
1833(t)(2) of the Act. We must review the clinical integrity of payment 
groups and relative payment weights at least annually. We are proposing 
to revise the APC relative payment weights using claims data for 
services furnished on and after January 1, 2015, through and including 
December 31, 2015, and processed through December 31, 2015, and updated 
cost report information.
    This proposed rule also is necessary to propose updates to the ASC 
payment rates for CY 2017, enabling CMS to make changes to payment 
policies and payment rates for covered surgical procedures and covered 
ancillary services that are performed in an ASC in CY 2017. Because ASC 
payment rates are based on the OPPS relative payment weights for the 
majority of the procedures performed in ASCs, the ASC payment rates are 
updated annually to reflect annual changes to the OPPS relative payment 
weights. In addition, we are required under section 1833(i)(1) of the 
Act to review and update the list of surgical procedures that can be 
performed in an ASC not less frequently than every 2 years.

[[Page 45762]]

3. Overall Impacts for the Proposed OPPS and ASC Payment Provisions
    We estimate that the total increase in Federal government 
expenditures under the OPPS for CY 2017 compared to CY 2016 due to the 
proposed changes in this proposed rule, would be approximately $671 
million. Taking into account our estimated changes in enrollment, 
utilization, and case-mix, we estimate that the proposed OPPS 
expenditures for CY 2017 would be approximately $5.1 billion higher 
relative to expenditures in CY 2016. We note that this estimate of $5.1 
billion does not include the proposed implementation of section 603 of 
the Bipartisan Budget Act of 2015 in CY 2017, which we estimate would 
reduce OPPS expenditures by $500 million in CY 2017. Because this 
proposed rule is economically significant as measured by the threshold 
of an additional $100 million in expenditures in 1 year, we have 
prepared this regulatory impact analysis that, to the best of our 
ability, presents its costs and benefits. Table 30 displays the 
distributional impact of the proposed CY 2017 changes in OPPS payment 
to various groups of hospitals and for CMHCs.
    We estimate that the proposed update to the conversion factor and 
other proposed adjustments (not including the effects of proposed 
outlier payments, the proposed pass-through estimates, and the proposed 
application of the frontier State wage adjustment for CY 2016) would 
increase total OPPS payments by 1.6 percent in CY 2017. The proposed 
changes to the APC relative payment weights, the proposed changes to 
the wage indexes, the proposed continuation of a payment adjustment for 
rural SCHs, including EACHs, and the proposed payment adjustment for 
cancer hospitals would not increase OPPS payments because these 
proposed changes to the OPPS are budget neutral. However, these 
proposed updates would change the distribution of payments within the 
budget neutral system. We estimate that the proposed total change in 
payments between CY 2016 and CY 2017, considering all payments, 
proposed changes in estimated total outlier payments, pass-through 
payments, and the application of the frontier State wage adjustment 
outside of budget neutrality, in addition to the application of the OPD 
fee schedule increase factor after all adjustments required by sections 
1833(t)(3)(F), 1833(t)(3)(G), and 1833(t)(17) of the Act, would 
increase total estimated OPPS payments by 1.6 percent.
    We estimate the proposed total increase (from proposed changes to 
the ASC provisions in this proposed rule as well as from enrollment, 
utilization, and case-mix changes) in Medicare expenditures under the 
ASC payment system for CY 2017 compared to CY 2016 to be approximately 
$214 million. Because the proposed provisions for the ASC payment 
system are part of a proposed rule that is economically significant as 
measured by the $100 million threshold, we have prepared a regulatory 
impact analysis of the proposed changes to the ASC payment system that, 
to the best of our ability, presents the costs and benefits of this 
portion of the proposed rule. Table 31 and Table 32 of this proposed 
rule display the redistributive impact of the proposed CY 2017 changes 
regarding ASC payments, grouped by specialty area and then grouped by 
procedures with the greatest ASC expenditures, respectively.
4. Detailed Economic Analyses
a. Estimated Effects of Proposed OPPS Changes in This Proposed Rule
(1) Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the proposed CY 2017 policy changes on various hospital groups. We 
post on the CMS Web site our proposed hospital-specific estimated 
payments for CY 2017 with the other supporting documentation for this 
proposed rule. To view the proposed hospital-specific estimates, we 
refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At 
the Web site, select ``regulations and notices'' from the left side of 
the page and then select ``CMS-1656-P'' from the list of regulations 
and notices. The hospital-specific file layout and the hospital-
specific file are listed with the other supporting documentation for 
this proposed rule. We show hospital-specific data only for hospitals 
whose claims were used for modeling the impacts shown in Table 30 
below. We do not show hospital-specific impacts for hospitals whose 
claims we were unable to use. We refer readers to section II.A. of this 
proposed rule for a discussion of the hospitals whose claims we do not 
use for ratesetting and impact purposes.
    We estimate the effects of the proposed individual policy changes 
by estimating payments per service, while holding all other proposed 
payment policies constant. We use the best data available, but do not 
attempt to predict behavioral responses to our policy changes. In 
addition, we have not made adjustments for future changes in variables 
such as service volume, service-mix, or number of encounters. We are 
soliciting public comment and information about the anticipated effects 
of our proposed changes on providers and our methodology for estimating 
them. Any public comments that we receive will be addressed in the 
applicable sections of the final rule with comment period that discuss 
the specific policies.
(2) Estimated Effects of Proposed OPPS Changes on Hospitals
    Table 30 below shows the estimated impact of this proposed rule on 
hospitals. Historically, the first line of the impact table, which 
estimates the proposed change in payments to all facilities, has always 
included cancer and children's hospitals, which are held harmless to 
their pre-BBA amount. We also include CMHCs in the first line that 
includes all providers. We now include a second line for all hospitals, 
excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 30, and we discuss 
them separately below, because CMHCs are paid only for partial 
hospitalization services under the OPPS and are a different provider 
type from hospitals. In CY 2017, we are proposing to pay CMHCs for 
partial hospitalization services under only one proposed APC 5853 
(Partial Hospitalization for CMHCs), and we are proposing to pay 
hospitals for partial hospitalization services under only one proposed 
APC 5863 (Partial Hospitalization for Hospital-Based PHPs).
    The estimated increase in the proposed total payments made under 
the OPPS is determined largely by the increase to the conversion factor 
under the statutory methodology. The distributional impacts presented 
do not include assumptions about changes in volume and service-mix. The 
conversion factor is updated annually by the OPD fee schedule increase 
factor as discussed in detail in section II.B. of this proposed rule. 
Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee schedule 
increase factor is equal to the market basket percentage increase 
applicable under section 1886(b)(3)(B)(iii) of the Act, which we refer 
to as the IPPS market basket percentage increase. The proposed IPPS 
market basket percentage increase for FY 2017 is 2.8 percent (81 FR 
25077). Section 1833(t)(3)(F)(i) of the Act reduces that 2.8 percent by 
the multifactor productivity adjustment described in section 
1886(b)(3)(B)(xi)(II)

[[Page 45763]]

of the Act, which is proposed to be 0.5 percentage point for FY 2017 
(which is also the proposed MFP adjustment for FY 2017 in the FY 2017 
IPPS/LTCH PPS proposed rule (81 FR 25077)), and sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act further reduce the 
market basket percentage increase by 0.75 percentage point, resulting 
in the proposed OPD fee schedule increase factor of 1.55 percent. We 
are using the proposed OPD fee schedule increase factor of 1.55 percent 
in the calculation of the CY 2017 OPPS conversion factor. Section 10324 
of the Affordable Care Act, as amended by HCERA, further authorized 
additional expenditures outside budget neutrality for hospitals in 
certain frontier States that have a wage index less than 1.0000. The 
amounts attributable to this frontier State wage index adjustment are 
incorporated in the CY 2017 estimates in Table 30.
    To illustrate the impact of the proposed CY 2017 changes, our 
analysis begins with a baseline simulation model that uses the CY 2016 
relative payment weights, the FY 2016 final IPPS wage indexes that 
include reclassifications, and the final CY 2016 conversion factor. 
Table 30 shows the estimated redistribution of the proposed increase or 
decrease in payments for CY 2017 over CY 2016 payments to hospitals and 
CMHCs as a result of the following factors: the impact of the proposed 
APC reconfiguration and recalibration changes between CY 2016 and CY 
2017 (Column 2); the proposed wage indexes and the proposed provider 
adjustments (Column 3); the combined impact of all of the proposed 
changes described in the preceding columns plus the proposed 1.55 
percent OPD fee schedule increase factor update to the conversion 
factor; and the estimated impact taking into account all proposed 
payments for CY 2017 relative to all payments for CY 2016, including 
the impact of proposed changes in estimated outlier payments, the 
frontier State wage adjustment, and proposed changes to the pass-
through payment estimate (Column 5).
    We did not model an explicit budget neutrality adjustment for the 
rural adjustment for SCHs because we are proposing to maintain the 
current adjustment percentage for CY 2017. Because the proposed updates 
to the conversion factor (including the proposed update of the OPD fee 
schedule increase factor), the estimated cost of the proposed rural 
adjustment, and the estimated cost of proposed projected pass-through 
payment for CY 2017 are applied uniformly across services, observed 
redistributions of payments in the impact table for hospitals largely 
depend on the mix of services furnished by a hospital (for example, how 
the APCs for the hospital's most frequently furnished services will 
change), and the impact of the proposed wage index changes on the 
hospital. However, proposed total payments made under this system and 
the extent to which this proposed rule would redistribute money during 
implementation also will depend on changes in volume, practice 
patterns, and the mix of services billed between CY 2016 and CY 2017 by 
various groups of hospitals, which CMS cannot forecast.
    Overall, we estimate that the proposed rates for CY 2017 would 
increase Medicare OPPS payments by an estimated 1.6 percent. Removing 
payments to cancer and children's hospitals because their payments are 
held harmless to the pre-OPPS ratio between payment and cost and 
removing payments to CMHCs results in a proposed estimated 1.7 percent 
increase in Medicare payments to all other hospitals. These proposed 
estimated payments would not significantly impact other providers.
Column 1: Total Number of Hospitals
    The first line in Column 1 in Table 30 shows the total number of 
facilities (3,862), including designated cancer and children's 
hospitals and CMHCs, for which we were able to use CY 2015 hospital 
outpatient and CMHC claims data to model CY 2016 and proposed CY 2017 
payments, by classes of hospitals, for CMHCs and for dedicated cancer 
hospitals. We excluded all hospitals and CMHCs for which we could not 
plausibly estimate CY 2016 or proposed CY 2017 payment and entities 
that are not paid under the OPPS. The latter entities include CAHs, 
all-inclusive hospitals, and hospitals located in Guam, the U.S. Virgin 
Islands, Northern Mariana Islands, American Samoa, and the State of 
Maryland. This process is discussed in greater detail in section II.A. 
of this proposed rule. At this time, we are unable to calculate a 
disproportionate share hospital (DSH) variable for hospitals that are 
not also paid under the IPPS, since DSH payments are only made to 
hospitals paid under the IPPS. Hospitals for which we do not have a DSH 
variable are grouped separately and generally include freestanding 
psychiatric hospitals, rehabilitation hospitals, and long-term care 
hospitals. We show the total number of OPPS hospitals (3,747), 
excluding the hold-harmless cancer and children's hospitals and CMHCs, 
on the second line of the table. We excluded cancer and children's 
hospitals because section 1833(t)(7)(D) of the Act permanently holds 
harmless cancer hospitals and children's hospitals to their ``pre-BBA 
amount'' as specified under the terms of the statute, and therefore, we 
removed them from our impact analyses. We show the isolated impact on 
the 49 CMHCs at the bottom of the impact table and discuss that impact 
separately below.
Column 2: APC Recalibration--All Proposed Changes
    Column 2 shows the estimated effect of proposed APC recalibration. 
Column 2 also reflects any proposed changes in multiple procedure 
discount patterns or conditional packaging that occur as a result of 
the proposed changes in the relative magnitude of payment weights. As a 
result of proposed APC recalibration, we estimate that urban hospitals 
would experience no change, with the impact ranging from an increase of 
0.2 percent to a decrease of 0.3 percent, depending on the number of 
beds. Rural hospitals would experience a 0.4 percent increase, with the 
impact ranging from an increase of 0.6 percent to no change, depending 
on the number of beds. Major teaching hospitals would experience a 
decrease of 0.3 percent overall.
Column 3: Proposed Wage Indexes and the Effect of the Proposed Provider 
Adjustments
    Column 3 demonstrates the combined budget neutral impact of the 
proposed APC recalibration; the proposed updates for the wage indexes 
with the proposed fiscal year (FY) 2017 IPPS post-reclassification wage 
indexes; and the proposed rural adjustment. We modeled the independent 
effect of the proposed budget neutrality adjustments and the proposed 
OPD fee schedule increase factor by using the relative payment weights 
and wage indexes for each year, and using a CY 2016 conversion factor 
that included the OPD fee schedule increase and a budget neutrality 
adjustment for differences in wage indexes.
    Column 3 reflects the independent effects of the proposed updated 
wage indexes, including the application of proposed budget neutrality 
for the proposed rural floor policy on a nationwide basis. This column 
excludes the effects of the proposed frontier State wage index 
adjustment, which is not budget neutral and is included in Column 5. We 
did not model a proposed budget neutrality adjustment for the proposed 
rural adjustment for SCHs because we are proposing to continue the 
rural payment adjustment of 7.1 percent to rural SCHs for CY 2017, as

[[Page 45764]]

described in section II.E. of this proposed rule.
    We modeled the independent effect of proposing to update the wage 
indexes by varying only the wage indexes, holding APC relative payment 
weights, service-mix, and the rural adjustment constant and using the 
proposed CY 2017 scaled weights and a CY 2016 conversion factor that 
included a budget neutrality adjustment for the effect of the proposed 
changes to the wage indexes between CY 2016 and CY 2017. The proposed 
FY 2017 wage policy results in modest redistributions.
    There is no difference in impact between the CY 2016 cancer 
hospital payment adjustment and the proposed CY 2017 cancer hospital 
payment adjustment because we are proposing to use the same payment-to-
cost ratio target in CY 2017 as in the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70362 through 70363).
Column 4: All Proposed Budget Neutrality Changes Combined With the 
Proposed Market Basket Update
    Column 4 demonstrates the combined impact of all of the proposed 
changes previously described and the proposed update to the conversion 
factor of 1.55 percent. Overall, these proposed changes would increase 
payments to urban hospitals by 1.5 percent and to rural hospitals by 
2.3 percent. Most classes of hospitals would receive an increase in 
line with the proposed 1.6 percent overall increase after the proposed 
update is applied to the proposed budget neutrality adjustments.
Column 5: All Proposed Changes for CY 2017
    Column 5 depicts the full impact of the proposed CY 2017 policies 
on each hospital group by including the effect of all of the proposed 
changes for CY 2017 and comparing them to all estimated payments in CY 
2016. Column 5 shows the combined budget neutral effects of Column 2 
and 3; the proposed OPD fee schedule increase; the impact of the 
proposed frontier State wage index adjustment; the impact of estimated 
proposed OPPS outlier payments as discussed in section II.G. of this 
proposed rule; the proposed change in the Hospital OQR Program payment 
reduction for the small number of hospitals in our impact model that 
failed to meet the reporting requirements (discussed in section XIII. 
of this proposed rule); and the difference in proposed total OPPS 
payments dedicated to transitional pass-through payments.
    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2016 update (and assumed, for 
modeling purposes, to be the same number for CY 2017), we included 48 
hospitals in our model because they had both CY 2015 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
of the proposed changes for CY 2017 would increase payments to all 
facilities by 1.6 percent for CY 2017. We modeled the independent 
effect of all of the proposed changes in Column 5 using the final 
relative payment weights for CY 2016 and the proposed relative payment 
weights for CY 2017. We used the final conversion factor for CY 2016 of 
$73.725 and the proposed CY 2017 conversion factor of $74.909 discussed 
in section II.B. of this proposed rule.
    Column 5 contains simulated outlier payments for each year. We used 
the proposed 1-year charge inflation factor used in the FY 2017 IPPS/
LTCH PPS proposed rule (81 FR 25270) of 4.4 percent (1.0440) to 
increase individual costs on the CY 2015 claims, and we used the most 
recent overall CCR in the April 2016 Outpatient Provider-Specific File 
(OPSF) to estimate outlier payments for CY 2016. Using the CY 2015 
claims and a proposed 4.4 percent charge inflation factor, we currently 
estimate that outlier payments for CY 2016, using a multiple threshold 
of 1.75 and a fixed-dollar threshold of $3,250 would be approximately 
0.96 percent of total payments. The estimated current outlier payments 
of 0.96 percent are incorporated in the comparison in Column 5. We used 
the same set of claims and a proposed charge inflation factor of 9.0 
percent (1.0898) and the CCRs in the April 2016 OPSF, with an 
adjustment of 0.9696, to reflect relative changes in cost and charge 
inflation between CY 2015 and CY 2017, to model the proposed CY 2017 
outliers at 1.0 percent of estimated total payments using a multiple 
threshold of 1.75 and a proposed fixed-dollar threshold of $3,825. The 
charge inflation and CCR inflation factors are discussed in detail in 
the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25270 through 25273).
    Overall, we estimate that facilities would experience an increase 
of 1.6 percent under this proposed rule in CY 2017 relative to total 
spending in CY 2016. This projected increase (shown in Column 5) of 
Table 30 reflects the proposed 1.55 percent OPD fee schedule increase 
factor, plus 0.03 percent to account for our proposal to package 
unrelated laboratory tests into OPPS payment, plus 0.02 percent for the 
proposed change in the pass-through estimate between CY 2016 and CY 
2017, plus 0.04 percent for the difference in estimated outlier 
payments between CY 2016 (0.96 percent) and CY 2017 (proposed 1.0 
percent). We estimate that the combined effect of all of the proposed 
changes for CY 2017 would increase payments to urban hospitals by 1.6 
percent. Overall, we estimate that rural hospitals would experience a 
2.3 percent increase as a result of the combined effects of all of the 
proposed changes for CY 2017.
    Among hospitals by teaching status, we estimate that the impacts 
resulting from the combined effects of all proposed changes would 
include an increase of 1.2 percent for major teaching hospitals and an 
increase of 1.9 percent for nonteaching hospitals. Minor teaching 
hospitals would experience an estimated increase of 1.7 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
would experience an increase of 1.7 percent, proprietary hospitals 
would experience an increase of 1.6 percent, and governmental hospitals 
would experience an increase of 1.5 percent.

