[Federal Register Volume 81, Number 219 (Monday, November 14, 2016)]
[Rules and Regulations]
[Pages 79562-79892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26515]



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Vol. 81

Monday,

No. 219

November 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 414, 416, 419, 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 Nonexcepted Off-
Campus Provider-Based Department of a Hospital; Hospital Value-Based 
Purchasing (VBP) Program; Establishment of Payment Rates Under the 
Medicare Physician Fee Schedule for Nonexcepted Items and Services 
Furnished by an Off-Campus Provider-Based Department of a Hospital; 
Final Rule

  Federal Register / Vol. 81 , No. 219 / Monday, November 14, 2016 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 414, 416, 419, 482, 486, 488, and 495

[CMS-1656-FC and IFC]
RIN 0938-AS82


Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Organ Procurement Organization Reporting and Communication; 
Transplant Outcome Measures and Documentation Requirements; Electronic 
Health Record (EHR) Incentive Programs; Payment to Nonexcepted Off-
Campus Provider-Based Department of a Hospital; Hospital Value-Based 
Purchasing (VBP) Program; Establishment of Payment Rates Under the 
Medicare Physician Fee Schedule for Nonexcepted Items and Services 
Furnished by an Off-Campus Provider-Based Department of a Hospital

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

ACTION: Final rule with comment period and interim final rule with 
comment period.

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SUMMARY: This final rule with comment period revises the Medicare 
hospital outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for CY 2017 to 
implement applicable statutory requirements and changes arising from 
our continuing experience with these systems. In this final rule with 
comment period, we describe the changes to the amounts and factors used 
to determine the payment rates for Medicare services paid under the 
OPPS and those paid under the ASC payment system. In addition, this 
final rule with comment period updates and refines the requirements for 
the Hospital Outpatient Quality Reporting (OQR) Program and the ASC 
Quality Reporting (ASCQR) Program.
    Further, in this final rule with comment period, we are making 
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 removing the HCAHPS Pain Management dimension 
from the Hospital Value-Based Purchasing (VBP) Program.
    In addition, we are implementing section 603 of the Bipartisan 
Budget Act of 2015 relating to payment for certain items and services 
furnished by certain off-campus provider-based departments of a 
provider. In this document, we also are issuing an interim final rule 
with comment period to establish the Medicare Physician Fee Schedule 
payment rates for the nonexcepted items and services billed by a 
nonexcepted off-campus provider-based department of a hospital in 
accordance with the provisions of section 603.

DATES: Effective date: This final rule with comment period and the 
interim final rule with comment period are effective on January 1, 
2017.
    Comment period: To be assured consideration, comments on: (1) The 
payment classifications assigned to new Level II HCPCS codes and 
recognition of new and revised Category I and III CPT codes in this 
final rule with comment period; (2) the 20-hour a week minimum 
requirement for partial hospitalization services in this final rule 
with comment period; (3) the potential limitation on clinical service 
line expansion or volume of services by nonexcepted off-campus PBDs in 
this final rule with comment period; and (4) the Medicare Physician Fee 
Schedule (MPFS) payment rates for nonexcepted items and services 
furnished and billed by nonexcepted off-campus provider-based 
departments of hospitals in the interim final rule with comment period 
must be received at one of the addresses provided in the ADDRESSES 
section no later than 5 p.m. EST on December 31, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1656-FC when 
commenting on the issues in the final rule with comment period and CMS-
1656-IFC when commenting on issues in the interim final rule with 
comment period. 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-FC or CMS-1656-IFC (as 
appropriate), 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-FC or CMS-1656-IFC (as 
appropriate), 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 
Katherine Eastridge at (410) 786-4474.
    Ambulatory Surgical Center (ASC) Payment System, contact Elisabeth 
Daniel at (410) 786-0237.

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    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 (Low Dose Brachytherapy and 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.
    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.
    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 Lela Strong at (410) 786-3213.
    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--Items and 
Services Furnished by Off-Campus Departments of a Provider, contact 
David Rice at (410) 786-6004 or Elisabeth Daniel at (410) 786-0237.
    Section 603 of the Bipartisan Budget Act of 2015--MPFS Payment 
Rates for Nonexcepted Off-Campus Provider-Based Departments of 
Hospitals, contact Geri Mondowney at (410) 786-1172, Patrick Sartini at 
(410) 786-9252, or Isadora Gil at (410) 786-4532.
    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 Lela Strong 
at (410) 786-3213.

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 https://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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating 
to the ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/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
API Application programming interface
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

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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
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
PBD Provider-based department
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDC Per day cost
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment Patterns Electronic Report
PHP Partial hospitalization program
PHSA Public Health Service Act, Public Law 96-88
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

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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. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    a. Recommendations of the Advisory Panel on Hospital Outpatient 
Payment (the Panel) Regarding Data Development
    b. Calculation of Single Procedure APC Criteria-Based Costs
    (1) Blood and Blood Products
    (a) Methodology
    (b) Solicitation of Public Comments
    (c) Rapid Bacterial Testing for Platelets
    (2) Brachytherapy Sources
    c. Comprehensive APCs (C-APCs) for CY 2017
    (1) Background
    (2) C-APCs for CY 2017
    (a) Additional C-APCs for CY 2017
    (b) New Allogeneic Hematopoietic Stem Cell Transplantation 
(HSCT) C-APC
    d. 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. Changes to Packaged Items and Services
    a. Background and Rationale for Packaging in the OPPS
    b. Clinical Diagnostic Laboratory Test Packaging Policy
    (1) Background
    (2) ``Unrelated'' Laboratory Test Exception
    (3) Molecular Pathology Test Exception
    c. Conditional Packaging Status Indicators ``Q1'' and ``Q2''
    (1) Background
    (2) Change in Conditional Packaging Status Indicators Logic
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default CCRs
    E. Adjustment for Rural SCHs and EACHs Under Section 
1833(t)(13)(B) of the Act
    1. Background
    2. Proposed and Finalized Policy for CY 2017
    F. OPPS Payment to Certain Cancer Hospitals Described by Section 
1886(d)(1)(B)(v) of the Act
    1. Background
    2. Payment Adjustment for Certain Cancer Hospitals for CY 2017
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Outlier Calculation
    H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted Medicare Payment
    I. Beneficiary Copayments
    1. Background
    2. OPPS Copayment Policy
    3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Treatment of New Level II HCPCS Codes Effective April 1, 2016 
for Which We Solicited Public Comments in the CY 2017 OPPS/ASC 
Proposed Rule
    2. Treatment of New CPT and Level II HCPCS Codes Effective July 
1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/
ASC Proposed Rule
    3. Process for New Level II HCPCS Codes That Became Effective 
October 1, 2016 and New Level II HCPCS Codes That Will Be Effective 
January 1, 2017 for Which Are Soliciting Public Comments in This CY 
2017 OPPS/ASC Final Rule With Comment Period
    4. Treatment of New and Revised CY 2017 Category I and III CPT 
Codes That Will Be Effective January 1, 2017 for Which We Solicited 
Public Comments in the CY 2017 OPPS/ASC Proposed Rule
    B. OPPS Changes--Variations Within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. APC Exceptions to the 2 Times Rule
    C. New Technology APCs
    1. Background
    2. Additional New Technology APC Groups
    3. Procedures Assigned to New Technology APC Groups for CY 2017
    a. Overall Proposal
    b. Retinal Prosthesis Implant Procedure
    D. OPPS APC-Specific Policies
    1. Cardiovascular Procedures and Services
    a. Cardiac Event Recorder (APC 5071)
    b. Cardiac Telemetry
    2. Eye-Related Services
    3. Gastrointestinal Procedures and Services
    a. Esophageal Sphincter Augmentation (APC 5362)
    b. Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst 
(APC 5303)
    4. Musculoskeletal Procedures/Services
    a. Auditory Osseointegrated Implants/Bone Anchored Hearing 
Systems (APCs 5114, 5115, 1nd 5116)
    b. Bunion Correction/Foot Fusion (APC 5114)
    c. Intervertebral Biomechanical Devices
    d. Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114)
    e. Strapping and Casting Applications (APCs 5101 and 5102)
    5. Nervous System Procedures/Services
    a. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 
and 5722)
    b. Percutaneous Epidural Adhesiolysis (APC 5443)
    c. Neurostimulator (APC 5463)
    6. Radiologic Procedures and Services
    a. Imaging APCs
    b. Radiation Oncology (APCs 5092, 5611, and 5627)
    7. Skin Substitutes (APCs 5053 Through 5055)
    8. Urology System Procedures and Services
    a. Chemodenervation of the Bladder (APC 5373)
    b. Temporary Prostatic Urethral Stent (APC 5372)
    c. Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 
and 5376)
    9. Other Procedures and Services
    a. Cryoablation Procedures (APCs 5114, 5361, 5362, and 5432)
    b. Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, 
and 5193)
    c. Blood Product Exchange and Related Services (APCs 5241 and 
5242)
    d. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) 
(APCs 1537, 5114, and 5414)
    e. Neulasta[supreg] On-Body Injector
    f. Smoking and Tobacco Use Cessation Counseling (APC 5821)
    g. Radiofrequency Ablation of Uterine Fibroids (APC 5362)
    h. Intrapulmonary Surfactant Administration (APC 5791)
    i. Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 
5051)
    j. Pulmonary Rehabilitation Services
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Expiration of Transitional Pass-Through for Certain Devices
    a. Background
    b. CY 2017 Pass-Through Devices
    2. New Device Pass-Through Applications
    a. Background
    b. Applications Received for Device Pass-Through Payment for CY 
2017
    (1) BioBag[supreg] (Larval Debridement Therapy in a Contained 
Dressing)
    (2) ENCORETM Suspension System
    (3) Endophys Pressure Sensing System (Endophys PSS) or Endophys 
Pressure Sensing Kit
    3. Beginning Eligibility Date for Device Pass-Through Payment 
Status
    4. Policy 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

[[Page 79566]]

    a. Background
    b. CY 2017 Policy
    5. Changes to Cost-to-Charge Ratios (CCRs) That Are Used To 
Determine Device Pass-Through Payment
    a. Background
    b. CY 2017 Policy
    6. Provisions for Reducing Transitional Pass-Through Payments To 
Offset Costs Packaged Into APC Groups
    a. Background
    b. CY 2017 Policy
    B. Device-Intensive Procedures
    1. Background
    2. HCPCS Code-Level Device-Intensive Determination
    3. Changes to the Device Edit Policy
    4. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    a. Background
    b. Policy for CY 2017
    5. Payment Policy for Low-Volume Device-Intensive Procedures
V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Policy 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. Drugs and Biologicals With Expiring Pass-Through Payment 
Status in CY 2016
    4. Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Status in CY 2017
    5. Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To 
Offset Costs Packaged Into APC Groups
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Payment Status
    1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    a. Packaging Threshold
    b. Packaging of Payment for HCPCS Codes That Describe Certain 
Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals 
Under the Cost Threshold (``Threshold-Packaged Policy'')
    c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    d. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    e. Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    2. Payment for Drugs and Biologicals Without Pass-Through Status 
That Are Not Packaged
    a. Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable and Packaged Drugs and Biologicals
    b. CY 2017 Payment Policy
    c. Biosimilar Biological Products
    3. Payment Policy for Therapeutic Radiopharmaceuticals
    4. Payment Adjustment Policy for Radioisotopes Derived From Non-
Highly Enriched Uranium Sources
    5. Payment for Blood Clotting Factors
    6. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital 
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care 
Services
VIII. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2017
    1. PHP APC Changes and Effects on Geometric Mean Per Diem Costs
    a. Changes to PHP APCs
    b. Rationale for Changes in PHP APCs
    c. Alternatives Considered
    2. Development of the 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. Outlier Policy for CMHCs
    1. Estimated Outlier Threshold
    2. CMHC Outlier Cap
    a. Summary of Proposal
    b. CY 2017 Final Rule Update and Policy
    3. Implementation Strategy for the 8-Percent Cap on CMHC Outlier 
Payments
    4. Summary of Policies
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient Only (IPO) List
    C. Response to Solicitation of Public Comments on the 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. 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 
Off-Campus Provider-Based Departments of a Hospital
    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. 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. Public Comments Received in Response to Solicitation on Data 
Collection Under Section 1833(t)(21)(D) of the Act
    3. Payment for Items and Services Furnished in Off-Campus PBDs 
to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply 
(Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus 
PBDs)
    a. Background on Medicare Payment for Services Furnished in an 
Off-Campus PBD
    b. 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 Payment for 
Nonexcepted Items and Services for CY 2017
    (3) Public Comments Received in Response to Solicitation on 
Allowing Direct Billing and Payment for Nonexcepted Items and 
Services in CY 2018
    4. Beneficiary Cost-Sharing
    5. Summary of Proposals
    6. Final Changes to Regulations
    B. Interim Final Rule With Comment Period: Establishment of 
Payment Rates Under the Medicare Physician Fee Schedule for 
Nonexcepted Items and Services Furnished by an Off-Campus Provider-
Based Department of a Hospital
    1. Background
    2. Payment Mechanisms
    a. Relevance of the MPFS for Payment for Nonexcepted Items and 
Services
    b. Operational Considerations
    c. General MPFS Coding and Billing Mechanisms
    3. Establishment of Payment Rates
    a. Methodology
    b. MPFS Relativity Adjuster
    c. Geographic Adjustments
    d. Coding Consistency
    4. OPPS Payment Adjustments
    5. Partial Hospitalization Services
    6. Supervision Rules
    7. Beneficiary Cost-Sharing
    8. CY 2018, CY 2019, and Future Years
    9. Waiver of Proposed Rulemaking
    10. Collection of Information Requirements
    11. Response to Comments
    12. Regulatory Impact Statement
    C. Changes for Payment for Film X-Ray
    D. Changes to Certain Scope of Service Elements for Chronic Care 
Management (CCM) Services

[[Page 79567]]

    E. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
XI. CY 2017 OPPS Payment Status and Comment Indicators
    A. CY 2017 OPPS Payment Status Indicator Definitions
    B. CY 2017 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background
    1. Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System
    2. Policies Governing Changes to the Lists of Codes and Payment 
Rates for ASC Covered Surgical Procedures and Covered Ancillary 
Services
    B. Treatment of New 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. Treatment of New and Revised Level II HCPCS Codes and 
Category III CPT Codes Implemented in April 2016 and July 2016 for 
Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed 
Rule
    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 Responding to Public Comments in This CY 2017 OPPS/ASC 
Final Rule With Comment Period
    4. Process for New and Revised Level II HCPCS Codes That Will Be 
Effective October 1, 2016 and January 1, 2017 for Which We Are 
Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule with 
Comment Period
    C. Update to the List of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Covered Surgical Procedures Designated as Office-Based
    (1) Background
    (2) Changes for CY 2017 to Covered Surgical Procedures 
Designated as Office-Based
    b. ASC Covered Surgical Procedures Designated as Device-
Intensive--Finalized Policy for CY 2016 and Final Policy for CY 2017
    (1) Background
    (2) ASC Device-Intensive Designation by HCPCS Code
    (3) Changes to List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2017
    c. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    d. Additions to the List of ASC Covered Surgical Procedures
    2. Covered Ancillary Services
    D. ASC Payment for Covered Surgical Procedures and Covered 
Ancillary Services
    1. ASC Payment for Covered Surgical Procedures
    a. Background
    b. Update to ASC Covered Surgical Procedure Payment Rates for CY 
2017
    2. Payment for Covered Ancillary Services
    a. Background
    b. 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. ASC Payment and Comment Indicators
    1. Background
    2. ASC Payment and Comment Indicators
    G. Calculation of the ASC Conversion Factor and the ASC Payment 
Rates
    1. Background
    2. Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2017 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Display of 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
    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. New Hospital OQR Program Quality Measures for the CY 2020 
Payment Determinations and Subsequent Years
    a. OP-35: Admissions and Emergency Department (ED) Visits for 
Patients Receiving Outpatient Chemotherapy Measure
    (1) Background
    (2) Overview of Measure
    (3) Data Sources
    (4) Measure Calculation
    (5) Cohort
    (6) Risk Adjustment
    b. OP-36: Hospital Visits After Hospital Outpatient Surgery 
Measure (NQF #2687)
    (1) Background
    (2) Overview of Measure
    (3) Data Sources
    (4) Measure Calculation
    (5) Cohort
    (6) Risk Adjustment
    c. OP-37a-e: Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey 
Measures
    (1) Background
    (2) Overview of Measures
    (3) Data Sources
    (4) Measure Calculations
    (5) Cohort
    (6) Exemption
    (7) Risk Adjustment
    (8) Public Reporting
    d. Summary of Previously Adopted and Newly Adopted 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. Data Submission Requirements for the 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. 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. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2017 Payment 
Determination
    1. Background
    2. 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

[[Page 79568]]

    3. Regulatory History of the ASCQR Program
    B. ASCQR Program Quality Measures
    1. Considerations in the Selection of ASCQR Program Quality 
Measures
    2. Policies for Retention and Removal of Quality Measures From 
the ASCQR Program
    3. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    4. ASCQR Program Quality Measures for the CY 2020 Payment 
Determination and Subsequent Years
    a. ASC-13: Normothermia Outcome
    (1) Background
    (2) Overview of Measure
    (3) Data Sources
    (4) Measure Calculation
    (5) Cohort
    (6) Risk Adjustment
    b. ASC-14: Unplanned Anterior Vitrectomy
    (1) Background
    (2) Overview of Measure
    (3) Data Sources
    (4) Measure Calculation
    (5) Cohort
    (6) Risk Adjustment
    c. ASC-15a-e: Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey 
Measures
    (1) Background
    (2) Overview of Measures
    (3) Data Sources
    (4) Measure Calculations
    (5) Cohort
    (6) Exemption
    (7) Risk Adjustment
    (8) Public Reporting
    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 an 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. Data Submission Requirements for 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
    1. Statutory Background
    2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet 
the ASCQR Program Requirements for a Payment Determination Year
XV. Transplant Outcomes: Restoring the Tolerance Range for Patient 
and Graft Survival
    A. Background
    B. 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 and Finalized 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 Other 
Revisions to 42 CFR 488.61
    A. Technical Correction to Transplant Enforcement Regulatory 
References
    B. Other Revisions to 42 CFR 488.61
XVIII. Changes to the Medicare and Medicaid Electronic Health Record 
(EHR) Incentive Programs
    A. Background
    B. Summary of Final Policies Included in This Final Rule With 
Comment Period
    C. 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. Changes to the Objectives and Measures for Modified Stage 2 
(42 CFR 495.22) in 2017
    b. Changes to the Objectives and Measures for Stage 3 (42 CFR 
495.24) in 2017 and 2018
    (1) Objective: Patient Electronic Access to Health Information 
(42 CFR 495.24(c)(5))
    (2) Objective: Coordination of Care Through Patient Engagement 
(42 CFR 495.24(c)(6))
    (3) Objective: Health Information Exchange (HIE) (42 CFR 
495.24(c)(7))
    (4) Objective: Public Health and Clinical Data Registry 
Reporting (42 CFR 495.24(c)(8))
    D. 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. Policy To Require Modified Stage 2 for New Participants in 
2017
    F. Significant Hardship Exception for New Participants 
Transitioning to MIPS in 2017
    G. Modifications To Measure Calculations for Actions Outside the 
EHR Reporting Period
XIX. Additional Hospital Value-Based Purchasing (VBP) Program 
Policies
    A. Background
    B. 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. 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
XXI. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
    D. ICRs Relating to Changes in Transplant Enforcement 
Performance Thresholds
    E. ICRs for Changes Relating to Organ Procurement Organizations 
(OPOs)
    F. ICRs Relating to Changes to the Electronic Health Record 
(EHR) Incentive Program
    G. ICRs Relating to Additional Hospital VBP Program Policies
    H. ICRs for Payment for Off-Campus Provider-Based Departments 
Policy Changes for CY 2017
XXII. Waiver of Proposed Rulemaking and Response to Comments
    A. Waiver of Proposed Rulemaking
    B. 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 OPPS Changes in This Final Rule With 
Comment Period
    (1) Limitations of Our Analysis
    (2) Estimated Effects of OPPS Changes on Hospitals
    (3) Estimated Effects of OPPS Changes on CMHCs
    (4) Estimated Effects of OPPS Changes on Beneficiaries
    (5) Estimated Effects of OPPS Changes on Other Providers
    (6) Estimated Effects of OPPS Changes on the Medicare and 
Medicaid Programs
    (7) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2017 ASC Payment System Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2017 ASC Payment System Policies on 
ASCs

[[Page 79569]]

    (3) Estimated Effects of ASC Payment System Policies on 
Beneficiaries
    (4) Alternative ASC Payment Policies Considered
    c. Accounting Statements and Tables
    d. Effects of Requirements for the Hospital OQR Program
    e. Effects of Requirements for the ASCQR Program
    f. Effects of the Changes to Transplant Performance Thresholds
    g. Effects of the Changes Relating to Organ Procurement 
Organizations (OPOs)
    h. Effects of the Changes to the Medicare and Medicaid 
Electronic Health Record (EHR) Incentive Programs
    i. Effects of Requirements for the Hospital VBP Program
    j. Effects of Implementation of Section 603 of the Bipartisan 
Budget Act of 2015 Relating to Payment for Nonexcepted Items and 
Services Furnished by Nonexcepted 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 document, we are updating 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 final rule with comment 
period. In addition, this final rule with comment period updates and 
refines the requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program and the ASC Quality Reporting (ASCQR) Program.
    In addition, we are making 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 implementing section 603 of the Bipartisan Budget 
Act of 2015 relating to payment for nonexcepted items and services 
furnished by nonexcepted off-campus provider-based departments (PBDs) 
of a hospital. In conjunction with implementation of section 603 in 
this final rule with comment period, we are issuing in this Federal 
Register document an interim final rule with comment period that 
establishes payment rates under the MPFS for nonexcepted items and 
services furnished by nonexcepted off-campus PBDs of hospitals.
2. Summary of the Major Provisions
     OPPS Update: For CY 2017, we are increasing the 
payment rates under the OPPS by an Outpatient Department (OPD) fee 
schedule increase factor of 1.65 percent. This increase factor is based 
on the hospital inpatient market basket percentage increase of 2.7 
percent for inpatient services paid under the hospital inpatient 
prospective payment system (IPPS), minus the multifactor productivity 
(MFP) adjustment of 0.3 percentage point, and minus a 0.75 percentage 
point adjustment required by the Affordable Care Act. Based on this 
update, we estimate that total payments to OPPS providers (including 
beneficiary cost-sharing and estimated changes in enrollment, 
utilization, and case-mix), for CY 2017 will be approximately $773 
million, an increase of approximately $5.0 billion compared to 
estimated CY 2016 OPPS payments.
    We are continuing to implement the statutory 2.0 percentage point 
reduction in payments for hospitals failing to meet the hospital 
outpatient quality reporting requirements, by applying a reporting 
factor of 0.980 to the OPPS payments and copayments for all applicable 
services.
     Rural Adjustment: We are continuing the adjustment of 7.1 
percent to the OPPS payments to certain rural sole community hospitals 
(SCHs), including essential access community hospitals (EACHs). This 
adjustment applies 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 
continuing to provide additional payments to cancer hospitals so that 
the cancer hospital's payment-to-cost ratio (PCR) after the additional 
payments is equal to the weighted average PCR for the other OPPS 
hospitals using the most recently submitted or settled cost report 
data. Based on those data, a target PCR of 0.91 will be used to 
determine the CY 2017 cancer hospital payment adjustment to be paid at 
cost report settlement. That is, the payment adjustments will be the 
additional payments needed to result in a PCR equal to 0.91 for each 
cancer hospital.
     Comprehensive APCs: For CY 2017, we are not making 
extensive changes to the already established methodology used for C-
APCs. However, we are creating 25 new C-APCs that meet the previously 
established criteria, which, when combined with the existing 37 C-APCs, 
will bring the total number to 62 C-APCs as of January 1, 2017.
     Chronic Care Management (CCM): For CY 2017, we are making 
some minor changes to certain CCM scope-of-service elements. We refer 
readers to the CY 2017 MPFS final rule with comment period for a 
detailed discussion of these changes to the scope of service elements 
for CCM. We are applying these changes to CCM furnished to hospital 
outpatients.
     Device-Intensive Procedures: For CY 2017, we are 
finalizing our policy of determining 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 to 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 revising the device 
intensive calculation methodology and calculating 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 
discontinuing the use of the ``L1'' modifier to identify unrelated 
laboratory tests on claims. In addition, we are expanding the 
laboratory packaging exclusion that currently

[[Page 79570]]

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 aligning 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 requiring that, effective for services 
furnished on or after January 1, 2017, hospitals are required to use a 
modifier on claims for X-rays that are taken using film. The use of 
this modifier will 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 Nonexcepted Items and Services Furnished by 
Nonexcepted Off-Campus Departments of a Provider: We are implementing 
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 PBDs shall not be considered covered OPD services for 
purposes of OPPS payment and those nonexcepted items and services will 
instead be paid ``under the applicable payment system'' beginning 
January 1, 2017. We are finalizing, with modification, the policies we 
proposed relating to which off-campus PBDs and which items and services 
furnished by such off-campus PBDs may be excepted from application of 
payment changes under this provision.
    In addition, we are establishing that the Medicare Physician Fee 
Schedule (MPFS) will be the ``applicable payment system'' for the 
majority of the nonexcepted items and services furnished by nonexcepted 
off-campus PBDs. We are establishing new site-of-service payment rates 
under the MPFS to pay nonexcepted off-campus PBDs for the furnishing of 
nonexcepted items and services. These nonexcepted items and services 
must be reported on the institutional claim form and identified with a 
newly established claims processing modifier.
     Ambulatory Surgical Center Payment Update: For CY 2017, we 
are increasing payment rates under the ASC payment system by 1.9 
percent for ASCs that meet the quality reporting requirements under the 
ASCQR Program. This increase is based on a projected CPI-U update of 
2.2 percent minus a multifactor productivity adjustment required by the 
Affordable Care Act of 0.3 percentage point. Based on this update, we 
estimate that total payments to ASCs (including beneficiary cost-
sharing and estimated changes in enrollment, utilization, and case-
mix), for CY 2017 will be approximately $4,478 million, an increase of 
approximately $177 million compared to estimated CY 2016 Medicare 
payments.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are establishing measures and policies 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 finalizing, as 
proposed, that we will 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 finalizing, as 
proposed, that hospitals will generally have approximately 30 days to 
preview their data. Lastly, we are finalizing, as proposed, that we 
also will 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 finalizing, as proposed, an 
extension of the time for filing extraordinary circumstances extensions 
or exemptions (ECE) requests 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 finalizing, as proposed, 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 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 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 finalizing our 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 finalizing, as 
proposed, that we will 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 finalizing, as 
proposed, that ASCs will generally have approximately 30 days to 
preview their data. Lastly, we are finalizing, as proposed, that we 
will 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 finalizing our proposal to 
change the submission deadline to May 15 for all data submitted via a 
CMS Web-based tool. We also are finalizing, as proposed, the extension 
of the submission deadline for filing extraordinary circumstances 
extensions or exemptions (ECE) requests from 45 days to 90 days. For 
the CY 2020 payment determination and subsequent years, we are 
finalizing, as proposed, 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

[[Page 79571]]

Systems (OAS CAHPS) Survey-based measures. The two 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 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 final rule with comment period, we are removing the HCAHPS Pain 
Management dimension from the Hospital VBP Program, beginning with the 
FY 2018 program year.
     Medicare and Medicaid Electronic Health Record (EHR) 
Incentive Programs: In this final rule, we are making changes to the 
objectives and measures of meaningful use for Modified Stage 2 and 
Stage 3 starting with the EHR reporting periods in CY 2017. Under both 
Modified Stage 2 in 2017 and Stage 3 in 2017 and 2018, for eligible 
hospitals and CAHs attesting to CMS, we are eliminating the Clinical 
Decision Support (CDS) and Computerized Provider Order Entry (CPOE) 
objectives and measures, and lowering the reporting thresholds for a 
subset of the remaining objectives and measures, generally to the 
Modified Stage 2 thresholds. The reduction of 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 revised requirements focus on reducing 
hospital administrative burden, allowing eligible hospitals and CAHs 
attesting to CMS 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. Based on the public comments we 
received, we are finalizing a policy that these changes to the 
objectives and measures apply for all eligible hospitals and CAHs that 
attest to CMS, including eligible hospitals and CAHs that are eligible 
to participate in both the Medicare and Medicaid EHR Incentive 
Programs.
    In addition, we are changing the EHR reporting period in CY 2016 
and 2017 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 making 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 
changes are responsive to additional stakeholder feedback received 
through both correspondence and in-person meetings and will 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 restoring the effective tolerance 
range for clinical outcomes that was allowed in our original 2007 rule. 
These outcome 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. We expect that our policies 
will increase access to organ transplants while continuing to protect 
Medicare beneficiaries.
     Organ Procurement Organizations (OPOs) Changes: In this 
final rule with comment period, we are: Changing the current ``eligible 
death'' definition to be consistent with the OPTN definition; modifying 
CMS current outcome measures to be consistent with yield calculations 
currently utilized by the SRTR; and modifying 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 final rule with comment 
period, we set forth a detailed analysis of the regulatory and 
Federalism impacts that these changes will have on affected entities 
and beneficiaries. Key estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All OPPS Changes
    Table 52 in section XXIII. of this final rule with comment period 
displays the distributional impact of all the OPPS changes on various 
groups of hospitals and CMHCs for CY 2017 compared to all estimated 
OPPS payments in CY 2016. We estimate that the policies in this final 
rule with comment period will result in a 1.7 percent overall increase 
in OPPS payments to providers. We estimate that total OPPS payments for 
CY 2017, including beneficiary cost-sharing, to the approximate 3,906 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will increase by 
approximately $773 million compared to CY 2016 payments, excluding our 
estimated changes in enrollment, utilization, and case-mix.
    We estimated the isolated impact of our OPPS policies on CMHCs 
because CMHCs are only paid for partial hospitalization services under 
the OPPS. Continuing the provider-specific structure that we adopted 
beginning in CY 2011 and basing payment fully on the type of provider 
furnishing the service, we estimate a 15.0 percent decrease in CY 2017 
payments to CMHCs relative to their CY 2016 payments.
(2) Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the FY 
2017 IPPS final 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 Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    There are no significant impacts of our CY 2017 payment policies 
for hospitals that are eligible for the rural adjustment or for the 
cancer hospital payment adjustment. We are not making any change in 
policies for determining the rural and cancer hospital payment 
adjustments, and the adjustment amounts do not significantly impact the 
budget neutrality adjustments for these policies.

