Federal Register, Volume 81 Issue 135 (Thursday, July 14, 2016)

[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

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) ENCORE^TM 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) Encore^TM 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 Encore^TM System). According to the
application, the Encore^TM 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 Encore^TM System is designed for hyoid bone suspension to
the mandible bone using bone screws and suspension lines. The
Encore^TM 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 Encore^TM
System received FDA clearance through the section 510(k) process on
March 26, 2014. Accordingly, it appears that the Encore^TM
System is new for purposes of evaluation for device pass-through
payments.
Several components of the Encore^TM 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 Encore^TM 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
Encore^TM 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
Encore^TM 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 Encore^TM
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 Encore^TM 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 Encore^TM System meets the third cost significance
test. Based on the costs submitted by the applicant and the
calculations noted earlier, the Encore^TM 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 Encore^TM 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 Encore^TM System is a new
kit of surgical instruments and implantable materials that are used to
perform this procedure. According to the Encore^TM System's
section 510(k) Summary, ``[t]he fundamental scientific technology and
technological characteristics of the Encore^TM 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 Encore^TM 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
Encore^TM System to the AirVance System. There is no clinical
data provided by the applicant to suggest that the Encore^TM
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
Encore^TM 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

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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

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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

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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

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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).

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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.
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(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.
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\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.
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(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\
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\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.
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\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).
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\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.
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[[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.
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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.
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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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

[[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:

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\
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\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\
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\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.
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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\
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\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.
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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.)
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\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.
---------------------------------------------------------------------------

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