[[Page 45765]]



   Table 30--Estimated Impact of the Proposed CY 2017 Changes for the Hospital Outpatient Prospective Payment
                                                     System
----------------------------------------------------------------------------------------------------------------
                                                                                   All proposed
                                                                                  budget neutral
                                                        APC                           changes
                                     Number of     recalibration  New wage index  (combined cols   All proposed
                                     hospitals     (all proposed   and  provider     2,3) with        changes
                                                     changes)       adjustments      proposed
                                                                                   market basket
                                                                                      update
                                             (1)             (2)             (3)             (4)             (5)
----------------------------------------------------------------------------------------------------------------
ALL FACILITIES *................           3,862             0.0             0.0             1.6             1.6
ALL HOSPITALS (excludes                    3,747             0.0             0.0             1.6             1.7
 hospitals permanently held
 harmless and CMHCs)............
URBAN HOSPITALS.................           2,917             0.0             0.0             1.5             1.6
    LARGE URBAN (GT 1 MILL.)....           1,609            -0.1            -0.1             1.4             1.4
    OTHER URBAN (LE 1 MILL.)....           1,308             0.0             0.1             1.7             1.7
RURAL HOSPITALS.................             830             0.4             0.3             2.3             2.3
    SOLE COMMUNITY..............             378             0.4             0.4             2.4             2.3
    OTHER RURAL.................             452             0.4             0.3             2.2             2.2
BEDS (URBAN):
    0--99 BEDS..................  ..............             0.0             0.2             1.8             1.9
    100-199 BEDS................             827             0.2            -0.1             1.6             1.6
    200-299 BEDS................             463             0.1            -0.1             1.6             1.7
    300-499 BEDS................             403             0.0             0.0             1.6             1.6
    500 + BEDS..................             214            -0.3            -0.1             1.2             1.3
BEDS (RURAL):
    0-49 BEDS...................             330             0.4             0.4             2.4             2.3
    50-100 BEDS.................             304             0.6             0.4             2.5             2.5
    101-149 BEDS................             111             0.5             0.1             2.2             2.1
    150-199 BEDS................              47             0.2             0.5             2.4             2.3
    200 + BEDS..................              38             0.0             0.3             2.0             2.0
REGION (URBAN):
    NEW ENGLAND.................             147             0.0            -1.1             0.5             0.5
    MIDDLE ATLANTIC.............             348             0.0            -0.4             1.1             1.1
    SOUTH ATLANTIC..............             460             0.0             0.0             1.7             1.7
    EAST NORTH CENT.............             467             0.0             0.3             1.9             2.0
    EAST SOUTH CENT.............             175            -0.3             0.2             1.5             1.6
    WEST NORTH CENT.............             178            -0.1             0.2             1.6             1.5
    WEST SOUTH CENT.............             512            -0.4             0.5             1.7             1.8
    MOUNTAIN....................             203             0.2            -0.1             1.7             1.8
    PACIFIC.....................             377             0.3            -0.3             1.6             1.7
    PUERTO RICO.................              50            -0.2            -0.2             1.2             1.2
REGION (RURAL):
    NEW ENGLAND.................              21             1.0             0.4             3.0             2.9
    MIDDLE ATLANTIC.............              56             0.1             1.1             2.9             2.5
    SOUTH ATLANTIC..............             125             0.3            -0.1             1.8             1.8
    EAST NORTH CENT.............             121             0.5             0.5             2.6             2.6
    EAST SOUTH CENT.............             158             0.2             0.1             1.9             2.0
    WEST NORTH CENT.............             100             0.4             0.5             2.5             2.4
    WEST SOUTH CENT.............             167             0.2             0.8             2.6             2.6
    MOUNTAIN....................              58             0.6            -0.4             1.8             1.6
    PACIFIC.....................              24             0.6            -0.3             1.9             1.9
TEACHING STATUS:
    NON-TEACHING................           2,691             0.2             0.1             1.9             1.9
    MINOR.......................             719             0.1             0.1             1.8             1.7
    MAJOR.......................             337            -0.3            -0.2             1.1             1.2
DSH PATIENT PERCENT:
    0...........................              15            -2.2             0.1            -0.5             0.7
    GT 0-0.10...................             311            -0.2            -0.1             1.2             1.3
    0.10-0.16...................             275             0.2             0.0             1.8             1.8
    0.16-0.23...................             602             0.2             0.1             1.9             1.9
    0.23-0.35...................           1,148             0.1             0.1             1.7             1.7
    GE 0.35.....................             858             0.0            -0.1             1.5             1.5
    DSH NOT AVAILABLE **........             538            -3.7            -0.1            -2.3            -2.2
URBAN TEACHING/DSH:
    TEACHING & DSH..............             962            -0.1            -0.1             1.4             1.4
    NO TEACHING/DSH.............           1,426             0.2             0.0             1.8             1.8
    NO TEACHING/NO DSH..........              15            -2.2             0.1            -0.5             0.7
    DSH NOT AVAILABLE**.........             514            -3.3            -0.2            -1.9            -1.9
TYPE OF OWNERSHIP:
    VOLUNTARY...................           1,981             0.1             0.0             1.7             1.7
    PROPRIETARY.................           1,259            -0.1             0.0             1.5             1.6
    GOVERNMENT..................             507             0.0            -0.1             1.4             1.5

[[Page 45766]]

 
CMHCs...........................              49            -9.7            -0.2            -8.5            -8.4
----------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all proposed CY 2017 OPPS policies and compares those to the CY 2016 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the proposed FY 2017 hospital
  inpatient wage index, including all hold harmless policies and transitional wages. The proposed rural
  adjustment continues our current policy of 7.1 percent so the budget neutrality factor is 1. The budget
  neutrality adjustment for the cancer hospital adjustment is 1.000 because the payment-to-cost ratio target
  remains the same as in the CY 2016 OPPS/ASC final rule (80 FR 70362 through 70364).
Column (4) shows the impact of all budget neutrality adjustments and the addition of the proposed 1.55 percent
  OPD fee schedule update factor (2.8 percent reduced by 0.5 percentage points for the proposed productivity
  adjustment and further reduced by 0.75 percentage point in order to satisfy statutory requirements set forth
  in the Affordable Care Act).
Column (5) shows the additional adjustments to the conversion factor resulting from a change in the pass-through
  estimate, adding estimated outlier payments, and applying the frontier State wage adjustment.
* These 3,862 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and
  CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation,
  psychiatric, and long-term care hospitals.

(3) Estimated Effects of Proposed OPPS Changes on CMHCs
    The last line of Table 30 demonstrates the isolated impact on 
CMHCs, which furnish only partial hospitalization services under the 
OPPS. In CY 2016, CMHCs are paid under two APCs for these services: APC 
5851 (Level 1 Partial Hospitalization (3 services) for CMHCs) and APC 
5852 (Level 2 Partial Hospitalization (4 or more services) for CMHCs). 
For CY 2017, we are proposing to combine APCs 5851 and 5852 into 
proposed new APC 5853 (Partial Hospitalization (3 or more services) for 
CMHCs). We modeled the impact of this proposed APC policy assuming that 
CMHCs would continue to provide the same number of days of PHP care as 
seen in the CY 2015 claims data used for this proposed rule. We 
excluded days with 1 or 2 services because our policy only pays a per 
diem rate for partial hospitalization when 3 or more qualifying 
services are provided to the beneficiary. We estimate that CMHCs would 
experience an overall 8.4 percent decrease in payments from CY 2016 
(shown in Column 5). We note that this would include the proposed 
trimming methodology described in section VIII.B. of this proposed 
rule.
    Column 3 shows that the estimated impact of adopting the proposed 
FY 2017 wage index values would result in a small decrease of 0.2 
percent to CMHCs. Column 4 shows that combining this proposed OPD fee 
schedule increase factor, along with proposed changes in APC policy for 
CY 2017 and the proposed FY 2017 wage index updates, would result in an 
estimated decrease of 8.5 percent. Column 5 shows that adding the 
proposed changes in outlier and pass-though payments would result in a 
total 8.4 percent decrease in payment for CMHCs. This reflects all 
proposed changes to CMHCs for CY 2017.
(4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
    For services for which the beneficiary pays a copayment of 20 
percent of the payment rate, the beneficiary's payment would increase 
for services for which the OPPS payments would rise and would decrease 
for services for which the OPPS payments would fall. For further 
discussion on the calculation of the proposed national unadjusted 
copayments and minimum unadjusted copayments, we refer readers to 
section II.I. of this proposed rule. In all cases, section 
1833(t)(8)(C)(i) of the Act limits beneficiary liability for copayment 
for a procedure performed in a year to the hospital inpatient 
deductible for the applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
would be 18.5 percent for all services paid under the OPPS in CY 2017. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including the proposed CY 2017 comprehensive APC payment 
policy discussed in section II.A.2.e. of this proposed rule.
(5) Estimated Effects of Proposed OPPS Changes on Other Providers
    The relative payment weights and payment amounts established under 
the OPPS affect the payments made to ASCs as discussed in section XII. 
of this proposed rule. No types of providers or suppliers other than 
hospitals, CMHCs, and ASCs would be affected by the proposed changes in 
this proposed rule.
(6) Estimated Effects of Proposed OPPS Changes on the Medicare and 
Medicaid Programs
    The effect on the Medicare program is expected to be an increase of 
$671 million in program payments for OPPS services furnished in CY 
2017. The effect on the Medicaid program is expected to be limited to 
copayments that Medicaid may make on behalf of Medicaid recipients who 
are also Medicare beneficiaries. We refer readers to our discussion of 
the impact on beneficiaries in section XX.A. of this proposed rule.
(7) Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we are proposing and the reasons 
for our selected alternatives are discussed throughout this proposed 
rule.
b. Estimated Effects of Proposed CY 2017 ASC Payment System Policies
    Most ASC payment rates are calculated by multiplying the ASC 
conversion factor by the ASC relative payment weight. As discussed 
fully in section XII. of this proposed rule, we are

[[Page 45767]]

proposing to set the CY 2017 ASC relative payment weights by scaling 
the proposed CY 2017 OPPS relative payment weights by the ASC scalar of 
0.9030. The estimated effects of the proposed updated relative payment 
weights on payment rates are varied and are reflected in the estimated 
payments displayed in Tables 31 and 32 below.
    Beginning in CY 2011, section 3401 of the Affordable Care Act 
requires that the annual update to the ASC payment system (which 
currently is the CPI-U) after application of any quality reporting 
reduction be reduced by a productivity adjustment. The Affordable Care 
Act defines the productivity adjustment to be equal to the 10-year 
moving average of changes in annual economy-wide private nonfarm 
business multifactor productivity (MFP) (as projected by the Secretary 
for the 10-year period ending with the applicable fiscal year, year, 
cost reporting period, or other annual period). For ASCs that fail to 
meet their quality reporting requirements, the CY 2017 payment 
determinations will be based on the application of a 2.0 percentage 
points reduction to the annual update factor, which currently is the 
CPI-U. We calculated the proposed CY 2017 ASC conversion factor by 
adjusting the CY 2016 ASC conversion factor by 0.9992 to account for 
changes in the pre-floor and pre-reclassified hospital wage indexes 
between CY 2016 and CY 2017 and by applying the proposed CY 2017 MFP-
adjusted CPI-U update factor of 1.2 percent (projected CPI-U update of 
1.7 percent minus a proposed projected productivity adjustment of 0.5 
percentage point). The proposed CY 2017 ASC conversion factor is 
$44.684.
(1) Limitations of Our Analysis
    Presented here are the projected effects of the proposed changes 
for CY 2017 on Medicare payment to ASCs. A key limitation of our 
analysis is our inability to predict changes in ASC service-mix between 
CY 2015 and CY 2017 with precision. We believe that the net effect on 
Medicare expenditures resulting from the proposed CY 2017 changes would 
be small in the aggregate for all ASCs. However, such changes may have 
differential effects across surgical specialty groups as ASCs continue 
to adjust to the payment rates based on the policies of the revised ASC 
payment system. We are unable to accurately project such changes at a 
disaggregated level. Clearly, individual ASCs would experience changes 
in payment that differ from the aggregated estimated impacts presented 
below.
(2) Estimated Effects of Proposed ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform the gamut of 
surgical procedures from excision of lesions to hernia repair to 
cataract extraction; others focus on a single specialty and perform 
only a limited range of surgical procedures, such as eye, digestive 
system, or orthopedic procedures. The combined effect on an individual 
ASC of the proposed update to the CY 2017 payments would depend on a 
number of factors, including, but not limited to, the mix of services 
the ASC provides, the volume of specific services provided by the ASC, 
the percentage of its patients who are Medicare beneficiaries, and the 
extent to which an ASC provides different services in the coming year. 
The following discussion presents tables that display estimates of the 
impact of the proposed CY 2017 updates to the ASC payment system on 
Medicare payments to ASCs, assuming the same mix of services as 
reflected in our CY 2015 claims data. Table 31 depicts the estimated 
aggregate percent change in payment by surgical specialty or ancillary 
items and services group by comparing estimated CY 2016 payments to 
estimated proposed CY 2017 payments, and Table 32 shows a comparison of 
estimated CY 2016 payments to estimated proposed CY 2017 payments for 
procedures that we estimate would receive the most Medicare payment in 
CY 2016.
    Table 31 shows the estimated effects on aggregate Medicare payments 
under the ASC payment system by surgical specialty or ancillary items 
and services group. We have aggregated the surgical HCPCS codes by 
specialty group, grouped all HCPCS codes for covered ancillary items 
and services into a single group, and then estimated the effect on 
aggregated payment for surgical specialty and ancillary items and 
services groups. The groups are sorted for display in descending order 
by estimated Medicare program payment to ASCs. The following is an 
explanation of the information presented in Table 31.
     Column 1--Surgical Specialty or Ancillary Items and 
Services Group indicates the surgical specialty into which ASC 
procedures are grouped and the ancillary items and services group which 
includes all HCPCS codes for covered ancillary items and services. To 
group surgical procedures by surgical specialty, we used the CPT code 
range definitions and Level II HCPCS codes and Category III CPT codes 
as appropriate, to account for all surgical procedures to which the 
Medicare program payments are attributed.
     Column 2--Estimated CY 2016 ASC Payments were calculated 
using CY 2015 ASC utilization (the most recent full year of ASC 
utilization) and CY 2016 ASC payment rates. The surgical specialty and 
ancillary items and services groups are displayed in descending order 
based on estimated CY 2016 ASC payments.
     Column 3--Estimated Proposed CY 2017 Percent Change is the 
aggregate percentage increase or decrease in Medicare program payment 
to ASCs for each surgical specialty or ancillary items and services 
group that are attributable to proposed updates to ASC payment rates 
for CY 2017 compared to CY 2016.
    As seen in Table 31, for the six specialty groups that account for 
the most ASC utilization and spending, we estimate that the proposed 
update to ASC payment rates for CY 2017 would result in a 1-percent 
increase in aggregate payment amounts for eye and ocular adnexa 
procedures, a 1-percent decrease in aggregate payment amounts for 
digestive system procedures, a 3-percent increase in aggregate payment 
amounts for nervous system procedures, a 6-percent increase in 
aggregate payment amounts for musculoskeletal system procedures, no 
change in aggregate payment amounts for genitourinary system 
procedures, and a 2-percent decrease in aggregate payment amounts for 
integumentary system procedures.
    Also displayed in Table 31 is a separate estimate of Medicare ASC 
payments for the group of separately payable covered ancillary items 
and services. The payment estimates for the covered surgical procedures 
include the costs of packaged ancillary items and services. We estimate 
that aggregate payments for these items and services would be $32 
million for CY 2017.

[[Page 45768]]



  TABLE 31--Estimated Impact of the Proposed CY 2017 Update to the ASC
 Payment System on Aggregate Proposed CY 2017 Medicare Program Payments
       by Surgical Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated CY      Estimated
                                             2016 ASC       proposed CY
        Surgical specialty group           payments (in    2017 percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $4,020              2%
Eye and ocular adnexa...................           1,567               1
Digestive system........................             819              -1
Nervous system..........................             692               3
Musculoskeletal system..................             469               6
Genitourinary system....................             180               0
Integumentary system....................             133              -2
------------------------------------------------------------------------

    Table 32 below shows the estimated impact of the proposed updates 
to the revised ASC payment system on aggregate ASC payments for 
selected surgical procedures during CY 2017. The table displays 30 of 
the procedures receiving the greatest estimated CY 2016 aggregate 
Medicare payments to ASCs. The HCPCS codes are sorted in descending 
order by estimated CY 2016 program payment.
     Column 1--CPT/HCPCS code.
     Column 2--Short Descriptor of the HCPCS code.
     Column 3--Estimated CY 2016 ASC Payments were calculated 
using CY 2015 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2016 ASC payment rates. The estimated CY 2016 
payments are expressed in millions of dollars.
     Column 4--Estimated Proposed CY 2017 Percent Change 
reflects the percent differences between the estimated ASC payment for 
CY 2016 and the estimated proposed payment for CY 2017 based on the 
proposed update.