[[Page 79572]]

(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the OPD 
fee schedule increase factor of 1.65 percent to the conversion factor 
for CY 2017 will 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 will experience increases of approximately 1.7 percent for 
urban hospitals and 2.2 percent for rural hospitals. Classifying 
hospitals by teaching status or type of ownership suggests that these 
hospitals will receive similar increases.
b. Impacts of the ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2017 payment 
rates compared to estimated CY 2016 payment rates ranges between 12 
percent for cardiovascular system procedures and -15 percent for hemic 
and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
    We do not expect our 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 CY 2017 policies to significantly affect the 
number of ASCs that do not receive a full annual payment update.
e. Impacts for Implementation of Section 603 of the Bipartisan Budget 
Act of 2015
    We estimate that implementation of section 603 of Public Law 114-74 
in this interim final rule with comment period will reduce Medicare 
Part B expenditures by approximately $50 million in CY 2017, relative 
to a baseline where section 603 was not implemented in CY 2017. This 
estimate is a significantly lower impact than the $330 million 
reduction estimated for the CY 2017 OPPS proposed rule. This lower 
impact estimate is primarily a result of changes in technical 
assumptions regarding the impact of this provision, not a result of the 
change in payment policy.

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 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 final rule with comment 
period. Section 1833(t)(1)(B) of the Act provides for payment under the 
OPPS for hospital outpatient services designated by the Secretary 
(which includes partial hospitalization services furnished by CMHCs), 
and certain inpatient hospital services that are paid under 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

[[Page 79573]]

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. In 
addition, section 1833(t)(1)(B)(v) of the Act authorizes that 
applicable items and services furnished by nonexcepted off-campus 
provider-based departments of a hospital on or after January 1, 2017, 
will not be considered covered outpatient department services as 
defined under section 1833(t)(1)(B) of the Act for purposes of payment 
under the OPPS. We set forth the services that are excluded from 
payment under the OPPS in regulations at 42 CFR 419.22, which was 
amended by adding paragraph (v) to implement exclusion of items and 
services furnished by nonexcepted off-campus provider-based departments 
from the definition of covered outpatient department services.
    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: https://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, the Secretary established the Advisory Panel 
on Ambulatory Payment Classification Groups (APC Panel) to fulfill this 
requirement. In CY 2011, based on section 222 of the PHS Act which 
gives discretionary authority to the Secretary to convene advisory 
councils and committees, the Secretary expanded the panel's scope to 
include the supervision of hospital outpatient therapeutic services in 
addition to the APC groups and weights. To reflect this new role of the 
panel, the Secretary changed the panel's name to the Advisory Panel on 
Hospital Outpatient Payment (the HOP Panel, or the Panel). The Panel is 
not restricted to using data compiled by CMS, and in conducting its 
review, it may use data collected or developed by organizations outside 
the Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the HOP Panel, and at that time named the APC Panel. This 
expert panel is composed of appropriate representatives of providers 
(currently employed full-time, not as consultants, in their respective 
areas of expertise), reviews clinical data, and advises CMS about the 
clinical integrity of the APC groups and their payment weights. Since 
CY 2012, the Panel also is charged with advising the Secretary on the 
appropriate level of supervision for individual hospital outpatient 
therapeutic services. The Panel is technical in nature, and it is 
governed by the provisions of the Federal Advisory Committee Act 
(FACA). The current charter specifies, among other requirements, that: 
The Panel continues to be technical in nature; is governed by the 
provisions of the FACA; may convene up to three meetings per year; has 
a Designated Federal Official (DFO); and is chaired by a Federal 
Official designated by the Secretary. The Panel's charter was amended 
on November 15, 2011, renaming the Panel and expanding the Panel's 
authority to include supervision of hospital outpatient therapeutic 
services and to add Critical Access Hospital (CAH) representation to 
its membership. The current charter was renewed on November 6, 2014 (80 
FR 23009) and the number of panel members was revised from up to 19 to 
up to 15 members.
    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: https://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 August 22, 2016. Prior to each meeting,

[[Page 79574]]

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 August 22, 2016 meeting that the subcommittees 
continue. We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
March 14, 2016 and August 22, 2016 Panel meetings are included in the 
sections of this final rule with comment period that are specific to 
each recommendation. For discussions of earlier Panel meetings and 
recommendations, we refer readers to previously published OPPS/ASC 
proposed and final rules, the CMS Web site mentioned earlier in this 
section, and the FACA database at: http://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 are set forth in this CY 2017 final rule with 
comment period under the appropriate subject matter headings.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45615), for CY 2017, 
we proposed 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 proposed to recalibrate the relative 
payment weights for each APC based on claims and cost report data for 
hospital outpatient department (HOPD) services, using the most recent 
available data to construct a database for calculating APC group 
weights.
    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.
    Addendum N to the proposed rule included 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 retained 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'' single procedure claims for ratesetting purposes. 
``Overlap bypass codes'' that are members of the proposed multiple 
imaging composite APCs were identified by asterisks (*) in the third 
column of Addendum N to the proposed rule. HCPCS codes that we proposed 
to add for CY 2017 were identified by asterisks (*) in the fourth 
column of Addendum N.
    We did not receive any public comments on our general proposal to 
recalibrate the relative payment weights for each APC based on claims 
and cost report data for HOPD services or on our proposed bypass code 
process. Therefore, we are adopting as final the proposed ``pseudo'' 
single claims process and the final CY 2017 bypass list of 194 HCPCS 
codes, as displayed in Addendum N to this final rule with comment 
period (which is available via the Internet on the CMS Web site). For 
this final rule with comment period, for the purpose of recalibrating 
the final APC relative payment weights for CY 2017, we used 
approximately 86 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 final rule with comment period on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Table 1 below contains the list of codes that we are removing from 
the CY 2017 bypass list.

        Table 1--HCPCS Codes 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. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45616), 
we

[[Page 79575]]

proposed to continue to use the hospital-specific overall ancillary and 
departmental cost-to-charge ratios (CCRs) to convert charges to 
estimated costs through application of a revenue code-to-cost center 
crosswalk. To calculate the APC costs on which the 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 the proposed rule (81 FR 45617) and of this 
final rule with comment period.
    Comment: One commenter supported the CY 2014 final rule 
transitional policy of excluding providers that use a ``square foot'' 
methodology to calculate CCRs used to estimate costs associated with 
the CT and MRI APCs for CYs 2014-2017, as discussed in the CY 2017 OPPS 
proposed rule claims accounting narrative on pages 33 through 37, that 
was made available under supporting documentation for the 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. 
However, the commenter opposed the provision of the CY 2014 final rule 
policy that was discussed in the CY 2017 OPPS proposed rule claims 
accounting narrative that sunsets this transitional policy after CY 
2017.
    Response: We thank the commenter for its support of our proposed CY 
2017 policy. In response to the commenter's concern about the sunset of 
the transitional policy after CY 2017, while CY 2018 payment policies 
will be addressed in the CY 2018 OPPS/ASC proposed rule, we note that 
the sunset of this transitional policy for CY 2018 was discussed in the 
CY 2014 OPPS/ASC final rule with comment period. We believe that 4 
years is sufficient time for hospitals that have not done so to 
transition to a more accurate cost allocation method and for the 
related data to be available for ratesetting purposes. After 
consideration of the public comment we received on the general CCR 
process, we are finalizing using the hospital-specific overall 
ancillary and departmental CCRs to convert charges to estimated costs 
through application of a revenue code-to-cost center crosswalk and the 
established methodology for CY 2017.
2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    In this section of this final rule with comment period, we discuss 
the use of claims to calculate the OPPS payment rates for CY 2017. The 
Hospital OPPS page on the CMS Web site on which this final rule with 
comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an 
accounting of claims used in the development of the final payment 
rates. That accounting provides additional detail regarding the number 
of claims derived at each stage of the process. In addition, below in 
this section we discuss the file of claims that comprises the data set 
that is available for purchase under a CMS data use agreement. The CMS 
Web site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing 
the ``OPPS Limited Data Set,'' which now includes the additional 
variables previously available only in the OPPS Identifiable Data Set, 
including ICD-9-CM diagnosis codes and revenue code payment amounts. 
This file is derived from the CY 2015 claims that were used to 
calculate the 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, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45616), we proposed to continue to use geometric mean costs 
to calculate the relative weights on which the CY 2017 OPPS payment 
rates are based.
    We did not receive any public comments on this proposed process and 
are finalizing our proposed methodology for calculating geometric mean 
costs for purposes of creating relative payment weights and subsequent 
APC payment rates for the CY 2017 OPPS. We used the methodology 
described in sections II.A.2.a. through II.A.2.d. of this final rule 
with comment period to calculate the costs we used to establish the 
relative payment weights used in calculating the final OPPS payment 
rates for CY 2017 shown in Addenda A and B to this final rule with 
comment period (which are available via the Internet on the CMS Web 
site). We refer readers to section II.A.4. of this final rule with 
comment period for a discussion of the conversion of APC costs to 
scaled payment weights.
    For details of the claims process used in this final rule with 
comment period, we refer readers to the claims accounting narrative 
under supporting documentation for this CY 2017 OPPS/ASC final rule 
with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

[[Page 79576]]

a. Recommendations of the Advisory Panel on Hospital Outpatient Payment 
(the Panel) Regarding Data Development
    As we discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45616 
through 45617), at the March 14, 2016 meeting of the Panel, we 
presented 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 Panel meeting.
    CMS Response: We accepted this recommendation.
    Recommendation: The Panel recommends that the work of the Data 
Subcommittee continue.
    CMS Response: We accepted this recommendation.
    Recommendation: The Panel recommends that Michael Schroyer continue 
serving as subcommittee Chair for the August 2016 HOP Panel.
    CMS Response: We accepted this recommendation.
    At the August 22, 2016 meeting of the Panel, we provided the Data 
Committee a list of APCs for CY 2017 for which geometric mean costs in 
the CY 2015 claims data varied significantly from the CY 2014 claims 
data used for the CY 2016 OPPS/ASC final rule with comment period. At 
the August 22, 2016 Panel meeting, the Panel made four 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 Panel meeting.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that CMS provide the Data 
Subcommittee a presentation on the claims accounting process prior to 
each HOP Panel meeting.
    CMS Response: We are accepting this recommendation.
    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 Chair of the Data Subcommittee.
    CMS Response: We are accepting this recommendation.
b. 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45617), 
we proposed to continue to establish payment rates for blood and blood 
products using our blood-specific CCR methodology, which utilizes 
actual or simulated CCRs from the most recently available hospital cost 
reports to convert hospital charges for blood and blood products to 
costs. This methodology has been our standard ratesetting methodology 
for blood and blood products since CY 2005. It was developed in 
response to data analysis indicating that there was a significant 
difference in CCRs for those hospitals with and without blood-specific 
cost centers, and past public comments indicating that the former OPPS 
policy of defaulting to the overall hospital CCR for hospitals not 
reporting a blood-specific cost center often resulted in an 
underestimation of the true hospital costs for blood and blood 
products. Specifically, in order to address the differences in CCRs and 
to better reflect hospitals' costs, we proposed to continue to simulate 
blood CCRs for each hospital that does not report a blood cost center 
by calculating the ratio of the blood-specific CCRs to hospitals' 
overall CCRs for those hospitals that do report costs and charges for 
blood cost centers. We also proposed to apply this mean ratio to the 
overall CCRs of hospitals not reporting costs and charges for blood 
cost centers on their cost reports in order to simulate blood-specific 
CCRs for those hospitals. We proposed to calculate the costs upon which 
the 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 
proposed 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 payment 
rates of the C-APCs), we proposed to not make separate payments for 
blood and blood products when they appear on the same claims as 
services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66796)).
    We invited public comments on these proposals. We also referred 
readers to Addendum B to the proposed rule (which was available via the 
Internet on the CMS Web site) for the proposed CY 2017 payment rates 
for blood and blood products (which were 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

[[Page 79577]]

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).
    Comment: Commenters supported the proposal to continue to 
separately pay for blood and blood products using a blood-specific CCR 
methodology.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our CY 2017 proposal to continue to establish payment rates 
for blood and blood products using our blood-specific CCR methodology. 
The final CY 2017 payment rates for blood and blood products (which are 
identified with status indicator ``R'') are reflective of the use of 
the hospital-specific simulated blood-specific CCR methodology and can 
be found in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).
(b) 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. In 
the CY 2017 OPPS/ASC proposed rule (81 FR 45617 through 45618), we 
requested 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,'' and 
``leukocyte reduced + irradiated + CMV-negative,'' among others. We 
asked 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 invited 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 products can be 
found in Addendum B to the proposed rule and this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    Comment: Several commenters responded to the solicitation for 
public comments and supported a thorough examination of the current set 
of HCPCS P-codes for blood products as a necessary undertaking because 
the HCPCS P-codes were created several years ago. Several commenters 
recommended that CMS convene a stakeholder group that includes 
representatives of hospitals, blood banks, the American Red Cross, and 
others to discuss a framework to systematically review and revise the 
HCPCS P-codes for blood products. Commenters also encouraged CMS to 
retain individual HCPCS P-codes for unique blood products with 
significant therapeutic distinctions, as opposed to creating modifiers 
to be applied to the existing HCPCS P-codes. Commenters also suggested 
that CMS establish a ``not otherwise classified (NOC)'' code for blood 
products, which would allow hospitals to begin immediately billing for 
a new blood product that is not described by a specific HCPCS P-code. 
One commenter supported the use of broader descriptions for HCPCS P-
codes when more granular language is no longer meaningful for 
differentiating between different types of blood and blood products, 
and where the costs and volume of the HCPCS P-codes are similar. Other 
commenters suggested specific modifications to the order, 
classification, and code descriptors of the blood and blood product 
HCPCS P-codes.
    Response: We appreciate the commenters' detailed responses. These 
comments will be taken into consideration in the development of 
proposals to update the HCPCS P-codes that describe blood products.
(c) Rapid Bacterial Testing for Platelets
    In March 2016, the Food and Drug Administration (FDA) issued draft 
guidance for the health care industry entitled, ``Bacterial Risk 
Control Strategies for Blood Collection Establishments and Transfusion 
Services to Enhance the Safety and Availability of Platelets for 
Transfusion'' (available at: http://www.fda.gov/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/default.htm). This 
guidance encourages the use of rapid bacterial testing devices or 
pathogen-reduction technology for platelets to adequately control the 
risk of bacterial contamination of platelets.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70322), CMS established three HCPCS P-codes for pathogen-reduced blood 
products, which became effective January 1, 2016. These codes included: 
HCPCS code P9070 (Plasma, pooled multiple donor, pathogen reduced, 
frozen, each unit); HCPCS code P9071 (Plasma (single donor), pathogen 
reduced, frozen, each unit); and HCPCS code P9072 (Platelets, pheresis, 
pathogen reduced, each unit).
    The HCPCS Workgroup has decided to revise the HCPCS code 
established in CY 2016 for pathogen-reduced platelets (HCPCS code 
P9072) to include the use of pathogen-reduction technology or rapid 
bacterial testing. Specifically, the descriptor for this code will be 
revised, effective January 1, 2017, to read as follows: HCPCS code 
P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, 
each unit). The payment rate for HCPCS code P9072 is based on a 
crosswalk to HCPCS code P9037 (Platelets, pheresis, leukocyte reduced, 
irradiated, each unit). We refer readers to the CY 2016 OPPS/ASC final 
rule with comment period for a further discussion of crosswalks for 
pathogen-reduced blood products (80 FR 70323). When claims data become 
available for HCPCS code P9072, we will establish a payment rate for 
this code using that data and our blood-specific CCR methodology. The 
revised HCPCS code descriptor and final payment rate for this service 
can be found in Addendum B of this final rule with comment period 
(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

[[Page 79578]]

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 the CY 2017 OPPS/ASC proposed rule (81 FR 45618), for CY 2017, 
we proposed to use the costs derived from CY 2015 claims data to set 
the CY 2017 payment rates for brachytherapy sources because CY 2015 is 
the same year of data we proposed to use to set the proposed payment 
rates for most other items and services that would be paid under the CY 
2017 OPPS. We proposed to base the payment rates for brachytherapy 
sources on the geometric mean unit costs for each source, consistent 
with the methodology that we proposed for other items and services paid 
under the OPPS, as discussed in section II.A.2. of the proposed rule. 
We also proposed to continue the other payment policies for 
brachytherapy sources that we finalized and first implemented in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60537). We proposed 
to pay for the stranded and 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 proposed to continue the policy we first 
implemented in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60537) regarding payment for new brachytherapy sources for which we 
have no claims data, based on the same reasons we discussed in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66786; which was 
delayed until January 1, 2010 by section 142 of Pub. L. 110-275). 
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 were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site) and were identified with status indicator 
``U''. We note that, for CY 2017, we proposed 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 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 proposed to assign new proposed status indicator 
``E2'' to HCPCS code C2644.
    We invited public comments on this proposed policy. We also 
requested recommendations for new HCPCS codes to describe new 
brachytherapy sources consisting of a radioactive isotope, including a 
detailed rationale to support recommended new sources.
    Comment: One commenter requested that CMS establish a new HCPCS 
code to specifically describe the use of CivaString[supreg], a linear, 
low dose rate polymer encapsulated palladium-103 brachytherapy source. 
The commenter stated that CivaString[supreg] became commercially 
available in CY 2013, and providers began reporting charges for the 
brachytherapy source using HCPCS code C2636 (Brachytherapy linear, non-
stranded, palladium-103). However, the commenter believed that 
providers experienced confusion regarding the appropriate reporting of 
HCPCS code C2636. The commenter stated that six hospitals reported 
charges using HCPCS code C2636 over the past 6 years, without 
purchasing a linear, non-stranded palladium-103 brachytherapy source. 
Moreover, the commenter believed that providers may have 
inappropriately reported charges using HCPCS code C2636, including 
instances where providers reported charges for the use of HCPCS code 
2636 although acquisition of CivaString[supreg] had not been obtained 
when it became commercially available in CY 2013. In addition, the 
commenter stated that the National Correct Coding Initiative (NCCI) 
established a medically unlikely edit (MUE) for HCPCS code C2636 in the 
outpatient hospital setting for 150 mm, effective April 1, 2010. 
Subsequently, in November 2015, the manufacturer of CivaString[supreg] 
requested that the MUE be increased to 900 mm based on the recommended 
clinical usage of CivaString[supreg]. In response to that request, the 
NCCI increased the MUE to 600 mm, effective April 1, 2016. However, the 
commenter further stated that claims for the use of CivaString[supreg] 
with the appropriate number of units continued to be denied based on 
the MUE. Because of these concerns, the commenter requested that CMS 
establish a new HCPCS code to specifically describe the use of 
CivaString[supreg], as well as an increase in the payment rate proposed 
to adequately pay for the costs of this brachytherapy source.
    Response: Section 1833(t)(2)(h) of the Act requires that the 
Secretary create additional groups of covered outpatient department 
services that classify brachytherapy sources separately from other 
services in a manner reflecting the number, isotope, and radioactive 
intensity of such sources. As such, we believe that HCPCS code C2636 
adequately describes the clinical properties of CivaString[supreg]. 
Therefore, it is not necessary and would be duplicative to create a 
separate group for another linear, non-stranded palladium-103 source.
    HCPCS code C2636 has been active since January 1, 2005. In response 
to the commenter's concerns regarding hospitals that may have 
inappropriately reported charges using HCPCS code C2636 although 
acquisition of

[[Page 79579]]

CivaString[supreg] had not been obtained, as a matter of general 
policy, we rely on hospitals to report all HCPCS codes on claims 
accurately in accordance with their code descriptors and CPT and CMS 
instructions, as applicable, and to report charges on claims and 
charges and costs on their Medicare hospital cost reports 
appropriately. We stated in the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 71838) that the quality and accuracy of reported 
units and charges significantly influence the geometric mean costs that 
are the basis for our payment rates, especially for low-volume items 
and services. Beyond our standard OPPS trimming methodology that we 
apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting.
    With regard to the MUE value, we note that the MUE for HCPCS code 
C2636 is a date-of-service edit. This means if billed units of service 
(UOS) for HCPCS code C2636 are denied based on the MUE value, the 
provider may appeal the denial. Medicare Administrative Contractors 
(MACs) may pay UOS in excess of the MUE value if medical record 
documentation supports medically reasonable and necessary UOS in excess 
of the MUE value. Therefore, we are not establishing a new HCPCS code 
for the use of CivaString[supreg] because we believe that HCPCS code 
C2636 adequately describes the clinical properties of 
CivaString[supreg]. We refer readers to the facility outpatient 
services MUE table, which is available on the CMS Web site at: https://www.cms.gov/Medicare/Coding/NationalCorrectCodInitEd/MUE.html.
    Comment: One commenter acknowledged the proposed increased CY 2017 
payment rate for brachytherapy sources described by HCPCS code C2616 
(Brachytx, non-str, yttrium-90) in comparison to the CY 2016 payment 
rate, but continued to believe that the proposed CY 2017 payment rate 
would not adequately pay a hospital's true cost for purchasing the 
device. The commenter supported the proposed CY 2017 increase in the 
payment rate for HCPCS code C2616, but remained concerned that the 
limited increase in payment would not adequately pay for all costs 
incurred by the hospital such as storage, handling, and disposal costs. 
In addition, based on the commenter's analysis of Medicare Provider 
Analysis and Review (MedPAR) data, which contain data from claims for 
services provided to beneficiaries admitted to Medicare certified 
inpatient hospitals and skilled nursing facilities, the commenter noted 
that a few hospitals inconsistently or incorrectly reported revenue 
code assignments with incorrect facility charge data. As a result of 
the erroneous and/or inaccurate coding, the commenter believed that the 
claims data used for CY 2017 ratesetting are adversely affected, which 
resulted in the inadequate proposed payment rate for HCPCS code C2616. 
Based on these concerns, the commenter requested that CMS eliminate 
outlier data that is out of range of other accurately reporting 
facilities. Specifically, the commenter requested that CMS eliminate 
claims from facilities that report a purchase price of $1.00 or other 
costs dramatically less than the $16,000 selling price.
    Response: As previously discussed, under the OPPS, we use cost-
based weights to determine relative costliness for outpatient items and 
services. The relativity of weights is used to set APC payment rates 
for brachytherapy sources, not the invoice cost or list price. 
Therefore, under a prospective payment system based on relative 
weights, items and services may not be paid at 100 percent of the 
reported costs.
    With regard to the commenter's analysis of MedPAR data on claims 
that reported HCPCS code C2616, we note that MedPAR data consolidate 
inpatient hospital or skilled nursing facility (SNF) claims data from 
the National Claims History (NCH) files into stay level records. 
Because MedPAR data do not include OPPS claims, it is incorrect for the 
commenter to conclude that the CY 2017 OPPS proposed payment rate is 
inadequate as a result of erroneous and/or inaccurate coding on 
inpatient hospital or SNF claims. We have no reason to believe that 
prospective payment rates based on outpatient claims data from those 
providers furnishing a brachytherapy source described by HCPCS code 
C2616 do not appropriately reflect the cost of that source to 
hospitals. Therefore, we are not excluding or eliminating any claims 
with paid lines for HCPCS code C2616 in ratesetting for CY 2017.
    Comment: A few commenters expressed concern regarding the 
outpatient hospital claims data that CMS used to set the prospective 
payment rates for brachytherapy sources. The commenters stated that 
high dose rate (HDR) brachytherapy devices are renewable because the 
devices have a 90-day use span and are used in the treatment of 
multiple patients during this 90-day span. According to the commenters, 
the true cost of treatment involving brachytherapy sources depends on 
the number of patients treated by a hospital within a 90-day period, as 
well as the number of treatments required and the intensity of the 
treatments. For this reason, the commenters believed that it is 
difficult to establish fair and adequate prospective payment rates for 
brachytherapy sources. The commenters also noted that the brachytherapy 
source payment data continue to show huge variation in per unit cost 
across hospitals.
    In addition, the commenters believed that CMS' claims data contain 
rank order anomalies, causing the usual cost relationship between the 
high activity palladium-103 source (HCPCS code C2635, Brachytherapy 
source, non-stranded, high activity, palladium-103, greater than 2.2 
mci (NIST) per source) and the low activity palladium-103 sources 
(HCPCS code C2640, Brachytherapy source, stranded, palladium-103, per 
source and HCPCS code C2641, Brachytherapy source, non-stranded, 
palladium-103, per source) to be reversed. The commenters noted that 
the proposed geometric mean costs of the brachytherapy source HCPCS 
codes are approximately $26, $77, and $70, respectively. The commenters 
stated that, based on their experience, stranded palladium-103 sources 
(HCPCS code C2640) always cost more than non-stranded palladium-103 
sources (HCPCS code C2641), which was not reflected in the proposed 
rule claims data that CMS used.
    In addition, the commenters expressed concern that payment for 
several brachytherapy sources are unstable and fluctuate significantly 
since CMS implemented the prospective payment methodology based on 
source-specific median cost in CY 2010 and geometric mean unit cost in 
CY 2013.
    As a result of these concerns, the commenters requested that CMS 
adopt policies that more accurately account for the costs associated 
with HDR brachytherapy treatment delivery and to limit the overall 
fluctuation in payment for brachytherapy devices.
    Response: We have received similar public comments regarding 
payment rates for HDR brachytherapy sources, payment rates for low and 
high activity palladium sources, and the year-to-year variation in 
payment rates for most brachytherapy sources in response to prior 
proposed rules and have addressed these public comments in prior final 
rules with comment period. We refer readers to 72 FR 66782; 74 FR 
60534; 75 FR 71979; 76 FR 74161; 77 FR 68241; 78 FR 74861; 79 FR 66796; 
and 80 FR 70324 for our past responses to these similar comments. In 
these rules, we explain the characteristics of a

[[Page 79580]]

prospective payment system and how low-volume services are more 
susceptible to payment volatility compared to high-volume services. We 
also describe our expectation for how hospitals should treat HDR 
brachytherapy sources that can be used on multiple patients during its 
use span. In addition, we address concerns on varied cost distributions 
and their impact on the observed relationship in geometric mean cost 
between the different types of sources.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to set the payment rates for 
brachytherapy sources using our established prospective payment 
methodology, which is based on geometric mean costs. In addition, we 
are finalizing our proposal to assign new status indicator ``E2'' to 
HCPCS code C2644 because there are no CY 2015 claims reporting use of 
this code and, therefore, we are unable to determine a payment rate for 
CY 2017.
    The final CY 2017 payment rates for brachytherapy sources are 
included in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site) and are identified with 
status indicator ``U''.
    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. 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 
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 final rule with comment 
period (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).

[[Page 79581]]

    In addition, payment for outpatient department services that are 
similar to therapy services and delivered either by therapists or non-
therapists 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 non-therapy 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 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

[[Page 79582]]

qualify for a complexity adjustment for CY 2017, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45620), we proposed 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 listed 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 the proposed rule (which is available via the Internet on 
the CMS Web site). For CY 2017, we proposed 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 final rule 
with comment period. Therefore, because the 2 times rule would not 
typically apply to complexity-adjusted code combinations, we proposed 
to discontinue this requirement.
    We provided in Addendum J to the proposed rule a breakdown of cost 
statistics for each code combination that would qualify for a 
complexity adjustment (including primary code and add-on code 
combinations). Addendum J to the proposed rule also contained summary 
cost statistics for each of the code combinations 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 the 
proposed rule allowed stakeholders the opportunity to better assess the 
impact associated with the proposed reassignment of each of the code 
combinations eligible for a complexity adjustment.
    Comment: Commenters generally supported the proposal to no longer 
require that a code combination (that qualifies for a complexity 
adjustment by satisfying the frequency and cost criteria thresholds) be 
evaluated for a 2 times rule violation in the higher level or receiving 
APC. One commenter requested that CMS allow the complexity-adjusted 
pair to move up an additional level in the clinical family if the code 
combination creates a 2 times rule violation in the receiving APC. 
Several other commenters requested that CMS review and modify the 
established C-APC complexity adjustment criteria to allow for 
complexity adjustments for specific ``J1'' service code combinations or 
code combinations of ``J1'' services and certain add-on codes that do 
not qualify under the current criteria.
    Response: We appreciate the commenters' support. We continue to 
believe that the complexity adjustment criteria, which require a 
frequency of 25 or more claims reporting a code combination and a 
violation of the 2 times rule in the originating C-APC in order to 
receive payment in the next higher cost C-APC within the clinical 
family, is adequate to determine if a combination of procedures 
represents a complex, costly subset of the primary service. If a code 
combination meets these criteria, the combination receives payment at 
the next higher cost C-APC. Code combinations that do not meet these 
criteria receive the C-APC payment rate associated with the primary 
``J1'' service. A minimum of 25 claims is already very low for a 
national payment system. Lowering the minimum of 25 claims further 
could lead to unnecessary complexity adjustments for service 
combinations that are rarely performed. The complexity adjustment cost 
threshold compares the code combinations to the lowest cost significant 
procedure assigned to the APC. If the cost of the code combination does 
not exceed twice the cost of the lowest cost significant procedure 
within the APC, no complexity adjustment is made. Lowering this 
threshold also could remove too many claims from the accounting for the 
primary J1 service, which would undermine the C-APC policy. We are 
finalizing the policy proposal to discontinue the requirement that a 
code combination (that qualifies for a complexity adjustment by 
satisfying the frequency and cost criteria thresholds) also not create 
a 2 times rule violation in the higher level or receiving APC as 
proposed. We are not otherwise changing the complexity adjustment 
criteria.
    Comment: Other commenters requested that CMS ensure that claims for 
bilateral C-APC procedures that are correctly reported with modifier 
``50'' (a modifier used to report bilateral procedures that are 
performed at the same operative session as a single line item) are 
accounted for in the evaluation of complexity adjustments, as well as 
the C-APC claims accounting. The commenters believed that these claims 
should be recognized as reporting two units of the service in the 
evaluation of the frequency of the code combination and the payment of 
the complexity-adjusted C-APC rate.
    Response: The issue of complexity adjustments for bilateral, status 
indicator ``J1'' procedures reported with modifier ``50'' was addressed 
in the April 2016 Integrated OCE Specifications Quarterly Release Files 
(Attachment A--Integrated OCE Specs, Appendix L: Comprehensive APC 
Assignment Logic). In that document, the C-APC assignment logic was 
updated to specify the following: Once the highest ranked comprehensive 
procedure is determined, if there are multiple comprehensive procedures 
present with status indicator ``J1'' or there are qualifying add-on 
procedure codes present (status indicator ``N''), determine if there 
are any pairings that may qualify for a complexity adjustment. Multiple 
occurrences or service units of the same comprehensive procedure, or 
the reporting of modifier ``50,'' may qualify for a complexity 
adjustment. If there is a qualifying pair present associated with the 
highest ranked comprehensive procedure, assign the complexity-adjusted 
comprehensive APC. This change was made retroactive to January 2015. As 
of January 1, 2015, status indicator ``J1'' procedure claims with 
modifier ``50'' also will be included in the C-APC claims accounting 
and the complexity adjustment evaluations.

[[Page 79583]]

    Comment: One commenter requested that CMS eliminate one of the 
criterion for assignment to status indicator ``J2'' and C-APC 8011 
(Comprehensive Observation Services). Specifically, the commenter 
stated that claims that otherwise would qualify for payment through C-
APC 8011, but contain a procedure described by a HCPCS code assigned to 
status indicator ``T'' that is reported with a date of service on the 
same day or 1 day earlier than the date of service associated with 
services described by HCPCS code G0378, should not be excluded from 
receiving payment through C-APC 8011.
    Response: Services that would otherwise qualify for the observation 
C-APC (C-APC 8011) are not considered to be observation services when 
they are associated with a surgical procedure (assigned to status 
indicator ``T''). Instead, they are considered to be perioperative 
recovery, which is always packaged in with the surgical procedure.
    Comment: Some commenters submitted comments regarding C-APC 5627 
(Level 7 Radiation Therapy) and the treatment planning and preparation 
services involved with stereotactic radiosurgery (SRS) treatment. 
Commenters urged CMS to continue the policy finalized in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70337) that pays 
separately for certain SRS planning and preparation services (a policy 
that is a temporary special exception for APC 5627 to the C-APC 
packaging policy that packages all adjunctive services (with a few 
exceptions listed in Addendum J)). Commenters believed that CMS should 
not package treatment planning and preparation into the C-APC payment 
rate for Level 7 Radiation Therapy in the future as discussed in the CY 
2016 OPPS/ASC final rule with comment period because SRS claims may 
include other unrelated radiation therapy services.
    Response: For CY 2017, we will continue the policy for the payment 
of SRS treatment as described in the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70337). This policy removes claims reporting 
certain planning and preparation services for SRS treatment from our 
geometric mean cost calculation for the CY 2017 payment rate for C-APC 
5627 and pays separately for these planning and preparation services. 
For 2018, we will again examine the claims for cranial single session 
SRS patients and evaluate the services reported with modifier ``CT'' 
(Adjunctive service related to a procedure assigned to a comprehensive 
ambulatory payment classification [C-APC] procedure). We will consider 
in the future whether repackaging all adjunctive services (planning, 
preparation, and imaging, among others) back into cranial single 
session SRS is appropriate in order to preserve the integrity of the C-
APC policy and the OPPS as a prospective payment system.
    Comment: Commenters noted that claims that included several 
insertion codes for brachytherapy devices (namely CPT codes 57155, 
20555, 31643, 41019, 43241, 55920, and 58346) often did not also 
contain a brachytherapy treatment delivery code. The commenters 
concluded that brachytherapy delivery charges are being 
underrepresented in ratesetting under the C-APC methodology because a 
correctly coded claim should always include an insertion and treatment 
delivery code combination. One commenter suggested that CMS adopt a 
composite APC methodology for CPT code 57155 similar to the composite 
methodology for LDR prostate brachytherapy services.
    Response: The calculation of OPPS relative payment weights that 
reflect the relative resources required for HOPD services is the 
foundation of the OPPS. We rely on hospitals to bill all HCPCS codes 
accurately in accordance with their code descriptors and CPT and CMS 
instructions, as applicable, and to report charges on claims and 
charges and costs on their Medicare hospital cost reports appropriately 
(77 FR 68324). Moreover, we generally do not remove claims from the 
claims accounting when stakeholders believe that hospitals included 
incorrect information on some claims. Therefore, we are not excluding 
claims from the ratesetting calculation that include procedures 
described by CPT codes 57155, 20555, 31643, 41019, 43241, 55920, and 
58346. In the future, we will examine the claims for these 
brachytherapy insertion codes and determine if any future adjustment to 
the methodology (or possibly code edits) would be appropriate.
(2) C-APCs for CY 2017
(a) Additional C-APCs for CY 2017
    For CY 2017 and subsequent years, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45620), we proposed to continue to apply the C-APC payment 
policy methodology made effective in CY 2015, as described in detail 
below. We proposed 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 proposed to 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 proposed 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 proposed 25 additional C-APCs to be paid 
under the existing C-APC payment policy beginning in CY 2017. The 
proposed additional CY 2017 C-APCs were listed in Table 2 of the 
proposed rule. All C-APCs, including those effective in CY 2016 and 
those being proposed for CY 2017, also were 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 contained all of 
the data related to the C-APC payment policy methodology, including the 
list of proposed complexity adjustments and other information.
    Comment: Many commenters supported the proposal to expand the C-APC 
policy to include new C-APCs. However, several commenters requested 
that CMS delay the expansion of the C-APC policy and expressed concerns 
that the costs of procedures and services paid through a C-APC are not 
being accurately captured and C-APC payment rates do not adequately 
cover the costs associated with the primary and adjunctive services. 
Commenters also requested more information regarding the rationale for 
the assignment of services to a C-APC and stated that more time is 
needed to analyze and assess the financial impact of the proposed C-APC 
policy changes. One commenter expressed concerns that CMS may not be 
fully considering the impact of adding relatively low cost (below 
$2,227) procedures to C-APCs and suggested the establishment of a 
minimum cost threshold for a procedure to be assigned to a C-APC. Other 
commenters requested a delay in the assignment of new codes, including 
add-on codes, to C-APCs unless a crosswalk exists from the old code to 
the new code.
    Response: We appreciate the commenters' support. With regard to the 
comments relating to delaying the expansion of the C-APC policy, we do

[[Page 79584]]

not believe that we should delay implementation of the proposed CY 2017 
C-APCs. C-APCs were introduced in 2015, and, like all of the payment 
polices contained in the OPPS, are reviewed annually, as provided at 
section 1833(t)(9)(A) of the Act. We communicate with various 
stakeholders on an ongoing basis as a part of our mutual efforts to 
further improve the OPPS. We believe that sufficient information is 
available for stakeholders to evaluate how C-APCs affect payment for 
services, and that there is sufficient time for the public to review 
and analyze our proposed payment policies. This is evidenced by the 
many stakeholders that submit public comments, including, for example, 
analyses of the C-APC payment policy. Regarding the comment about 
creating a cost threshold for assignment of a procedure to a C-APC, we 
do not believe that this is necessary. Procedures assigned to C-APCs 
are primary services (mostly major surgical procedures) that are 
typically the focus of the hospital outpatient stay. We do not believe 
that a cost threshold would help to differentiate primary from 
secondary or adjunctive services. Lastly, we assign new codes to APCs 
(including C-APCs) based on predecessor code APC assignments, 
comparisons to similar codes, clinical comparability, and estimates of 
the resource intensity, as well as other relevant information. If we 
failed to assign new codes to C-APCs, this could result in significant 
underpayment for some new codes if a C-APC is the most appropriate APC 
for the new procedure.
    Comment: A few commenters requested that CMS not convert APCs 5153 
through 5155 (Levels 3 through 5 Airway Endoscopy) into C-APCs. The 
commenters expressed concerns regarding reduced payments for sinus 
surgeries when a patient has multiple surgeries during a single 
operative session. The major concern focused on the loss of additional 
payments for multiple procedures under the C-APC methodology. 
Commenters stated that multiple procedures (coded either as a bilateral 
case or with multiple different CPT codes) are common for the treatment 
of sinus diseases. One commenter noted that the AMA CPT Editorial Panel 
is in the process of revising some of the sinus surgery codes and 
bundling some of these codes. Another commenter believed that payment 
reductions for sinus surgery could negatively affect opportunities for 
resident training on these procedures.
    Response: The commenters concerns are not unique to sinus surgery. 
The C-APC methodology relies on the average cost of the range of cases 
included in the claims accounting for the primary service code. We 
believe that this approach is better suited to a prospective payment 
system like the OPPS that relies on average cost payments that 
sometimes exceed the cost of a given case and other times are less than 
the cost of a given case. If, as the commenters suggest, bilateral 
surgery and/or multiple procedures are common in sinus surgery, the 
costs of this approach would be reflected in the geometric mean cost of 
the primary procedure under the C-APC methodology. It also seems that, 
according to one commenter, the AMA is preparing to address what might 
be fragmented codes in this clinical area. We are finalizing as 
proposed the conversion of the three highest level airway endoscopy 
APCs to C-APCs as a part of our continuing effort to direct the OPPS 
more towards a prospective payment system and away from a per service 
or per code fee schedule in which every coded item or service results 
in additional payment. We also do not agree that this payment policy 
raises concerns regarding the training of otolaryngology residents in 
sinus surgery, but we will monitor these APCs as we do with all others 
as a part of our annual OPPS/ASC rulemaking.
    Comment: One commenter stated that while APC 5153 (Level 3 Airway 
Endoscopy Procedures) is a proposed C-APC for CY 2017, one of the codes 
assigned to APC 5153, namely CPT code 31649 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with removal 
of bronchial valve(s), each additional lobe (List separately in 
addition to code for primary procedure)), is assigned a status 
indicator of ``Q2'' and not ``J1.'' The commenter requested that this 
procedure be assigned to status indicator ``J1.''
    Response: This procedure is assigned status indicator ``Q2'' 
because it describes the removal of a device, specifically a bronchial 
valve. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74926), we finalized a proposal to conditionally package device removal 
procedures. This procedure is separately paid unless it is billed on 
the same date of service as a surgical procedure assigned to status 
indicator ``J1'' or ``T'' that involves repair or replacement of the 
device. The procedure was placed in a C-APC on the basis of resource 
and clinical homogeneity. For these reasons, we do not agree with the 
commenters, and are not assigning CPT code 31649 to status indicator 
``J1.''
    After consideration of the public comments we received, we are 
finalizing the proposal for 25 additional C-APCs to be paid under the 
existing C-APC payment policy beginning in CY 2017.
    Table 2 below lists the final additional C-APCs for CY 2017, 
including the C-APCs currently effective for CY 2016. All C-APCs, 
including those effective in CY 2016 and those finalized for CY 2017, 
also are displayed in Addendum J to this final rule with comment 
period. Addendum J to this final rule with comment period (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 complexity adjustments and other information.

                                             Table 1--CY 2017 C-APCs
----------------------------------------------------------------------------------------------------------------
                  C-APC                          CY 2017 APC title           Clinical family        New C-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.

[[Page 79585]]

 
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.
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.
----------------------------------------------------------------------------------------------------------------
* 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) 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

[[Page 79586]]

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 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45623), 
for CY 2017, we proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed to no longer use revenue code 
0819 for the identification of stem cell acquisition charges for 
allogeneic bone marrow/stem cell transplants. We invited public 
comments on these proposals.
    Comment: Several commenters supported the proposal to create a new 
C-APC for allogeneic HSCT (C-APC 5244) and the assignment of status

[[Page 79587]]

indicator ``J1'' to CPT code 38240. However, many commenters believed 
that the proposed payment for C-APC 5244 continued to be significantly 
less than the overall cost of the service. Some commenters stated that 
CMS used claims to calculate the proposed payment rate for this service 
that were incomplete and did not adhere to CMS billing instructions for 
providers for allogeneic bone marrow/stem cell transplants. 
Specifically, the commenters stated that there were claims included in 
the geometric mean cost calculation for allogeneic HSCT (CPT code 
38240) that did not include donor acquisition costs reported with 
revenue code 0819 on the same date of service as the transplant. 
According to the commenters, this resulted in an inaccurate and low 
estimation of the total cost of this service. The commenters requested 
that CMS exclude these claims from ratesetting for allogeneic HSCT. 
Commenters also suggested that CMS institute an edit beginning in CY 
2017 that requires both the donor acquisition revenue code and the stem 
cell transplant CPT code on the claim to ensure that Medicare receives 
correctly coded claims for this relatively costly service.
    Lastly, commenters stated that the new cost center and revenue code 
should be utilized for both inpatient and outpatient donor acquisition 
cost reporting, requested instructions from CMS on how to reclassify 
expenses into the new cost center from ancillary departments, and also 
suggested that CMS reconsider the use of cost center line 112.50 
because this line is designated for solid organ acquisition costs, 
which are paid at cost. According to these commenters, these costs do 
not carry to Worksheet C and, for calculation of CCR, are dropped from 
cost report after accumulation of overhead. The commenter suggested the 
use of a cost center in the range of lines 50 through 76.99.
    Response: We are persuaded by the commenters and note that at the 
summer 2016 meeting of the Advisory Panel on Hospital Outpatient 
Payment (HOP Panel), the panel also recommended that CMS use only the 
claims that include both CPT code 38240 and revenue code 0819 in 
calculating the CY 2017 payment rates for allogeneic HSCT. Therefore, 
we believe it is preferable to use only the claims with both the CPT 
code for the transplant (CPT code 38240) and the revenue code for the 
donor acquisition costs (revenue code 0819) to calculate the payment 
rate for this service under the new C-APC. We agree, in this case, to 
use only the subset of claims that include both codes because hospitals 
were specifically instructed in the CMS Internet Only Manual and in 
prior final rule preamble language to use revenue code 0819 to report 
donor acquisition costs. This instruction is different from our general 
instructions regarding correct coding in that this instruction is very 
specific and was issued to address problems associated with the 
reporting of donor acquisition costs. We also agree with the 
commenters' that implementing a code edit beginning in CY 2017 that 
will require revenue code 0815 to be on a claim with CPT code 38240 is 
appropriate because this practice will help to ensure that donor 
acquisition costs for allogeneic HSCT are reported with the appropriate 
revenue code and that these costs are accurately recorded in the 
Medicare hospital cost report. This edit will become effective January 
1, 2017, and will return claims to the provider if CPT code 38240 is 
present for the transplant procedure without a separate line on the 
claim reporting revenue code 0815 for donor acquisition services. 
Again, we emphasize that this is an exceptional circumstance. We do not 
anticipate taking any similar actions for any other existing or future 
APCs or C-APCs. The combination of forming a new C-APC, providing 
unusually specific instructions in the CMS Internet Only Manual, 
needing to create a new cost center on the hospital cost report, and 
the clear recommendation from the HOP Panel--following both its and our 
thorough analysis of the issue--make this case particularly unique.
    Regarding the comment related to the use of cost center line 112.50 
to report allogeneic HSCT donor acquisition costs, we agree with the 
commenter that cost report lines 105 through 117 are designated for 
solid organ acquisition costs and other data for informational 
purposes. The commenter also indicated that the proposed line 112.50 
does not carry over to Worksheet C for the calculation of a CCR and 
drops off after accumulation of overhead. The commenter makes a valid 
point regarding the proposed line 112.50, and we agree that the 
proposed new revenue code 0815 should be mapped to a different cost 
center. The commenters recommended the use of a cost center in the 
range of lines 50 through 76.99. However these cost centers have 
standard cost center descriptions that do not have a logical subscript 
for the proposed new line ``Allogeneic Stem Cell Acquisition''. Also, 
line 76 is used for too many variables and would not provide the needed 
isolation of costs or charges. However, the Medicare hospital cost 
report contains an available expansion in the range of lines 77 through 
87. We are revising our proposal to update the Medicare hospital cost 
report (Form CMS-2552- 10) by adding proposed new line 112.50 (with the 
cost center code of ``11250'') and are instead adding a new standard 
cost center 77, ``Allogeneic Stem Cell Acquisition,'' to Worksheet A 
(and applicable worksheets) with the standard cost center code of 
``07700.'' The new cost center, line 77, will 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).
    After consideration of the public comments we received, we are 
finalizing the proposal for C-APC 5244 (Level 4 Blood Product Exchange 
and Related Services), with the modification to exclude claims that do 
not include donor acquisition costs reported with revenue code 0819 
from ratesetting. In addition, for CY 2017 and subsequent years, we are 
finalizing the proposal to no longer use revenue code 0819 for the 
identification of stem cell acquisition charges for allogeneic bone 
marrow/stem cell transplants. We are establishing a final payment rate 
for new C-APC 5244 of $27,752 for CY 2017.
d. 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

[[Page 79588]]

readers to the CY 2008 OPPS/ASC final rule with comment period for a 
full discussion of the development of the composite APC methodology (72 
FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74163) for more recent 
background. In the CY 2017 OPPS/ASC proposed rule (81 FR 45623), for CY 
2017 and subsequent years, we proposed to continue our composite APC 
payment policies for LDR prostate brachytherapy services, mental health 
services, and multiple imaging services, as discussed below.
    At its August 22, 2016 meeting the HOP Panel recommended that CMS 
develop a composite APC for pathology services when multiple pathology 
services are reported on a claim with no other payable services.
    Comment: Several commenters supported the HOP Panel's 
recommendation to develop a composite APC for pathology services when 
multiple pathology services are reported on a claim with no other 
payable services and urged CMS to propose and finalize a policy to 
create such a composite APC. Some commenters also requested that CMS 
create additional composite APCs for X-ray services, respiratory 
services, cardiology services, and allergy testing services.
    Response: We appreciate the HOP Panel's recommendation, as well as 
the commenters' request to create new composite APCs for additional 
services. However, we did not propose to create any new composite APCs 
for CY 2017. Therefore, we are not accepting the HOP Panel's 
recommendation at this time. We may consider this HOP Panel 
recommendation in conjunction with the commenters' request for the 
creation of new additional composite APCs for future rulemaking.
(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
    LDR prostate brachytherapy is a treatment for prostate cancer in 
which hollow needles or catheters are inserted into the prostate, 
followed by permanent implantation of radioactive sources into the 
prostate through the needles/catheters. At least two CPT codes are used 
to report the composite treatment service because there are separate 
codes that describe placement of the needles/catheters and the 
application of the brachytherapy sources: CPT code 55875 (Transperineal 
placement of needles or catheters into prostate for interstitial 
radioelement application, with or without cystoscopy) and CPT code 
77778 (Interstitial radiation source application; complex), which are 
generally present together on claims for the same date of service in 
the same operative session. In order to base payment on claims for the 
most common clinical scenario, and to further our goal of providing 
payment under the OPPS for a larger bundle of component services 
provided in a single hospital encounter, beginning in CY 2008, we began 
providing a single payment for LDR prostate brachytherapy when the 
composite service, reported as CPT codes 55875 and 77778, is furnished 
in a single hospital encounter. We base the payment for composite APC 
8001 (LDR Prostate Brachytherapy Composite) on the geometric mean cost 
derived from claims for the same date of service that contain both CPT 
codes 55875 and 77778 and that do not contain other separately paid 
codes that are not on the bypass list. We refer readers to the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66652 through 66655) for 
a full history of OPPS payment for LDR prostate brachytherapy services 
and a detailed description of how we developed the LDR prostate 
brachytherapy composite APC.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45623 through 45624), 
we proposed to continue to pay for LDR prostate brachytherapy services 
using the composite APC payment methodology proposed and implemented 
for CY 2008 through CY 2016. That is, we proposed 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 the CY 2017 OPPS/ASC proposed rule, we proposed not to use 
the claims that meet these criteria in the calculation of the geometric 
mean costs of procedures or services assigned to APC 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 proposed 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 the CY 
2017 OPPS/ASC 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 was 
based.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal, without modification, to continue to 
use the payment rate for composite APC 8001 to pay for LDR prostate 
brachytherapy services for CY 2017 and to set the payment rate for this 
APC using our established methodology. Using the CY 2015 claims data 
available for this CY 2017 final rule with comment period, we were able 
to use 224 claims that contained both CPT codes 55875 and 77778 to 
calculate the geometric mean cost of approximately $3,598 for these 
procedures upon which the final CY 2017 payment rate for composite APC 
8001 is based.
(2) Mental Health Services Composite APC
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45624), we proposed to 
continue our longstanding policy of limiting the aggregate payment for 
specified less resource-intensive mental health services furnished on 
the same date to the payment for a day of partial hospitalization 
services provided by a hospital, which we consider to be the most 
resource-intensive of all outpatient mental health services. We refer 
readers to the April 7, 2000 OPPS final rule with comment period (65 FR 
18452 through 18455) for the initial discussion of this longstanding 
policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74168) for more recent background.
    Specifically, we proposed that when the aggregate payment for 
specified mental health services provided by one hospital to a single 
beneficiary on one date of service based on the payment rates 
associated with the APCs for the individual services exceeds the 
maximum per diem payment rate for partial hospitalization services 
provided by a hospital, those specified mental health services would be 
assigned to composite APC 8010 (Mental Health Services Composite). We 
also proposed to continue to set the payment rate for

[[Page 79589]]

composite APC 8010 at the same payment rate that we proposed 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45667 through 45678), 
we proposed to combine the existing Level 1 and Level 2 hospital- based 
PHP APCs into a single hospital-based PHP APC and thereby discontinue 
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) and replace them with proposed new 
APC 5863 (Partial Hospitalization (3 or more services per day)). This 
proposal is being finalized in section VIII. of this final rule with 
comment period. In light of this policy, we are modifying our final 
policy for CY 2017, as fully discussed below.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our CY 2017 proposal, without modification, that when 
the aggregate payment for specified mental health services provided by 
one hospital to a single beneficiary on a single 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 will be paid through composite APC 8010 (Mental Health 
Services Composite) for CY 2017. In addition, we are finalizing our CY 
2017 proposal, with modification, to set the payment rate for composite 
APC 8010 for CY 2017 at the same payment rate that we established for 
new APC 5863, 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.
(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 the CY 2017 OPPS/ASC proposed rule (81 FR 45624 through 45625), 
we proposed to continue to pay for all multiple imaging procedures 
within an imaging family performed on the same date of service using 
the multiple imaging composite APC payment methodology. 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) were based on 
proposed geometric mean costs calculated from a partial year of CY 2015 
claims available for the CY 2017 OPPS/ASC 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 geometric 
mean costs for these composite APCs since CY 2014, 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), were identified by asterisks in 
Addendum N to the CY 2017 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site) and were discussed in more detail 
in section II.A.1.b. of the CY 2017 OPPS/ASC proposed rule. For the 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 7 of the CY 2017 
OPPS/

[[Page 79590]]

ASC proposed rule lists the proposed HCPCS codes that would be subject 
to the multiple imaging composite APC policy and their respective 
families and approximate composite APC proposed geometric mean costs 
for CY 2017.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal to continue the use of multiple imaging 
composite APCs to pay for services providing more than one imaging 
procedure from the same family on the same date, without modification. 
For this CY 2017 final rule with comment period, we were able to 
identify approximately 635,363 ``single session'' claims out of an 
estimated 1.7 million potential claims for payment through composite 
APCs from our ratesetting claims data, which represents approximately 
37 percent of all eligible claims, to calculate the final CY 2017 
geometric mean costs for the multiple imaging composite APCs. Table 3 
below lists the HCPCS codes that are subject to the multiple imaging 
composite APC policy and their respective families and approximate 
composite APC geometric mean costs for CY 2017.