  Table 32--Estimated Impact of the Proposed CY 2017 Update to the ASC Payment System on Aggregate Payments for
                                               Selected Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated CY
                                                                                     2016 ASC      Estimated CY
             CPT/HCPCS code                          Short descriptor              payment  (in    2017 percent
                                                                                     millions)        change
(1)                                      (2)....................................             (3)             (4)
----------------------------------------------------------------------------------------------------------------
66984..................................  Cataract surg w/iol 1 stage............          $1,115              -1
43239..................................  Egd biopsy single/multiple.............             187             -13
45380..................................  Colonoscopy and biopsy.................             181              12
45385..................................  Colonoscopy w/lesion removal...........             119              12
66982..................................  Cataract surgery complex...............              97              -1
64483..................................  Inj foramen epidural l/s...............              87              18
63685..................................  Insrt/redo spine n generator...........              82               2
64493..................................  Inj paravert f jnt l/s 1 lev...........              71             -16
63650..................................  Implant neuroelectrodes................              66              14
66821..................................  After cataract laser surgery...........              65               3
64635..................................  Destroy lumb/sac facet jnt.............              55               1
29827..................................  Arthroscop rotator cuff repr...........              54               9
G0105..................................  Colorectal scrn; hi risk ind...........              54             -12
45378..................................  Diagnostic colonoscopy.................              53             -14
G0121..................................  Colon ca scrn not hi rsk ind...........              51             -12
0191T..................................  Insert ant segment drain int...........              42              43
64590..................................  Insrt/redo pn/gastr stimul.............              38               5
64721..................................  Carpal tunnel surgery..................              33               1
29881..................................  Knee arthroscopy/surgery...............              32              -9
15823..................................  Revision of upper eyelid...............              32              -3
29880..................................  Knee arthroscopy/surgery...............              28              -9
26055..................................  Incise finger tendon sheath............              25             -14
43235..................................  Egd diagnostic brush wash..............              24             -13
64490..................................  Inj paravert f jnt c/t 1 lev...........              24             -16
67042..................................  Vit for macular hole...................              23              -4
52000..................................  Cystoscopy.............................              21               4
G0260..................................  Inj for sacroiliac jt anesth...........              21              -5
50590..................................  Fragmenting of kidney stone............              21              -1
64555..................................  Implant neuroelectrodes................              19              19
67904..................................  Repair eyelid defect...................              19               2
----------------------------------------------------------------------------------------------------------------


[[Page 45769]]

(3) Estimated Effects of Proposed ASC Payment System Policies on 
Beneficiaries
    We estimate that the proposed CY 2017 update to the ASC payment 
system would be generally positive for beneficiaries with respect to 
the new procedures that we are proposing to add to the ASC list of 
covered surgical procedures and for those that we are proposing to 
designate as office-based for CY 2017. First, other than certain 
preventive services where coinsurance and the Part B deductible is 
waived to comply with section 1833(a)(1) and (b) of the Act, the ASC 
coinsurance rate for all procedures is 20 percent. This contrasts with 
procedures performed in HOPDs under the OPPS, where the beneficiary is 
responsible for copayments that range from 20 percent to 40 percent of 
the procedure payment (other than for certain preventive services). 
Second, in almost all cases, the ASC payment rates under the ASC 
payment system are lower than payment rates for the same procedures 
under the OPPS. Therefore, the beneficiary coinsurance amount under the 
ASC payment system will almost always be less than the OPPS copayment 
amount for the same services. (The only exceptions would be if the ASC 
coinsurance amount exceeds the inpatient deductible. The statute 
requires that copayment amounts under the OPPS not exceed the inpatient 
deductible.) Beneficiary coinsurance for services migrating from 
physicians' offices to ASCs may decrease or increase under the revised 
ASC payment system, depending on the particular service and the 
relative payment amounts under the MPFS compared to the ASC. However, 
for those additional procedures that we are proposing to designate as 
office-based in CY 2017, the beneficiary coinsurance amount under the 
ASC payment system generally would be no greater than the beneficiary 
coinsurance under the MPFS because the coinsurance under both payment 
systems generally is 20 percent (except for certain preventive services 
where the coinsurance is waived under both payment systems).
(4) Alternative ASC Payment Policies Considered
    Alternatives to the ASC changes we are proposing and the reasons 
for our selected alternatives are discussed throughout this proposed 
rule.
c. Accounting Statements and Tables
    As required by OMB Circular A-4 (available on the Office of 
Management and Budget Web site at: https://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf, we have 
prepared two accounting statements to illustrate the impacts of this 
proposed rule. The first accounting statement, Table 33 below, 
illustrates the classification of expenditures for the proposed CY 2017 
estimated hospital OPPS incurred benefit impacts associated with the 
proposed CY 2017 OPD fee schedule increase, based on the 2016 Trustee's 
Report,. The second accounting statement, Table 34 below, illustrates 
the classification of expenditures associated with the proposed 1.2 
percent CY 2017 update to the ASC payment system, based on the 
provisions of this proposed rule and the baseline spending estimates 
for ASCs in the 2016 Trustee's Report. Lastly, the tables classify most 
estimated impacts as transfers.

Table 33--Accounting Statement: Proposed CY 2017 Estimated Hospital OPPS
 Transfers From CY 2016 to CY 2017 Associated With the Proposed CY 2017
              Hospital Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
             Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers....  $671 million.
From Whom to Whom.................  Federal Government to outpatient
                                     hospitals and other providers who
                                     receive payment under the hospital
                                     OPPS.
                                   -------------------------------------
    Total.........................  $671 million.
------------------------------------------------------------------------


  Table 34--Accounting Statement: Classification of Estimated Transfers
  From CY 2016 to CY 2017 as a Result of the Proposed CY 2017 Update to
                         the ASC Payment System
------------------------------------------------------------------------
             Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers....  $39 million.
From Whom to Whom.................  Federal Government to Medicare
                                     Providers and Suppliers.
                                   -------------------------------------
    Total.........................  $39 million.
------------------------------------------------------------------------

d. Effects of Proposed Requirements for the Hospital OQR Program
    We refer readers to the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70593 through 70594) for the estimated effects of changes 
to the Hospital OQR Program for the CY 2018 payment determination. In 
section XIII. of this proposed rule, we are proposing changes to 
policies affecting the Hospital OQR Program. Of the 3,266 hospitals 
that met eligibility requirements for the CY 2016 payment 
determination, we determined that 113 hospitals did not meet the 
requirements to receive the full OPD fee schedule increase factor. Most 
of these hospitals (71 of the 113) chose not to participate in the 
Hospital OQR Program for the CY 2015 payment determination. We estimate 
that approximately 108 to 121 hospitals would not receive the full OPD 
fee schedule increase factor for the CY 2018 payment determination and 
subsequent years.
    In section XIII. of this proposed rule, we are proposing to make 
several changes to the Hospital OQR Program for the CY 2018 payment 
determination and subsequent years, CY 2019 payment determination and 
subsequent years, and the CY 2020 payment determination and subsequent 
years. We note that while there is burden associated with filing a 
reconsideration request, section 3518(c)(1)(B) of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3518(c)(1)(B)) excludes collection 
activities during the conduct of administrative actions such as 
reconsiderations. We do not believe that any of the other changes we 
are proposing would increase burden, as further discussed below.

[[Page 45770]]

    For the CY 2018 payment determination and subsequent years, we are 
proposing to publicly display data on the Hospital Compare Web site, or 
other CMS Web site, as soon as possible after measure data have been 
submitted to CMS. In addition, we are proposing that hospitals will 
generally have approximately 30 days to preview their data. Both of 
these proposals are consistent with current practice. Lastly, we are 
proposing to announce the timeframes for the preview period starting 
with the CY 2018 payment determination on a CMS Web site and/or on our 
applicable listservs. We do not anticipate additional burden to 
hospitals as a result of these proposed changes to the public display 
policies because hospitals would not be required to submit additional 
data or forms to CMS.
    For the CY 2019 payment determination and subsequent years, we are 
proposing to extend the time for filing an extraordinary circumstance 
exception or exemption request from 45 days to 90 days. We do not 
anticipate additional burden to hospitals as a result of this proposal 
because the requirements for filing a request have not otherwise 
changed.
    For the CY 2020 payment determination and subsequent years, we are 
proposing to adopt two new claims-based measures for the Hospital OQR 
Program: OP-35: Admissions and Emergency Department Visits for Patients 
Receiving Outpatient Chemotherapy; and OP-36: Hospital Visits after 
Hospital Outpatient Surgery (NQF #2687). For the CY 2020 payment 
determination and subsequent years, we also are proposing to adopt five 
new OAS CAHPS Survey-based measures: (1) OP-37a: OAS CAHPS--About 
Facilities and Staff; (2) OP-37b: OAS CAHPS--Communication About 
Procedure; (3) OP-37c: OAS CAHPS--Preparation for Discharge and 
Recovery; (4) OP-37d: OAS CAHPS--Overall Rating of Facility; and (5) 
OP-37e: OAS CAHPS--Recommendation of Facility. As discussed in section 
XXI.B.3. of this proposed rule, we do not believe that the OP-35 and 
OP-36 measures would create any additional burden across all 
participating hospitals because these measures use Medicare FFS claims 
data and do not require additional hospital data submissions. In 
addition, as discussed in the same section, the burden associated with 
the proposed OAS CAHPS Survey-based measures (proposed OP-37a, OP-37b, 
OP-37c, OP-37d, and OP-37e) is already accounted for in previously 
approved OMB Control Number 0938-1240.
    We refer readers to section XXI.B. of this proposed rule 
(information collection requirements) for a detailed discussion of the 
burden of the proposed additional requirements for submitting data to 
the Hospital OQR Program.
e. Effects of Proposed Requirements for the ASCQR Program
    In section XIV. of this proposed rule, we discuss our proposals to 
adopt policies affecting the ASCQR Program. For the CY 2016 payment 
determination, of the 5,260 ASCs that met eligibility requirements for 
the ASCQR Program, 261 ASCs did not meet the requirements to receive 
the full annual payment update. We note that, in the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70594), we used the CY 2015 
payment determination numbers as a baseline, and estimated that 
approximately 115 ASCs will not receive the full annual payment update 
in CY 2018 due to failure to meet the ASCQR Program requirements (CY 
2016 and CY 2017 payment determination information were not yet 
available).
    For the CY 2018 payment determination and subsequent years, we are 
making a few proposals. In section XIV.B.7. of this proposed rule, we 
are proposing to publicly display data on the Hospital Compare Web 
site, or other CMS Web site, as soon as possible after measure data 
have been submitted to CMS. In addition, we are proposing that ASCs 
will generally have approximately 30 days to preview their data. Both 
of these proposals are consistent with current practice. Lastly, we are 
proposing to announce the timeframes for the preview period starting 
with the CY 2018 payment determination on a CMS Web site and/or on our 
applicable listservs. We believe that these proposed changes to the 
ASCQR Program public reporting policies will have no effect on burden 
for ASCs because these changes would not require participating ASCs to 
submit additional data to CMS.
    For the CY 2019 payment determination and subsequent years, we are 
making two new proposals. In section XIV.D.3. of this proposed rule, we 
are proposing to implement a submission deadline with an end date of 
May 15 for all data submitted via a Web-based tool (CMS or non-CMS) 
beginning with the CY 2019 payment determination. We do not anticipate 
additional burden as the data collection and submission requirements 
have not changed; only the deadline would be moved to a slightly 
earlier date that we anticipate would alleviate burden by aligning data 
submission deadlines. In section XIV.D.6. of this proposed rule, we are 
proposing to extend the time for filing an extraordinary circumstance 
exception or exemption request from 45 days to 90 days. We do not 
believe this proposal will result in additional burden to ASCs because 
the requirements for filing a request have not otherwise changed. We 
are not proposing to add any quality measures to the ASCQR measure set 
for the CY 2019 payment determination, nor do we believe that the other 
measures we previously adopted would cause any additional ASCs to fail 
to meet the ASCQR Program requirements. (We refer readers to the CY 
2015 OPPS/ASC final rule with comment period (79 FR 66978 through 
66979) for a list of these measures.) Therefore, we do not believe that 
these proposals would increase the number of ASCs that do not receive a 
full annual payment update for the CY 2019 payment determination.
    In section XIV.B.4. of this proposed rule, we are proposing to add 
two new measures collected via a CMS online data submission tool to the 
ASCQR program measure set for the CY 2020 payment determination--ASC-
13: Normothermia Outcome and ASC-14: Unplanned Anterior Vitrectomy--and 
five new OAS CAHPS Survey-based measures for the CY 2020 payment 
determination: (1) ASC-15a: OAS CAHPS--About Facilities and Staff; (2) 
ASC-15b: OAS CAHPS--Communication About Procedure; (3) ASC-15c: OAS 
CAHPS--Preparation for Discharge and Recovery; (4) ASC-15d: OAS CAHPS--
Overall Rating of Facility; and (5) ASC-15e: OAS CAHPS--Recommendation 
of Facility. As discussed in section XXI.C.2. of this proposed rule, we 
estimate a data collection and submission burden of approximately 15.75 
hours and $517 (15.75 hours x $32.84 per hour) each per ASC for the 
proposed ASC-14 and ASC-14 measures based on an average sample of 63 
cases. This results in a total estimated burden of approximately 82,845 
hours and $2,720,630 for proposed ASC-13 and ASC-14 measures across all 
ASCs based on an average sample of 63 cases per ASC. In addition, and 
as discussed in the same section, the burden associated with the 
proposed OAS CAHPS Survey-based measures is already accounted for in a 
previously approved OMB Control Number 0938-1240.
    We refer readers to the information collection requirements in 
section XXI.C.2. of this proposed rule for a detailed discussion of the 
financial and hourly burden of the ASCQR Program's current and proposed 
requirements.

[[Page 45771]]

    We are inviting public comment on the burden associated with these 
proposals.
f. Effects of the Proposed Changes to Transplant Performance Thresholds
    In section XV. of this proposed rule, we discuss proposed changes 
to the transplant centers performance thresholds to restore the 
tolerance range for patient and graft survival with respect to organ 
transplants to those we established in our 2007 regulations. We 
considered the option of leaving the current regulation unchanged. 
However, given the recent upward trend in the percent of unused adult 
kidneys, combined with an increase in the number of recovered organs, 
we do not believe that inaction is advisable. In addition, in the 
original 2007 organ transplant rule, CMS committed to review the 
outcomes thresholds if it considered them to be set at a level that was 
too high or too low. We are following through on that commitment.
    We considered the option of leaving the regulation unchanged and 
instead reclassifying a larger range of outcomes as a ``standard-
level'' rather than the more serious ``condition-level'' deficiency. We 
have already taken this approach to a considerable extent in survey and 
certification guidance (https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Policy-and-Memos-to-States-and-Regions.html). However, standard-level deficiencies 
must be remedied at some point; therefore, reclassification may not 
yield the change necessary to ensure that the barrier presented by an 
increasingly stringent outcomes requirement.
    We considered the option of creating a ``balancing measure'' that 
would directly measure a transplant program's effectiveness in using 
organs, including tracking organs that are declined to see if other 
programs were able to make use of the organs successfully for long term 
graft survival. Such a balancing measure could ``unflag'' a program 
that had been flagged for substandard outcomes under the existing 
outcome measures. The OPTN developed a concept paper to obtain public 
comment for a similar idea, in which highest risk organs might be 
removed from the data when calculating outcomes (https://optn.transplant.hrsa.gov/governance/public-comment/performance-metrics-concept-paper/). This concept is slightly different than use of a 
balancing measure, but both approaches would require a multiyear effort 
to construct, test, and study the effects, including potential 
undesirable side effects. It is not an option readily available.
    We considered the argument that the regulation should be unchanged 
because CMS should expect health care providers to improve outcomes 
over time, and if the outcomes standard is becoming more difficult to 
meet, providers should rise to the challenge. We agree that we should 
expect health care providers to improve outcomes over time. However, 
once programs are at a very high level of performance, there is little 
room to improve. Therefore, there is no persuasive reason to leave the 
regulations unchanged. First, in addition to patient and graft 
survival, we are interested in optimizing the use of organs so that 
individuals on the waiting list can gain the benefits of a transplant. 
To the extent that there are unintended and undesirable effects on this 
access goal as a result of an increasingly stringent outcomes 
requirement, we believe we should respond. Second, the transplant 
community has demonstrated a track record of consistent improvement 
efforts and innovation. Third, we commissioned a study that found that 
the overall risk levels of both available organs and transplant 
candidates have been increasing every year.\128\ To the extent these 
population trends continue (for example, increasing age, higher rates 
of diabetes, obesity, hypertension), transplant programs will continue 
to be challenged to improve their care and processes just to sustain 
the patient and graft survival rates already achieved. We will continue 
to monitor these trends.
---------------------------------------------------------------------------

    \128\ White, Zinsser et al., ``Patient Selection and Volume in 
the Era Surrounding Implementation of Medicare Conditions of 
Participation for Transplant Programs,'' Health Services Research, 
DOI: 10.111/1465-6773.12188.
---------------------------------------------------------------------------

    Finally, we considered the option to adopt the Bayesian methodology 
that the OPTN recently adopted. We are not doing so at this time 
because the OPTN continues to study its implementation of that 
methodology and to evaluate its own thresholds for flagging programs in 
relation to the Bayesian model.
    We believe that these proposed changes would result in costs 
savings to hospitals. The savings results from: (1) Fewer programs that 
would need to file a request for approval on the basis of mitigating 
factors; and (2) fewer programs that would need to fulfill the terms of 
an SIA. Both a mitigating factors review and completion of an SIA are 
voluntary acts on the part of a hospital that maintains a transplant 
program. Since the 2007 effective date of the CMS regulation, only one 
hospital has not filed a request for mitigating factors review after 
being cited by CMS for a condition-level deficiency for patient 
outcomes or clinical experience, and few hospitals have declined a CMS 
offer to complete an SIA. Therefore, we have concluded that the costs 
involved in these activities are much lower for the hospital compared 
with other alternatives, such as filing an appeal and incurring the 
legal costs of that appeal.
    In the two SRTR reports from 2015, a total of 54 programs were 
flagged once (24 of which were adult kidney programs). If the proposed 
performance threshold were set at 1.85 instead of the existing 1.5, 
this number would have been reduced to 48 programs (21 of which would 
have been adult kidney programs). However, the cost savings would occur 
mainly for programs that were multiple-flagged and met the criteria for 
citation at the condition-level. These are the programs that are cited 
at the condition level and risk termination of Medicare approval unless 
they are approved under the mitigating factors provision, and some of 
those programs would not be approved without successful completion of 
an SIA. Historically, of the programs that voluntarily withdrew from 
Medicare participation pending termination or were terminated based on 
outcomes deficiencies for which data are available, all had O/E ratios 
above the proposed performance threshold of 1.85. For CY 2015, a total 
of 30 programs met the criteria for condition-level deficiency (15 of 
which were adult kidney programs). If the threshold had been at the 
1.85 instead of 1.5 level, these numbers would have been reduced to 27 
and 13 respectively.
    We estimate the cost associated with the application for mitigating 
factors at $10,000. This is based on the salary for the transplant 
administrator to prepare the documents for the application during the 
30-day timeframe allotted. Based on the CY 2015 SRTR reports described 
earlier, we estimate that three fewer programs each year would need to 
file a mitigating factors request, yielding a small savings of $30,000 
per year.
    We also estimate that four fewer programs each year would be 
required to complete an SIA. For transplant programs that enter into an 
SIA, the estimated cost to the transplant program is $250,000 based on 
reports from programs that have completed such agreements in the past. 
Therefore, we estimate the annual cost savings to hospitals from fewer 
SIAs to be $1 million.
    We estimate that the total costs savings would be $1 million per 
year ($1 million plus $30,000), and conclude that our proposed policies 
would not have a significant impact on a substantial number of small 
businesses