               Table 3--Final 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 = $296
----------------------------------------------------------------------------------------------------------------
76604.........................................  Us exam, chest.
76700.........................................  Us exam, abdom, complete.
76705.........................................  Echo exam of abdomen.
76770.........................................  Us exam abdo back wall, comp.
76775.........................................  Us exam abdo back wall, lim.
76776.........................................  Us exam k transpl w/Doppler.
76831.........................................  Echo exam, uterus.
76856.........................................  Us exam, pelvic, complete.
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 = $325
----------------------------------------------------------------------------------------------------------------
70450.........................................  Ct head/brain w/o dye.
70480.........................................  Ct orbit/ear/fossa w/o dye.
70486.........................................  Ct maxillofacial w/o dye.
70490.........................................  Ct soft tissue neck w/o dye.
71250.........................................  Ct thorax w/o dye.
72125.........................................  Ct neck spine w/o dye.
72128.........................................  Ct chest spine w/o dye.
72131.........................................  Ct lumbar spine w/o dye.
72192.........................................  Ct pelvis w/o dye.
73200.........................................  Ct upper extremity w/o dye.
73700.........................................  Ct lower extremity w/o dye.
74150.........................................  Ct abdomen w/o dye.
74261.........................................  Ct colonography, w/o dye.
74176.........................................  Ct angio abd & pelvis.
----------------------------------------------------------------------------------------------------------------


 
  CY 2017 APC 8006 (CT and CTA with contrast
                  composite)                           CY 2017 Approximate APC geometric mean cost = $548
----------------------------------------------------------------------------------------------------------------
70487.........................................  Ct maxillofacial w/dye.
70460.........................................  Ct head/brain w/dye.
70470.........................................  Ct head/brain w/o & w/dye.
70481.........................................  Ct orbit/ear/fossa w/dye.
70482.........................................  Ct orbit/ear/fossa w/o & w/dye.
70488.........................................  Ct maxillofacial w/o & w/dye.
70491.........................................  Ct soft tissue neck w/dye.
70492.........................................  Ct sft tsue nck w/o & w/dye.
70496.........................................  Ct angiography, head.
70498.........................................  Ct angiography, neck.
71260.........................................  Ct thorax w/dye.
71270.........................................  Ct thorax w/o & w/dye.
71275.........................................  Ct angiography, chest.
72126.........................................  Ct neck spine w/dye.
72127.........................................  Ct neck spine w/o & w/dye.
72129.........................................  Ct chest spine w/dye.
72130.........................................  Ct chest spine w/o & w/dye.
72132.........................................  Ct lumbar spine w/dye.
72133.........................................  Ct lumbar spine w/o & w/dye.
72191.........................................  Ct angiograph pelv w/o & w/dye.
72193.........................................  Ct pelvis w/dye.
72194.........................................  Ct pelvis w/o & w/dye.
73201.........................................  Ct upper extremity w/dye.
73202.........................................  Ct uppr extremity w/o & w/dye.

[[Page 79591]]

 
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 = $631
----------------------------------------------------------------------------------------------------------------
70336.........................................  Magnetic image, jaw joint.
70540.........................................  Mri orbit/face/neck w/o dye.
70544.........................................  Mr angiography head w/o dye.
70547.........................................  Mr angiography neck w/o dye.
70551.........................................  Mri brain w/o dye.
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 = $945
----------------------------------------------------------------------------------------------------------------
70549.........................................  Mr angiograph neck w/o & w/dye.
70542.........................................  Mri orbit/face/neck w/dye.
70543.........................................  Mri orbt/fac/nck w/o & w/dye.
70545.........................................  Mr angiography head w/dye.
70546.........................................  Mr angiograph head w/o & w/dye.
70547.........................................  Mr angiography neck w/o dye.
70548.........................................  Mr angiography neck w/dye.
70552.........................................  Mri brain w/dye.
70553.........................................  Mri brain w/o & w/dye.
71551.........................................  Mri chest w/dye.
71552.........................................  Mri chest w/o & w/dye.
72142.........................................  Mri neck spine w/dye.
72147.........................................  Mri chest spine w/dye.
72149.........................................  Mri lumbar spine w/dye.
72156.........................................  Mri neck spine w/o & w/dye.
72157.........................................  Mri chest spine w/o & w/dye.
72158.........................................  Mri lumbar spine w/o & w/dye.
72196.........................................  Mri pelvis w/dye.
72197.........................................  Mri pelvis w/o & w/dye.
73219.........................................  Mri upper extremity w/dye.
73220.........................................  Mri uppr extremity w/o & w/dye.
73222.........................................  Mri joint upr extrem w/dye.
73223.........................................  Mri joint upr extr w/o & w/dye.
73719.........................................  Mri lower extremity w/dye.

[[Page 79592]]

 
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. 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 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 the CY 2017 OPPS/ASC proposed 
rule (81 FR 45628), we proposed some modifications to our packaging 
policies. The specific proposals and any applicable summations of and 
responses to any public comments received in response to these 
proposals are discussed under the sections below.
b. Clinical Diagnostic Laboratory Test Packaging Policy
(1) Background
    In CY 2014, we finalized a policy to package payment for most 
clinical

[[Page 79593]]

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) ``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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45628), 
we proposed 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 given 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 not integral, ancillary, 
supportive, dependent, or adjunctive to other hospital outpatient 
services provided to the beneficiary during the hospital stay, we 
proposed 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 proposed to package any and all 
laboratory tests (except molecular pathology tests, certain ADLTs, and 
preventive tests) if they appear on a claim with other hospital 
outpatient services.
    We invited public comments on this proposal.
    Comment: The majority of commenters supported the proposal. Some of 
the commenters believed that the proposal would reduce administrative 
burden. Other commenters opposed the proposal and stated that, despite 
the burden, they would rather have the opportunity for separate payment 
for ``unrelated'' laboratory tests. Some commenters believed that the 
proposal would result in no separate payment for laboratory tests when 
laboratory tests are the only services provided.
    Response: We appreciate the commenters' support. The proposal was 
made in response to concerns raised by hospitals about when to use 
modifier ``L1,'' and because we agreed with the commenters' concerns as 
noted above. We also do not believe that the discontinuation of the 
modifier ``L1'' policy is inconsistent with our policy to package items 
and services that are integral, ancillary, supportive, dependent, or 
adjunctive to other hospital outpatient services. Also, we stated in 
the CY 2017 OPPS/ASC proposed rule (81 FR 45628) that ``[i]n 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.'' Therefore, we do not believe 
that it is necessary to attempt to identify certain laboratory tests as 
unrelated to other services furnished to a patient. Finally, the 
discontinuation of the ``L1'' modifier and the associated policy does 
not affect the separate payment for laboratory tests when these 
procedures are the only services that are provided to the beneficiary.
    After consideration of the public comments we received, we are 
finalizing, as proposed, the discontinuation of the ``unrelated'' 
laboratory test exception and consequently the ``L1'' modifier.
(3) 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

[[Page 79594]]

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 CY 2017, in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45628), we proposed 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 proposed to assign status indicator ``A'' 
(Separate payment under the CLFS) to ADLTs once a laboratory test is 
designated an ADLT under the CLFS.
    We invited public comments on this proposal.
    Comment: Many commenters supported the proposal. A few commenters 
suggested that CMS apply the exception not just to ADLTs that meet the 
criteria of section 1834A(d)(5)(A) of the Act, but to all MAAAs.
    Response: We appreciate the commenters' support. Regarding the 
suggestion that we exempt all MAAAs from OPPS packaging, we do not 
believe that this would be prudent, as MAAAs are a broad category of 
tests. We are limiting the expansion of this exception to only those 
ADLTs that meet the criteria of section 1834A(d)(5)(A) of the Act, 
which are defined as tests that provide an analysis of multiple 
biomarkers of DNA, RNA, or proteins combined with a unique algorithm to 
yield a single patient-specific result.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to assign status 
indicator ``A'' (Separate payment under the CLFS) to ADLTs once a 
laboratory test is designated an ADLT under the CLFS.
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 packaging 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) 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 proposed 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 (81 FR 45629). We pointed 
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 invited public comments on this proposal.
    Comment: The majority of commenters opposed the proposal. These 
commenters opposed the proposal primarily because of a general 
opposition to packaging in the OPPS. Other commenters supported the 
proposal and acknowledged CMS' efforts to promote consistency in the 
OPPS. Some commenters requested further information on the impacts of 
the proposed change.
    Response: We thank the commenters who support this proposal. The 
commenters who opposed the proposal did not provide specifics as to why 
the proposed change would be inconsistent with OPPS packaging policies. 
We believe that conditional packaging should operate at the claim level 
for an entire hospital stay and not be limited to a single date of 
service. We refer the commenters interested in the impacts of this and 
other policies to section XXIII. of this final rule with comment 
period.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, 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 
occurs at the claim level (instead of based on the date of service).
4. 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 
proposed to continue to apply the policy established in CY 2013 and 
calculate relative payment weights for each APC for CY 2017 using 
geometric mean-based APC costs (81 FR 45629).
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five

[[Page 79595]]

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 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 reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70351).
    For CY 2017, we proposed to continue to standardize all of the 
relative payment weights to APC 5012 (81 FR 45629). 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, in the CY 2017 
OPPS/ASC proposed rule (81 FR 45629), we proposed to assign APC 5012 a 
relative payment weight of 1.00 and to divide the geometric mean cost 
of each APC by the geometric mean cost for APC 5012 to derive the 
unscaled relative payment weight for each APC. The choice of the APC on 
which to standardize the 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 proposed 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.
    We did not receive any public comments on our proposal to use the 
geometric mean cost of renumbered APC 5012 to standardize relative 
payment weights. Therefore, we are finalizing our proposal and 
assigning APC 5012 the relative payment weight of 1.00, and using the 
relative payment weight for APC 5012 to derive the unscaled relative 
payment weight for each APC for CY 2017.
    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, in 
the CY 2017 OPPS/ASC proposed rule (81 FR 45629), we proposed to apply 
the same process using the estimated CY 2017 unscaled relative payment 
weights rather than scaled relative payment weights. We proposed 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 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 
final rule link and open the claims accounting document link at the 
bottom of the page.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45630), we proposed 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 proposed to adjust the calculated CY 2017 unscaled relative payment 
weights for purposes of budget neutrality. We proposed to adjust the 
estimated CY 2017 unscaled relative payment weights by multiplying them 
by a weight scaler 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 the 
proposed rule (which are available via the Internet on the CMS Web 
site) were scaled and incorporated the recalibration adjustments 
discussed in sections II.A.1. and II.A.2. of the 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 final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2017 OPPS.
    We did not receive any public comments on the proposed weight 
scaler calculation.
    Therefore, we are finalizing our proposal to use the calculation 
process described in the proposed rule, without modification. Using 
updating final rule claims data, we are updating the estimated CY 2017 
unscaled relative payment weights by multiplying them by a weight 
scaler of 1.4208 to ensure that the final CY 2017 relative payment 
weights are scaled to be budget neutral.
B. Conversion Factor Update
    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 56938 through 81 FR 56939), consistent with current 
law, based on IHS Global Insight, Inc.'s second quarter 2016 forecast 
of the FY 2017 market basket increase, the FY 2017 IPPS market basket 
update is 2.7 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

[[Page 79596]]

(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, and then revised this methodology as discussed in the FY 
2016 IPPS/LTCH PPS final rule (80 FR 49509). In the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 56938 through 81 FR 56939), we discussed the 
calculation of the final MFP adjustment for FY 2017, which is 0.3 
percentage point.
    In the CY 2017 OPPS/ASC proposed rule, we proposed that if more 
recent data became subsequently available after the publication of the 
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, which are components in calculating the OPD fee schedule 
increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of 
the Act, in this CY 2017 OPPS/ASC final rule with comment period. 
Consistent with that proposal, and the FY 2017 IPPS/LTCH PPS final 
rule, we applied the updated final FY 2017 market basket percentage 
increase (2.7 percent) and the MFP adjustment (0.3 percent) to the OPD 
fee schedule increase factor for the CY 2017 OPPS.
    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, in the CY 2017 OPPS/
ASC proposed rule, we proposed 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 applying an OPD fee schedule increase factor of 1.65 
percent for the CY 2017 OPPS (which is 2.7 percent, the final estimate 
of the hospital inpatient market basket percentage increase, less the 
final 0.3 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 final rule with comment period.
    In the CY 2017 OPPS/ASC proposed rule, we proposed 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 2017, 
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.
    We did not receive any public comments on the proposed adjustments 
to the OPD fee schedule increase factor or on the proposed changes to 
the regulations at 42 CFR 419.32(b)(1)(iv)(B). For the reasons 
discussed above, we are adjusting the OPD fee schedule increase factor 
and finalizing the changes to the regulations as proposed. To set the 
OPPS conversion factor for the CY 2017 proposed rule, we proposed 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 proposed further 
to adjust the conversion factor for CY 2017 to ensure that any 
revisions made to the wage index and rural adjustment were made on a 
budget neutral basis. We proposed to calculate an overall 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 the CY 2017 proposed rule, we proposed to maintain the current 
rural adjustment policy, as discussed in section II.E. of this final 
rule with comment period. Therefore, the proposed budget neutrality 
factor for the rural adjustment was 1.0000.
    For the CY 2017 proposed rule, we proposed to continue previously 
established policies for implementing the cancer hospital payment 
adjustment described in section 1833(t)(18) of the Act, as discussed in 
section II.F. of this final rule with comment period. We proposed 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 were identical to estimated 
payments applying the CY 2016 final cancer hospital payment adjustment. 
Therefore, we proposed to apply a budget neutrality adjustment factor 
of 1.0000 to the conversion factor for the cancer hospital payment 
adjustment.
    For CY 2017, we proposed 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 the proposed rule, we estimated that proposed pass-through 
spending for drugs, biologicals, and devices for CY 2017 would equal 
approximately $148.3 million, which represented 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 remain at 1.0 percent of total OPPS 
payments for CY 2017. We estimated for the proposed rule that outlier 
payments would 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.
    Comment: One commenter requested that CMS verify the amount of 
dollars

[[Page 79597]]

used to calculate the adjustment of the conversion factor from the 
policy change to include payments for unrelated laboratory services 
with modifier ``L1'' that will be packaged into OPPS services starting 
in CY 2017. The commenter believed that the cost of packaging those 
services would be approximately $40 million rather than the 
approximately $22 million that CMS identified using the methodology and 
claims data from the CY 2017 OPPS/ASC proposed rule (81 FR 45631).
    Response: We appreciate the commenter's review of our analysis. We 
note that, while estimated cost is generally used for ratesetting 
purposes to establish the relative payment weights, our proposed policy 
of including those payments for unrelated laboratory services with the 
``L1'' modifier that would be newly packaged would be in the context of 
budget neutralizing those payments into the OPPS. While the costs used 
from these services in establishing the relative weights would be 
approximately $45 million, the payments that would be used for budget 
neutralization would be approximately $25 million, using the same 
source claims dataset as in the CY 2017 OPPS/ASC final rule with 
comment period. We then determine how to adjust the OPPS conversion 
factor by comparing the CY 2015 aggregate payment of approximately $25 
million to the total estimated payment for the CY 2015 OPPS, which 
results in a final conversion factor adjustment for this final 
laboratory services policy change of 1.0004.
    For the proposed rule, we also proposed that hospitals that fail to 
meet the reporting requirements of the Hospital OQR Program would 
continue to be subject to a further reduction of 2.0 percentage points 
to the OPD fee schedule increase factor. For hospitals that fail to 
meet the requirements of the Hospital OQR Program, we proposed 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 proposed 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 proposed 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).
    We invited public comments on these proposals. However, we did not 
receive any public comments. Therefore, we are finalizing these 
proposals without modification. For CY 2017, we proposed to continue 
previously established policies for implementing the cancer hospital 
payment adjustment described in section 1833(t)(18) of the Act, as 
discussed in section II.F. of this final rule with comment period. 
Based on the final rule updated data used in calculating the cancer 
hospital payment adjustment in section II.F. of this final rule with 
comment period, the target payment-to-cost ratio for the cancer 
hospital payment adjustment, which was 0.92 for CY 2016, is 0.91 for CY 
2017. As a result, we are applying a budget neutrality adjustment 
factor of 1.0003 to the conversion factor for the cancer hospital 
payment adjustment.
    As a result of these finalized policies, the OPD fee schedule 
increase factor for the CY 2017 OPPS is 1.65 percent (which is 2.7 
percent, the estimate of the hospital inpatient market basket 
percentage increase, less the 0.3 percentage point MFP adjustment, and 
less the 0.75 percentage point additional adjustment). For CY 2017, we 
are using a conversion factor of $75.001 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 1.65 percent for CY 2017, the 
required wage index budget neutrality adjustment of approximately 
0.9999, the cancer hospital payment adjustment of 1.0003, the packaging 
of unrelated laboratory tests adjustment factor of 1.0004, and the 
adjustment of 0.02 percentage point of projected OPPS spending for the 
difference in the pass-through spending and outlier payments that 
result in a conversion factor for CY 2017 of $75.001.

C. Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust the portion of payment and 
coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion 
of the OPPS payment rate is called the OPPS labor-related share. Budget 
neutrality is discussed in section II.B. of this final rule with 
comment period.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). In the CY 2017 OPPS/ASC proposed rule (81 
FR 45631), we proposed to continue this policy for the CY 2017 OPPS. We 
refer readers to section II.H. of this final rule with comment period 
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 final rule with comment 
period, for estimating APC costs, we standardize 60 percent of 
estimated claims costs for geographic area wage variation using the 
same FY 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 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

[[Page 79598]]

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 
proposed 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 2017 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; for FY 2016, 80 FR 49498; and for FY 2017, 81 FR 
56922.
    In addition to the changes required by the Affordable Care Act, we 
note that the 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 final rule (81 FR 56912 
through 56937) for a detailed discussion of all 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), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49488 
through 49489 and 49494 through 49496), and the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 56913), 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. Implementation of these revisions for the IPPS/LTCH 
PPS was finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 
56913). 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, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45632), we proposed to implement these 
revisions to the OMB statistical area delineations, effective January 
1, 2017, beginning with the CY 2017 OPPS wage indexes. We invited 
public comments on these proposals for the CY 2017 OPPS wage indexes. 
We note that Tables 2 and 3 for the FY 2017 IPPS/LTCH PPS final 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 the CBSA changes. These two tables are available via the 
Internet on the CMS Web site.
    In the CY 2017 OPPS/ASC proposed rule, we proposed to use the FY 
2017 hospital IPPS post-reclassified wage index for urban and rural 
areas as the wage index for the OPPS to determine the wage adjustments 
for both the OPPS payment rate and the copayment standardized amount 
for CY 2017. Therefore, we stated that 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 above, as set 
forth in OMB Bulletin No.

[[Page 79599]]

15-01. (We refer readers to the FY 2017 IPPS/LTCH PPS proposed rule (81 
FR 25062 through 25076) and final rule (81 FR 56912 through 56937), and 
the proposed and final 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 proposed to continue this policy 
for CY 2017. The following is a brief summary of the major FY 2017 IPPS 
wage index policies and adjustments that we proposed to apply to these 
hospitals under the OPPS for CY 2017. We further refer readers to the 
FY 2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937) for a 
detailed discussion of the final 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 proposed to continue our policy of allowing non-
IPPS hospitals paid under the OPPS to qualify for the out-migration 
adjustment if they are located in a section 505 out-migration county 
(section 505 of the 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). Therefore, for the 
CY 2017 OPPS, consistent with the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56912 through 56937), this 3-year transition will continue for the 
third year in CY 2017.
    In addition, for the FY 2017 IPPS, we extended the imputed floor 
policy (both the original methodology and alternative methodology) for 
another year, through September 30, 2017 (81 FR 56919 through 56922). 
For purposes of the CY 2017 OPPS, we proposed 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 proposed to continue to calculate the 
wage index by using the post-reclassification IPPS wage index based on 
the CBSA where the CMHC is located. As with OPPS hospitals and for the 
same reasons, 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.
    We did not receive any public comments on our proposals as 
discussed above.
    Therefore, for the reasons discussed above and in the CY 2017 OPPS/
ASC proposed rule, we are finalizing our proposals, without 
modification, to:
     Continue to use an OPPS labor-related share of 60 percent 
of the national OPPS payment for the CY 2017 OPPS;
     Use the final FY 2017 IPPS post-reclassified wage index 
for urban and rural areas in its entirety, including the frontier State 
wage index floor, the rural floor, geographic reclassifications, and 
all other applicable wage index adjustments, as the final CY 2017 wage 
index for OPPS hospitals and CMHCs based on where the facility is 
located for both the OPPS payment rate and the copayment standardized 
amount, as discussed above and as set forth in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45631 through 45633). (We refer readers to the FY 
2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937) and the final 
FY 2017 hospital wage index files posted on the CMS Web site.);
     Implement the revisions to the OMB statistical area 
delineations set forth in OMB Bulletin No. 15-01 effective January 1, 
2017, beginning with the CY 2017 OPPS wage indexes;
     Implement the frontier State floor provisions in the same 
manner as we have since CY 2011 as discussed above;
     For non-IPPS hospitals paid under the OPPS, continue 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;
     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, which CMS has extended for an additional year under the 
IPPS in the FY 2017 IPPS/LTCH PPS final rule; and
     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).
    Table 2 associated with the FY 2017 IPPS/LTCH PPS final rule 
(available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
identifies counties eligible for the out-migration adjustment and IPPS 
hospitals that will receive the adjustment for FY 2017. We are 
including the out-migration adjustment information from Table 2 
associated with the FY 2017 IPPS/LTCH PPS final rule as Addendum L to 
this final rule with comment period with the addition of non-IPPS 
hospitals that will receive the section 505 out-migration adjustment 
under the CY 2017 OPPS. Addendum L is available via the Internet on the 
CMS Web site. We refer readers to the CMS Web site for the OPPS at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a 
link to the final FY 2017 IPPS wage index tables and Addendum L.

D. Statewide Average Default CCRs

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the

[[Page 79600]]

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 the CY 2017 OPPS/ASC proposed rule (81 FR 45633), we proposed to 
update the default ratios for CY 2017 using the most recent cost report 
data. We discussed 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 referred readers to the CY 
2017 OPPS proposed rule Claims Accounting Narrative that was posted on 
the CMS Web site. Table 4 published in the proposed rule (81 FR 45634 
through 45635) listed the proposed statewide average default CCRs for 
OPPS services furnished on or after January 1, 2017.
    We did not receive any public comments on the proposed statewide 
average default CCR policy. Therefore, we are finalizing our proposal, 
without modification, to apply our standard methodology of calculating 
the statewide average default CCRs using the same hospital overall CCRs 
that we used to adjust charges to costs on claims data for setting the 
final CY 2017 OPPS relative payment weights. Table 4 below lists the 
statewide average default CCRs for OPPS services furnished on or after 
January 1, 2017 based on final rule data.