[[Page 45772]]

or other small entities. Nor would they have a significant impact on 
small rural hospitals.
g. Effects of the Proposed Changes Relating to Organ Procurement 
Organizations (OPOs)
    In section XVI. of this proposed rule, we discuss our proposals to 
expand and clarify the current OPO regulation as it relates to revising 
the definition of eligible death, adjusting the outcome performance 
yield measure and changing the documentation requirements of donor 
information to the transplant center to align CMS policy with OPTN 
policy and the SRTR yield metric.
    All 58 OPOs would be affected by the proposed requirements to a 
greater or lesser degree. Many OPOs have already put into practice many 
of the proposed requirements. Thus, while we do not believe these 
proposals would have a substantial economic impact on a significant 
number of OPOs, we believe it is desirable to inform the public of our 
projections of the likely effects of these proposals on OPOs. It is 
important to note that because OPOs are paid by the Medicare program on 
a cost basis, any additional costs that exceed an OPO's annual revenues 
would be fully paid under the Medicare program. In addition, these 
proposals would have no identifiable economic impact on transplant 
hospitals. It is expected that improved OPO performance would result 
from the proposals and increase organ donation and the number of organs 
available for transplantation.
    The proposed definition and yield metric changes would result in no 
additional burden. OPOs already report a large amount of data to the 
OPTN which, in turn, provides the data to the SRTR for analysis. OPOs 
would not be asked to report additional data as a result of the 
proposals.
    The proposal to change the documentation requirements of donor 
information sent to the transplant center with the organs would reduce 
burden for the OPOs. This proposed change would reduce the amount of 
hard copy documentation that is packaged and shipped with each organ 
and would free up the OPO transplant coordinator's time to focus on the 
critical donor management and organ preparation tasks. We estimate that 
this proposed change would save OPOs a total of approximately $259,000 
a year for all 58 certified OPOs. There were approximately 7,000 
deceased eligible donors in 2014 (according to the CMS data report), 
which would require hard copy documentation packaged and shipped with 
the organ(s) procured by the OPO transplant coordinator. According to 
http://www.payscale.com/, the average salary for an OPO transplant 
coordinator is $70,693 per year, which is approximately $37 an hour. We 
estimate that it takes an OPO transplant coordinator approximately 1 
hour to print, package, and ship the hard copy documentation with the 
organ(s) at $37 an hour for approximately 7,000 deceased donors. 
Thirty-seven dollars an hour multiplied by 7,000 deceased donors which 
require hard copy documentation equals $259,000 and 7,000 hours saved 
for OPOs nationwide.
    The primary economic impact of these proposals would lie with their 
potential to increase organ donation. However, it is difficult to 
predict precisely what that impact would be, but we estimate that, by 
increasing OPOs' efficiency and adherence to continuous quality 
improvement measures, these proposals could increase the number of 
organ donors in the regulation's first year.
    With regard to the impact of the proposed OPO transplant 
enforcement technical corrections discussed in section XVII. of this 
proposed rule, there is no economic impact.
h. Effects of the Proposed Changes to the Medicare and Medicaid 
Electronic Health Record (EHR) Incentive Programs
    In section XVIII. of this proposed rule, we discuss proposed 
requirements for the Medicare and Medicaid EHR Incentive Programs. 
Specifically, in this proposed rule, for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program, we are proposing to 
eliminate the Clinical Decision Support (CDS) and Computerized Provider 
Order Entry (CPOE) objectives and measures for Modified Stage 2 and 
Stage 3 as well as to reduce the reporting thresholds on a subset of 
the remaining objectives and measures to the Modified Stage 2 
thresholds. We do not believe that the proposals would increase burden 
on eligible hospitals and CAHs as the objectives and measures remain 
the same, only a subset of thresholds would be reduced. In addition, 
the proposals to eliminate the CDS and CPOE objectives and measures are 
based on high performance and the statistical evidence demonstrates 
that the expected result of any provider attesting to the EHR Incentive 
Programs would be a score near the maximum. While the functions of 
measures and the processes behind them would continue even without a 
requirement to report the results, the provisions would result in a 
reduction in reporting requirements.
    We are also proposing to modify the EHR reporting period in 2016 
for all returning EPs, eligible hospitals and CAHs that have previously 
demonstrated meaningful use to any continuous 90-day period within CY 
2016. We do not believe that the modification of the EHR reporting 
period in 2016 to any continuous 90-day period would increase the 
reporting burden of providers in the Medicare and Medicaid EHR 
Incentive Programs as all providers attested to a 90-day EHR reporting 
period in 2015.
    We are proposing to modify the options for reporting on Modified 
Stage 2 or Stage 3 objectives finalized in the 2015 EHR Incentive 
Programs final rule by requiring new participants in 2017 who are 
seeking to avoid the 2018 payment adjustment to attest to the Modified 
Stage 2 objectives and measures. We do not believe proposing to require 
new participants in 2017 to attest to Modified Stage 2 objectives and 
measures would increase the reporting burden because new participants 
using 2014 Edition, 2015 Edition, or any combination of 2014 and 2015 
Edition certified EHR technology in 2017 would have the necessary 
technical capabilities to attest to the Modified Stage 2 objectives and 
measures.
    We are proposing that for all meaningful use measures, unless 
otherwise specified, actions included in the numerator must occur 
within the EHR reporting period if that period is a full calendar year, 
or if it is less than a full calendar year, within the calendar year in 
which the EHR reporting period occurs. Because this proposal only 
affect the time period within which certain actions must occur, but not 
the underlying actions to be reported, we do not believe that this 
proposal would affect the burden on meaningful users.
    Finally, we are proposing a one-time significant hardship exception 
from the 2018 payment adjustment for certain EPs who are new 
participants in the EHR Incentive Program in 2017 and are transitioning 
to MIPS in 2017. We do not believe the proposal to allow a one-time 
significant hardship exception from the 2018 payment adjustment for 
certain EPs would increase their burden, rather, we believe this would 
reduce the reporting burden for 2017 because this proposal would reduce 
confusion on the different reporting requirements for the EHR Incentive 
Program and MIPs as well as the different systems to which participants 
would need to register and attest.

[[Page 45773]]

i. Effects of Proposed Requirements for the Hospital VBP Program
    In section XIX. of this proposed rule, we discuss proposed 
requirements for the Hospital VBP Program. Specifically, in this 
proposed rule, we are proposing to remove the HCAHPS Pain Management 
dimension in the Patient- and Caregiver-Centered Experience of Care/
Care Coordination domain.
    As required under section 1886(o)(2)(A) of the Act, the HCAHPS 
Survey is included the Hospital IQR Program. Therefore, its inclusion 
in the Hospital VBP Program does not result in any additional burden 
because the Hospital VBP Program uses data that are required for the 
Hospital IQR Program. The proposed removal of the HCAHPS Pain 
Management dimension from the Hospital VBP Program also would not 
result in any additional reporting burden.
j. Effects of Proposed Implementation of Section 603 of the Bipartisan 
Budget Act of 2015 Relating To Payment for Certain Items and Services 
Furnished by Certain Off-Campus Departments of a Provider
    In section X.A. of this proposed rule, we discuss the proposed 
implementation of section 603 of the Bipartisan Budget Act of 2015 
relating to payments for certain items and services furnished by 
certain off-campus departments of a provider. Section 603 does not 
impact OPPS payment rates or payments to OPPS-eligible providers. The 
impact tables displayed in section XXIII.A.3. of this proposed rule do 
not factor in changes in volume or service-mix in OPPS payments. As a 
result, the impact tables displayed in section XXIII.A.3. of this 
proposed rule do not reflect changes in the volume of OPPS services due 
to the implementation of section 603.
    We estimate that implementation of section 603 will reduce net OPPS 
payments by $500 million in CY 2017, relative to a baseline where 
section 603 was not implemented in CY 2017. We estimate that section 
603 would increase payments to physicians under the MPFS by $170 
million in CY 2017, resulting in a net Medicare Part B impact from the 
provision of reducing CY 2017 Part B expenditures by $330 million. 
These estimates include both the FFS impact of the provision and the 
Medicare Advantage impact of the provision. These estimates also 
reflect that the reduced spending from implementation of section 603 
results in a lower Part B premium; the reduced Part B spending is 
slightly offset by lower aggregate Part B premium collections.

B. Regulatory Flexibility Act (RFA) Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
most hospitals, ASCs and CMHCs are small entities as that term is used 
in the RFA. For purposes of the RFA, most hospitals are considered 
small businesses according to the Small Business Administration's size 
standards with total revenues of $38.5 million or less in any single 
year or by the hospital's not-for-profit status. Most ASCs and most 
CMHCs are considered small businesses with total revenues of $15 
million or less in any single year. For details, see the Small Business 
Administration's ``Table of Small Business Size Standards'' at http://www.sba.gov/content/table-small-business-size-standards.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has 100 or fewer beds. We estimate that this 
proposed rule would increase payments to small rural hospitals by less 
than 3 percent; therefore, it should not have a significant impact on 
approximately 634 small rural hospitals.
    The analysis above, together with the remainder of this preamble, 
provides a regulatory flexibility analysis and a regulatory impact 
analysis.

C. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $146 million. This proposed rule does 
not mandate any requirements for State, local, or tribal governments, 
or for the private sector.

D. Conclusion

    The changes we are proposing to make in this proposed rule would 
affect all classes of hospitals paid under the OPPS and would affect 
both CMHCs and ASCs. We estimate that most classes of hospitals paid 
under the OPPS would experience a modest increase or a minimal decrease 
in payment for services furnished under the OPPS in CY 2017. Table 31 
demonstrates the estimated distributional impact of the OPPS budget 
neutrality requirements that would result in a 1.6 percent increase in 
payments for all services paid under the OPPS in CY 2017, after 
considering all of the proposed changes to APC reconfiguration and 
recalibration, as well as the proposed OPD fee schedule increase 
factor, proposed wage index changes, including the proposed frontier 
State wage index adjustment, proposed estimated payment for outliers, 
and proposed changes to the pass-through payment estimate. However, 
some classes of providers that are paid under the OPPS would experience 
more significant gains or losses in OPPS payments in CY 2017.
    The proposed updates to the ASC payment system for CY 2017 would 
affect each of the approximately 5,300 ASCs currently approved for 
participation in the Medicare program. The effect on an individual ASC 
will depend on its mix of patients, the proportion of the ASC's 
patients who are Medicare beneficiaries, the degree to which the 
payments for the procedures offered by the ASC are changed under the 
ASC payment system, and the extent to which the ASC provides a 
different set of procedures in the coming year. Table 32 demonstrates 
the estimated distributional impact among ASC surgical specialties of 
the proposed MFP-adjusted CPI-U update factor of 1.2 percent for CY 
2017.

XXV. Federalism Analysis

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct costs on State and local 
governments, preempts State law, or otherwise has Federalism 
implications. We have examined the OPPS and ASC provisions included in 
this proposed rule in accordance with Executive Order 13132, 
Federalism, and have determined that they will not have a substantial 
direct effect on State, local or tribal governments, preempt State law, 
or otherwise have a Federalism implication. As reflected in Table 30 of 
this proposed rule, we estimate that OPPS payments to governmental 
hospitals (including State and local governmental hospitals) would 
increase by 1.6 percent under this proposed rule. While we do not know 
the number of ASCs or CMHCs with government

[[Page 45774]]

ownership, we anticipate that it is small. The analyses we have 
provided in this section of this proposed rule, in conjunction with the 
remainder of this document, demonstrate that this proposed rule is 
consistent with the regulatory philosophy and principles identified in 
Executive Order 12866, the RFA, and section 1102(b) of the Act.
    This proposed rule would affect payments to a substantial number of 
small rural hospitals and a small number of rural ASCs, as well as 
other classes of hospitals, CMHCs, and ASCs, and some effects may be 
significant.

List of Subjects

42 CFR Part 416

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

42 CFR Part 419

    Hospitals, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 482

    Grant programs--health, Hospitals, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

42 CFR Part 486

    Grant programs--health, Health facilities, Medicare, Reporting and 
recordkeeping requirements, X-rays.

42 CFR Part 488

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

42 CFR Part 495

    Administrative practice and procedure, Electronic health records, 
Health facilities, Health professions, Health maintenance organizations 
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.

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

PART 416--AMBULATORY SURGICAL SERVICES

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

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

0
2. Section 416.171 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  416.171  Determination of payment rates for ASC services.

* * * * *
    (b) * * *
    (2) The device portion of device-intensive procedures, which are 
procedures with a HCPCS code-level device offset of greater than 40 
percent when calculated according to the standard OPPS APC ratesetting 
methodology.
* * * * *
0
3. Section 416.310 is amended by revising paragraphs (c)(1)(ii) and 
(d)(1) and adding paragraph (e) to read as follows:


Sec.  416.310.  Data collection and submission requirements under the 
ASCQR Program.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Data collection requirements. The data collection time period 
for quality measures for which data are submitted via a CMS online data 
submission tool is for services furnished during the calendar year 2 
years prior to the payment determination year. Beginning with the CY 
2017 payment determination year, data collected must be submitted 
during the time period of January 1 to May 15 in the year prior to the 
payment determination year.
* * * * *
    (d) * * *
    (1) Upon request of the ASC. ASCs may request an extension or 
exemption within 90 days of the date that the extraordinary 
circumstance occurred. Specific requirements for submission of a 
request for an extension or exemption are available on the QualityNet 
Web site; or
* * * * *
    (e) Requirements for Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey. OAS 
CAHPS is the Outpatient and Ambulatory Surgical Center Consumer 
Assessment of Healthcare Providers and Systems survey that measures 
patient experience of care after a recent surgery or procedure at 
either a hospital outpatient department or an ambulatory surgical 
center. Ambulatory surgical centers must use an approved OAS CAHPS 
survey vendor to administer and submit OAS CAHPS data to CMS.
    (1) [Reserved]
    (2) CMS approves an application for an entity to administer the OAS 
CAHPS survey as a vendor on behalf of one or more ambulatory surgical 
centers when the applicant has met the Minimum Survey Requirements and 
Rules of Participation that can be found on the official OAS CAHPS Web 
site, and agrees to comply with the current survey administration 
protocols that can be found on the official OAS CAHPS Web site.

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

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

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

0
5. Section 419.22 is amended by adding paragraph (v) to read as 
follows:


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

* * * * *
    (v) Effective January 1, 2017, for cost reporting periods beginning 
on or after January 1, 2017, items and services that are provided by an 
off-campus provider-based department (as defined at Sec.  419.48(b)) 
that do not meet the definition of excepted items and services under 
Sec.  419.48(a).
0
6. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(8) to 
read as follows:


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

* * * * *
    (b) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (8) For calendar year 2017, a multiproductivity adjustment (as 
determined by CMS) and 0.75 percentage point.
* * * * *
0
7. Section 419.43 is amended by adding paragraph (d)(7) to read as 
follows:


Sec.  419.43  Adjustments to national program payment and beneficiary 
copayment amounts.

* * * * *
    (d) * * *
    (7) Community mental health center (CMHC) outlier payment cap. 
Outlier payments made to CMHCs for services provided on or after 
January 1, 2017 are subject to a cap, applied at the individual CMHC 
level, so that each CMHC's total outlier payments for the calendar year 
do not exceed 8 percent of that CMHC's total per diem payments for the 
calendar year. Total per diem payments are total Medicare per diem 
payments plus the total beneficiary share of those per diem payments.
* * * * *

[[Page 45775]]

0
8. Section 419.44 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  419.44  Payment reductions for procedures.

* * * * *
    (b) * * *
    (2) For all device-intensive procedures (defined as having a device 
offset of greater than 40 percent), the device offset portion of the 
device-intensive procedure payment is subtracted prior to determining 
the program payment and beneficiary copayment amounts identified in 
paragraph (b)(1)(ii) of this section.
0
9. Section 419.46 is amended by adding paragraph (g) to read as 
follows:


Sec.  419.46  Participation, data submission, and validation 
requirements under the Hospital Outpatient Quality Reporting (OQR) 
Program.

* * * * *
    (g) Requirements for Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey. OAS 
CAHPS is the Outpatient and Ambulatory Surgical Center Consumer 
Assessment of Healthcare Providers and Systems Survey that measures 
patient experience of care after a recent surgery or procedure at 
either a hospital outpatient department or an ambulatory surgical 
center. Hospital outpatient departments must use an approved OAS CAHPS 
survey vendor to administer and submit OAS CAHPS data to CMS.
    (1) [Reserved]
    (2) CMS approves an application for an entity to administer the OAS 
CAHPS Survey as a vendor on behalf of one or more hospital outpatient 
departments when the applicant has met the Minimum Survey Requirements 
and Rules of Participation that can be found on the official OAS CAHPS 
Web site, and agrees to comply with the current survey administration 
protocols that can be found on the official OAS CAHPS Survey Web site. 
An entity must be an approved OAS CAHPS Survey vendor in order to 
administer and submit OAS CAHPS Survey data to CMS on behalf of one or 
more hospital outpatient departments.
0
10. Section 419.48 is added to subpart D to read as follows:


Sec.  419.48  Definition of excepted items and services.

    (a) Excepted items and services are items or services that are 
furnished on or after January 1, 2017--
    (1) In a dedicated emergency department (as defined at Sec.  
489.24(b) of this chapter); or
    (2) By an off-campus provider-based department that submitted a 
bill for a covered OPD service prior to November 2, 2015, are furnished 
at the same location that the department was furnishing such services 
as of November 1, 2015, and are in the same clinical family of services 
as the services that the department furnished prior to November 2, 
2015.
    (b) For the purpose of this section, ``off-campus provider-based 
department'' means a department of a provider (as defined at Sec.  
413.65(a)(2) of this chapter as in effect as of November 2, 2015) that 
is not located on the campus (as defined in Sec.  413.65(a)(2) of this 
chapter) or within the distance described in such definition from a 
remote location of a hospital (as defined in Sec.  413.65 of this 
chapter) that meets the requirements for provider-based status under 
Sec.  413.65 of this chapter.
0
11. Section 419.66 is amended by revising paragraph (g) to read as 
follows:


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

* * * * *
    (g) Limited period of payment for devices. CMS limits the 
eligibility of a pass-through payment established under this section to 
a period of at least 2 years, but not more than 3 years, beginning on 
the first date on which pass-through payment is made.
* * * * *

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

0
12. The authority citation for part 482 continues to read as follows:

    Authority:  Secs. 1102, 1871, and 1881 of the Social Security 
Act (42 U.S.C. 1302, 1395hh, and 1395rr), unless otherwise noted.

0
13. Section 482.80 is amended by revising paragraph (c)(2)(ii)(C) to 
read as follows:


Sec.  482.80  Condition of participation: Data submission, clinical 
experience, and outcome requirements for initial approval of transplant 
centers.