                                     Table 4--CY 2017 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                               Previous  default
                   State                             Urban/rural           CY 2017  default   CCR  (CY 2016 OPPS
                                                                                  CCR             final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA....................................  RURAL.......................               0.449               0.588
ALASKA....................................  URBAN.......................               0.237               0.269
ALABAMA...................................  RURAL.......................               0.196               0.224
ALABAMA...................................  URBAN.......................               0.158               0.168
ARKANSAS..................................  RURAL.......................               0.196               0.223
ARKANSAS..................................  URBAN.......................               0.205               0.218
ARIZONA...................................  RURAL.......................               0.238               0.246
ARIZONA...................................  URBAN.......................               0.176               0.170
CALIFORNIA................................  RURAL.......................               0.179               0.179
CALIFORNIA................................  URBAN.......................               0.188               0.190
COLORADO..................................  RURAL.......................               0.354               0.366
COLORADO..................................  URBAN.......................               0.208               0.208
CONNECTICUT...............................  RURAL.......................               0.402               0.366
CONNECTICUT...............................  URBAN.......................               0.253               0.257
DISTRICT OF COLUMBIA......................  URBAN.......................               0.286               0.298
DELAWARE..................................  URBAN.......................               0.288               0.308
FLORIDA...................................  RURAL.......................               0.169               0.170
FLORIDA...................................  URBAN.......................               0.143               0.150
GEORGIA...................................  RURAL.......................               0.230               0.251
GEORGIA...................................  URBAN.......................               0.196               0.199
HAWAII....................................  RURAL.......................               0.338               0.339
HAWAII....................................  URBAN.......................               0.319               0.313
IOWA......................................  RURAL.......................               0.291               0.305
IOWA......................................  URBAN.......................               0.252               0.256
IDAHO.....................................  RURAL.......................               0.341               0.337
IDAHO.....................................  URBAN.......................               0.401               0.459
ILLINOIS..................................  RURAL.......................               0.241               0.234
ILLINOIS..................................  URBAN.......................               0.209               0.208
INDIANA...................................  RURAL.......................               0.272               0.314
INDIANA...................................  URBAN.......................               0.218               0.237
KANSAS....................................  RURAL.......................               0.269               0.287
KANSAS....................................  URBAN.......................               0.194               0.209
KENTUCKY..................................  RURAL.......................               0.194               0.202
KENTUCKY..................................  URBAN.......................               0.189               0.203
LOUISIANA.................................  RURAL.......................               0.217               0.256
LOUISIANA.................................  URBAN.......................               0.201               0.202
MASSACHUSETTS.............................  RURAL.......................               0.316               0.324
MASSACHUSETTS.............................  URBAN.......................               0.345               0.330
MAINE.....................................  RURAL.......................               0.425               0.470
MAINE.....................................  URBAN.......................               0.413               0.395
MARYLAND..................................  RURAL.......................               0.264               0.277
MARYLAND..................................  URBAN.......................               0.229               0.234
MICHIGAN..................................  RURAL.......................               0.295               0.317
MICHIGAN..................................  URBAN.......................               0.324               0.319

[[Page 79601]]

 
MINNESOTA.................................  RURAL.......................               0.398               0.449
MINNESOTA.................................  URBAN.......................               0.319               0.377
MISSOURI..................................  RURAL.......................               0.222               0.238
MISSOURI..................................  URBAN.......................               0.261               0.253
MISSISSIPPI...............................  RURAL.......................               0.224               0.235
MISSISSIPPI...............................  URBAN.......................               0.167               0.169
MONTANA...................................  RURAL.......................               0.450               0.480
MONTANA...................................  URBAN.......................               0.368               0.403
NORTH CAROLINA............................  RURAL.......................               0.216               0.229
NORTH CAROLINA............................  URBAN.......................               0.223               0.235
NORTH DAKOTA..............................  RURAL.......................               0.411               0.443
NORTH DAKOTA..............................  URBAN.......................               0.334               0.355
NEBRASKA..................................  RURAL.......................               0.294               0.283
NEBRASKA..................................  URBAN.......................               0.238               0.238
NEW HAMPSHIRE.............................  RURAL.......................               0.320               0.306
NEW HAMPSHIRE.............................  URBAN.......................               0.279               0.306
NEW JERSEY................................  URBAN.......................               0.195               0.194
NEW MEXICO................................  RURAL.......................               0.225               0.280
NEW MEXICO................................  URBAN.......................               0.280               0.290
NEVADA....................................  RURAL.......................               0.196               0.219
NEVADA....................................  URBAN.......................               0.123               0.146
NEW YORK..................................  RURAL.......................               0.309               0.311
NEW YORK..................................  URBAN.......................               0.292               0.298
OHIO......................................  RURAL.......................               0.292               0.295
OHIO......................................  URBAN.......................               0.207               0.212
OKLAHOMA..................................  RURAL.......................               0.231               0.255
OKLAHOMA..................................  URBAN.......................               0.180               0.192
OREGON....................................  RURAL.......................               0.280               0.265
OREGON....................................  URBAN.......................               0.344               0.341
PENNSYLVANIA..............................  RURAL.......................               0.274               0.277
PENNSYLVANIA..............................  URBAN.......................               0.179               0.195
PUERTO RICO...............................  URBAN.......................               0.527               0.590
RHODE ISLAND..............................  URBAN.......................               0.291               0.290
SOUTH CAROLINA............................  RURAL.......................               0.185               0.188
SOUTH CAROLINA............................  URBAN.......................               0.190               0.197
SOUTH DAKOTA..............................  RURAL.......................               0.383               0.367
SOUTH DAKOTA..............................  URBAN.......................               0.229               0.224
TENNESSEE.................................  RURAL.......................               0.181               0.198
TENNESSEE.................................  URBAN.......................               0.180               0.177
TEXAS.....................................  RURAL.......................               0.214               0.238
TEXAS.....................................  URBAN.......................               0.177               0.179
UTAH......................................  RURAL.......................               0.349               0.493
UTAH......................................  URBAN.......................               0.315               0.325
VIRGINIA..................................  RURAL.......................               0.191               0.195
VIRGINIA..................................  URBAN.......................               0.226               0.233
VERMONT...................................  RURAL.......................               0.426               0.434
VERMONT...................................  URBAN.......................               0.340               0.336
WASHINGTON................................  RURAL.......................               0.271               0.349
WASHINGTON................................  URBAN.......................               0.294               0.308
WISCONSIN.................................  RURAL.......................               0.354               0.317
WISCONSIN.................................  URBAN.......................               0.290               0.296
WEST VIRGINIA.............................  RURAL.......................               0.266               0.276
WEST VIRGINIA.............................  URBAN.......................               0.285               0.294
WYOMING...................................  RURAL.......................               0.429               0.433
WYOMING...................................  URBAN.......................               0.311               0.311
----------------------------------------------------------------------------------------------------------------

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

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding drugs, 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the 
Act, as added by section 411 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
Section 1833(t)(13) of the Act provided the Secretary the authority to 
make an adjustment to OPPS payments for rural hospitals, effective 
January 1, 2006, if justified by a study of the difference in costs by 
APC between hospitals in rural areas and hospitals in urban areas. Our 
analysis showed a difference in costs for rural SCHs. Therefore, for 
the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 
7.1 percent for all services and procedures paid under the OPPS, 
excluding separately

[[Page 79602]]

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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45635), for the CY 
2017 OPPS, we proposed to continue our policy of a 7.1 percent payment 
adjustment that is done in a budget neutral manner for rural SCHs, 
including EACHs, for all services and procedures paid under the OPPS, 
excluding separately payable drugs and biologicals, devices paid under 
the pass-through payment policy, and items paid at charges reduced to 
costs (80 FR 39244).
    Comment: Commenters supported the proposed payment adjustment for 
rural SCHs and EACHs, and stated that this adjustment would support 
access to care in rural areas.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal for CY 2017 to continue our policy of a 7.1 
percent payment adjustment that is done in a budget neutral manner for 
rural SCHs, including EACHs, for all services and procedures paid under 
the OPPS, excluding separately payable drugs and biologicals, devices 
paid under the pass-through payment policy, and items paid at charges 
reduced to costs.

F. Payment Adjustment for Certain Cancer Hospitals for CY 2017

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient hospital services. These cancer hospitals are exempted from 
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced 
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established 
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit 
Decline in Payment,'' to determine OPPS payments to cancer and 
children's hospitals based on their pre-BBA payment amount (often 
referred to as ``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower 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, 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).

[[Page 79603]]

b. Proposed and Finalized Policy for CY 2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45636), for CY 2017, 
we proposed 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 the 
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 the 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 2012 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 were approximately 92 percent of reasonable cost 
(weighted average PCR of 0.92). Therefore, we proposed that the payment 
amount associated with the cancer hospital payment adjustment to be 
determined at cost report settlement would be the additional payment 
needed to result in a proposed target PCR equal to 0.92 for each cancer 
hospital. Table 5 of the proposed rule indicated the proposed estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2017 due to the cancer hospital payment adjustment policy.
    Comment: Several commenters supported the proposed cancer hospital 
payment adjustment for CY 2017.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our cancer hospital payment adjustment methodology as 
proposed. For this final rule with comment period, we are using the 
most recent cost report data through June 30, 2016 to update the 
adjustment. This update yields a target PCR of 0.91. We limited the 
dataset to the hospitals with CY 2015 claims data that we used to model 
the impact of the CY 2017 APC relative payment weights (3,744 
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 2012 to 2016. We then 
removed the cost report data of the 49 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 13 
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 3,682 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 91 percent of reasonable cost 
(weighted average PCR of 0.91). Therefore, we are finalizing that the 
payment amount associated with the cancer hospital payment adjustment 
to be determined at cost report settlement will be the additional 
payment needed to result in a PCR equal to 0.91 for each cancer 
hospital.
    Table 5 below indicates the final estimated percentage increase in 
OPPS payments to each cancer hospital for CY 2017 due to the finalized 
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 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--Estimated CY 2017 Hospital-Specific Payment Adjustment for Cancer Hospitals To Be Provided At Cost
                                                Report Settlement
----------------------------------------------------------------------------------------------------------------
                                                                               Estimated percentage  increase in
                Provider No.                           Hospital name           OPPS  payments for CY 2017 due to
                                                                                    payment adjustment  (%)
----------------------------------------------------------------------------------------------------------------
050146......................................  City of Hope Comprehensive                                    25.8
                                               Cancer Center.
050660......................................  USC Norris Cancer Hospital....                                14.0
100079......................................  Sylvester Comprehensive Cancer                                32.4
                                               Center.
100271......................................  H. Lee Moffitt Cancer Center &                                27.3
                                               Research Institute.
220162......................................  Dana-Farber Cancer Institute..                                49.8
330154......................................  Memorial Sloan-Kettering                                      50.4
                                               Cancer Center.
330354......................................  Roswell Park Cancer Institute.                                30.0
360242......................................  James Cancer Hospital & Solove                                37.9
                                               Research Institute.
390196......................................  Fox Chase Cancer Center.......                                16.6
450076......................................  M.D. Anderson Cancer Center...                                52.3

[[Page 79604]]

 
500138......................................  Seattle Cancer Care Alliance..                                58.7
----------------------------------------------------------------------------------------------------------------

G. Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 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 OPPS. In the CY 2017 OPPS/ASC proposed rule (81 FR 45637), we 
indicated that our estimate of total outlier payments as a percent of 
total CY 2015 OPPS payment, using CY 2015 claims available for the 
proposed rule and the revised OPPS expenditure estimate for the FY 2016 
President's Budget, was approximately 1.0 percent of the total 
aggregated OPPS payments. For CY 2015, we continue to estimate that we 
paid the outlier target of 1.0 percent of total aggregated OPPS 
payments.
    As stated in the proposed rule, using CY 2015 claims data and CY 
2016 payment rates, we estimated that the aggregate outlier payments 
for CY 2016 would be approximately 1.0 percent of the total CY 2016 
OPPS payments. Using an updated claims dataset and OPPS ancillary CCRs, 
we estimate that we paid approximately 0.96 percent of the total CY 
2016 OPPS payments, in OPPS outliers. We provided 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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation for CY 2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45637), for CY 2017, 
we proposed to continue our policy of estimating outlier payments to be 
1.0 percent of the estimated aggregate total payments under the OPPS. 
We proposed that a portion of that 1.0 percent, an amount equal to 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.C. of the proposed rule 
and this final rule with comment period, we proposed 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 the proposed rule and this final rule with comment 
period.
    To ensure that the estimated CY 2017 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we proposed that the hospital outlier threshold be set so that 
outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus $3,825.
    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 the 
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 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 the 
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 final rule (81 FR 
57286). 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.

[[Page 79605]]

    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we proposed to apply the same CCR 
inflation adjustment factor that we proposed to apply for the FY 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 proposed 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 was 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 multiplier 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 multiplier threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we proposed that, if a CMHC's cost for 
partial hospitalization services, paid under 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 
proposed 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 
final rule with comment period.
    Comment: One commenter suggested that the OPPS outlier fixed-dollar 
threshold of $3,825 was too high for CMS to pay the target aggregate 
outlier payment amount of 1.0 percent of the estimated aggregate total 
payments under the OPPS for the prospective year. The commenter 
suggested that CMS reduce the OPPS outlier threshold to compensate for 
the difference between the proposed and final fixed-dollar thresholds 
for outlier payments under the IPPS.
    Response: As indicated earlier, we introduced a fixed-dollar 
threshold in order to better target outlier payments to those high-cost 
and complex procedures where a very costly service could present a 
hospital with significant financial loss. We maintain the target 
outlier percentage of 1.0 percent of estimated aggregate total payment 
under the OPPS and have a fixed-dollar threshold so that OPPS outlier 
payments are made only when the hospital would experience a significant 
loss for furnishing a particular service. The methodology we use to 
calculate the fixed-dollar threshold for the prospective payment year 
factors is based on several data inputs that may change from prior 
payment years. For instance, updated hospital CCR data and changes to 
the OPPS payment methodology influence projected outlier payments in 
the prospective year. For this final rule with comment period, we used 
the same methodology for calculating the outlier fixed-dollar threshold 
that we used for the proposed rule but used updated data. We do not 
believe that incorporating the percentage difference between the 
proposed and final fixed-dollar loss thresholds under the IPPS would 
improve our methodology to meet our target outlier payment percentage 
of 1.0 percent.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue our policy of estimating outlier 
payments to be 1.0 percent of the estimated aggregate total payments 
under the OPPS and to use our established methodology to set the OPPS 
outlier fixed-dollar loss threshold for CY 2017.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period for outlier calculations. For CY 2017, 
we are applying the overall CCRs from the July 2016 OPSF file after 
adjustment (using the CCR inflation adjustment factor of 0.9688 to 
approximate CY 2017 CCRs) to charges on CY 2015 claims that were 
adjusted (using the charge inflation factor of 1.0984 to approximate CY 
2017 charges). These are the same CCR adjustment and charge inflation 
factors that were used to set the IPPS fixed-dollar thresholds for the 
FY 2017 IPPS/LTCH PPS final rule (81 FR 57286). 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 will continue to be made at 
50 percent of the amount by which the cost of furnishing the service 
would exceed 1.75 times the APC payment amount, until the total outlier 
payments equaled 1.0 percent of aggregated estimated total CY 2017 OPPS 
payments. We estimated that a fixed-dollar threshold of $3,825, 
combined with the multiple threshold of 1.75 times the APC payment 
rate, will allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, if a CMHC's cost for partial 
hospitalization services, paid under APC 5853 exceeds 3.40 times the 
payment rate, the outlier payment will be calculated as 50 percent of 
the amount by which the cost exceeds 3.40 times APC 5853.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR part 419, subparts C and D. For this CY 2017 OPPS/ASC final rule 
with comment period, the payment rate for most services and procedures 
for which payment is made under the OPPS is the product of the 
conversion factor calculated in accordance with section II.B. of this 
final rule with comment period and the relative payment weight 
determined under section II.A. of this

[[Page 79606]]

final rule with comment period. Therefore, the national unadjusted 
payment rate for most APCs contained in Addendum A to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site) and for most HCPCS codes to which separate payment under the OPPS 
has been assigned in Addendum B to this final rule with comment period 
(which is available via the Internet on the CMS Web site) was 
calculated by multiplying the CY 2017 scaled weight for the APC by the 
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 final rule with 
comment period.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45638), we 
demonstrated the steps on how to determine the APC payments that will 
be made in a calendar year under the OPPS to a hospital that fulfills 
the Hospital OQR Program requirements and to a hospital that fails to 
meet the Hospital OQR Program requirements for a service that has any 
of the following status indicator assignments: ``J1,'' ``J2,'' ``P,'' 
``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' 
(as defined in Addendum D1 to the 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 noted that, 
although blood and blood products with status indicator ``R'' and 
brachytherapy sources with status indicator ``U'' are not subject to 
wage adjustment, they are subject to reduced payments when a hospital 
fails to meet the Hospital OQR Program requirements.
    We did not receive any public comments on these steps under the 
methodology that we included in the proposed rule to determine the APC 
payments for CY 2017. Therefore, we are using the steps in the 
methodology specified below, as we proposed, to demonstrate the 
calculation of the final CY 2017 OPPS payments using the same 
parameters.
    Individual providers interested in calculating the payment amount 
that they will receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this final 
rule with comment period (which are available via the Internet on the 
CMS Web site) should follow the formulas presented in the following 
steps. For purposes of the payment calculations below, we refer to the 
national unadjusted payment rate for hospitals that meet the 
requirements of the Hospital OQR Program as the ``full'' national 
unadjusted payment rate. We refer to the national unadjusted payment 
rate for hospitals that fail to meet the requirements of the Hospital 
OQR Program as the ``reduced'' national unadjusted payment rate. The 
reduced national unadjusted payment rate is calculated by multiplying 
the reporting ratio of 0.980 times the ``full'' national unadjusted 
payment rate. The national unadjusted payment rate used in the 
calculations below is either the full national unadjusted payment rate 
or the reduced national unadjusted payment rate, depending on whether 
the hospital met its Hospital OQR Program requirements in order to 
receive the full CY 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 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 final rule with comment period. The wage index values assigned to 
each area reflect the geographic statistical areas (which are based 
upon OMB standards) to which hospitals are assigned for FY 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 changes to the FY 2017 IPPS wage indexes, as 
applied to the CY 2017 OPPS, we refer readers to section II.C. of this 
final rule with comment period. As we proposed, we are continuing to 
apply a wage index floor of 1.00 to frontier States, in accordance with 
section 10324 of the Affordable Care Act of 2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this final rule with comment period (which is 
available via the Internet on the CMS Web site) contains the qualifying 
counties and the associated wage index increase developed for the FY 
2017 IPPS, which are listed in Table 2 in the FY 2017 IPPS/LTCH PPS 
final rule and correction notice tables 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.


[[Page 79607]]


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

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

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

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

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

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

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

    We are providing examples below of the calculation of both the full 
and reduced national unadjusted payment rates that will apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the Hospital OQR Program requirements, using the 
steps outlined above. For purposes of this example, we used a provider 
that is located in Brooklyn, New York that is assigned to CBSA 35614. 
This provider bills one service that is assigned to APC 5071 (Level 1 
Excision/Biopsy/Incision and Drainage). The CY 2017 full national 
unadjusted payment rate for APC 5071 is approximately $538.88. The 
reduced national unadjusted payment rate for APC 5071 for a hospital 
that fails to meet the Hospital OQR Program requirements is 
approximately $528.10. This reduced rate is calculated by multiplying 
the reporting ratio of 0.980 by the full unadjusted payment rate for 
APC 5071.
    The FY 2017 wage index for a provider located in CBSA 35614 in New 
York is 1.2936. The labor-related portion of the full national 
unadjusted payment is approximately $418.26 (.60 * $538.88 * 1.2936). 
The labor-related portion of the reduced national unadjusted payment is 
approximately $409.89 (.60 * $528.10 * 1.2936). The nonlabor-related 
portion of the full national unadjusted payment is approximately 
$215.55 (.40 * $538.88). The nonlabor-related portion of the reduced 
national unadjusted payment is approximately $211.24 (.40 * $528.10). 
The sum of the labor-related and nonlabor-related portions of the full 
national adjusted payment is approximately $633.81 ($418.26 + $215.55). 
The sum of the portions of the reduced national adjusted payment is 
approximately $621.13 ($409.89 + $211.24).

I. Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in calendar years thereafter, shall not exceed 40 percent of 
the APC payment rate. Section 1833(t)(3)(B)(ii) of the Act provides 
that, for a covered OPD service (or group of such services) furnished 
in a year, the national unadjusted copayment amount cannot be less than 
20 percent of the OPD fee schedule amount. However, section 
1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment 
that may be collected for a procedure performed in a year to the amount 
of the inpatient hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Medicare 
Part B coinsurance for preventive services furnished on and after 
January 1, 2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45640), for CY 2017, 
we proposed to determine copayment amounts for new and revised APCs 
using the same methodology that we implemented beginning in CY 2004. 
(We refer readers to the November 7, 2003 OPPS final rule with comment 
period (68 FR 63458).) In addition, we proposed to use the same 
standard rounding principles that we have historically used in 
instances where the application of our standard copayment methodology 
would result in a copayment amount that is less than 20 percent and 
cannot be rounded, under standard rounding principles, to 20 percent. 
(We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66687) in which we discuss our rationale for applying 
these rounding principles.) We included the proposed national 
unadjusted copayment amounts for services payable under the OPPS that 
would be effective January 1, 2017, in Addenda A and B to the proposed 
rule (which are available via the Internet on the CMS Web site).
    As discussed in section XIII.E. of the proposed and this final rule 
with comment period, for CY 2017, the 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.

[[Page 79608]]

     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 the 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 recalibration of 
relative payment weights (68 FR 63459).
    We did not receive any public comments on the copayment policy 
proposal. For the reasons set forth in this final rule with comment 
period, we are finalizing our proposed CY 2017 copayment policy without 
modification.
3. Calculation of an Adjusted Copayment Amount for an APC Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 5071, $107.78 is approximately 20 percent of the 
full national unadjusted payment rate of $538.88. For APCs with only a 
minimum unadjusted copayment in Addenda A and B to this final rule with 
comment period (which are available via the Internet on the CMS Web 
site), the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

B is the beneficiary payment percentage.

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

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

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

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

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

    CPT and Level II HCPCS codes are used to report procedures, 
services, items, and supplies under the hospital OPPS. Specifically, 
CMS recognizes the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures 
and medical services;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes, which are used primarily to identify 
products, supplies, temporary procedures, and services not described by 
CPT codes.
    CPT codes are established by the American Medical Association (AMA) 
and the Level II HCPCS codes are established by the CMS HCPCS 
Workgroup. These codes are updated and changed throughout the year. CPT 
and HCPCS code changes that affect the OPPS are published both through 
the annual rulemaking cycle and through

[[Page 79609]]

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 
final rule with comment period 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 l, 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     January 1, 2017............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               III CPT Codes.                                  proposed rule.    final rule with
                                                                                                 comment period.
----------------------------------------------------------------------------------------------------------------

1. Treatment of New Level II HCPCS Codes Effective April 1, 2016 for 
Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed 
Rule
    Through the April 2016 OPPS quarterly update CR (Transmittal 3471, 
Change Request 9549, dated February 26, 2016) we recognized several new 
Level II HCPCS codes for separate payment under the OPPS. Effective 
April 1, 2016, we implemented 10 new HCPCS codes and also assigned them 
to appropriate interim OPPS status indicators and APCs. Specifically, 
as displayed in Table 7 of the CY 2017 OPPS/ASC proposed rule (81 FR 
45642), we provided separate payment for HCPCS codes C9137, C9138, 
C9461, C9470, C9471, C9472, C9473, C9474, C9475, and J7503. We note 
that HCPCS code J7503 was initially assigned to OPPS status indicator 
``E'' (Not paid by Medicare when submitted on outpatient claims (any 
outpatient bill type) when the code was established on January 1, 2016. 
However, we revised its OPPS status indicator from ``E'' to ``G'' 
(Pass-Through Drugs and Biologicals. Paid under OPPS; separate APC 
payment) effective April 1, 2016, when the drug associated with HCPCS 
code J7503 was approved for pass-through payment status under the 
hospital OPPS.
    In the CY 2017 OPPS/ASC proposed rule, we solicited public comments 
on the proposed APC and status indicator assignments for the 10 HCPCS 
codes implemented on April 1, 2016. We indicated that the proposed 
payment rates for these codes, where applicable, could be found in 
Addendum B to the proposed rule (which is available via the Internet on 
the CMS Web site).
    We did not receive any public comments on the proposed APC and 
status indicator assignments for the HCPCS codes implemented in April 
2016. Therefore, we are finalizing the proposed APC assignments and 
status indicators for the new HCPCS codes that were implemented on 
April 1, 2016. The final APC and status indicator assignments are 
listed in Table 7 below.
    We note that, for the CY 2017 update, the HCPCS Workgroup replaced 
the temporary drug HCPCS C-codes that were listed in Table 7 of the 
proposed rule with permanent HCPCS J-codes effective January 1, 2017. 
Because the replacement HCPCS J-codes describe the same drugs with the 
same dosage descriptors as their predecessor HCPCS C-codes, they will 
continue to receive pass-through payment status in CY 2017. Therefore, 
we are assigning the replacement HCPCS J-codes to the same APCs and 
status indicators as their predecessor HCPCS C-codes, as shown in Table 
7 below. The final payment rates for these codes, where applicable, can 
be found in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).

   Table 7--Final CY 2017 Status Indicator (SI) and APC Assignments for the New Level II HCPCS Codes That Were
                                          Implemented on April 1, 2016
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2017    Final CY 2017
    CY 2016 HCPCS code          CY 2017 HCPCS code      CY 2017 long descriptor         SI              APC
----------------------------------------------------------------------------------------------------------------
C9137.....................  J7207....................  Injection, factor viii,                G             1844
                                                        (antihemophilic factor,
                                                        recombinant),
                                                        PEGylated, 1 i.u..
C9138.....................  J7209....................  Injection, factor viii,                G             1846
                                                        (antihemophilic factor,
                                                        recombinant), (Nuwiq),
                                                        1 i.u..
C9461.....................  A9515....................  Choline c-11,                          G             9461
                                                        diagnostic, per study
                                                        dose up to 20
                                                        millicuries.

[[Page 79610]]

 
C9470.....................  J1942....................  Injection, aripiprazole                G             9470
                                                        lauroxil, 1 mg.
C9471.....................  J7322....................  Hyaluronan or                          G             9471
                                                        derivative, Hymovis,
                                                        for intra-articular
                                                        injection, 1 mg.
C9472.....................  J9325....................  Injection, talimogene                  G             9472
                                                        laherparepvec, per 1
                                                        million plaque forming
                                                        units.
C9473.....................  J2182....................  Injection, mepolizumab,                G             9473
                                                        1 mg.
C9474.....................  J9205....................  Injection, irinotecan                  G             9474
                                                        liposome, 1 mg.
C9475.....................  J9295....................  Injection, necitumumab,                G             9475
                                                        1 mg.
J7503.....................  J7503....................  Tacrolimus, extended                   G             1845
                                                        release, (Envarsus XR),
                                                        oral, 0.25 mg.
----------------------------------------------------------------------------------------------------------------

2. Treatment of New CPT and Level II HCPCS Codes Effective July 1, 2016 
for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed 
Rule
    Effective July 1, 2016, we implemented several new CPT and Level II 
HCPCS codes under the hospital OPPS. Through the July 2016 OPPS 
quarterly update CR (Transmittal 3523, Change Request 9658, dated May 
13, 2016), we assigned nine new Category III CPT codes and nine Level 
II HCPCS codes that were made effective July 1, 2016, to interim OPPS 
status indicators and APCs. Specifically, as displayed in Table 8 of 
the CY 2017 OPPS/ASC proposed rule (81 FR 45643), we established 
interim OPPS status indicator 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 
noted 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.
    Table 8 of the CY 2017 OPPS/ASC proposed rule listed the CPT and 
Level II HCPCS codes that were implemented on July 1, 2016, along with 
the proposed status indicators and proposed APC assignments, where 
applicable, for CY 2017. We solicited public comments on the proposed 
APC and status indicator assignments.
    We received one comment related to the proposed APC assignment for 
Category III CPT codes 0440T, 0441T, and 0442T, which we address in 
section III.D.10. of this final rule with comment period. We did not 
receive any public comments on the proposed APC and status indicator 
assignments for the other 15 codes that were listed in Table 8 of the 
CY 2017 OPPS/ASC proposed rule. Therefore, in this final rule with 
comment period, we are adopting as final, without modification, the 
proposed APC and/or status indicator assignments for Category III CPT 
codes 0437T, 0438T, 0439T, 0444T, and 0445T and Level II HCPCS codes 
C9476, C9477, C9478, C9479, C9480, Q5102, Q9981, Q9982, and Q9983. 
However, we are modifying the OPPS status indicator for CPT code 0443T 
from ``T'' to ``N'' because this is an add-on code. Since January 1, 
2014, payment for procedures described by add-on codes have been 
packaged under the hospital OPPS.
    In addition, for the CY 2017 update, the HCPCS Workgroup replaced 
temporary HCPCS codes C9476, C9477, C9478, C9480, and Q9981 with 
permanent HCPCS J-codes effective January 1, 2017. Because the 
replacement HCPCS J-codes describe the same drugs with the same dosage 
descriptors as their predecessor HCPCS C-codes and Q-codes, they will 
continue to receive pass-through payment status in CY 2017. 
Consequently, we are assigning the replacement HCPCS J-codes to the 
same APCs and status indicators as their predecessor HCPCS C-codes and 
Q-codes, as shown in Table 8 below. Table 8 lists the CPT and Level II 
HCPCS codes that were implemented on July 1, 2016, along with the final 
status indicators and APC assignments for CY 2017. The final payment 
rates for these codes, where applicable, can be found in Addendum B to 
this final rule with comment period (which is available via the 
Internet on the CMS Web site).

   Table 8--Final CY 2017 Status Indicators (SI) and APC Assignments for the New Category III CPT and Level II
                                     HCPCS Codes Implemented on July 1, 2016
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2017    Final CY 2017
  CY 2016 CPT/HCPCS code      CY 2017 CPT/HCPCS code    CY 2017 long descriptor         SI              APC
----------------------------------------------------------------------------------------------------------------
C9476.....................  J9145....................  Injection, daratumumab,                G             9476
                                                        10 mg.
C9477.....................  J9176....................  Injection, elotuzumab, 1               G             9477
                                                        mg.
C9478.....................  J2840....................  Injection, sebelipase                  G             9478
                                                        alfa, 1 mg.
C9479.....................  J7342....................  Instillation,                          G             9479
                                                        ciprofloxacin otic
                                                        suspension, 6 mg.
C9480.....................  J9352....................  Injection, trabectedin,                G             9480
                                                        0.1 mg.
Q5102.....................  Q5102....................  Injection, Infliximab,                E2              N/A
                                                        Biosimilar, 10 mg.
Q9981.....................  J8670....................  Rolapitant, oral, 1 mg..               K             1761
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.
0437T.....................  0437T....................  Implantation of non-                   N              N/A
                                                        biologic or synthetic
                                                        implant (e.g.,
                                                        polypropylene) for
                                                        fascial reinforcement
                                                        of the abdominal wall
                                                        (List separately in
                                                        addition to primary
                                                        procedure).
0438T.....................  0438T ***................  Transperineal placement                T             5374
                                                        of biodegradable
                                                        material, peri-
                                                        prostatic (via needle),
                                                        single or multiple,
                                                        includes image guidance.
0439T.....................  0439T....................  Myocardial contrast                    N              N/A
                                                        perfusion
                                                        echocardiography; at
                                                        rest or with stress,
                                                        for assessment of
                                                        myocardial ischemia or
                                                        viability (List
                                                        separately in addition
                                                        to primary procedure).