* * * * *
    (c) * * *
    (2) * * *
    (ii) * * *
    (C) The number of observed events divided by the number of expected 
events is greater than 1.85.
* * * * *
0
14. Section 482.82 is amended by revising paragraph (c)(2)(ii)(C) to 
read as follows:


Sec.  482.82  Condition of participation: Data submission, clinical 
experience, and outcome requirements for re-approval of transplant 
centers.

* * * * *
    (c) * * *
    (2) * * *
    (ii) * * *
    (C) The number of observed events divided by the number of expected 
events is greater than 1.85.
* * * * *

PART 486--CONDITIONS FOR COVERAGE OF SPECIALIZED SERVICES FURNISHED 
BY SUPPLIERS

0
15. The authority citation for part 486 continues to read as follows:

    Authority:  1102, 1138, and 1871 of the Social Security Act (42 
U.S.C. 1302, 1320b-8, and 1395hh) and section 371 of the Public 
Health Service Act (42 U.S.C. 273).

0
16. Section 486.302 is amended by revising the definition of ``Eligible 
death'' to read as follows:


Sec.  486.302  Definitions.

* * * * *
    Eligible death. An eligible death for organ donation means the 
death of a person--
    (1) Who is 75 years old or younger;
    (2) Who is legally declared dead by neurologic criteria in 
accordance with State or local law;
    (3) Whose body weight is 5 kg or greater;
    (4) Whose body mass Index (BMI) is 50 kg/m2 or less;
    (5) Who had at least one kidney, liver, heart, or lung that is 
deemed to meet the eligible data definition as follows:
    (i) The kidney would be initially deemed to meet the eligible data 
definition unless the donor meets one of the following:
    (A) Is more than 70 years of age;
    (B) Is age 50-69 years with history of Type 1 diabetes for more 
than 20 years;
    (C) Has polycystic kidney disease;
    (D) Has glomerulosclerosis equal to or more than 20 percent by 
kidney biopsy;
    (E) Has terminal serum creatinine greater than 4/0 mg/dl;
    (F) Has chronic renal failure; or
    (G) Has no urine output for at least or more than 24 hours;
    (ii) The liver would be initially deemed to meet the eligible data 
definition unless the donor has one of the following:
    (A) Cirrhosis;
    (B) Terminal total bilirubin equal to or more than 4 mg/dl;
    (C) Portal hypertension;
    (D) Macrosteatosis equal to or more than 50 percent or fibrosis 
equal to or more than stage II;

[[Page 45776]]

    (E) Fulminant hepatic failure; or
    (F) Terminal AST/ALT of more than 700 U/L.
    (iii) The heart would be initially deemed to meet the eligible data 
definition unless the donor meets one of the following:
    (A) Is more than 60 years of age;
    (B) Is at least or more than 45 years of age with a history of at 
least or more than 10 years of HTN or at least or more than 10 years of 
type 1 diabetes;
    (C) Has a history of Coronary Artery Bypass Graft (CABG);
    (D) Has a history of coronary stent/intervention;
    (E) Has a current or past medical history of myocardial infarction 
(MI);
    (F) Has a severe vessel diagnosis as supported by cardiac 
catheterization (that is more than 50 percent occlusion or 2+ vessel 
disease);
    (G) Has acute myocarditis and/or endocarditis;
    (H) Has heart failure due to cardiomyopathy;
    (I) Has an internal defibrillator or pacemaker;
    (J) Has moderate to severe single valve or 2-valve disease 
documented by echo or cardiac catheterization, or previous valve 
repair;
    (K) Has serial echo results showing severe global hypokinesis;
    (L) Has myxoma; or
    (M) Has congenital defects (whether surgically corrected or not).
    (iv) The lung would be initially deemed to meet the eligible data 
definition unless the donor meets one of the following:
    (A) Is more than 65 years of age;
    (B) Is diagnosed with coronary obstructive pulmonary disease (COPD) 
(for example, emphysema);
    (C) Has terminal PaO2/FiO2 less than 250 mmHg;
    (D) Has asthma (with daily prescription);
    (E) Asthma is the cause of death;
    (F) Has pulmonary fibrosis;
    (G) Has previous lobectomy;
    (H) Has multiple blebs documented on Computed Axial Tomography 
(CAT) Scan;
    (I) Has pneumonia as indicated on Computed Tomography (CT), X-ray, 
bronchoscopy, or cultures;
    (J) Has bilateral severe pulmonary contusions as per CT
    (6) If a deceased person meets the criteria specified in paragraphs 
(1) through (5) of this definition, the death of the person would be 
classified as an eligible death, unless the donor meets any of the 
following criteria:
    (i) The donor was taken to the operating room with the intent for 
the OPO to recover organs for transplant and all organs were deemed not 
medically suitable for transplantation; or
    (ii) The donor exhibits any of the following active infections 
(specific diagnoses) of--
    (A) Bacterial: Tuberculosis, Gangrenous bowel or perforated bowel 
or intra-abdominal sepsis;
    (B) Viral: HIV infection by serologic or molecular detection, 
Rabies, Reactive Hepatitis B Surface Antigen, Retroviral infections 
including Viral Encephalitis or Meningitis, Active Herpes simplex, 
varicella zoster, or cytomegalovirus viremia or pneumonia, Acute 
Epstein Barr Virus (mononucleosis), West Nile (c) Virus infection, 
SARS, except as provided in paragraph (8) of this definition.
    (C) Fungal: Active infection with Cryptococcus, Aspergillus, 
Histoplasma, Coccidioides, Active candidemia or invasive yeast 
infection;
    (D) Parasites: Active infection with Trypanosoma cruzi (Chagas'), 
Leishmania, Strongyloides, or Malaria (Plasmodium sp.); or
    (E) Prion: Creutzfeldt-Jacob Disease.
    (7) The following are general exclusions:
    (i) Aplastic anemia, Agranulocytosis;
    (ii) Current malignant neoplasms except non-melanoma skin cancers 
such as basal cell and squamous cell cancer and primary CNS tumors 
without evident metastatic disease;
    (iii) Previous malignant neoplasms with current evident metastatic 
disease;
    (iv) A history of melanoma;
    (v) Hematologic malignancies: Leukemia, Hodgkin's Disease, 
Lymphoma, Multiple Myeloma;
    (vi) Active Fungal, Parasitic, Viral, or Bacterial Meningitis or 
Encephalitis; and
    (vii) No discernable cause of death.
    (8) Notwithstanding paragraph (6)(ii)(B) of this definition, an HIV 
positive organ procured for the purpose of transplantation into an HIV 
positive recipient would be an exception to an active infection rule 
out.
* * * * *
0
17. Section 486.318 is amended by revising paragraphs (a)(3) and (b)(3) 
to read as follows:


Sec.  486.318  Condition: Outcome measures.

    (a) * * *
    (3) At least 2 of the 3 yield measures specified in paragraph 
(a)(3)(i) of this section are no more than 1 standard deviation below 
the national mean, averaged over the 4 years of the recertification 
cycle, and the OPO data reports must meet the rules and requirements of 
the most current OPTN aggregate donor yield measure:
    (i) The initial criteria used to identify OPOs with lower than 
expected organ yield, for all organs as well as for each organ type, 
will include all of the following:
    (A) A difference of at least 11 fewer observed organs per 100 
donors than expected yield (Observed per 100 donors-Expected per 100 
donors < -10);
    (B) A ratio of observed to expected yield less than 0.90; and
    (C) A two-sided p-value is less than 0.05.
    (ii) The yield measures include pancreata used for islet cell 
transplantation as required by section 371(c) of the Public Health 
Service Act (42 U.S.C. 273(c)).
    (b) * * *
    (3) At least 2 out of the 3 following yield measures specified in 
paragraph (b)(3)(i) of this section are no more than 1 standard 
deviation below the national mean, averaged over the 4 years of the 
recertification cycle, and the OPO data reports must meet the rules and 
requirements of the most current OPTN aggregate donor yield measure:
    (i) The initial criteria used to identify OPOs with lower than 
expected organ yield, for all organs as well as for each organ type, 
will include all of the following:
    (A) More than 10 fewer observed organs per 100 donors than expected 
yield (Observed per 100 donors-Expected per 100 donors < -10);
    (B) A ratio of observed to expected yield less than 0.90; and
    (C) A two-sided p-value is less than 0.05.
    (ii) The yield measures include pancreata used for islet cell 
transplantation as required by section 371(c) of the Public Health 
Service Act (42 U.S.C. 273(c)).
* * * * *
0
18. Section 486.346 is amended by revising paragraph (b) to read as 
follows:


Sec.  486.346  Condition: Organ preparation and transport.

* * * * *
    (b)(1) The OPO must send complete documentation of donor 
information to the transplant center with the organ, including donor 
evaluation, the complete record of the donor's management, 
documentation of consent, documentation of the pronouncement of death, 
and documentation for determining organ quality. This information is 
available to the transplant center electronically.
    (2) The OPO must physically send a paper copy of the following 
documentation with each organ:
    (i) Blood type;
    (ii) Blood subtype, if used for allocation; and

[[Page 45777]]

    (iii) Infectious disease testing results available at the time of 
organ packaging.
    (3) The source documentation must be placed in a watertight 
container in either of the following:
    (i) A location specifically designed for documentation; or
    (ii) Between the inner and external transport materials.
    (4) Two individuals, one of whom must be an OPO employee, must 
verify that the documentation that accompanies an organ to a transplant 
center is correct.
* * * * *

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
19. The authority citation for part 488 continues to read as follows:

    Authority:  Secs. 1102, 1128l, 1864, 1865, 1871 and 1875 of the 
Social Security Act, unless otherwise noted (42 U.S.C. 1302, 1320a-
7j, 1395aa, 1395bb, 1395hh) and 1395ll.

0
20. Section 488.61 is amended by revising paragraphs (f)(1) 
introductory text, (f)(3), and (h)(2) to read as follows:


Sec.  488.61  Special procedures for approval and re-approval of organ 
transplant centers.

* * * * *
    (f) * * *
    (1) Factors. Except for situations of immediate jeopardy or 
deficiencies other than failure to meet requirements of Sec.  482.80 or 
Sec.  482.82 of this chapter, CMS will consider such mitigating factors 
as may be appropriate in light of the nature of the deficiency and 
circumstances, including (but not limited to) the following, in making 
a decision of initial and re-approval of a transplant center that does 
not meet the data submission, clinical experience, or outcome 
requirements:
* * * * *
    (3) Timing. Within 14 calendar days after CMS has issued formal 
written notice of a condition-level deficiency to the program, CMS must 
receive notification of the program's intent to seek mitigating factors 
approval or re-approval, and receive all information for consideration 
of mitigating factors within 120 calendar days of the CMS written 
notification for a deficiency due to data submission, clinical 
experience or outcomes at Sec.  482.80 or Sec.  482.82 of this chapter. 
Failure to meet these timeframes may be the basis for denial of 
mitigating factors. However, CMS may permit an extension of the 
timeline for good cause, such as a declared public health emergency.
* * * * *
    (h) * * *
    (2) Timeframe. A Systems Improvement Agreement will be established 
for up to a 12-month period, subject to CMS' discretion to determine if 
a shorter timeframe may suffice. At the hospital's request, CMS may 
extend the agreement for up to an additional 6-month period. A signed 
Systems Improvement Agreement remains in force even if a subsequent 
SRTR report indicates that the program has restored compliance with the 
CMS conditions of participation, except that CMS in its sole discretion 
may shorten the timeframe or allow modification to any portion of the 
elements of the Agreement in such a case.

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY 
INCENTIVE PROGRAM

0
21. The authority citation for part 495 continues to read as follows:

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

0
22. Section 495.4 is amended by--
0
a. In the definition of ``EHR reporting period'' revising paragraphs 
(1)(ii)(B)(2) and (2)(ii)(B)(2).
0
b. In the definition of ``EHR reporting period for a payment adjustment 
year'' revising paragraphs (1)(ii)(B)(2), (2)(ii)(B)(2), and 
(3)(ii)(B)(2).
    The revisions read as follows:


Sec.  495.4  Definitions.

* * * * *
    EHR reporting period. * * *
    (1) * * *
    (ii) * * *
    (B) * * *
    (2) For the EP who has successfully demonstrated he or she is a 
meaningful EHR user in any prior year, any continuous 90-day period 
within CY 2016.
* * * * *
    (2) * * *
    (ii) * * *
    (B) * * *
    (2) For the eligible hospital or CAH that has successfully 
demonstrated it is a meaningful EHR user in any prior year, any 
continuous 90-day period within CY 2016.
* * * * *
    EHR reporting period for a payment adjustment year. * * *
    (1) * * *
    (ii) * * *
    (B) * * *
    (2) If in a prior year an EP has successfully demonstrated he or 
she is a meaningful EHR user, the EHR reporting period is any 
continuous 90-day period within CY 2016 and applies for the CY 2018 
payment adjustment year.
* * * * *
    (2) * * *
    (ii) * * *
    (B) * * *
    (2) If in a prior year an eligible hospital has successfully 
demonstrated it is a meaningful EHR user, the EHR reporting period is 
any continuous 90-day period within CY 2016 and applies for the FY 2018 
payment adjustment year.
* * * * *
    (3) * * *
    (ii) * * *
    (B) * * *
    (2) If in a prior year a CAH has successfully demonstrated it is a 
meaningful EHR user, the EHR reporting period is any continuous 90-day 
period within CY 2016 and applies for the FY 2016 payment adjustment 
year.
* * * * *
0
23. Section 495.22 is amended by revising paragraphs (a), (c)(1) 
introductory text, (d)(1), (e) subject heading, and adding paragraph 
(f) to read as follows:


Sec.  495.22  Meaningful use objectives and measures for EPs, eligible 
hospitals, and CAHs for 2015 through 2017.

    (a) General rules. (1) Subject to the provisions of paragraph 
(a)(2) of this section, the criteria specified in this section are 
applicable for EPs, eligible hospitals and CAHs for 2015 through 2017.
    (2) For 2017 only, EPs, eligible hospitals and CAHs that have 
successfully demonstrated meaningful use in a prior year have the 
option to use the criteria specified for 2018 in Sec.  495.24 instead 
of the criteria specified for 2017 under paragraphs (e) and (f) of this 
section.
* * * * *
    (c) * * *
    (1) General rule regarding criteria for meaningful use for 2015 
through 2017 for eligible hospitals and CAHs. Except as specified in 
paragraph (c)(2) of this section, eligible hospitals and CAHs attesting 
under the Medicare EHR Incentive Program must meet all objectives and 
associated measures of the meaningful use criteria specified under 
paragraph (e) of this section to meet the definition of a meaningful 
EHR user in 2015 and 2016 and must meet all objectives and associated 
measures of the meaningful use criteria specified under paragraph (f) 
of this section to meet the definition of a meaningful EHR user in 
2017. Except as specified in paragraph (c)(2) of this section, eligible 
hospitals and CAHs attesting under a

[[Page 45778]]

state's Medicaid EHR Incentive Program must meet all objectives and 
associated measures of the meaningful use criteria specified under 
paragraph (e) of this section to meet the definition of a meaningful 
EHR user in 2015 through 2017.
* * * * *
    (d) * * *
    (1) If a measure (or associated objective) in paragraph (e) or (f) 
of this section references paragraph (d) of this section, the measure 
may be calculated by reviewing only the actions for patients whose 
records are maintained using CEHRT. A patient's record is maintained 
using CEHRT if sufficient data were entered in the CEHRT to allow the 
record to be saved, and not rejected due to incomplete data.
* * * * *
    (e) Meaningful use objectives and measures for EPs for 2015 through 
2017, for eligible hospitals and CAHs attesting under the Medicare EHR 
Incentive Program for 2015 and 2016, and for eligible hospitals and 
CAHs attesting under a State's Medicaid EHR Incentive Program for 2015 
through 2017.
* * * * *
    (f) Meaningful use objectives and measures for eligible hospitals 
and CAHs attesting under the Medicare EHR Incentive Program for 2017.--
(1) Protect patient health information--(i) Objective. Protect 
electronic protected health information created or maintained by the 
CEHRT through the implementation of appropriate technical capabilities.
    (ii) Security risk analysis measure. Conduct or review a security 
risk analysis in accordance with the requirements under 45 CFR 
164.308(a)(1), including addressing the security (to include 
encryption) of ePHI created or maintained in CEHRT in accordance with 
requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), 
and implement security updates as necessary, and correct identified 
security deficiencies as part of the eligible hospital's or CAH's risk 
management process.
    (2) [Reserved]
    (3) [Reserved]
    (4) e-Rx (electronic prescribing)--(i) Objective. Generate and 
transmit permissible discharge prescriptions electronically (eRx).
    (ii) e-Prescribing measure. Subject to the provisions of paragraph 
(d) of this section, more than 10 percent of hospital discharge 
medication orders for permissible prescriptions are queried for a drug 
formulary and transmitted electronically using CEHRT.
    (iii) Exclusion for nonapplicable objectives. Subject to the 
provisions of paragraph (c)(2) of this section, any eligible hospital 
or CAH that does not have an internal pharmacy that can accept 
electronic prescriptions and is not located within 10 miles of any 
pharmacy that accepts electronic prescriptions at the start of their 
EHR reporting period.
    (5) Health Information Exchange--(i) Objective. The eligible 
hospital or CAH who transitions a patient to another setting of care or 
provider of care or refers a patient to another provider of care 
provides a summary care record for each transition of care or referral.
    (ii) Health information exchange measure. Subject to the provisions 
of paragraph (d) of this section, the eligible hospital or CAH that 
transitions or refers their patient to another setting of care or 
provider of care must do the following:
    (A) Use CEHRT to create a summary of care record; and
    (B) Electronically transmit such summary to a receiving provider 
for more than 10 percent of transitions of care and referrals.
    (6) Patient specific education--(i) Objective. Use clinically 
relevant information from CEHRT to identify patient-specific education 
resources and provide those resources to the patient.
    (ii) Patient-specific education measure. More than 10 percent of 
all unique patients admitted to the eligible hospital's or CAH's 
inpatient or emergency department (POS 21 or 23) are provided patient 
specific education resources identified by CEHRT.
    (7) Medication reconciliation.--(i) Objective. The eligible 
hospital or CAH that receives a patient from another setting of care or 
provider of care or believes an encounter is relevant performs 
medication reconciliation.
    (ii) Medication reconciliation measure. Subject to the provisions 
of paragraph (d) of this section, the eligible hospital or CAH performs 
medication reconciliation for more than 50 percent of transitions of 
care in which the patient is admitted to the eligible hospital's or 
CAH's inpatient or emergency department (POS 21 or 23).
    (8) Patient electronic access--(i) Objective. Provide patients the 
ability to view online, download, and transmit information within 36 
hours of hospital discharge.
    (ii) Measures. An eligible hospital or CAH must meet the following 
two measures:
    (A) Patient access measure. More than 50 percent of all unique 
patients who are discharged from the inpatient or emergency department 
(POS 21 or 23) of an eligible hospital or CAH have timely access to 
view online, download, and transmit to a third party their health 
information.
    (B) View, download, transmit (VDT) measure. At least 1 patient (or 
patient-authorized representative) who is discharged from the inpatient 
or emergency department (POS 21 or 23) of an eligible hospital or CAH 
during the EHR reporting period views, downloads, or transmits to a 
third party his or her information during the EHR reporting period.
    (iii) Exclusion for nonapplicable objectives. Subject to the 
provisions of paragraph (c)(2) of this section, any eligible hospital 
or CAH that is located in a county that does not have 50 percent or 
more of its housing units with 4Mbps broadband availability according 
to the latest information available from the FCC on the first day of 
the EHR reporting period is excluded from paragraph (f)(8)(ii)(B) of 
this section.
    (9) Public health reporting--(i) Objective. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
electronic public health data from CEHRT, except where prohibited, and 
in accordance with applicable law and practice.
    (ii) Measures. In order to meet the objective under paragraph 
(f)(9)(i) of this section, an eligible hospital or CAH must choose from 
measures 1 through 4 (as described in paragraphs (f)(9)(ii)(A) through 
(D) of this section).
    (A) Immunization measure. The eligible hospital or CAH is in active 
engagement with a public health agency to submit immunization data.
    (B) Syndromic surveillance measure. The eligible hospital or CAH is 
in active engagement with a public health agency to submit syndromic 
surveillance data.
    (C) Specialized registry measure. The eligible hospital or CAH is 
in active engagement to submit data to a specialized registry.
    (D) Electronic reportable laboratory result reporting measure. The 
eligible hospital or CAH is in active engagement with a public health 
agency to submit electronic reportable laboratory results.
    (iii) Exclusions for non-applicable objectives. Subject to the 
provisions of paragraph (c)(2) of this section--
    (A) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the immunization measure 
specified in paragraph (f)(9)(ii)(A) of this section if the eligible 
hospital or CAH--
    (1) Does not administer any immunizations to any of the populations 
for which data is collected by its jurisdiction's immunization registry 
or immunization information system during the EHR reporting period.

[[Page 45779]]

    (2) Operates in a jurisdiction for which no immunization registry 
or immunization information system is capable of accepting the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period.
    (3) Operates in a jurisdiction where no immunization registry or 
immunization information system has declared readiness to receive 
immunization data from the eligible hospital or CAH at the start of the 
EHR reporting period.
    (B) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the syndromic surveillance 
measure specified in paragraph (f)(9)(ii)(B) of this section if the 
eligible hospital or CAH--
    (1) Does not have an emergency or urgent care department.
    (2) Operates in a jurisdiction for which no public health agency is 
capable of receiving electronic syndromic surveillance data from 
eligible hospitals or CAHs in the specific standards required to meet 
the CEHRT definition at the start of the EHR reporting period.
    (3) Operates in a jurisdiction where no public health agency has 
declared readiness to receive syndromic surveillance data from eligible 
hospitals or CAHs at the start of the EHR reporting period.
    (C) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the specialized registry 
measure specified in paragraph (f)(9)(ii)(C) of this section if the 
eligible hospital or CAH--
    (1) Does not diagnose or directly treat any disease associated with 
or collect relevant data is required by a specialized registry for 
which the eligible hospital or CAH is eligible in their jurisdiction.
    (2) Operates in a jurisdiction for which no specialized registry is 
capable of accepting electronic registry transactions in the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period; or
    (3) Operates in a jurisdiction where no specialized registry for 
which the eligible hospital or CAH is eligible has declared readiness 
to receive electronic registry transactions at the beginning of the EHR 
reporting period.
    (D) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the electronic reportable 
laboratory result reporting measure specified in paragraph 
(f)(9)(ii)(D) of this section if the eligible hospital or CAH--
    (1) Does not perform or order laboratory tests that are reportable 
in the eligible hospital's or CAH's jurisdiction during the EHR 
reporting period.
    (2) Operates in a jurisdiction for which no public health agency 
that is capable of accepting the specific ELR standards required to 
meet the CEHRT definition at the start of the EHR reporting period.
    (3) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic reportable laboratory results 
from eligible hospitals or CAHs at the start of the EHR reporting 
period.
0
24. Section 495.24 is revised to read as follows:


Sec.  495.24  Stage 3 meaningful use objectives and measures for EPs, 
eligible hospitals and CAHs for 2018 and subsequent years.

    The criteria specified in paragraphs (c) and (d) of this section 
are optional for 2017 for EPs, eligible hospitals, and CAHs that have 
successfully demonstrated meaningful use in a prior year. The criteria 
specified in paragraph (c) of this section are applicable for eligible 
hospitals and CAHs attesting under the Medicare EHR Incentive Program 
for 2018. The criteria specified in paragraph (d) of this section are 
applicable for all EPs for 2018 and subsequent years, and for eligible 
hospitals and CAHs attesting under a State's Medicaid EHR Incentive 
Program for 2018.
    (a) Stage 3 criteria for EPs--(1) General rule regarding Stage 3 
criteria for meaningful use for EPs. Except as specified in paragraphs 
(a)(2) and (3) of this section, EPs must meet all objectives and 
associated measures of the Stage 3 criteria specified in paragraph (d) 
of this section to meet the definition of a meaningful EHR user.
    (2) Selection of measures for specified objectives in paragraph (d) 
of this section. An EP may meet the criteria for 2 out of the 3 
measures associated with an objective, rather than meeting the criteria 
for all 3 of the measures, if the EP meets all of the following 
requirements:
    (i) Must ensure that the objective in paragraph (d) of this section 
includes an option to meet 2 out of the 3 associated measures.
    (ii) Meets the threshold for 2 out of the 3 measures for that 
objective.
    (iii) Attests to all 3 of the measures for that objective
    (3) Exclusion for non-applicable objectives and measures. (i) An EP 
may exclude a particular objective that includes an option for 
exclusion contained in paragraph (d) of this section, if the EP meets 
all of the following requirements:
    (A) Meets the criteria in the applicable objective that would 
permit the exclusion.
    (B) Attests to the exclusion.
    (ii) An EP may exclude a measure within an objective which allows 
for a provider to meet the threshold for 2 of the 3 measures, as 
outlined in paragraph (a)(2) of this section, in the following manner:
    (A)(1) Meets the criteria in the applicable measure or measures 
that would permit the exclusion; and
    (2) Attests to the exclusion or exclusions.
    (B)(1) Meets the threshold; and
    (2) Attests to any remaining measure or measures.
    (4) Exception for Medicaid EPs who adopt, implement or upgrade in 
their first payment year. For Medicaid EPs who adopt, implement, or 
upgrade its CEHRT in their first payment year, the meaningful use 
objectives and associated measures of the Stage 3 criteria specified in 
paragraph (d) of this section apply beginning with the second payment 
year, and do not apply to the first payment year.
    (5) Objectives and associated measures in paragraph (d) of this 
section that rely on measures that count unique patients or actions. 
(i) If a measure (or associated objective) in paragraph (d) of this 
section references paragraph (a)(5) of this section, the measure may be 
calculated by reviewing only the actions for patients whose records are 
maintained using CEHRT. A patient's record is maintained using CEHRT if 
sufficient data were entered in the CEHRT to allow the record to be 
saved, and not rejected due to incomplete data.
    (ii) If the objective and associated measure does not reference 
this paragraph (a)(5) of this section, the measure must be calculated 
by reviewing all patient records, not just those maintained using 
CEHRT.
    (b) Stage 3 criteria for meaningful use for eligible hospitals and 
CAHs--(1) General rule. Except as specified in paragraphs (b)(2) and 
(3) of this section, eligible hospitals and CAHs must meet all 
objectives and associated measures of the Stage 3 criteria specified in 
paragraphs (c) and (d) of this section, as applicable, to meet the 
definition of a meaningful EHR user.
    (2) Selection of measures for specified objectives in paragraphs 
(c) and (d) of this section. An eligible hospital or CAH may meet the 
criteria for 2 out of the 3 measures associated with an objective, 
rather than meeting the criteria for all 3 of the measures, if the 
eligible hospital

[[Page 45780]]

or CAH meets all of the following requirements:
    (i) Must ensure that the objective in paragraph (c) or (d) of this 
section, as applicable, includes an option to meet 2 out of the 3 
associated measures.
    (ii) Meets the threshold for 2 out of the 3 measures for that 
objective.
    (iii) Attests to all 3 of the measures for that objective.
    (3) Exclusion for nonapplicable objectives and measures. (i) An 
eligible hospital or CAH may exclude a particular objective that 
includes an option for exclusion contained in paragraph (c) or (d) of 
this section, as applicable, if the eligible hospital or CAH meets all 
of the following requirements:
    (A) Meets the criteria in the applicable objective that would 
permit the exclusion.
    (B) Attests to the exclusion.
    (ii) An eligible hospital or CAH may exclude a measure within an 
objective which allows for a provider to meet the threshold for 2 of 
the 3 measures, as outlined in paragraph (b)(2) of this section, in the 
following manner:
    (A)(1) Meets the criteria in the applicable measure or measures 
that would permit the exclusion; and
    (2) Attests to the exclusion or exclusions.
    (B)(1) Meets the threshold; and
    (2) Attests to any remaining measure or measures.
    (4) Exception for Medicaid eligible hospitals or CAHs that adopt, 
implement or upgrade in their first payment year. For Medicaid eligible 
hospitals or CAHs that adopt, implement or upgrade CEHRT in their first 
payment year, the meaningful use objectives and associated measures of 
the Stage 3 criteria specified in paragraph (c) or (d) of this section 
apply beginning with the second payment year, and do not apply to the 
first payment year.
    (5) Objectives and associated measures in paragraph (c) or (d) of 
this section that rely on measures that count unique patients or 
actions. (i) If a measure (or associated objective) in paragraph (c) or 
(d) of this section, as applicable, references paragraph (b)(5) of this 
section, the measure may be calculated by reviewing only the actions 
for patients whose records are maintained using CEHRT. A patient's 
record is maintained using CEHRT if sufficient data were entered in the 
CEHRT to allow the record to be saved, and not rejected due to 
incomplete data.
    (ii) If the objective and associated measure does not reference 
this paragraph (b)(5) of this section, the measure must be calculated 
by reviewing all patient records, not just those maintained using 
CEHRT.
    (c) Stage 3 objectives and measures for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program for 2018.--(1) 
Protect patient health information. (i) Objective. Protect electronic 
protected health information (ePHI) created or maintained by the CEHRT 
through the implementation of appropriate technical, administrative, 
and physical safeguards.
    (ii) Security risk analysis measure. Conduct or review a security 
risk analysis in accordance with the requirements under 45 CFR 
164.308(a)(1), including addressing the security (including encryption) 
of data created or maintained by CEHRT in accordance with requirements 
under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement 
security updates as necessary, and correct identified security 
deficiencies as part of the provider's risk management process.
    (2) eRx (electronic prescribing).--(i) Objective. Generate and 
transmit permissible discharge prescriptions electronically (eRx).
    (ii) e-Prescribing measure. Subject to paragraph (b)(5) of this 
section, more than 25 percent of hospital discharge medication orders 
for permissible prescriptions (for new and changed prescriptions) are 
queried for a drug formulary and transmitted electronically using 
CEHRT.
    (iii) Exclusions in accordance with paragraph (b)(3) of this 
section. Any eligible hospital or CAH that does not have an internal 
pharmacy that can accept electronic prescriptions and there are no 
pharmacies that accept electronic prescriptions within 10 miles at the 
start of the eligible hospital or CAH's EHR reporting period.
    (3) [Reserved]
    (4) [Reserved]
    (5) Patient electronic access to health information.--(i) 
Objective. The eligible hospital or CAH provides patients (or patient-
authorized representative) with timely electronic access to their 
health information and patient-specific education.
    (ii) Measures. Eligible hospitals and CAHs must meet the following 
two measures:
    (A) Patient access measure. For more than 50 percent of all unique 
patients discharged from the eligible hospital or CAH inpatient or 
emergency department (POS 21 or 23):
    (1) The patient (or patient-authorized representative) is provided 
timely access to view online, download, and transmit his or her health 
information; and
    (2) The provider ensures the patient's health information is 
available for the patient (or patient-authorized representative) to 
access using any application of their choice that is configured to meet 
the technical specifications of the API in the provider's CEHRT.
    (B) Patient specific education measure. The eligible hospital or 
CAH must use clinically relevant information from CEHRT to identify 
patient-specific educational resources and provide electronic access to 
those materials to more than 10 percent of unique patients discharged 
from the eligible hospital or CAH inpatient or emergency department 
(POS 21 or 23) during the EHR reporting period.
    (iii) Exclusion in accordance with paragraph (b)(3) of this 
section. Any eligible hospital or CAH that is located in a county that 
does not have 50 percent or more of its housing units with 4Mbps 
broadband availability according to the latest information available 
from the FCC on the first day of the EHR reporting period is excluded 
from the measures specified in paragraphs (c)(5)(ii)(A) and (B) of this 
section.
    (6) Coordination of care through patient engagement.--(i) 
Objective. Use CEHRT to engage with patients or their authorized 
representatives about the patient's care.
    (ii) Measures. In accordance with paragraph (b)(2) of this section, 
an eligible hospital or CAH must satisfy 2 of the 3 following measures 
in paragraphs (c)(6)(ii)(A), (B), and (C) of this section, except those 
measures for which an eligible hospital or CAH qualifies for an 
exclusion under paragraph (b)(3) of this section.
    (A) View, download, transmit (VDT) measure. During the EHR 
reporting period, at least one unique patient (or their authorized 
representatives) discharged from the eligible hospital or CAH inpatient 
or emergency department (POS 21 or 23) actively engage with the 
electronic health record made accessible by the provider and one of the 
following:
    (1) View, download or transmit to a third party their health 
information.
    (2) Access their health information through the use of an API that 
can be used by applications chosen by the patient and configured to the 
API in the provider's CEHRT; or
    (3) A combination of paragraphs (c)(6)(ii)(A)(1) and (2) of this 
section.
    (B) Secure messaging. During the EHR reporting period, more than 5 
percent of all unique patients discharged from the eligible hospital or 
CAH inpatient or emergency department (POS 21 or 23)

[[Page 45781]]

during the EHR reporting period, a secure message was sent using the 
electronic messaging function of CEHRT to the patient (or the patient 
authorized representative), or in response to a secure message sent by 
the patient (or the patient authorized representative).
    (C) Patient generated health data measure. Patient generated health 
data or data from a non-clinical setting is incorporated into the CEHRT 
for more than 5 percent of unique patients discharged from the eligible 
hospital or CAH inpatient or emergency department (POS 21 or 23) during 
the EHR reporting period.
    (iii) Exclusions under paragraph (b)(3) of this section. Any 
eligible hospital or CAH operating in a location that does not have 50 
percent or more of its housing units with 4Mbps broadband availability 
according to the latest information available from the FCC on the first 
day of the EHR reporting period may exclude from the measures specified 
in paragraphs (c)(6)(ii)(A), (B), and (C) of this section.
    (7) Health information exchange--(i) Objective. The eligible 
hospital or CAH provides a summary of care record when transitioning or 
referring their patient to another setting of care, receives or 
retrieves a summary of care record upon the receipt of a transition or 
referral or upon the first patient encounter with a new patient, and 
incorporates summary of care information from other providers into 
their EHR using the functions of CEHRT.
    (ii) Measures. In accordance with paragraph (b)(2) of this section, 
a eligible hospital or CAH must attest to all 3 measures, but must meet 
the threshold for 2 of the 3 measures in paragraphs (e)(7)(ii)(A), (B), 
and (C) of this section. Subject to paragraph (b)(5) of this section--
    (A) Patient care record exchange measure. For more than 10 percent 
of transitions of care and referrals, the eligible hospital or CAH that 
transitions or refers its patient to another setting of care or 
provider of care--
    (1) Creates a summary of care record using CEHRT; and
    (2) Electronically exchanges the summary of care record.
    (B) Request/accept patient care record measure. For more than 10 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH incorporates into the patient's EHR an 
electronic summary of care document.
    (C) Clinical information reconciliation measure. For more than 50 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH performs a clinical information 
reconciliation. The provider must implement clinical information 
reconciliation for the following three clinical information sets:
    (1) Medication. Review of the patient's medication, including the 
name, dosage, frequency, and route of each medication.
    (2) Medication allergy. Review of the patient's known allergic 
medications.
    (3) Current problem list. Review of the patient's current and 
active diagnoses.
    (iii) Exclusions in accordance with paragraph (b)(3) of this 
section. (A) Any eligible hospital or CAH for whom the total of 
transitions or referrals received and patient encounters in which the 
provider has never before encountered the patient, is fewer than 100 
during the EHR reporting period may be excluded from paragraphs 
(c)(7)(ii)(B) and (C) of this section.
    (B) Any eligible hospital or CAH operating in a location that does 
not have 50 percent or more of its housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
on the first day of the EHR reporting period may be excluded from the 
measures specified in paragraphs (e)(7)(ii)(A) and (B) of this section.
    (8) Public health and clinical data registry reporting--(i) 
Objective. The eligible hospital or CAH is in active engagement with a 
public health agency (PHA) or clinical data registry (CDR) to submit 
electronic public health data in a meaningful way using CEHRT, except 
where prohibited, and in accordance with applicable law and practice.
    (ii) Measures. In order to meet the objective under paragraph 
(c)(8)(i) of this section, an eligible hospital or CAH must choose from 
measures 1 through 6 (as described in paragraphs (c)(8)(ii)(A) through 
(F) of this section) and must successfully attest to any combination of 
three measures. These measures may be met by any combination, including 
meeting the measure specified in paragraphs (c)(8)(ii)(D) and (E) of 
this section multiple times, in accordance with applicable law and 
practice:
    (A) Immunization registry reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
immunization data and receive immunization forecasts and histories from 
the public health immunization registry/immunization information system 
(IIS).
    (B) Syndromic surveillance reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
syndromic surveillance data from an urgent care setting.
    (C) Case reporting measure. The eligible hospital or CAH is in 
active engagement with a public health agency to submit case reporting 
of reportable conditions.
    (D) Public health registry reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
data to public health registries.
    (E) Clinical data registry reporting measure. The eligible hospital 
or CAH is in active engagement to submit data to a clinical data 
registry.
    (F) Electronic reportable laboratory result reporting measure. The 
eligible hospital or CAH is in active engagement with a public health 
agency to submit electronic reportable laboratory results.
    (iii) Exclusions in accordance with paragraph (b)(3) of this 
section. (A) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the immunization registry 
reporting measure specified in paragraph (c)(8)(ii)(A) of this section 
if the eligible hospital or CAH--
    (1) Does not administer any immunizations to any of the populations 
for which data is collected by its jurisdiction's immunization registry 
or immunization information system during the EHR reporting period.
    (2) Operates in a jurisdiction for which no immunization registry 
or immunization information system is capable of accepting the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period.
    (3) Operates in a jurisdiction where no immunization registry or 
immunization information system has declared readiness to receive 
immunization data as of 6 months prior to the start of the EHR 
reporting period.
    (B) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the syndromic surveillance 
reporting measure specified in paragraph (c)(8)(ii)(B) of this section 
if the eligible hospital or CAH--
    (1) Does not have an emergency or urgent care department.
    (2) Operates in a jurisdiction for which no public health agency is 
capable of receiving electronic syndromic surveillance data in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (3) Operates in a jurisdiction where no public health agency has 
declared readiness to receive syndromic surveillance data from eligible 
hospitals