[[Page 79611]]

 
0440T.....................  0440T....................  Ablation, percutaneous,               J1             5432
                                                        cryoablation, includes
                                                        imaging guidance; upper
                                                        extremity distal/
                                                        peripheral nerve.
0441T.....................  0441T....................  Ablation, percutaneous,               J1             5432
                                                        cryoablation, includes
                                                        imaging guidance; lower
                                                        extremity distal/
                                                        peripheral nerve.
0442T.....................  0442T....................  Ablation, percutaneous,               J1             5432
                                                        cryoablation, includes
                                                        imaging guidance; nerve
                                                        plexus or other truncal
                                                        nerve (e.g., brachial
                                                        plexus, pudendal nerve).
0443T.....................  0443T....................  Real time spectral                     N              N/A
                                                        analysis of prostate
                                                        tissue by fluorescence
                                                        spectroscopy.
0444T.....................  0444T....................  Initial placement of a                 N              N/A
                                                        drug-eluting ocular
                                                        insert under one or
                                                        more eyelids, including
                                                        fitting, training, and
                                                        insertion, unilateral
                                                        or bilateral.
0445T.....................  0445T....................  Subsequent placement of                N              N/A
                                                        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.

3. Process for New Level II HCPCS Codes That Became Effective October 
1, 2016 and New Level II HCPCS Codes That Will Be Effective January 1, 
2017 for Which We Are Soliciting Public Comments in This 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 October 1 and 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 through 
the October and January OPPS quarterly update CRs and via the CMS HCPCS 
Web site (for Level II HCPCS codes). For CY 2017, we proposed to 
continue our established policy of assigning comment indicator ``NI'' 
to these codes to indicate that we are assigning them an interim 
payment status which is subject to public comment (81 FR 45643). 
Specifically, the status indicators and the APC assignments for codes 
flagged with comment indicator ``NI'' are open to public comment in 
this final rule with comment period, and we will respond to these 
public comments in the OPPS/ASC final rule with comment period for the 
next year's OPPS/ASC update. For CY 2017, we proposed to include in 
Addendum B to the CY 2017 OPPS/ASC final rule with comment period the 
following new HCPCS codes:
     New Level II HCPCS codes effective October 1, 2016, that 
would be incorporated in the October 2016 OPPS quarterly update CR;
     New Level II HCPCS codes effective January 1, 2017, that 
would be incorporated in the January 2017 OPPS quarterly update CR.
    As stated above, the October 1, 2016 and January 1, 2017 codes are 
flagged with comment indicator ``NI'' in Addendum B to this 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 are 
inviting public comments on the interim status indicator and APC 
assignments and payment rates for these codes, if applicable, that will 
be finalized in the CY 2018 OPPS/ASC final rule with comment period.
4. Treatment of New and Revised CY 2017 Category I and III CPT Codes 
That Will Be Effective January 1, 2017, for Which We Solicited Public 
Comments in the 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 propose APC and status 
indicator assignments in the following year's rulemaking cycle. We 
noted 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 establishing HCPCS G codes and the resulting delay 
in utilization of the most current CPT codes. In addition, 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 that 
will be effective January 1, 2017, from the AMA in time for inclusion 
in the CY 2017 OPPS/ASC proposed rule. In the proposed rule (81 FR 
45643 through 45644), we indicated that the new and revised CY 2017 
Category I and III CPT codes could be found in OPPS Addendum B to the 
proposed rule and were assigned to new comment indicator ``NP'' to 
indicate that the code

[[Page 79612]]

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. We 
further stated that comments would be accepted on the proposed APC 
assignment and status indicator.
    In addition, we reminded readers that the CPT code descriptors that 
appeared in OPPS Addendum B are short descriptors and do not accurately 
describe the complete procedure, service, or item described of the CPT 
code. Therefore, we included the 5-digit placeholder codes and their 
long descriptors in Addendum O to the proposed rule (which is available 
via the Internet on the CMS Web site) so that the public could 
adequately comment on our proposed APCs and status indicator 
assignments. The 5-digit placeholder codes were listed in Addendum O of 
the proposed rule, specifically under the column labeled ``CY 2017 
OPPS/ASC Proposed Rule 5-Digit Placeholder Code.'' We also indicated 
that the final CPT code numbers would be included in this CY 2017 OPPS/
ASC final rule with comment period. The final CPT code numbers, along 
with their corresponding 5-digit placeholder codes, can be found in 
Addendum O of this final rule with comment period.
    We note that not every code listed in Addendum O of the proposed 
rule was subject to comment. For the new/revised Category I and III CPT 
codes, we requested public comments on only those codes that were 
assigned to comment indicator ``NP.'' We indicated that public comments 
would not be accepted for new Category I CPT laboratory codes that were 
not assigned to ``NP'' comment indicator in Addendum O to the proposed 
rule. We stated that comments to these codes must be submitted at the 
Clinical Laboratory Fee Schedule (CLFS) Public Meeting, which was 
scheduled for July 18, 2016.
    We received public comments on several of the new CPT codes that 
were assigned to comment indicator ``NP'' in Addendum B of the CY 2017 
OPPS/ASC proposed rule. We respond to these comments in section III.D. 
of this CY 2017 OPPS/ASC final rule with comment period.
    The final status indicators, APC assignments, and payment rates for 
the new CPT codes that will be effective January 1, 2017, can be found 
in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).

B. 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 
final rule with comment period.
    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. In the CY 2017 OPPS/ASC proposed rule (81 FR 45644), for CY 
2017, we proposed 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
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and revise the APC groups, the relative 
payment weights, and the wage and other adjustments described in 
paragraph (2) to take into account changes in medical practice, changes 
in technology, the addition of new services, new cost data, and other 
relevant information and factors. Section 1833(t)(9)(A) of the Act also 
requires the Secretary to consult with an expert outside advisory panel 
composed of an appropriate selection of representatives of providers to 
review (and advise the Secretary concerning) the clinical integrity of 
the APC groups and the relative payment weights. We note that the Panel 
recommendations for specific services for the CY 2017 OPPS and our 
responses to them are discussed in the relevant specific sections 
throughout this final rule with comment period.
    In addition, section 1833(t)(2) of the Act provides that, subject 
to certain exceptions, the items and services within an APC group 
cannot be considered comparable with respect to the use of resources if 
the highest cost for an item or service in the group is more than 2 
times greater than the lowest cost for an item or service within the 
same group (referred to as the ``2 times rule''). The statute 
authorizes the Secretary to make exceptions to the 2 times rule in 
unusual cases, such as low-volume items and services (but the Secretary 
may not make such an exception in the case of a drug or biological that 
has been designated as an orphan drug under section 526 of the Federal 
Food, Drug, and Cosmetic Act).
    Therefore, 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 if there are any APC 
violations of the 2 times rule and whether there are any appropriate 
revisions to APC assignments that may be necessary or exceptions to be 
made. 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

[[Page 79613]]

of the single major claims used to establish the APC cost to be 
significant (75 FR 71832). This longstanding definition of when a 
procedure code is significant for purposes of the 2 times rule was 
selected because we believe that a subset of 1,000 claims (or less than 
1,000 claims) is negligible within the set of approximately 100 million 
single procedure or single session claims we use for establishing 
costs. Similarly, a procedure code for which there are fewer than 99 
single claims and which comprises less than 2 percent of the single 
major claims within an APC will have a negligible impact on the APC 
cost. In the CY 2017 OPPS/ASC proposed rule (81 FR 45644 through 
45645), we proposed to make exceptions to this limit on the variation 
of costs within each APC group in unusual cases, such as low-volume 
items and services.
    For the CY 2017 OPPS update, we identified the APCs with violations 
of the 2 times rule, and we proposed changes to the procedure codes 
assigned to these APCs in Addendum B to the CY 2017 OPPS/ASC proposed 
rule. We noted that Addendum B did not appear in the printed version of 
the Federal Register as part of the CY 2017 OPPS/ASC proposed rule. 
Rather, it was published and made available via the Internet on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate 
a violation of the 2 times rule or to improve clinical and resource 
homogeneity, in the CY 2017 OPPS/ASC proposed rule (81 FR 45645), we 
proposed to reassign these procedure codes to new APCs that contain 
services that are similar with regard to both their clinical and 
resource characteristics. In many cases, the proposed procedure code 
reassignments and associated APC reconfigurations for CY 2017 included 
in the 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 proposed changes to the status indicators for some 
procedure codes that were not specifically and separately discussed in 
the proposed rule. In these cases, we proposed to change the status 
indicators for these procedure codes because we believe that another 
status indicator would more accurately describe their payment status 
from an OPPS perspective based on the policies that we proposed for CY 
2017. Addendum B to the CY 2017 OPPS/ASC proposed rule identified with 
a comment indicator ``CH'' those procedure codes for which we proposed 
a change to the APC assignment or status indicator, or both, that were 
initially assigned in the April 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). In 
contrast, Addendum B to this final rule with comment period (available 
via the Internet on the CMS Web site) identifies with the ``CH'' 
comment indicator the final CY 2017 changes compared to the HCPCS 
codes' status as reflected in the October 2016 Addendum B update.
3. APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we proposed 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 the 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 proposed 
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 the proposed rule. 
For a detailed discussion of these criteria, we refer readers to the 
April 7, 2000 OPPS final rule with comment period (65 FR 18457 and 
18458).
    In addition, in the proposed rule, we noted 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 the proposed rule listed the 4 APCs that we proposed 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. We 
indicated that, 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.
    Based on the updated final rule CY 2015 claims data, we found 7 
APCs with violations of the 2 times rule for this final rule with 
comment period. We applied the criteria as described earlier to 
identify the APCs that are exceptions to the 2 times rule for CY 2015, 
and identified 4 additional APCs that meet the criteria for exception 
to the 2 times rule for this final rule with comment period, but that 
did not meet the criteria using proposed rule claims data. 
Specifically, we found that the following 4 additional APCs violated 
the 2 times rule using the final rule with comment period claims data:

 APC 5181 (Level 1 Vascular Procedures)
 APC 5732 (Level 2 Minor Procedures)
 APC 5821 (Level 1 Health and Behavior Services)
 APC 5823 (Level 3 Health and Behavior Services)

    After considering the public comments we received on APC 
assignments and our analysis of the CY 2015 costs from hospital claims 
and cost report data available for this final rule with comment period, 
we are finalizing our proposals with some modifications. Specifically, 
we are finalizing our proposal to except 3 of the 4 proposed APCs from 
the 2 times rule for CY 2017 (APCs 5521, 5735, and 5771), and also 
excepting 4 additional APCs (APCs 5181, 5732, 5821, and 5823). APC 5841 
(Psychotherapy), which appeared as one of the 4 APCs in Table 9 of the 
CY 2017 OPPS/ASC proposed rule, no longer met the criteria for 
exception to the 2 times rule in this final rule with comment period. 
Table 9 below lists the 7 APCs that we are excepting from the 2 times 
rule for CY 2017 based on the criteria described earlier and a review 
of updated claims data. We note that, for cases in which a 
recommendation by the HOP Panel appears to result in or allow a 
violation of the 2 times rule, we generally accept the Panel's 
recommendation because those recommendations are based on explicit 
consideration of resource use, clinical homogeneity, site of service, 
and the quality of the claims data used to determine the APC payment 
rates. The geometric mean costs for hospital outpatient services for 
these and all other APCs that were used in the development of this 
final rule with comment period can be found on the CMS Web site at: 
http://www.cms.gov/

[[Page 79614]]

Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/
Hospital-Outpatient-Regulations-and-Notices.html.

        Table 9--Final CY 2017 APC Exceptions to the 2 Times Rule
------------------------------------------------------------------------
           CY 2017 APC                       CY 2017 APC title
------------------------------------------------------------------------
5181.............................  Level 1 Vascular Procedures.
5521.............................  Level 1 Imaging without Contrast.
5732.............................  Level 2 Minor Procedures.
5735.............................  Level 5 Minor Procedures.
5771.............................  Cardiac Rehabilitation.
5821.............................  Level 1 Health and Behavior Services.
5823.............................  Level 3 Health and Behavior Services.
------------------------------------------------------------------------

C. 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 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 $9,999. 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 
($501-$600)) is made at $550.50.
    Every year we receive several requests for higher payment amounts 
under the New Technology APCs for specific procedures paid under the 
OPPS because they require the use of expensive equipment. We are taking 
this opportunity to reiterate our response in general to the issue of 
hospitals' capital expenditures as they relate to the OPPS and 
Medicare, as specified in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70374).
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
inpatient market basket increase. We believe that our payment rates 
generally reflect the costs that are associated with providing care to 
Medicare beneficiaries, and we believe that our payment rates are 
adequate to ensure access to services (80 FR 70374).
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
parties request that Medicare make higher payment amounts under the New 
Technology APCs for new procedures in that transitional phase. These 
requests, and their accompanying estimates for expected total patient 
utilization, often reflect very low rates of patient use of expensive 
equipment, resulting in high per use costs for which requesters believe 
Medicare should make full payment. Medicare does not, and we believe 
should not, assume responsibility for more than its share of the costs 
of procedures based on projected utilization for Medicare beneficiaries 
and does not set its payment rates based on initial projections of low 
utilization for services that require expensive capital equipment. For 
the OPPS, we rely on hospitals to make informed business decisions 
regarding the acquisition of high cost capital equipment, taking into 
consideration their knowledge about their entire patient base (Medicare 
beneficiaries included) and an understanding of Medicare's and other 
payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68314) for further discussion 
regarding this payment policy.)
    We note that, in a budget neutral environment, payments may not 
fully cover hospitals' costs in a particular circumstance, including 
those for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high 
cost equipment with the understanding that the Medicare program must be 
careful to establish its initial payment rates, including those made 
through New Technology APCs, for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we regularly examine the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice (77 FR 68314).
2. Additional New Technology APC Groups
    As stated above, for the CY 2017 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, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45646), we proposed to expand the New Technology APC groups 
by adding 3 more levels, specifically, adding New Technology Levels 49 
through 51. We proposed 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 final rule with comment 
period. Therefore, for the CY 2017 OPPS update, we proposed to 
establish 6 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

[[Page 79615]]

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 of the CY 2017 OPPS/ASC proposed 
rule included the complete list of the proposed additional 6 New 
Technology APC groups for CY 2017 (81 FR 45646).
    We did not receive any public comments on the proposed expansion of 
the New Technology APC groups, specifically, adding New Technology 
Levels 49 through 51 for New Technology APCs 1901 through 1906. 
Therefore, we are finalizing our proposal, without modification. Table 
10 lists the final CY 2017 New Technology APCs and the group titles for 
New Technology Levels 49 through 51. The payment rates for New 
Technology APCs 1901 through 1906 can be found in Addendum A to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).

      Table 10--Final CY 2017 Additional New Technology APC Groups
------------------------------------------------------------------------
                                                          Final  CY 2017
        New CY 2017 APC             CY 2017 APC title           SI
------------------------------------------------------------------------
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).
------------------------------------------------------------------------

3. 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 we obtain new information that was not available at the time 
of our initial New Technology APC assignment, 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, in the CY 2017 
OPPS/ASC proposed rule (81 FR 45646), we proposed 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).
    For CY 2016, only two procedure codes, specifically, HCPCS codes 
C9740 (Cystourethroscopy, with insertion of transprostatic implant; 4 
or more implants) and 0100T (Placement of a subconjunctival retinal 
prosthesis receiver and pulse generator, and implantation of intra-
ocular retinal electrode array, with vitrectomy) received payment 
through a New Technology APC. In the CY 2017 OPPS/ASC proposed rule (81 
FR 45646 through 45648), we proposed to reassign HCPCS code C9740 from 
APC 1565 (New Technology--Level 28 ($5000-$5500)) to APC 5376 (Level 6 
Urology and Related Services), and to reassign CPT code 0100T from APC 
1599 (New Technology--Level 48 ($90,000-$100,000)) to APC 1906 (New 
Technology--Level 51 ($140,001-$160,000)). We received public comments 
on the proposed APC assignment revisions for both procedure codes. 
Below in section III.C.3.b. of this final rule with comment period, we 
discuss the public comments we received, our responses, and our final 
policy for CY 2017 for CPT code 0100T on the retinal prosthesis implant 
procedure. In section III.D.4.a. of this final rule with comment 
period, we discuss the public comments we received, our responses, and 
our final policy for CY 2017 for HCPCS code C9740 on cystourethroscopy.
b. Retinal Prosthesis Implant Procedure
    As stated above, in the CY 2017 OPPS/ASC proposed rule, we proposed 
to revise the APC assignment for CPT code 0100T from New Technology APC 
1599 to New Technology APC 1906. CPT code 0100T 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 
device described by HCPCS code C1841 was assigned to OPPS status 
indicator ``N'' to indicate that payment for the device 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 
with a 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 
the procedure 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 the CY 2017 proposed rule showed 5 single claims (out of 7 
total claims) for CPT code 0100T, with a geometric mean

[[Page 79616]]

cost of approximately $141,900 based on claims submitted between 
January 1, 2015, through December 31, 2015, and processed through 
December 31, 2015. In the proposed rule, we noted that the final 
payment rate in the CY 2017 OPPS/ASC final rule with comment period 
would be based on claims submitted between January 1, 2015, and 
December 31, 2015, and processed through June 30, 2016.
    Based on the CY 2015 OPPS claims data available for the proposed 
rule and our understanding of the Argus[supreg] II procedure, we 
proposed to reassign CPT code 0100T from APC 1599 to APC 1906 with a 
proposed payment rate of approximately $150,000 for CY 2017. We stated 
that we believe that APC 1906 is the most appropriate APC assignment 
for the Argus[supreg] II procedure. We noted that this payment rate 
includes the cost of both the surgical procedure (CPT code 0100T) and 
the retinal prosthesis device (HCPCS code C1841).
    Comment: Several commenters supported CMS' proposal to reassign CPT 
code 0100T from APC 1599 to APC 1906, which had a proposed CY 2017 
payment rate of $150,000, and stated that the proposed payment better 
aligns with the cost of providing the service. However, one commenter 
stated that, while this change may benefit some hospitals, it does not 
help hospitals with a low wage-index value because the cost of the 
technology itself is not affected by the hospital's wages relative to 
other hospitals. The commenter further stated that the use of such new 
technologies as the Argus[supreg] II procedure underpays hospitals in 
less costly wage areas and, therefore, limit its use. Consequently, the 
commenter suggested that CMS consider the effect of setting new 
technology payments for hospitals assigned to less costly wage areas.
    Response: We appreciate the commenters' support. Based on the 
updated CY 2015 hospital outpatient claims data used for this final 
rule with comment period, which is based on claims submitted between 
January 1, 2015, and December 31, 2015, and processed through June 30, 
2016, we believe that APC 1906 remains the most appropriate APC 
assignment for CPT code 0100T. The latest claims data showed 9 single 
claims (out of 13 total claims) for CPT code 0100T, with a geometric 
mean cost of approximately $142,003. We believe that the payment for 
APC 1906 appropriately captures the cost of providing the service 
associated with the Argus[supreg] II procedure.
    With respect to the issue of hospitals with a low wage index, we 
appreciate the commenter's interest in refining the methodology for new 
technology APCs under the OPPS. Because we did not propose a change to 
hospitals with a low wage index values, we will take this comment into 
consideration in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT code 
0100T from APC 1599 (New Technology--Level 48 ($90,001-$100,000)) to 
APC 1906 (New Technology--Level 51 ($140,001-$160,000)), which has a 
final payment rate of $150,000.50 for CY 2017. We note this payment 
includes both the surgical procedure (CPT code 0100T) and the use of 
the Argus[supreg] II device (HCPCS code C1841).

D. OPPS APC-Specific Policies

1. Cardiovascular Procedures/Services
a. Cardiac Event Recorder (APC 5071)
    We proposed to assign procedures described by CPT code 33284 
(Removal of an implantable, patient-activated cardiac event recorder) 
to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage) for CY 
2017. Based on the CY 2015 claims data used for the proposed rule, the 
geometric mean cost of procedures described by CPT code 33284 was 
approximately $733 (2,650 single claims), and the geometric mean cost 
of APC 5071 was approximately $555. In addition, CPT code 33284 is 
assigned to status indicator ``Q2,'' which indicates that the service 
is conditionally packaged under the OPPS. Therefore, when this 
procedure is performed in conjunction with a revision or replacement 
procedure, the payment for the procedure described by CPT code 33284 is 
packaged under the OPPS.
    Comment: One commenter requested that CMS assign procedures 
described by CPT code 33284 to a higher paying APC. In particular, the 
commenter requested that procedures described by CPT code 33284 be 
assigned to APC 5211 (Level 1 Electrophysiologic Procedures) instead of 
APC 5071. The commenter believed that the procedure described by CPT 
code 33284 is more similar clinically and in terms of resource use to 
the services assigned to APC 5211 than to those assigned to APC 5071.
    Response: We disagree with the commenter. We believe that the 
procedures described by CPT code 33284 are appropriately assigned to 
APC 5071. Based on updated claims data used for the final rule, the 
geometric mean cost of CPT code 33284 (approximately $715) is more 
comparable to the geometric mean cost of APC 5071 (approximately $554) 
than to the geometric mean cost of APC 5072 (approximately $1,271). 
Therefore, we do not believe that it would be appropriate to assign 
procedures described by CPT code 33284 to a higher level within the 
Excision/Biopsy/Incision and Drainage APC series. In addition, the 
procedures described by CPT code 33284 are not electrophysiology 
services and, therefore, do not appropriately correlate with the 
services assigned to APC 5211. Therefore, we are finalizing our CY 2017 
proposal to assign the procedures described by CPT code 33284 to APC 
5071.
b. Cardiac Telemetry (APC 5733)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to reassign CPT code 93229 (External mobile cardiovascular 
telemetry with electrocardiographic recording, concurrent computerized 
real time data analysis and greater than 24 hours of accessible ecg 
data storage (retrievable with query) with ecg triggered and patient 
selected events transmitted to a remote attended surveillance center 
for up to 30 days; technical support for connection and patient 
instructions for use, attended surveillance, analysis and transmission 
of daily and emergent data reports as prescribed by a physician or 
other qualified health care professional) from APC 5722 (Level 2 
Diagnostic Tests and Related Services) to APC 5734 (Level 4 Minor 
Procedures), with a proposed payment rate of $95.66.
    Comment: One commenter disagreed with the proposed reassignment of 
CPT code 93229 to APC 5734, and stated that the proposed payment rate 
represents a 60-percent decrease from the CY 2016 payment rate of 
$220.35. The commenter indicated that the proposed underpayment of 
$95.66 does not reflect the significant costs involved in providing the 
service. The commenter added that the wearable device used by the 
beneficiary costs over $21,000. The commenter explained that because of 
the significant resource costs associated with performing the service 
described by CPT code 93229, most hospital outpatient facilities that 
provide this service contract the work to a remote cardiac monitoring 
service company because HOPDs do not have the devices, technology, or 
infrastructure in place to provide the service in-house. In addition, 
the commenter believed that hospitals are still confused about how to 
code for remote cardiac diagnostic tests, and indicated that the 
proposed payment rate of $95.66 for CPT code 93229 is the result of 
hospitals

[[Page 79617]]

miscoding the service on claims. The commenter believed that the coding 
education provided in the April 2015 edition of the Coding Clinic for 
HCPCS will assist hospitals in coding appropriately for the service. 
However, until the coding education effort effectuates changes in 
coding practices, the commenter believed that the true cost of 
furnishing the service described by CPT code 93229 is more comparable 
to the OPPS payment rate of approximately $795 made in CY 2012, and 
recommended that CMS reassign this service to APC 5724 (Level 4 
Diagnostic Tests and Related Services), with a proposed payment rate of 
$870.62. Alternatively, if CMS is unable to reassign the service to APC 
5724, the commenter suggested that CMS continue the CY 2016 APC 
assignment for CPT code 93229 to APC 5722, with a payment rate of 
$220.35. The commenter further stated that when the service described 
by CPT code 93229 is provided under the MPFS, the payment rate for 
performing this service is $732.68. The commenter believed that 
continuing to assign CPT code 93229 to APC 5722 for CY 2017 will 
provide payment stability for this service while coding education 
efforts continue.
    Response: Based on our analysis of the CY 2015 claims data used for 
the proposed rule, we proposed to reassign CPT code 93229 to APC 5734. 
Specifically, our analysis showed a geometric mean cost of 
approximately $77 based on 1,847 single claims (out of 3,747 total 
claims). Based on its clinical and resource homogeneity to the other 
services, we proposed to reassign the service described by CPT code 
93229 to APC 5734, whose geometric mean cost was approximately $100. We 
did not propose to continue to assign CPT code 93229 to APC 5722 
because the geometric mean cost for this APC was approximately $242, 
which would result in a significant overpayment for the service. 
However, based on our review of the updated CY 2015 claims data used 
for this final rule with comment period, we found the geometric mean 
cost for CPT code 93229 to be lower than the proposed rule geometric 
mean cost. We note that the proposed rule claims data were based on 
claims submitted from January 1, 2015, through December 31, 2015, and 
processed through December 31, 2015, while the final rule with comment 
period claims data are based on claims submitted from January 1, 2015, 
through December 31, 2015, and processed through June 30, 2016. Based 
on our analysis of the final rule with comment period claims data, we 
found a geometric mean cost of approximately $71 for the service 
described by CPT code 93229 based on 2,323 single claims (out of 4,495 
total claims). The geometric mean cost for the service described by CPT 
code 93229 is more similar to that of APC 5733 (Level 3 Minor 
Procedures), which has a geometric mean cost of approximately $56, than 
to the geometric mean cost of approximately $103 for APC 5734. 
Consequently, we believe that CPT code 93229 should be reassigned to 
APC 5733, rather than APC 5734.
    Also, as we have stated repeatedly, beyond our standard OPPS 
trimming methodology that we apply to those claims that have passed 
various types of claims processing edits, it is not our general policy 
to judge the accuracy of hospital coding and charging for purposes of 
ratesetting. (We refer readers to the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 71838) for further discussion.) Hospitals are 
responsible for accurately coding the performance of procedures and 
services and the items furnished to beneficiaries.
    In summary, after evaluating the public comment we received and our 
subsequent analysis of the updated claims data for this final rule with 
comment period, we are modifying our proposal and reassigning the 
service described by CPT code 93229 to APC 5733 for CY 2017. The final 
payment rate for this code can be found in Addendum B to this final 
rule with comment period (which is available via the Internet on the 
CMS Web site).
2. Eye-Related Services
    Comment: A few commenters requested that CMS assign new CPT code 
0465T (Suprachoroidal injection of a pharmacologic agent (does not 
include supply of medication)) to APC 5694 (Level 4 Drug 
Administration) instead of APC 5693 (Level 3 Drug Administration) 
because the commenters believed that the service is clinically similar 
and similar from a resource-use perspective to CPT code 67028 
(Intravitreal injection of a pharmacologic agent (separate procedure), 
which is assigned to APC 5694.
    Response: We agree with the commenters. We are modifying our 
proposal and assigning CPT code 0465T to APC 5694 for CY 2017. Because 
CPT code 0465T is new, we do not have claims data upon which to base an 
initial APC assignment. However, we believe that the clinical and 
resource similarities of the procedure described by CPT code 0465T, 
when compared to the procedure described by CPT code 67028, support 
assigning CPT code 0465T to APC 5694 at this time. When cost and claims 
data become available for CPT code 0465T, we will reevaluate the APC 
assignment.
    Comment: One commenter requested that CMS pay separately for the 
new CPT codes 0444T (Initial placement of a drug-eluting ocular insert 
under one or more eyelids, including fitting, training, and insertion, 
unilateral or bilateral) and 0445T (Subsequent placement of a drug-
eluting ocular insert under one or more eyelids, including re-training, 
and removal of existing insert, unilateral or bilateral) instead of 
unconditionally packaging the payment for these services, as proposed.
    Response: We disagree with the commenters. The procedure to place 
one of these inserts under an eyelid (as described by these procedure 
codes) is a very minor service (not unlike delivering eye drops) that 
requires little time or effort from a nurse or technician. Any 
associated additional cost associated with performing these procedures 
are appropriately packaged with another service.
3. Gastrointestinal Procedures and Services
a. Esophageal Sphincter Augmentation (APC 5362)
    For CY 2017, we proposed to assign the procedures described by new 
CPT code 43284 (Laparoscopy, surgical, esophageal sphincter 
augmentation procedure, placement of sphincter augmentation device, 
including cruroplasty when performed) to APC 5362 (Level 2 Laparoscopy 
and Related Services), with a geometric mean cost of approximately 
$7,183. CPT code 43284 replaces CPT code 0392T, which replaced HCPCS 
code C9737. HCPCS code C9737 was in effect for the first half of CY 
2015, and CPT code 0392T became effective beginning in the second half 
of CY 2015 and will be deleted at the end of CY 2016. Based on the 
claims data used for the proposed rule, the geometric mean cost for the 
procedure described by HCPCS code C9737 was approximately $10,260 (45 
single claims) and the geometric mean cost for the procedure described 
by CPT code 0392T was approximately $8,453 (19 single claims).
    Comment: One commenter disagreed with the proposed APC assignment 
for procedures described by CPT code 43284 to APC 5362. The commenter 
stated that the proposed payment rate for APC 5362 does not accurately 
reflect the anticipated cost of providing the services described by CPT 
code 43284. The commenter suggested that CMS create a new Level 3 APC 
within the laparoscopy and related services APC