[[Page 45782]]

or CAHs as of 6 months prior to the start of the EHR reporting period.
    (C) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the case reporting measure 
specified in paragraph (e)(8)(ii)(C) of this section if the eligible 
hospital or CAH--
    (1) Does not treat or diagnose any reportable diseases for which 
data is collected by their jurisdiction's reportable disease system 
during the EHR reporting period.
    (2) Operates in a jurisdiction for which no public health agency is 
capable of receiving electronic case reporting data in the specific 
standards required to meet the CEHRT definition at the start of their 
EHR reporting period.
    (3) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic case reporting data as of 6 
months prior to the start of the EHR reporting period.
    (D) Any eligible hospital or CAH meeting at least one of the 
following criteria may be excluded from the public health registry 
reporting measure specified in paragraph (c)(8)(ii)(D) of this section 
if the eligible hospital or CAH--
    (1) Does not diagnose or directly treat any disease or condition 
associated with a public health registry in its jurisdiction during the 
EHR reporting period.
    (2) Operates in a jurisdiction for which no public health agency is 
capable of accepting electronic registry transactions in the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period.
    (3) Operates in a jurisdiction where no public health registry for 
which the eligible hospital or CAH is eligible has declared readiness 
to receive electronic registry transactions as of 6 months prior to the 
start of the EHR reporting period.
    (E) Any eligible hospital or CAH meeting at least one of the 
following criteria may be excluded from the clinical data registry 
reporting measure specified in paragraph (c)(8)(ii)(E) of this section 
if the eligible hospital or CAH--
    (1) Does not diagnose or directly treat any disease or condition 
associated with a clinical data registry in their jurisdiction during 
the EHR reporting period.
    (2) Operates in a jurisdiction for which no clinical data registry 
is capable of accepting electronic registry transactions in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (3) Operates in a jurisdiction where no clinical data registry for 
which the eligible hospital or CAH is eligible has declared readiness 
to receive electronic registry transactions as of 6 months prior to the 
start of the EHR reporting period.
    (F) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the electronic reportable 
laboratory result reporting measure specified in paragraph 
(c)(8)(ii)(F) of this section if the eligible hospital or CAH--
    (1) Does not perform or order laboratory tests that are reportable 
in its jurisdiction during the EHR reporting period.
    (2) Operates in a jurisdiction for which no public health agency 
that is capable of accepting the specific ELR standards required to 
meet the CEHRT definition at the start of the EHR reporting period.
    (3) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic reportable laboratory results 
from an eligible hospital or CAH as of 6 months prior to the start of 
the EHR reporting period.
    (d) Stage 3 objectives and measures for all EPs for 2018 and 
subsequent years, and for eligible hospitals and CAHs attesting under a 
State's Medicaid EHR Incentive Program for 2018--(1) Protect patient 
health information--(i) EP protect patient health information--(A) 
Objective. Protect electronic protected health information (ePHI) 
created or maintained by the CEHRT through the implementation of 
appropriate technical, administrative, and physical safeguards.
    (B) Security risk analysis measure. Conduct or review a security 
risk analysis in accordance with the requirements under 45 CFR 
164.308(a)(1), including addressing the security (including encryption) 
of data created or maintained by CEHRT in accordance with requirements 
under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement 
security updates as necessary, and correct identified security 
deficiencies as part of the provider's risk management process.
    (ii) Eligible hospital/CAH protect patient health information--(A) 
Objective. Protect electronic protected health information (ePHI) 
created or maintained by the CEHRT through the implementation of 
appropriate technical, administrative, and physical safeguards.
    (B) Security risk analysis measure. Conduct or review a security 
risk analysis in accordance with the requirements under 45 CFR 
164.308(a)(1), including addressing the security (including encryption) 
of data created or maintained by CEHRT in accordance with requirements 
under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement 
security updates as necessary, and correct identified security 
deficiencies as part of the provider's risk management process.
    (2) eRx (electronic prescribing)--(i) EP eRx (electronic 
prescribing)--(A) Objective. Generate and transmit permissible 
prescriptions electronically (eRx).
    (B) e-Prescribing measure. Subject to paragraph (a)(5) of this 
section, more than 60 percent of all permissible prescriptions written 
by the EP are queried for a drug formulary and transmitted 
electronically using CEHRT.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
(1) Any EP who writes fewer than 100 permissible prescriptions during 
the EHR reporting period; or
    (2) Any EP who does not have a pharmacy within its organization and 
there are no pharmacies that accept electronic prescriptions within 10 
miles of the EP's practice location at the start of his/her EHR 
reporting period.
    (ii) Eligible hospital/CAH eRx (electronic prescribing)--(A) 
Objective. Generate and transmit permissible discharge prescriptions 
electronically (eRx).
    (B) e-Prescribing measure. Subject to paragraph (b)(5) of this 
section, more than 25 percent of hospital discharge medication orders 
for permissible prescriptions (for new and changed prescriptions) are 
queried for a drug formulary and transmitted electronically using 
CEHRT.
    (C) Exclusions in accordance with paragraph (b)(3) of this section. 
Any eligible hospital or CAH that does not have an internal pharmacy 
that can accept electronic prescriptions and there are no pharmacies 
that accept electronic prescriptions within 10 miles at the start of 
the eligible hospital or CAH's EHR reporting period.
    (3) Clinical decision support--(i) EP clinical decision support--
(A) Objective. Implement clinical decision support (CDS) interventions 
focused on improving performance on high-priority health conditions.
    (B) Measures. (1) Clinical decisions support intervention measure. 
Implement five clinical decision support interventions related to four 
or more clinical quality measures at a relevant point in patient care 
for the entire EHR reporting period. Absent four clinical quality 
measures related to

[[Page 45783]]

an EP's scope of practice or patient population, the clinical decision 
support interventions must be related to high-priority health 
conditions; and
    (2) Drug interaction and drug allergy checks measure. The EP has 
enabled and implemented the functionality for drug-drug and drug-
allergy interaction checks for the entire EHR reporting period.
    (C) Exclusion in accordance with paragraph (a)(3) of this section 
for paragraph (d)(3)(i)(B)(2) of this section. An EP who writes fewer 
than 100 medication orders during the EHR reporting period.
    (ii) Eligible hospital/CAH clinical decision support--(A) 
Objective. Implement clinical decision support (CDS) interventions 
focused on improving performance on high-priority health conditions.
    (B) Measures--(1) Clinical decisions support intervention measure. 
Implement five clinical decision support interventions related to four 
or more clinical quality measures at a relevant point in patient care 
for the entire EHR reporting period. Absent four clinical quality 
measures related to an eligible hospital or CAH's patient population, 
the clinical decision support interventions must be related to high-
priority health conditions; and
    (2) Drug interaction and drug allergy checks measure. The eligible 
hospital or CAH has enabled and implemented the functionality for drug-
drug and drug-allergy interaction checks for the entire EHR reporting 
period.
    (4) Computerized provider order entry (CPOE)--(i) EP CPOE--(A) 
Objective. Use computerized provider order entry (CPOE) for medication, 
laboratory, and diagnostic imaging orders directly entered by any 
licensed healthcare professional, credentialed medical assistant, or a 
medical staff member credentialed to and performing the equivalent 
duties of a credentialed medical assistant, who can enter orders into 
the medical record per state, local, and professional guidelines.
    (B) Measures. Subject to paragraph (a)(5) of this section--
    (1) Medication orders measure. More than 60 percent of medication 
orders created by the EP during the EHR reporting period are recorded 
using computerized provider order entry;
    (2) Laboratory orders measure. More than 60 percent of laboratory 
orders created by the EP during the EHR reporting period are recorded 
using computerized provider order entry; and
    (3) Diagnostic imaging orders measure. More than 60 percent of 
diagnostic imaging orders created by the EP during the EHR reporting 
period are recorded using computerized provider order entry.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
(1) For the measure specified in paragraph (d)(4)(i)(B)(1) of this 
section, any EP who writes fewer than 100 medication orders during the 
EHR reporting period.
    (2) For the measure specified in paragraph (d)(4)(i)(B)(2) of this 
section, any EP who writes fewer than 100 laboratory orders during the 
EHR reporting period.
    (3) For the measure specified in paragraph (d)(4)(i)(B)(3) of this 
section, any EP who writes fewer than 100 diagnostic imaging orders 
during the EHR reporting period.
    (ii) Eligible hospital and CAH CPOE--(A) Objective. Use 
computerized provider order entry (CPOE) for medication, laboratory, 
and diagnostic imaging orders directly entered by any licensed 
healthcare professional, credentialed medical assistant, or a medical 
staff member credentialed to and performing the equivalent duties of a 
credentialed medical assistant; who can enter orders into the medical 
record per State, local, and professional guidelines.
    (B) Measures. Subject to paragraph (b)(5) of this section--
    (1) Medication orders measure. More than 60 percent of medication 
orders created by authorized providers of the eligible hospital's or 
CAH's inpatient or emergency department (POS 21 or 23) during the EHR 
reporting period are recorded using computerized provider order entry;
    (2) Laboratory orders measure. More than 60 percent of laboratory 
orders created by authorized providers of the eligible hospital's or 
CAH's inpatient or emergency department (POS 21 or 23) during the EHR 
reporting period are recorded using computerized provider order entry; 
and
    (3) Diagnostic imaging orders measure. More than 60 percent of 
diagnostic imaging orders created by authorized providers of the 
eligible hospital's or CAH's inpatient or emergency department (POS 21 
or 23) during the EHR reporting period are recorded using computerized 
provider order entry.
    (5) Patient electronic access to health information--(i) EP patient 
electronic access to health information--(A) Objective. The EP provides 
patients (or patient-authorized representative) with timely electronic 
access to their health information and patient-specific education.
    (B) Measures. EPs must meet the following two measures:
    (1) Patient access measure. For more than 80 percent of all unique 
patients seen by the EP--
    (i) The patient (or the patient-authorized representative) is 
provided timely access to view online, download, and transmit his or 
her health information; and
    (ii) The provider ensures the patient's health information is 
available for the patient (or patient-authorized representative) to 
access using any application of their choice that is configured to meet 
the technical specifications of the API in the provider's CEHRT.
    (2) Patient specific education measure. The EP must use clinically 
relevant information from CEHRT to identify patient-specific 
educational resources and provide electronic access to those materials 
to more than 35 percent of unique patients seen by the EP during the 
EHR reporting period.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
(1) Any EP who has no office visits during the reporting period may 
exclude from the measures specified in paragraphs (d)(5)(i)(B)(1) and 
(2) of this section.
    (2) Any EP that conducts 50 percent or more of his or her patient 
encounters in a county that does not have 50 percent or more of its 
housing units with 4Mbps broadband availability according to the latest 
information available from the FCC on the first day of the EHR 
reporting period may exclude from the measures specified in paragraphs 
(d)(5)(i)(B)(1) and (2) of this section.
    (ii) Eligible hospital and CAH patient electronic access to health 
information--(A) Objective. The eligible hospital or CAH provides 
patients (or patient-authorized representative) with timely electronic 
access to their health information and patient-specific education.
    (B) Measures. Eligible hospitals and CAHs must meet the following 
two measures:
    (1) Patient access measure. For more than 80 percent of all unique 
patients discharged from the eligible hospital or CAH inpatient or 
emergency department (POS 21 or 23):
    (i) The patient (or patient-authorized representative) is provided 
timely access to view online, download, and transmit his or her health 
information; and
    (ii) The provider ensures the patient's health information is 
available for the patient (or patient-authorized representative) to 
access using any application of their choice that is configured to meet 
the technical

[[Page 45784]]

specifications of the API in the provider's CEHRT.
    (2) Patient specific education measure. The eligible hospital or 
CAH must use clinically relevant information from CEHRT to identify 
patient-specific educational resources and provide electronic access to 
those materials to more than 35 percent of unique patients discharged 
from the eligible hospital or CAH inpatient or emergency department 
(POS 21 or 23) during the EHR reporting period.
    (C) Exclusion in accordance with paragraph (b)(3) of this section. 
Any eligible hospital or CAH that is located in a county that does not 
have 50 percent or more of its housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
on the first day of the EHR reporting period is excluded from the 
measures specified in paragraphs (d)(5)(ii)(B)(1) and (2) of this 
section.
    (6) Coordination of care through patient engagement--(i) EP 
coordination of care through patient engagement--(A) Objective. Use 
CEHRT to engage with patients or their authorized representatives about 
the patient's care.
    (B) Measures. In accordance with paragraph (a)(2) of this section, 
an EP must satisfy 2 out of the 3 following measures in paragraphs 
(d)(6)(i)(B)(1), (2), and (3) of this section except those measures for 
which an EP qualifies for an exclusion under paragraph (a)(3) of this 
section.
    (1) View, download, transmit (VDT) measure. During the EHR 
reporting period, more than 10 percent of all unique patients (or their 
authorized representatives) seen by the EP actively engage with the 
electronic health record made accessible by the provider and either of 
the following:
    (i) View, download or transmit to a third party their health 
information;
    (ii) their health information through the use of an API that can be 
used by applications chosen by the patient and configured to the API in 
the provider's CEHRT; or
    (iii) A combination of paragraphs (d)(6)(i)(B)(1)(i) and (ii) of 
this section.
    (iv) For an EHR reporting period in 2017 only, an EP may meet a 
threshold of 5 percent instead of 10 percent for the measure at 
paragraph (d)(6)(i)(B)(1) of this section.
    (2) During the EHR reporting period--
    (i) For an EHR reporting period in 2017 only, for more than 5 
percent of all unique patients seen by the EP during the EHR reporting 
period, a secure message was sent using the electronic messaging 
function of CEHRT to the patient (or their authorized representatives), 
or in response to a secure message sent by the patient; or
    (ii) For an EHR reporting period other than 2017, for more than 25 
percent of all unique patients seen by the EP during the EHR reporting 
period, a secure message was sent using the electronic messaging 
function of CEHRT to the patient (or their authorized representatives), 
or in response to a secure message sent by the patient.
    (3) Patient generated health data or data from a nonclinical 
setting is incorporated into the CEHRT for more than 5 percent of all 
unique patients seen by the EP during the EHR reporting period.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
(1) Any EP who has no office visits during the reporting period may 
exclude from the measures specified in paragraphs (d)(6)(i)(B)(1), (2), 
and (3) of this section.
    (2) Any EP that conducts 50 percent or more of his or her patient 
encounters in a county that does not have 50 percent or more of its 
housing units with 4Mbps broadband availability according to the latest 
information available from the FCC on the first day of the EHR 
reporting period may exclude from the measures specified in paragraphs 
(d)(6)(i)(B)(1), (2), and (3) of this section.
    (ii) Eligible hospital and CAH coordination of care through patient 
engagement--(A) Objective. Use CEHRT to engage with patients or their 
authorized representatives about the patient's care.
    (B) Measures. In accordance with paragraph (b)(2) of this section, 
an eligible hospital or CAH must satisfy 2 of the 3 following measures 
in paragraphs (d)(6)(ii)(B)(1), (2), and (3) of this section, except 
those measures for which an eligible hospital or CAH qualifies for an 
exclusion under paragraph (b)(3) of this section.
    (1) View, download, transmit (VDT) measure. During the EHR 
reporting period, more than 10 percent of all unique patients (or their 
authorized representatives) discharged from the eligible hospital or 
CAH inpatient or emergency department (POS 21 or 23) actively engage 
with the electronic health record made accessible by the provider and 
one of the following:
    (i) View, download or transmit to a third party their health 
information.
    (ii) Access their health information through the use of an API that 
can be used by applications chosen by the patient and configured to the 
API in the provider's CEHRT.
    (iii) A combination of paragraphs (d)(6)(ii)(B)(1)(i) and (ii) of 
this section.
    (iv) For an EHR reporting period in 2017, an eligible hospital or 
CAH may meet a threshold of 5 percent instead of 10 percent for the 
measure at paragraph (d)(6)(ii)(B)(1) of this section.
    (2) Secure messaging measure. During the EHR reporting period--
    (i) For an EHR reporting period in 2017 only, for more than 5 
percent of all unique patients discharged from the eligible hospital or 
CAH inpatient or emergency department (POS 21 or 23) during the EHR 
reporting period, a secure message was sent using the electronic 
messaging function of CEHRT to the patient (or their authorized 
representatives), or in response to a secure message sent by the 
patient (or their authorized representatives).
    (ii) For an EHR reporting period other than 2017, for more than 25 
percent of all unique patients discharged from the eligible hospital or 
CAH inpatient or emergency department (POS 21 or 23) during the EHR 
reporting period, a secure message was sent using the electronic 
messaging function of CEHRT to the patient (or their authorized 
representatives), or in response to a secure message sent by the 
patient (or their authorized representatives).
    (3) Patient generated health data measure. Patient generated health 
data or data from a non-clinical setting is incorporated into the CEHRT 
for more than 5 percent of unique patients discharged from the eligible 
hospital or CAH inpatient or emergency department (POS 21 or 23) during 
the EHR reporting period.
    (C) Exclusions under paragraph (b)(3) of this section. Any eligible 
hospital or CAH operating in a location that does not have 50 percent 
or more of its housing units with 4Mbps broadband availability 
according to the latest information available from the FCC on the first 
day of the EHR reporting period may exclude from the measures specified 
in paragraphs (d)(6)(ii)(B)(1), (2), and (3) of this section.
    (7) Health information exchange--(i) EP health information 
exchange--(A) Objective. The EP provides a summary of care record when 
transitioning or referring their patient to another setting of care, 
receives or retrieves a summary of care record upon the receipt of a 
transition or referral or upon the first patient encounter with a new 
patient, and incorporates summary of care information from other 
providers into their EHR using the functions of CEHRT.
    (B) Measures. In accordance with paragraph (a)(2) of this section, 
an EP must attest to all 3 measures, but must