[[Page 79618]]

series that would contain the 20 most costly procedures that are 
currently assigned to APC 5362. According to the commenter, the 
creation of this new Level 3 Laparoscopy APC would be more 
representative of the resource costs for services described by CPT code 
43284.
    Response: Based on updated claims data for the final rule, we 
compared the geometric mean cost for procedures described by CPT code 
0392T (the predecessor code for CPT code 43284) to the geometric mean 
cost of APC 5362. The geometric mean cost for procedures described by 
CPT code 0392T is $8,715 based on 24 single claims, which is $1,551 
greater than the geometric mean cost for APC 5362 of $7,164. 
Furthermore, since CPT code 0392T replaced HCPCS code C9737, the cost 
of this service has decreased from $10,388 for HCPCS code C9737 to 
$8,715 for CPT code 0392T. The commenter identified 9,276 single claims 
using data published with the proposed rule that could be used to 
create a new Level 3 Laparoscopy and Related Services APC. However, 
this subgroup of procedures from APC 5362 only contains two significant 
procedures, and 23 percent of the 40,035 single claims from APC 5362. 
The services for the suggested Level 3 Laparoscopy and Related Services 
APC have both sufficient clinical and resource homogeneity to the other 
procedures assigned to APC 5362. Therefore, we do not believe that 
there is a need to create another APC for these services.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to assign procedures 
described by CPT code 43284 to APC 5362, effective January 1, 2017. The 
final payment rate for CPT code 43284 can be found in Addendum B to 
this final rule with comment period, which is available via the 
Internet on the CMS Web site.
b. Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 
5303)
    For CY 2017, we proposed to assign CPT code 43240 
(Esophagogastroduodenoscopy, flexible, transoral; with transmural 
drainage of pseudocyst (includes placement of transmural drainage 
catheter(s)/stent(s), when performed, and endoscopic ultrasound, when 
performed)) to APC 5303 (Level 3 Upper GI Procedures), for which we 
proposed a CY 2017 geometric mean cost of approximately $2,598.
    Comment: Commenters disagreed with CMS' proposal to assign CPT code 
43240 to APC 5303. The commenters believed that CPT code 43240 would be 
more appropriately assigned to APC 5331 (Complex GI Procedures), for 
which we proposed a CY 2017 geometric mean cost of approximately, based 
upon the procedure's clinical similarity to other endoscopy procedures 
involving stent placement currently assigned to APC 5331. Additionally, 
commenters stated that the proposed CY 2017 geometric mean cost of 
$2,578 may underrepresent the true costs of the procedure because of 
underreporting of the C-code for stents.
    Response: We disagree with the commenters' assertion that CPT code 
43240 would be more appropriately assigned to APC 5331. While we 
acknowledge that a number of endoscopy procedures involving stent 
placement are currently assigned to APC 5331, we continue to believe 
that based on our claims data available for CY 2017 ratesetting, the 
proposed assignment of CPT code 43240 to APC 5303 is appropriate.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to assign CPT code 43240 
to APC 5303, which has a final CY 2017 APC geometric mean cost of 
approximately $2,581. The final payment rate for this code can be found 
in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).
    Comment: One commenter requested that we create a new APC and 
assign the following four codes to this new APC: (1) HCPCS code G0105 
(Colorectal cancer screening; colonoscopy on individual at high risk); 
(2) HCPCS code G0121 (Colorectal cancer screening; colonoscopy on 
individual not meeting criteria for high risk); (3) CPT code 44388 
(Colonoscopy through stoma; diagnostic, including collection of 
specimen(s) by brushing or washing, when performed (separate 
procedure)); and (4) CPT code 45378 (Colonoscopy, flexible; diagnostic, 
including collection of specimen(s) by brushing or washing, when 
performed (separate procedure)). The commenters emphasized the clinical 
importance of colonoscopy in the detection and treatment of colon 
cancer as a motivation for the creation of this new APC.
    Response: We recognize the importance of colonoscopies to Medicare 
beneficiaries and believe that the OPPS and ASC payment policies for 
colonoscopies allow full access to these services. As a part of our 
multi-year review, which includes restructuring and reorganization and 
consolidation of the OPPS APCs, we have been creating larger APCs based 
on simpler and more intuitive clinical groupings. We believe that APC 
5311 (Level 1 Lower GI Procedures) is an appropriate APC assignment for 
these four codes from a clinical and resource perspective. We also fail 
to recognize any particular advantage of creating the suggested new APC 
that would contain only four codes. The geometric mean cost of CPT code 
45378 drives the payment rate for APC 5311 because it represents 81 
percent of the single claims in this APC. As we discuss later in the 
section on the imaging APCs, we are reassigning HCPCS codes G0105 and 
G0121 to APC 5311. We believe that all four of these codes are 
clinically similar (all are similar colonoscopy services) and are 
similar in terms of resource costs based on their geometric mean costs. 
We are finalizing the proposal to assign HCPCS codes G0105 and G0121, 
and CPT codes 44388 and 45378 to APC 5311 for CY 2017.
    Comment: One commenter believed that some of the tube and catheter 
placement procedure codes (for example, CPT code 32561 
(Installation(s), via chest tube/catheter agent for fibrinolysis (e.g., 
fibrinolytic agent for break up of multiloculated effusion); initial 
day) that were assigned to APC 5301 (Level 1 Upper GI Procedures) in 
the proposed rule are not clinically similar to the endoscopy 
procedures that have traditionally been grouped together in APC 5301 
(or its predecessor APC). The commenter requested that CMS reassign the 
catheter and tube placement procedure codes to other APCs that would be 
more clinically suitable.
    Response: Upon further review of the procedure codes assigned to 
APC 5301, we agree with the commenter. Table 11 below shows the final 
APC reassignments for the tube and catheter placement and removal 
procedure codes that were assigned to APC 5301 in the proposed rule.

[[Page 79619]]



       Table 11--Tube and Catheter Codes Reassigned from APC 5301
------------------------------------------------------------------------
                                         Final  CY 2017   Final  CY 2017
      CPT code            Descriptor           APC              SI
------------------------------------------------------------------------
32552...............  Removal of                   5181              Q2
                       indwelling
                       tunneled pleural
                       catheter with
                       cuff.
32554...............  Thoracentesis,               5181               T
                       needle or
                       catheter,
                       aspiration of
                       the pleural
                       space; without
                       imaging guidance.
32555...............  Thoracentesis,               5181               T
                       needle or
                       catheter,
                       aspiration of
                       the pleural
                       space; with
                       imaging guidance.
32560...............  Instillation, via            5181               T
                       chest tube/
                       catheter, agent
                       for pleurodesis
                       (e.g., talc for
                       recurrent or
                       persistent
                       pneumothorax).
32561...............  Installation(s),             5181               T
                       via chest tube/
                       catheter agent
                       for fibrinolysis
                       (e.g.,
                       fibrinolytic
                       agent for break
                       up of
                       multiloculated
                       effusion);
                       initial day.
32562...............  (Installation(s),            5181               T
                       via chest tube/
                       catheter agent
                       for fibrinolysis
                       (e.g.,
                       fibrinolytic
                       agent for break
                       up of
                       multiloculated
                       effusion);
                       subsequent day.
32960...............  Pneumothorax,                5181               T
                       therapeutic,
                       intrapleural
                       injection of air.
36575...............  Repair of                    5181               T
                       tunneled or non-
                       tunneled central
                       venous access
                       catheter,
                       without
                       subcutaneous
                       port or pump,
                       central or
                       peripheral
                       insertion site.
36589...............  Removal of                   5181              Q2
                       tunneled central
                       venous catheter,
                       without
                       subcutaneous
                       port or pump.
61070...............  Puncture of shunt            5442               T
                       tubing or
                       reservoir for
                       aspiration or
                       injection
                       procedure.
------------------------------------------------------------------------

    We are reassigning all of the procedure codes listed in the above 
table to APC 5181 (Level 1 Vascular Procedures), except for CPT code 
61070 which we are reassigning to APC 5442. We believe that APC 5181 is 
the most appropriate APC assignment because it currently contains 
various catheter insertion and removal codes and similar procedures 
that use catheters. We do not believe that the nine procedures codes 
that we are reassigning to APC 5181 are sufficiently unique that a new 
APC specifically for assignment of these nine codes is warranted. We 
also understand that these codes are at the low end of the cost range 
for the procedures assigned to APC 5181, but APC 5181 is the lowest 
cost APC in this series. We also understand that the lung procedures 
that we are proposing to reassign to APC 5181 are not vascular 
procedures, but we believe that they are generally sufficiently similar 
to vascular catheter insertion procedures such that assignment to APC 
5181 is clinically appropriate, and that a dedicated lung procedures 
APC is not necessary. However, to acknowledge that these APCs includes 
services that are not strictly ``vascular,'' we are renaming the 
Vascular Procedures APCs (5181 through 5183) Levels 1 through 3 to 
``Vascular Procedures & Related Services.''
4. Musculoskeletal Procedures/Services
    Consistent with CMS' statutory requirement under section 
1833(t)(9)(A) of the Act to review and revise APC assignments annually 
and to construct the most appropriate APC groupings, as well as, to the 
extent desirable, correct any 2 times rule violations, we evaluated the 
resource costs and clinical coherence of the procedures associated with 
the Closed Treatment Fracture and Related Services (APCs 5111, 5112, 
and 5113) and Musculoskeletal Procedures APCs (APCs 5121, 5122, 5123, 
5124, and 5125). For the CY 2017 OPPS update, we reviewed the 
procedures assigned to the Closed Treatment Fracture and 
Musculoskeletal Procedures APCs, and consolidated the two APC groups 
into the Musculoskeletal APC group, with six Levels, to improve the 
homogeneity of the procedures within these two APC groups. Based on our 
analysis of the CY 2015 hospital outpatient claims data used for the 
proposed rule, we proposed some modifications to these groups as 
reflected in Addendum B to the CY 2017 OPPS/ASC proposed rule. 
Specifically, we proposed to reassign certain procedures from one level 
within an APC to another; either from a lower-level paying APC to a 
higher-level paying APC, or from a higher-level paying APC to a lower-
level paying APC, depending on the geometric mean cost for each 
procedure code. In addition, we proposed to revise the APC group title 
from ``Closed Treatment Fracture and Related Services'' to 
``Musculoskeletal Procedures,'' and also proposed to establish a new 
level within the APC, specifically, Level 6, for the assignment of 
musculoskeletal procedures. We believe that the proposed restructuring 
and consolidation of the musculoskeletal APCs more appropriately group 
the musculoskeletal services according to their current resource costs, 
as well as their clinical characteristics.
    Comment: Some commenters supported the reorganization and the 
increase in the number of musculoskeletal APC levels from five to six. 
One commenter expressed approval for the number of procedures assigned 
to Level 6 within the APC and stated that the methodology for assigning 
procedures to this level is logical, consistent with other APCs, and 
leads to more appropriate hospital payments. One commenter also stated 
that the change will help correct the problem associated with those 
musculoskeletal procedures that had previously shifted to the more 
costly inpatient setting because of inadequate payments under the 
hospital OPPS. Consequently, these commenters requested that CMS 
finalize the proposal.
    Response: We appreciate the commenters' support.
    Comment: One commenter requested that CMS reevaluate the procedure 
codes assigned to Level 4 within the Musculoskeletal Procedures APC to 
ensure that these services are paid appropriately. The commenter 
expressed concern with the range of costs for the procedures assigned 
to Level 4 and 5, and stated that the current proposal underpays for 
some of the procedures assigned to Level 4. To correct the variation of 
costs between Level 4 and 5, the commenter suggested reassigning some 
of the procedures from Level 4 to Level 5, or alternatively, 
establishing a new, intermediate level APC whose geometric mean cost is 
between Level 4 and 5.
    Response: We appreciate the commenter's suggestion. However, we 
believe that the proposed structure of the musculoskeletal APCs with 
six levels, compared to last year's five levels, improves the 
homogeneity of the procedures within the musculoskeletal APC group. As 
we do annually, we will again review and evaluate the APC assignments 
for all items, procedures, and services paid under the hospital OPPS 
for the CY 2018 rulemaking.
    We also received several public comments concerning the proposed 
reassignment of certain procedures assigned to the Musculoskeletal 
Procedures APCs. A summary of the

[[Page 79620]]

public comments and our responses follow.
a. Auditory Osseointegrated Implants/Bone-Anchored Hearing Systems 
(APCs 5114, 5115, and 5116)
    In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to 
reassign four auditory osseointegrated implant procedures. 
Specifically, as listed in Table 12 below, we proposed to reassign CPT 
code 69714 from APC 5125 (Level 5--Musculoskeletal Procedures) to APC 
5115 (Level 5--Musculoskeletal Procedures), CPT code 69715 from APC 
5125 to APC 5116 (Level 6--Musculoskeletal Procedures), CPT code 69717 
from APC 5123 (Level 3--Musculoskeletal Procedures) to APC 5114 (Level 
4--Musculoskeletal Procedures), and CPT code 69718 from APC 5124 (Level 
4--Musculoskeletal Procedures) to APC 5115.

            Table 12--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Auditory Osseointegrated Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2016    Proposed  CY    Proposed     CY 2017
               CPT code                         Long descriptors             CY 2016      CY 2016        OPPS      2017  OPPS     CY 2017        OPPS
                                                                             OPPS SI      OPPS APC     payment         SI         OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
69714................................  Implantation, osseointegrated               J1          5125   $10,537.90           J1          5115    $9,491.00
                                        implant, temporal bone, with
                                        percutaneous attachment to
                                        external speech processor/
                                        cochlear stimulator; without
                                        mastoidectomy.
69715................................  Implantation, osseointegrated               J1          5125    10,537.90           J1          5116    14,444.00
                                        implant, temporal bone, with
                                        percutaneous attachment to
                                        external speech processor/
                                        cochlear stimulator; with
                                        mastoidectomy.
69717................................  Replacement (including removal of           J1          5123     4,969.26           J1          5114     5,199.03
                                        existing device),
                                        osseointegrated implant,
                                        temporal bone, with percutaneous
                                        attachment to external speech
                                        processor/cochlear stimulator;
                                        without mastoidectomy.
69718................................  Replacement (including removal of           J1          5124     7,064.07           J1          5115     9,491.00
                                        existing device),
                                        osseointegrated implant,
                                        temporal bone, with percutaneous
                                        attachment to external speech
                                        processor/cochlear stimulator;
                                        with mastoidectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter expressed appreciation for the proposed 
payment increase for CPT codes 69715, 69717, and 69718. However, 
several commenters opposed the proposed payment decrease for CPT code 
69714. The commenters who disagreed with the APC reassignment indicated 
that the data used by CMS are flawed and do not accurately capture the 
cost of performing an osseointegrated implant surgery. Some commenters 
stated that the proposed payment rate for CPT code 69714 would be 
inadequate to cover the cost of the procedure. These commenters noted 
that the list price for a CochlearTM Baha[supreg] Implant 
System ranges from $6,887 to $8,435. Consequently, several commenters 
requested that CMS not finalize the proposed payment reduction for CPT 
code 69714 pending the collection of accurate claims data.
    Response: As stated above, 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. As 
such, we review on an annual basis all APC assignments for both general 
appropriateness and for violations of the 2 times rule, and when 
necessary, reassign CPT codes to more appropriate APCs. Although there 
was no violation of the 2 times rule within the Closed Treatment 
Fracture and Related Services and Musculoskeletal Procedures APCs, 
based on our review of the updated CY 2015 claims data used for this CY 
2017 OPPS/ASC final rule with comment period, we believe that revising 
the Musculoskeletal Procedure APC structure is necessary to maintain 
the clinical homogeneity and resource characteristics of the procedures 
within this APC group.
    In addition, review of the latest hospital outpatient claims data 
used for this final rule with comment period shows the geometric mean 
cost for CPT code 69714 is approximately $9,407 based on 703 single 
claims (out of 713 total claims), which is relatively similar to and 
slightly less than the final rule geometric mean cost of $9,828 for APC 
5115. Therefore, we continue to believe that the procedure described by 
CPT code 69714 is appropriately placed in APC 5115 based on resource 
and clinical homogeneity to other procedures currently assigned to APC 
5115.
    Further, as we do every year, we evaluate our claims data to 
determine the appropriateness of the APC assignments for all payable 
services and items under the hospital OPPS. For the CY 2017 OPPS 
update, based on our review, we proposed to revise the APC assignments 
for four auditory osseointegrated implant procedures, specifically, CPT 
codes 69714, 69715, 69717, and 69718. As a result of our APC review for 
the CY 2017 OPPS update, we note that, based on our review of the final 
rule with comment period claims data, three of the four procedures, 
specifically, CPT codes 69715, 69717, and 69718, will receive an 
increase in payment for CY 2017 under the hospital OPPS.

[[Page 79621]]

    Comment: Some commenters believed that the proposed payment 
reduction for CPT code 69714 would restrict Medicare beneficiary access 
to the procedure.
    Response: We disagree with the commenters. We do not believe that 
the revised payment for CPT code 69714 will affect beneficiaries' 
access to reasonable and appropriate care. Moreover, we believe that 
providers will continue to perform this procedure when medically 
necessary.
    After consideration of the public comments we received, we are 
finalizing our CY 2017 proposal, without modification, to reassign CPT 
codes 69714, 69715, 69717 and 69718 to APCs 5115, 5116, 5114, and 5115, 
respectively. Table 13 below lists the final status indicator and APC 
assignments, and payment rates for the four auditory osseointegrated 
procedures.

              Table 13--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Auditory Osseointegrated Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
69714................................  Implantation, osseointegrated               J1          5125   $10,537.90           J1          5115    $9,557.20
                                        implant, temporal bone, with
                                        percutaneous attachment to
                                        external speech processor/
                                        cochlear stimulator; without
                                        mastoidectomy.
69715................................  Implantation, osseointegrated               J1          5125    10,537.90           J1          5116    14,697.92
                                        implant, temporal bone, with
                                        percutaneous attachment to
                                        external speech processor/
                                        cochlear stimulator; with
                                        mastoidectomy.
69717................................  Replacement (including removal of           J1          5123     4,969.26           J1          5114     5,219.36
                                        existing device),
                                        osseointegrated implant,
                                        temporal bone, with percutaneous
                                        attachment to external speech
                                        processor/cochlear stimulator;
                                        without mastoidectomy.
69718................................  Replacement (including removal of           J1          5124     7,064.07           J1          5115     9,557.20
                                        existing device),
                                        osseointegrated implant,
                                        temporal bone, with percutaneous
                                        attachment to external speech
                                        processor/cochlear stimulator;
                                        with mastoidectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Bunion Correction/Foot Fusion (APC 5114)
    In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to 
reassign CPT codes 28297 (Correction, hallux valgus (bunion), with or 
without sesamoidectoy; lapidus-type) and 28740 (Arthrodesis, midtarsal 
or tarsometatarsal, single joint) to APC 5114 (Level 4--Musculoskeletal 
Procedures) with status indicator ``J1.'' Both CPT codes 28297 and 
28740 have a CY 2016 payment rate of approximately $7,064 and a 
proposed CY 2017 payment rate of approximately $5,199.
    Comment: One commenter expressed concern with the reassignment of 
CPT codes 28297 and 28740 to C-APC 5114, and stated that the proposed 
payment would result in a significantly lower payment rate for these 
services. The commenter indicated that its invoices document the total 
equipment cost at approximately $7,490, which is more than the proposed 
payment rate for C-APC 5114. The commenter also believed that CPT codes 
28297 and 28740 are inappropriately assigned to C-APC 5114 because this 
APC does not reflect the resource or clinical complexity of these 
procedures. In addition, the commenter stated that the Musculoskeletal 
APCs are not granular enough to account for the costs associated with 
the broad range of orthopedic procedures performed in the hospital 
outpatient setting. Finally, this same commenter recommended that CMS 
establish an additional APC level that is not designated as a 
comprehensive APC for musculoskeletal procedures whose costs are in the 
range of $7,000 to $7,999. The commenter requested that CMS reassign 
CPT codes 28297 and 28740 to this new APC level, with a payment rate of 
approximately $7,500. If CMS is unable to establish an additional APC, 
the commenter recommended that CMS retain the CY 2016 Musculoskeletal 
APC structure and payment levels. However, if CMS finalizes the 
proposal, the commenter requested that CMS ensure that all hospital 
costs for CPT codes 28297 and 28740 are captured appropriately and that 
the payment rate for C-APC 5114 is adjusted to reflect the cost of 
providing these services.
    Response: We do not believe that it is necessary to create an 
additional APC level for these musculoskeletal procedures. We believe 
that CPT codes 28297 and 28740 are clinically similar to the other 
procedures assigned to C-APC 5114 with similar resource costs. As the 
commenter observed, the musculoskeletal APCs include various orthopedic 
procedures representing a range of costs from $3,774 (CPT code 27385) 
to $7,283 (CPT code 28740). The payment for procedures assigned to C-
APC 5114 is based on the weighted average geometric mean cost for all 
of the procedures assigned to C-APC 5114. As with most other APCs, 
because the payment is based on an average of the costs of all of the 
procedures assigned to the APC, the payment rate can be either above or 
below the cost of a specific procedure. We believe that the assignment 
of CPT codes 28297 and 28740 to C-APC 5114 satisfies both the 
requirement for clinical similarity and resource similarity. There are 
several other similar foot surgical procedures assigned to C-APC 5114. 
Further, our claims data do not reveal any 2 times

[[Page 79622]]

rule violations in C-APC 5114. We also note that certain complex multi-
procedure cases, including cases involving the procedures described by 
both CPT code 28297 and 28740, receive a complexity adjustment and 
reassignment to C-APC 5115, which results in a significantly higher 
payment for these more costly cases. For CY 2017, the payment rate for 
C-APC 5115 is approximately $9,557. We remind hospitals that, as we do 
every year, we will again review the APC assignments for all services 
under the hospital OPPS for the CY 2018 rulemaking.
    After consideration of the public comments received, we are 
finalizing our CY 2017 proposal, without modification, to reassign CPT 
codes 28297 and 28740 to C-APC 5114. Table 14 below lists the final CY 
2017 OPPS status indicator and APC assignments, and payment rates for 
CPT codes 28297 and 28740. We refer readers to Addendum B of this final 
rule with comment period for the payment rates for all codes reportable 
under the OPPS. Addendum B is available via the Internet on the CMS Web 
site. In addition, the list of codes that qualify for complexity 
adjustments can be found in Addendum J to this final rule with comment 
period (which is available via the Internet on the CMS Web site). 
Addendum J to this final rule with comment period also contains the 
summary cost statistics for each of the code combinations that describe 
a complex code combination that qualify for a complexity adjustment and 
are reassigned to the next higher cost C-APC within the clinical 
family.

                     Table 14--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for CPT Codes 28297 and 28740
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
28297................................  Correction, hallux valgus                   J1          5124    $7,064.07           J1          5114    $5,219.36
                                        (bunion), with or without
                                        sesamoidectomy; lapidus-type
                                        procedure.
28740................................  Arthrodesis, midtarsal or                   J1          5124     7,064.07           J1          5114     5,219.36
                                        tarsometatarsal, single joint.
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Intervertebral Biomechanical Devices
    For CY 2017, the AMA CPT Editorial Panel deleted CPT code 22851 and 
replaced it with three new codes, effective January 1, 2017. Table 15 
below lists the long descriptor for the procedure described by CPT code 
22851, as well as the replacement codes, specifically, CPT codes 22853, 
22854, and 22859. We note that the deleted and replacement codes were 
listed in Addendum B and Addendum O to the CY 2017 OPPS/ASC proposed 
rule. Addendum B listed the proposed status indicator assignments for 
the replacement codes, which are assigned to comment indicator ``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.), while 
Addendum O listed the placeholder/proposed CY 2017 CPT codes and their 
long descriptors.