[[Page 45785]]

meet the threshold for 2 of the 3 measures in paragraphs 
(d)(7)(i)(B)(1), (2), and (3) of this section, in order to meet the 
objective. Subject to paragraph (c) of this section--
    (1) Patient record exchange measure. For more than 50 percent of 
transitions of care and referrals, the EP that transitions or refers 
their patient to another setting of care or provider of care--
    (i) Creates a summary of care record using CEHRT; and
    (ii) Electronically exchanges the summary of care record.
    (2) Request/accept patient care record measure. For more than 40 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the EP 
incorporates into the patient's EHR an electronic summary of care 
document.
    (3) Clinical information reconciliation measure. For more than 80 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the EP 
performs clinical information reconciliation. The EP must implement 
clinical information reconciliation for the following three clinical 
information sets:
    (i) Medication. Review of the patient's medication, including the 
name, dosage, frequency, and route of each medication.
    (ii) Medication allergy. Review of the patient's known allergic 
medications.
    (iii) Current problem list. Review of the patient's current and 
active diagnoses.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
An EP must be excluded when any of the following occur:
    (1) Any EP who transfers a patient to another setting or refers a 
patient to another provider less than 100 times during the EHR 
reporting period must be excluded from paragraph (d)(7)(i)(B)(1) of 
this section.
    (2) Any EP for whom the total of transitions or referrals received 
and patient encounters in which the provider has never before 
encountered the patient, is fewer than 100 during the EHR reporting 
period may be excluded from paragraphs (d)(7)(i)(B)(2) and (3) of this 
section.
    (3) Any EP that conducts 50 percent or more of his or her patient 
encounters in a county that does not have 50 percent or more of its 
housing units with 4Mbps broadband availability according to the latest 
information available from the FCC on the first day of the EHR 
reporting period may exclude from the measures specified in paragraphs 
(d)(7)(i)(B)(1) and (2) of this section.
    (ii) Eligible hospitals and CAHs health information exchange--(A) 
Objective. The eligible hospital or CAH provides a summary of care 
record when transitioning or referring their patient to another setting 
of care, receives or retrieves a summary of care record upon the 
receipt of a transition or referral or upon the first patient encounter 
with a new patient, and incorporates summary of care information from 
other providers into their EHR using the functions of CEHRT.
    (B) Measures. In accordance with paragraph (b)(2) of this section, 
an eligible hospital or CAH must attest to all three measures, but must 
meet the threshold for 2 of the 3 measures in paragraphs 
(d)(7)(ii)(B)(1), (2), and (3) of this section. Subject to paragraph 
(b)(5) of this section--
    (1) Patient record exchange measure. For more than 50 percent of 
transitions of care and referrals, the eligible hospital or CAH that 
transitions or refers its patient to another setting of care or 
provider of care--
    (i) Creates a summary of care record using CEHRT; and
    (ii) Electronically exchanges the summary of care record.
    (2) Request/accept patient care record measure. For more than 40 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH incorporates into the patient's EHR an 
electronic summary of care document from a source other than the 
provider's EHR system.
    (3) Clinical information reconciliation measure. For more than 80 
percent of transitions or referrals received and patient encounters in 
which the provider has never before encountered the patient, the 
eligible hospital or CAH performs a clinical information 
reconciliation. The provider must implement clinical information 
reconciliation for the following three clinical information sets:
    (i) Medication. Review of the patient's medication, including the 
name, dosage, frequency, and route of each medication.
    (ii) Medication allergy. Review of the patient's known allergic 
medications.
    (iii) Current problem list. Review of the patient's current and 
active diagnoses.
    (C) Exclusions in accordance with paragraph (b)(3) of this section. 
(1) Any eligible hospital or CAH for whom the total of transitions or 
referrals received and patient encounters in which the provider has 
never before encountered the patient, is fewer than 100 during the EHR 
reporting period may be excluded from paragraphs (d)(7)(i)(B)(2) and 
(3) of this section.
    (2) Any eligible hospital or CAH operating in a location that does 
not have 50 percent or more of its housing units with 4Mbps broadband 
availability according to the latest information available from the FCC 
on the first day of the EHR reporting period may exclude from the 
measures specified in paragraphs (d)(7)(ii)(B)(1) and (2) of this 
section.
    (8) Public Health and Clinical Data Registry Reporting--(i) EP 
Public Health and Clinical Data Registry: Reporting Objective--(A) 
Objective. The EP is in active engagement with a public health agency 
or clinical data registry to submit electronic public health data in a 
meaningful way using CEHRT, except where prohibited, and in accordance 
with applicable law and practice.
    (B) Measures. In order to meet the objective under paragraph 
(d)(8)(i)(A) of this section, an EP must choose from measures 1 through 
5 (paragraphs (d)(8)(i)(B)(1) through (5) of this section) and must 
successfully attest to any combination of two measures. These measures 
may be met by any combination, including meeting measure specified in 
paragraph (d)(8)(i)(B)(4) or (5) of this section multiple times, in 
accordance with applicable law and practice:
    (1) Immunization registry reporting measure. The EP is in active 
engagement with a public health agency to submit immunization data and 
receive immunization forecasts and histories from the public health 
immunization registry/immunization information system (IIS).
    (2) Syndromic surveillance reporting measure. The EP is in active 
engagement with a public health agency to submit syndromic surveillance 
data from an urgent care setting
    (3) Electronic case reporting measure. The EP is in active 
engagement with a public health agency to submit case reporting of 
reportable conditions.
    (4) Public health registry reporting measure. The EP is in active 
engagement with a public health agency to submit data to public health 
registries.
    (5) Clinical data registry reporting measure. The EP is in active 
engagement to submit data to a clinical data registry.
    (C) Exclusions in accordance with paragraph (a)(3) of this section. 
(1) Any EP meeting one or more of the following criteria may be 
excluded from the immunization registry reporting

[[Page 45786]]

measure in paragraph (d)(8)(i)(B)(1) of this section if the EP--
    (i) Does not administer any immunizations to any of the populations 
for which data is collected by their jurisdiction's immunization 
registry or immunization information system during the EHR reporting 
period.
    (ii) Operates in a jurisdiction for which no immunization registry 
or immunization information system is capable of accepting the specific 
standards required to meet the CEHRT definition at the start of its EHR 
reporting period.
    (iii) Operates in a jurisdiction where no immunization registry or 
immunization information system has declared readiness to receive 
immunization data as of 6 months prior to the start of the EHR 
reporting period.
    (2) Any EP meeting one or more of the following criteria may be 
excluded from the syndromic surveillance reporting measure described in 
paragraph (d)(8)(i)(B)(2) of the section if the EP--
    (i) Is not in a category of providers from which ambulatory 
syndromic surveillance data is collected by their jurisdiction's 
syndromic surveillance system.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of receiving electronic syndromic surveillance data in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no public health agency has 
declared readiness to receive syndromic surveillance data from EPs as 
of 6 months prior to the start of the EHR reporting period.
    (3) Any EP meeting one or more of the following criteria may be 
excluded from the case reporting measure at paragraph (d)(8)(i)(B)(3) 
of this section if the EP:
    (i) Does not treat or diagnose any reportable diseases for which 
data is collected by their jurisdiction's reportable disease system 
during the EHR reporting period.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of receiving electronic case reporting data in the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period.
    (iii) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic case reporting data as of 6 
months prior to the start of the EHR reporting period.
    (4) Any EP meeting at least one of the following criteria may be 
excluded from the public health registry reporting measure specified in 
paragraph (d)(8)(i)(B)(4) of this section if the EP--
    (i) Does not diagnose or directly treat any disease or condition 
associated with a public health registry in the EP's jurisdiction 
during the EHR reporting period.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of accepting electronic registry transactions in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no public health registry 
for which the EP, eligible hospital, or CAH is eligible has declared 
readiness to receive electronic registry transactions as of 6 months 
prior to the start of the EHR reporting period.
    (5) Any EP meeting at least one of the following criteria may be 
excluded from the clinical data registry reporting measure specified in 
paragraph (d)(8)(i)(B)(5) of this section if the EP--
    (i) Does not diagnose or directly treat any disease or condition 
associated with a clinical data registry in their jurisdiction during 
the EHR reporting period.
    (ii) Operates in a jurisdiction for which no clinical data registry 
is capable of accepting electronic registry transactions in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no clinical data registry 
for which the EP, eligible hospital, or CAH is eligible has declared 
readiness to receive electronic registry transactions as of 6 months 
prior to the start of the EHR reporting period.
    (ii) Eligible hospital and CAH Public Health and Clinical Data 
Registry: Reporting objective--(A) Objective. The eligible hospital or 
CAH is in active engagement with a public health agency (PHA) or 
clinical data registry (CDR) to submit electronic public health data in 
a meaningful way using CEHRT, except where prohibited, and in 
accordance with applicable law and practice.
    (B) Measures. In order to meet the objective under paragraph 
(d)(8)(ii)(A) of this section, an eligible hospital or CAH must choose 
from measures 1 through 6 (as described in paragraphs (d)(8)(ii)(B)(1) 
through (6) of this section) and must successfully attest to any 
combination of four measures. These measures may be met by any 
combination, including meeting the measure specified in paragraph 
(d)(8)(ii)(B)(4) or (5) of this section multiple times, in accordance 
with applicable law and practice:
    (1) Immunization registry reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
immunization data and receive immunization forecasts and histories from 
the public health immunization registry/immunization information system 
(IIS).
    (2) Syndromic surveillance reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
syndromic surveillance data from an urgent care setting.
    (3) Case reporting measure. The eligible hospital or CAH is in 
active engagement with a public health agency to submit case reporting 
of reportable conditions.
    (4) Public health registry reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
data to public health registries.
    (5) Clinical data registry reporting measure. The eligible hospital 
or CAH is in active engagement to submit data to a clinical data 
registry.
    (6) Electronic reportable laboratory result reporting measure. The 
eligible hospital or CAH is in active engagement with a public health 
agency to submit electronic reportable laboratory results.
    (C) Exclusions in accordance with paragraph (b)(3) of this section. 
(1) Any eligible hospital or CAH meeting one or more of the following 
criteria may be excluded from to the immunization registry reporting 
measure specified in paragraph (d)(8)(ii)(B)(1) of this section if the 
eligible hospital or CAH--
    (i) Does not administer any immunizations to any of the populations 
for which data is collected by its jurisdiction's immunization registry 
or immunization information system during the EHR reporting period.
    (ii) Operates in a jurisdiction for which no immunization registry 
or immunization information system is capable of accepting the specific 
standards required to meet the CEHRT definition at the start of the EHR 
reporting period.
    (iii) Operates in a jurisdiction where no immunization registry or 
immunization information system has declared readiness to receive 
immunization data as of 6 months prior to the start of the EHR 
reporting period.
    (2) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the syndromic surveillance 
reporting measure specified in paragraph (d)(8)(ii)(B)(2) of this 
section if the eligible hospital or CAH--
    (i) Does not have an emergency or urgent care department.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of receiving electronic syndromic surveillance data in the

[[Page 45787]]

specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no public health agency has 
declared readiness to receive syndromic surveillance data from eligible 
hospitals or CAHs as of 6 months prior to the start of the EHR 
reporting period.
    (3) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the case reporting measure 
specified in paragraph (d)(8)(ii)(B)(3) of this section if the eligible 
hospital or CAH--
    (i) Does not treat or diagnose any reportable diseases for which 
data is collected by their jurisdiction's reportable disease system 
during the EHR reporting period.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of receiving electronic case reporting data in the specific 
standards required to meet the CEHRT definition at the start of their 
EHR reporting period.
    (iii) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic case reporting data as of 6 
months prior to the start of the EHR reporting period.
    (4) Any eligible hospital or CAH meeting at least one of the 
following criteria may be excluded from the public health registry 
reporting measure specified in paragraph (d)(8)(ii)(B)(4) of this 
section if the eligible hospital or CAH--
    (i) Does not diagnose or directly treat any disease or condition 
associated with a public health registry in its jurisdiction during the 
EHR reporting period.
    (ii) Operates in a jurisdiction for which no public health agency 
is capable of accepting electronic registry transactions in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no public health registry 
for which the eligible hospital or CAH is eligible has declared 
readiness to receive electronic registry transactions as of 6 months 
prior to the start of the EHR reporting period.
    (5) Any eligible hospital or CAH meeting at least one of the 
following criteria may be excluded from the clinical data registry 
reporting measure specified in paragraph (d)(8)(ii)(B)(5) of this 
section if the eligible hospital or CAH--
    (i) Does not diagnose or directly treat any disease or condition 
associated with a clinical data registry in their jurisdiction during 
the EHR reporting period.
    (ii) Operates in a jurisdiction for which no clinical data registry 
is capable of accepting electronic registry transactions in the 
specific standards required to meet the CEHRT definition at the start 
of the EHR reporting period.
    (iii) Operates in a jurisdiction where no clinical data registry 
for which the eligible hospital or CAH is eligible has declared 
readiness to receive electronic registry transactions as of 6 months 
prior to the start of the EHR reporting period.
    (6) Any eligible hospital or CAH meeting one or more of the 
following criteria may be excluded from the electronic reportable 
laboratory result reporting measure specified in paragraph 
(d)(8)(ii)(B)(6) of this section if the eligible hospital or CAH--
    (i) Does not perform or order laboratory tests that are reportable 
in its jurisdiction during the EHR reporting period.
    (ii) Operates in a jurisdiction for which no public health agency 
that is capable of accepting the specific ELR standards required to 
meet the CEHRT definition at the start of the EHR reporting period.
    (iii) Operates in a jurisdiction where no public health agency has 
declared readiness to receive electronic reportable laboratory results 
from an eligible hospital or CAH as of 6 months prior to the start of 
the EHR reporting period.
0
25. Section 495.40 is amended by--
0
a. Revising paragraph (a) introductory text.
0
b. Revising paragraphs (a)(2)(i)(E) and (F).
0
c. Adding paragraph (a)(2)(i)(G).
0
d. Revising paragraphs (b) introductory text and (b)(2)(i)(E) and (F).
0
e. Redesignating paragraph (b)(2)(i)(G) as paragraph (b)(2)(i)(H).
0
f. Adding a new paragraph (b)(2)(i)(G).
    The revisions and additions read as follows:


Sec.  495.40  Demonstration of meaningful use criteria.

    (a) Demonstration by EPs. An EP must demonstrate that he or she 
satisfies each of the applicable objectives and associated measures 
under Sec.  495.20 or Sec.  495.24, as follows:
* * * * *
    (2) * * *
    (i) * * *
    (E) For CYs 2015 through 2016, satisfied the required objectives 
and associated measures under Sec.  495.22(e) for meaningful use.
    (F) For CY 2017: An EP that has successfully demonstrated it is a 
meaningful EHR user in any prior year may satisfy either the objectives 
and measures specified in Sec.  495.22(e) for meaningful use or the 
objectives and measures specified in Sec.  495.24(d) for meaningful 
use; an EP that has never successfully demonstrated it is a meaningful 
EHR user in any prior year must satisfy the objectives and measures 
specified in Sec.  495.22(e) for meaningful use.
    (G) For CY 2018 and subsequent years, satisfied the required 
objectives and associated measures under Sec.  495.24(d) for meaningful 
use.
* * * * *
    (b) Demonstration by eligible hospitals and CAHs. To successfully 
demonstrate that it is a meaningful EHR user, an eligible hospital or 
CAH must satisfy the following requirements:
* * * * *
    (2) * * *
    (i) * * *
    (E) For CYs 2015 through 2016, satisfied the required objectives 
and associated measures under Sec.  495.22(e) for meaningful use.
    (F) For CY 2017:
    (1) For an eligible hospital or CAH attesting under the Medicare 
EHR Incentive Program: An eligible hospital or CAH that has 
successfully demonstrated it is a meaningful EHR user in any prior year 
may satisfy either the objectives and measures specified in Sec.  
495.22(f) for meaningful use or the objectives and measures specified 
in Sec.  495.24(c) for meaningful use; an eligible hospital or CAH that 
has never successfully demonstrated it is a meaningful EHR user in any 
prior year must satisfy the objectives and measures specified in Sec.  
495.22(f) for meaningful use.
    (2) For an eligible hospital or CAH attesting under a state's 
Medicaid EHR Incentive Program: An eligible hospital or CAH that has 
successfully demonstrated it is a meaningful EHR user in any prior year 
may satisfy either the objectives and measures specified in Sec.  
495.22(e) for meaningful use or the objectives and measures specified 
in Sec.  495.24(d) for meaningful use; an eligible hospital or CAH that 
has never successfully demonstrated it is a meaningful EHR user in any 
prior year must satisfy the objectives and measures specified in Sec.  
495.22(e) for meaningful use.
    (G) For CY 2018:
    (1) For an eligible hospital or CAH attesting under the Medicare 
EHR Incentive Program, satisfied the required objectives and associated 
measures under Sec.  495.24(c) for meaningful use.
    (2) For an eligible hospital or CAH attesting under a state's 
Medicaid EHR Incentive Program, satisfied the required

[[Page 45788]]

objectives and associated measures under Sec.  495.24(d) for meaningful 
use.
* * * * *
0
26. Section 495.102 is amended by adding paragraph (d)(4)(v) to read as 
follows:


Sec.  495.102  Incentive payments to EPs.

* * * * *
    (d) * * *
    (4) * * *
    (v) For the 2018 payment adjustment only, an EP who has not 
successfully demonstrated meaningful use in a prior year, intends to 
attest to meaningful use for an EHR reporting period in 2017 by October 
1, 2017 to avoid the 2018 payment adjustment, and intends to transition 
to the Merit-Based Incentive Payment System (MIPS) and report on 
measures specified for the advancing care information performance 
category under the MIPS in 2017. The EP must explain in the application 
why demonstrating meaningful use for an EHR reporting period in 2017 
would result in a significant hardship. Applications requesting this 
exception must be submitted no later than October 1, 2017, or a later 
date specified by CMS.
* * * * *

    Dated: June 22, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare and Medicaid Services.
    Dated: June 23, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-16098 Filed 7-6-16; 4:15 pm]
 BILLING CODE 4120-01-P