     Table 15--CY 2017 Status Indicator (SI) Assignments for the Application/Insertion of the Intervertebral
                                              Biomechanical Devices
----------------------------------------------------------------------------------------------------------------
                                                                                  Proposed CY     Final CY 2017
 Proposed CY 2017 CPT code    Final CY 2017 CPT code       Long descriptors       2017 OPPS SI       OPPS SI
----------------------------------------------------------------------------------------------------------------
22851.....................  22851.....................  Application of                       D                D
                                                         intervertebral
                                                         biomechanical
                                                         device(s) (e.g.,
                                                         synthetic cage(s),
                                                         methylmethacrylate)
                                                         to vertebral defect
                                                         or interspace (List
                                                         separately in
                                                         addition to code for
                                                         primary procedure).
22X81.....................  22853.....................  Insertion of interbody               N                N
                                                         biomechanical
                                                         device(s) (e.g.,
                                                         synthetic cage, mesh)
                                                         with integral
                                                         anterior
                                                         instrumentation for
                                                         device anchoring
                                                         (e.g., screws,
                                                         flanges), when
                                                         performed, to
                                                         intervertebral disc
                                                         space in conjunction
                                                         with interbody
                                                         arthrodesis, each
                                                         interspace (List
                                                         separately in
                                                         addition to code for
                                                         primary procedure).
22X82.....................  22854.....................  Insertion of                         N                N
                                                         intervertebral
                                                         biomechanical
                                                         device(s) (e.g.,
                                                         synthetic cage, mesh)
                                                         with integral
                                                         anterior
                                                         instrumentation for
                                                         device anchoring
                                                         (e.g., screws,
                                                         flanges), when
                                                         performed, to
                                                         vertebral
                                                         corpectomy(ies)
                                                         (vertebral body
                                                         resection, partial or
                                                         complete) defect, in
                                                         conjunction with
                                                         interbody
                                                         arthrodesis, each
                                                         contiguous defect
                                                         (List separately in
                                                         addition to code for
                                                         primary procedure).
22X83.....................  22859.....................  Insertion of                         N                N
                                                         intervertebral
                                                         biomechanical
                                                         device(s) (e.g.,
                                                         synthetic cage, mesh,
                                                         methylmethacrylate)
                                                         to intervertebral
                                                         disc space or
                                                         vertebral body defect
                                                         without interbody
                                                         arthrodesis, each
                                                         contiguous defect
                                                         (List separately in
                                                         addition to code for
                                                         primary procedure).
----------------------------------------------------------------------------------------------------------------

    Comment: One commenter suggested that CMS pay separately for the 
replacement CPT codes 22X81, 22X82, and 22X83 and assign the new codes 
to New Technology APCs to enable CMS to collect cost information and 
determine

[[Page 79623]]

whether to pay separately or package the procedures in the future. The 
commenter explained that the cost of providing the procedures 
associated with these new spine instrumentation codes are costly and 
include high-cost implants. The commenter also believed that, while CMS 
has a policy for packaging payment for procedures described by add-on 
codes under the hospital OPPS, it is not required to do so because its 
regulation refers only to packaging of certain services described by 
add-on codes.
    Response: We do not agree with the commenter that the spine 
instrumentation procedures described by proposed CPT codes 22X81, 
22X82, and 22X83 (replacement CPT codes 22853, 22854, and 22859) are 
new technology procedures that warrant an assignment to a new 
technology APC. These procedures have been performed for some time now 
in the hospital outpatient setting, and as evidenced by the predecessor 
code, CPT code 22851 which was established in 1996, these procedures 
are not new. In addition, we do not agree with the commenter that we 
should pay separately for replacement CPT codes 22853, 22854, and 22859 
because these codes describe add-on services. Since January 1, 2014, 
payment for procedures described by add-on codes have been packaged 
under the hospital OPPS. Because the predecessor CPT code 22851 was 
assigned to a packaged status indicator under the hospital OPPS, we are 
assigning CPT codes 22853, 22854, and 22859 to status indicator ``N'' 
to indicate that payment for these services are packaged under the 
hospital OPPS for CY 2017.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to assign CPT codes 
22853, 22854, and 22859 to status indicator ``N'' for CY 2017.
d. Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114)
    In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to 
reassign CPT codes 22513 (Percutaneous vertebral augmentation, 
including cavity creation (fracture reduction and bone biopsy included 
when performed) using mechanical device (e.g., kyphoplasty), 1 
vertebral body, unilateral or bilateral cannulation, inclusive of all 
imaging guidance; thoracic) and 22514 (Percutaneous vertebral 
augmentation, including cavity creation (fracture reduction and bone 
biopsy included when performed) using mechanical device (e.g., 
kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, 
inclusive of all imaging guidance; lumbar) from APC 5124 (Level 4 
Musculoskeletal Procedures) to APC 5114 (Level 4 Musculoskeletal 
Procedures). Both CPT codes have a CY 2016 payment rate of 
approximately $7,064 and a proposed CY 2017 payment rate of 
approximately $5,199. Because CPT code 22515 (Percutaneous vertebral 
augmentation, including cavity creation (fracture reduction and bone 
biopsy included when performed) using mechanical device (e.g., 
kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, 
inclusive of all imaging guidance; each additional thoracic or lumbar 
vertebral body (list separately in addition to code for primary 
procedure) is an add-on code, we proposed to continue its packaged 
status.
    Based on the CY 2015 hospital outpatient claims data available for 
the proposed rule, our analysis revealed a geometric mean cost of 
approximately $5,434 for APC 5114, while the geometric mean cost for 
CPT codes 22513 and 22514 is approximately $6,664 and $6,672, 
respectively. Because the proposed geometric mean cost for APC 5115, 
which is the Level 5 Musculoskeletal Procedures APC, is significantly 
higher at $9,920 compared to the geometric mean cost for CPT codes 
22513 and 22514, we proposed to assign CPT codes 22513 and 22514 to APC 
5114 for CY 2017.
    At the August 22, 2016 HOP Panel meeting, a presenter requested the 
reassessment of the proposed revised Musculoskeletal APC groupings that 
result in payment reductions for CPT codes 22513 and 22514. 
Specifically, the commenter observed that the proposed modification to 
the musculoskeletal APCs reduces the payment for these procedures by 26 
percent for CY 2017. During the Panel discussion, CMS indicated that, 
in the CY 2016 OPPS/ASC proposed rule, the Agency initially proposed to 
establish four levels of the musculoskeletal APCs. However, based on 
the comments received on the CY 2016 proposal, CMS agreed with the 
request to establish a new level, specifically, Level 5 Musculoskeletal 
Procedures APC, for the CY 2016 update. In addition, during the 
discussion at the August 2016 Panel meeting, CMS informed the Panel 
that, for the CY 2017 update, CMS proposed to establish an additional 
level, specifically, Level 6 Musculoskeletal Procedures APC, for the 
musculoskeletal procedures. At the August 2016 HOP meeting, despite the 
request from the presenter, the Panel made no recommendation related to 
this issue.
    Comment: Several commenters disagreed with the proposal and stated 
that the proposed reassignment of these procedures to APC 5114 would 
result in significant underpayment for these services. Some commenters 
noted that the proposed CY 2017 payment rate of $5,199.03 for CPT codes 
22513 and 22514 is lower than the geometric mean costs of $6,664 for 
CPT code 22513 and $6,672 for CPT code 22514. These commenters 
requested that CMS reassign CPT codes 22513 and 22514 to APC 5115 
(Level 5 Musculoskeletal Procedures APC), whose proposed CY 2017 
payment rate is $9,491.
    Response: We do not agree with the commenters that we should 
reassign these procedures to APC 5115. Based on the updated CY 2015 
hospital outpatient claims data used for this final rule with comment 
period, our analysis reveals a geometric mean cost of approximately 
$5,367 for APC 5114, which is lower than the geometric mean cost of 
approximately $6,674 for CPT code 22513 based on 8,553 single (out of 
8,665 total claims), or the geometric mean cost of approximately $6,643 
for CPT code 22514 based on 10,451 single claims (out of 10,609 total 
claims). Because the difference between the geometric mean cost for APC 
5115 ($9,828) and the geometric mean costs of CPT code 22513 ($6,674) 
and CPT code 22514 ($6,643) is significantly greater than the 
difference between the geometric mean cost of CPT codes 22513 and 22514 
and the geometric mean cost of APC 5114 ($5,367), we believe these 
procedures should be assigned to APC 5114.
    In addition, we do not agree with the commenters' assertion that 
the current assignment of CPT codes 22513 and 22514 in APC 5114 would 
result in significant underpayment for these services. OPPS payments 
are based on the geometric mean costs of all of the services assigned 
to the APC. By definition the costs of some services must be below the 
geometric mean and others must be above the geometric mean. As we have 
stated in the past (72 FR 66639), in some cases, payment exceeds the 
average cost of the CPT code, and in other cases, payment is less than 
the average cost of the CPT code.
    Comment: One commenter stated that procedures described by add-on 
codes are paid separately in physician offices. However, payment for 
these services are packaged under the hospital OPPS. This difference 
results in higher payments for percutaneous vertebral augment/
kyphoplasty procedures performed in the office setting compared to the 
HOPD setting. The commenter further noted that this discrepancy 
indicates that CMS

[[Page 79624]]

may be using a flawed methodology, similar to the CPT Committee and 
RUC, in determining payment rates for services under the hospital OPPS. 
Finally, the commenter requested that CMS increase the payment rate for 
CPT codes 22513 and 22514 to equalize payment for these procedures 
across all settings.
    Response: The hospital OPPS and the MPFS that applies to 
physician's office services are fundamentally different payment systems 
with essential differences in their payment policies and structures. 
Specifically, the hospital OPPS is a prospective payment system, based 
on the concept of payment for groups of services that share clinical 
and resource characteristics. Payment is made under the hospital OPPS 
according to prospectively established payment rates that are related 
to the relative costs of hospital resources for services. The MPFS is a 
fee schedule based on the relative value of each individual component 
of services. Furthermore, physician fee schedule payments include 
payment for physician professional work, which is not a part of the 
OPPS payment to hospitals.
    In addition, consistent with our general add-on code packaging 
policy, we package payment for certain procedures described by add-on 
codes under the hospital OPPS. Because CPT code 22515 is an add-on 
code, we have assigned this code to a packaged payment status. We 
believe that the procedure is a service that is always furnished in 
addition to another procedure (in this case, either CPT code 22513 or 
22514) and cannot be performed independently. Under the MPFS approach, 
separate payment is made for add-on procedures provided in the 
physician's office, but the OPPS packages payment for add-on codes into 
the associated procedure code payment for the APC group. We recognize 
that the MPFS pays separately for CPT code 22515, as it does for other 
add-on codes. However, the MPFS and the OPPS are very different payment 
systems. Each is established under a different set of statutory and 
regulatory principles and the policies established under the MPFS do 
not have bearing on the payment policies under the OPPS. Given the 
fundamental difference between the MPFS payment mechanism and the OPPS 
payment mechanism, differences in the degrees of packaged payment and 
separate payment between these two systems are to be expected.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT codes 
22513 and 22514 to APC 5114. Table 16 below lists the final OPPS status 
indicator and APC assignments and payment rates for CPT codes 22513 and 
22514 for CY 2017.

  Table 16--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Percutaneous Vertebral Augmentation/Kyphoplasty Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
22513................................  Percutaneous vertebral                      J1          5124    $7,064.07           J1          5114   $5,219.36.
                                        augmentation, including cavity
                                        creation (fracture reduction and
                                        bone biopsy included when
                                        performed) using mechanical
                                        device (e.g., kyphoplasty), 1
                                        vertebral body, unilateral or
                                        bilateral cannulation, inclusive
                                        of all imaging guidance;
                                        thoracic.
22514................................  Percutaneous vertebral                      J1          5124     7,064.07           J1          5114    5,219.36.
                                        augmentation, including cavity
                                        creation (fracture reduction and
                                        bone biopsy included when
                                        performed) using mechanical
                                        device (e.g., kyphoplasty), 1
                                        vertebral body, unilateral or
                                        bilateral cannulation, inclusive
                                        of all imaging guidance; lumbar.
22515................................  Percutaneous vertebral                       N           N/A     Packaged            N           N/A    Packaged.
                                        augmentation, including cavity
                                        creation (fracture reduction and
                                        bone biopsy included when
                                        performed) using mechanical
                                        device (e.g., kyphoplasty), 1
                                        vertebral body, unilateral or
                                        bilateral cannulation, inclusive
                                        of all imaging guidance; each
                                        additional thoracic or lumbar
                                        vertebral body (list separately
                                        in addition to code for primary
                                        procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

e. Strapping and Casting Applications (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 analysis of the procedures 
assigned to APCs 5101 and 5102, in the CY 2017 OPPS/ASC proposed rule 
(81 FR 45648), we proposed to revise the status indicator assignment 
for these procedures from ``S'' to ``T'' (Procedure or Service, 
Multiple Procedure

[[Page 79625]]

Reduction Applies; Paid under OPPS; separate APC payment) to indicate 
that the services are paid separately under the 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 often 
associated with surgical treatments, we stated that 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. Also, there is no 
payment reduction unless there is another status indicator ``T'' 
procedure reported on the claim describing cast/splint/strap services. 
Consequently, we also proposed 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.
    Comment: Several commenters opposed the status indicator 
reassignment from ``S'' to ``T'' for APCs 5101 and 5102, and stated 
that CMS did not provide substantive information for the proposed 
change, making it difficult for stakeholders to properly analyze the 
effects of the proposed change. Other commenters indicated that such a 
change contradicts current coding guidelines.
    Response: As stated above, as part of our annual review, we examine 
the APC assignments for all items and services under the OPPS, which 
include review of status indicators, for appropriate placements in the 
context of our proposed policies for the update year. Although not 
every code, status indicator, or APC revision is discussed in the 
preamble of the proposed rule, they are nonetheless listed in Addendum 
B of the proposed rule. We note that Addendum B of the proposed rule is 
an Excel file that is arranged in CPT/HCPCS code order and shows the 
proposed OPPS status indicator and APC assignments, relative payment 
weights, and payment rates for every procedure code reported under the 
hospital OPPS.
    Comment: Some commenters indicated that the National Correct Coding 
Initiative (NCCI) guidelines prevent the reporting of casting/strapping 
services when performed as part of a surgical procedure. Other 
commenters stated that the AMA CPT code instructions indicate that CPT 
codes 29700 through 29799 are only reported when the service is for a 
replacement procedure following a period of follow-up, or when the 
service is performed as the primary treatment without an associated 
restorative treatment or procedure(s). The commenters urged CMS not to 
finalize the proposal.
    Response: We do not believe that the commenters completely 
understand the NCCI or CPT coding guidelines associated with the 
strapping and casting services. While it is true that strapping and 
casting services cannot be reported separately when performed as part 
of a surgical procedure, there are certain circumstances when strapping 
and casting services can be performed separate from a surgical 
procedure. It should be noted that Chapter IV (Surgery: Musculoskeletal 
System) of the 2016 NCCI Policy Manual for Medicare Services states 
that hospitals paid under the OPPS should report the appropriate 
casting, splinting, or strapping code in certain instances. 
Specifically, the NCCI Policy Manual specifies that for payment under 
the OPPS, if a hospital treats a fracture, dislocation, or injury with 
a cast, splint, or strap as an initial service without any other 
definitive procedure or treatment, the hospital should report the 
appropriate casting/splinting/strapping CPT code. In addition, while it 
is true that the procedures described by CPT codes 29700 through 29799 
are only reported when the service is for a replacement procedure 
following a period of follow-up, or when the service is performed as 
the primary treatment without an associated restorative treatment or 
procedure(s), the CPT guidelines also elaborate that these removal/
repair codes can be reported separately if the initial application of 
the cast, splint, or strapping was performed by a different entity.
    Comment: Some commenters stated that casting and strapping services 
are performed in the emergency department for Medicare patients 
following a fall or injury, and these patients often require an 
extended period of observation before they are discharged. These 
commenters stated that revising the status indicator assignment for 
APCs 5101 and 5102 from ``S'' to ``T'' would no longer qualify 
hospitals for comprehensive observation service APC payments.
    Response: We do not anticipate that this will be a significant 
issue because all observation services that are less than 8 hours are 
packaged into the payment for the emergency department visit. We do not 
believe that most Medicare beneficiaries would require long periods of 
observation after receiving cast/splint/strap services in the emergency 
room. Instead, we believe that physicians would appropriately assess 
the patient and determine whether the patient should be discharged to 
home or admitted as an inpatient.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to revise the status 
indicator assignment for APCs 5101 and 5102 from ``S'' to ``T'' for CY 
2017.
5. Nervous System Procedures/Services
a. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722)
    Currently, three CPT codes exist to describe TMS therapy, 
specifically, CPT codes 90867, 90868, and 90869. As shown on Table 17 
below, for CY 2016, we proposed to assign these codes to APC 5722 
(Level 2 Diagnostic Tests and Related Services).

   Table 17--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transcranial Magnetic Stimulation Therapy (TMS) Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                               Proposed CY
                                                                          CY 2016 OPPS    CY 2016        OPPS      Proposed CY  Proposed CY   2017 OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment    2017 OPPS SI   2017 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867................................  Therapeutic repetitive                       S          5722      $220.35            S          5722      $231.67
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        initial, including cortical
                                        mapping, motor threshold
                                        determination, delivery and
                                        management.

[[Page 79626]]

 
90868................................  Therapeutic repetitive                       S          5722       220.35            S          5722       231.67
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        subsequent delivery and
                                        management, per session.
90869................................  Therapeutic repetitive                       S          5722       220.35            S          5721       127.42
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        subsequent motor threshold re-
                                        determination with delivery and
                                        management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As we do every year, we review the APC assignments for all services 
under the hospital OPPS based on the latest claims data. For CY 2017, 
we did not propose to make any changes to the APC assignment for CPT 
codes 90867 and 90868, and proposed to continue to assign the 
procedures described by these procedure codes to APC 5722 because the 
geometric mean cost for these procedures were within the range of the 
geometric mean costs for procedures assigned to APC 5722. Specifically, 
our proposed rule claims data showed a geometric mean cost of 
approximately $196 based on 136 single claims (out of 136 total claims) 
for CPT code 90867, and approximately $187 for CPT code 90868 based on 
5,239 single claims (out of 5,287 total claims). Because the geometric 
mean cost of $196 and $187 are relatively similar to the geometric mean 
cost of $242 for APC 5722, we proposed to continue to assign CPT codes 
90867 and 90868 to APC 5722. However, for CPT code 90869, we proposed 
to reassign CPT code 90869 to APC 5721 (Level 1 Diagnostic Tests and 
Related Services) based on the latest claims data used for the proposed 
rule. Specifically, our claims data showed a geometric mean cost of 
approximately $119 based on 47 single claims (out of 47 total claims). 
Because the geometric mean cost of $133 for APC 5721 is relatively 
similar to the geometric mean cost of $119 for CPT code 90869, we 
proposed to reassign the procedure code to APC 5721.
    Comment: One commenter disagreed with the proposal to reassign CPT 
code 90869 to APC 5721, and requested that CMS continue to assign the 
procedure to APC 5722. The commenter believed that the proposed CY 2017 
payment rate of $127.42 is the result of low-volume and incorrect 
revenue code reporting. The commenter noted that, based on its analysis 
of the claims data, one hospital's inappropriate revenue code 
assignment resulted in a low cost-to-charge ratio, thereby decreasing 
the proposed payment rate. In addition, the commenter believed that the 
proposed payment rate for CPT code 90869, which involves a 
redetermination and TMS delivery and management services, should be 
higher than the proposed payment rate for CPT code 90868, which 
involves only TMS delivery and management services.
    Response: As we have stated in section 20.5 (Clarification of HCPCS 
Code to Revenue Code Reporting) of Chapter 4 of the Medicare Claims 
Processing Manual, hospitals are responsible for reporting the correct 
revenue code on the claim form. Specifically, we state that we do not 
instruct hospitals on how to report the assignment of HCPCS codes to 
revenue codes for services provided under OPPS because hospitals' costs 
vary. Where explicit instructions are not provided, providers should 
report their charges under the revenue code that will result in the 
charges being assigned to the same cost center to which the cost of 
those services are assigned in the cost report. We note that the 
Medicare cost report form allows hospitals to report in a manner that 
is consistent with their own financial accounting systems and, 
therefore, should be accurate for each individual hospital. Moreover, 
we believe that the cost report data and their use in the OPPS cost 
estimation and payment rate development process, combined with 
potential penalties for inaccurate reporting, provide financial 
incentive for hospitals to report costs accurately. Furthermore, as we 
have stated repeatedly, beyond our standard OPPS trimming methodology 
that we apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting. (We refer 
readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71838) for further discussion.) Therefore, we will not question the 
accuracy of the coding and charging practices in this case.
    In addition, based on the latest hospital outpatient claims data 
used for the final rule with comment period, we believe that APC 5721 
is the most appropriate APC assignment for CPT code 90869. 
Specifically, our claims data show a geometric mean cost of 
approximately $107 for CPT code 90869 based on 54 single claims (out of 
54 total claims), which is similar to the geometric mean cost of 
approximately $131 for APC 5721. We do not agree with the commenter 
that maintaining the assignment for CPT code 90869 to APC 5722 is 
appropriate because its geometric mean cost of approximately $239 is 
significantly higher than the geometric mean cost of $107 for CPT code 
90869. Compared to the geometric mean cost of approximately $239 for 
APC 5722, we believe that APC 5721 is the most appropriate assignment 
for CPT code 90869 based on clinical and resource homogeneity with 
other procedures and services in the APC.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to assign CPT code 90869 
to APC 5721 for CY 2017. In addition, we are adopting as final, without 
modification, the proposed APC assignments for CPT codes 90867 and 
90868 for CY 2017. Table 18 below lists the final status indicator and 
APC assignments and payment rates for the three TMS CPT codes for CY 
2017. We refer readers to Addendum B of this final rule with comment 
period for the payment rates for all codes reportable under the OPPS. 
Addendum B is available via the Internet on the CMS Web site.

[[Page 79627]]



     Table 18--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transcranial Magnetic Stimulation Therapy (TMS) Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                 Final CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867................................  Therapeutic repetitive                       S          5722      $220.35            S          5722      $232.21
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        initial, including cortical
                                        mapping, motor threshold
                                        determination, delivery and
                                        management.
90868................................  Therapeutic repetitive                       S          5722       220.35            S          5722       232.21
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        subsequent delivery and
                                        management, per session.
90869................................  Therapeutic repetitive                       S          5722       220.35            S          5721       127.05
                                        transcranial magnetic
                                        stimulation (tms) treatment;
                                        subsequent motor threshold re-
                                        determination with delivery and
                                        management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Percutaneous Epidural Adhesiolysis (APC 5443)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT codes 62263 (Percutaneous lysis of 
epidural adhesions using solution injection (e.g., hypertonic saline, 
enzyme) or mechanical means (e.g., catheter) including radiologic 
localization (includes contrast when administered), multiple 
adhesiolysis sessions; 2 or more days) and 62264 (Percutaneous lysis of 
epidural adhesions using solution injection (e.g., hypertonic saline, 
enzyme) or mechanical means (e.g., catheter) including radiologic 
localization (includes contrast when administered), multiple 
adhesiolysis sessions; 1 day) to APC 5443 (Level 3 Nerve Injections), 
with a proposed CY 2017 payment rate of approximately $711.
    Comment: One commenter expressed concern with the proposed payment 
rate for CPT codes 62263 and 62264. The commenter stated that these 
codes were paid for appropriately in CY 2014 and CY 2015. However, the 
commenter believed that the payment for these procedures has declined 
beginning in CY 2016. The commenter also suggested that CMS reevaluate 
the APC structure and consider reinstating the APC classification that 
was in place during CY 2014 and CY 2015 in which the percutaneous 
adhesiolysis and radiofrequency neurotomy procedures were combined in 
the same APC. The commenter stated that the payment rate for the 
percutaneous adhesiolysis procedures should be the same as the 
radiofrequency neurotomy procedures, which are assigned to APC 5431 
(Level 1 Nerve Procedures), with a proposed payment rate of 
approximately $1,557.
    Response: Based on our analysis of the claims data used for the 
proposed rule, APC 5443 is the most appropriate APC assignment for CPT 
codes 62263 and 62264 based on its clinical and resource similarity to 
the procedures within this APC. Specifically, our analysis revealed a 
geometric mean cost of approximately $1,149 for CPT code 62263 based on 
97 single claims (out of 107 total claims), and a geometric mean cost 
of approximately $839 for CPT code 62264 based on 2,188 single claims 
(out of 3,726 total claims). We believe that the geometric mean costs 
of CPT codes 62263 and 62264 are more similar to the geometric mean 
cost of approximately $743 for APC 5443. We believe that APC 5431 is 
not a more appropriate APC for CPT codes 62263 and 62264 because the 
geometric mean cost for this APC is approximately $1,627.
    We also note that we reviewed the updated CY 2015 claims data used 
for this final rule with comment period. The proposed rule claims data 
were based on claims submitted from January 1, 2015 through December 
31, 2015 and processed through December 31, 2015, while the final rule 
with comment period claims data are based on claims submitted from 
January 1, 2015 through December 31, 2015 and processed through June 
30, 2016. Based on our analysis of the final rule with comment period 
claims data, we found a similar pattern for CPT codes 62263 and 62264. 
Specifically, we found a geometric mean cost of approximately $1,138 
for CPT code 62263 based on 109 single claims (out of 121 total 
claims), and a geometric mean cost of approximately $842 for CPT code 
62264 based on 2,243 single claims (out of 3,972 total claims). We note 
that the geometric mean costs for the significant procedures within APC 
5443 range between $603 (CPT code 62310) and $1,083 (CPT code 64640). 
Because the geometric mean cost for APC 5431 is approximately $1,607, 
which is greater than the geometric mean cost for either CPT code 62263 
or 62264, we believe that APC 5443 is the more appropriate APC 
assignment for these procedures.
    After consideration of the public comment we received, we are 
adopting as final, without modification, the APC assignment to APC 5443 
for CPT codes 62263 and 62264 for CY 2017. The final payment rates for 
these codes can be found in Addendum B to this final rule with comment 
period (which is available via the Internet on the CMS Web site).
c. Neurostimulator (APC 5463)
    For CY 2017, we proposed to assign CPT code 0268T (Implantation or 
replacement of a carotid sinus baroreflex activation device; pulse 
generator only (includes intraoperative interrogation, programming, and 
repositioning when performed)) to APC 5463 (Level 3 Neurostimulator and 
Related Procedures), for which we proposed a CY 2017 geometric mean 
cost of approximately $18,325.
    Comment: Commenters disagreed with CMS' proposal to assign CPT code 
0268T to APC 5463. The commenters believed that CPT code 0268T would be 
more appropriately assigned to APC 5464 (Level 4 Neurostimulator and 
Related Procedures), for which we proposed a CY 2017 geometric mean 
cost of approximately $27,907. The commenters stated that the 
relatively

[[Page 79628]]

few claims submitted to CMS that are eligible for CY 2017 ratesetting 
do not accurately reflect the cost of performing this procedure.
    Response: We disagree with commenters' assertion that CPT code 
0268T would be more appropriately assigned to APC 5464, which has a 
final CY 2017 APC geometric mean cost of approximately $27,802. Based 
on available claims data used for CY 2017 ratesetting, the proposed 
assignment of CPT code 0268T, which has a final CY 2017 geometric mean 
cost of approximately $21,794, to APC 5463 is appropriate. After 
consideration of the public comments we received, we are finalizing our 
proposal, without modification, to assign CPT code 0268T to APC 5463, 
which has a final CY 2017 APC geometric mean cost of 
approximately$18,300. The final payment rate for CPT code 0268T can be 
found in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).
6. Radiologic Procedures and Services
a. Imaging APCs
    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 agreed that further improvements can be achieved by 
making further changes to the structure of the APC groupings of the 
imaging services classified within the imaging APCs. Therefore, in the 
CY 2017 OPPS/ASC proposed rule (81 FR 45647), for CY 2017, we proposed 
to make further changes to the structure of the imaging APCs. In Table 
11 of the proposed rule, we listed the CY 2016 imaging APCs, and in 
Table 12 of the proposed rule we listed 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 were listed in Addendum B to the proposed rule, 
which is available via the Internet on the CMS Web site. We noted in 
the proposed rule that some of the imaging procedures are assigned to 
APCs that are not listed in the tables of the proposed rule (for 
example, the vascular procedures APCs). Also, the nuclear medicine 
services APCs were not included in this proposed APC restructuring. We 
invited public comments on our proposal to consolidate the imaging APCs 
from 17 APCs in CY 2016 to 8 in CY 2017.
    Comment: One of the stakeholders mentioned above who suggested 
further restructuring of the OPPS imaging services earlier this year 
expressed concern with CMS' proposed restructured imaging APCs. In 
particular, the stakeholder was disappointed that the proposed 
restructured imaging APCs differed from its specific recommendations. 
The stakeholder supported, in part, CMS' proposal; in particular, the 
reassignment of the interventional radiology procedures from imaging 
APCs to vascular procedure APCs and the maintenance of separate APCs 
for nuclear medicine procedures. In addition, several other commenters 
also agreed with CMS' proposal to not change the nuclear medicine APCs. 
Further, the stakeholder and other commenters requested that CMS 
provide additional explanation regarding the clinical similarity of the 
services assigned to the proposed restructured APCs. These commenters 
also were displeased that CMS assigned procedures that are primarily 
performed by cardiologists (for example, echocardiography) to APCs that 
also include imaging tests that are primarily interpreted by 
radiologists. They requested that CMS separate echocardiography 
services from other imaging tests. They also pointed out that the 
proposed groupings are broader than the APC title (that use the term 
``Diagnostic Radiology'') descriptions because the proposed APC 
groupings include imaging tests that are interpreted by physicians 
other than radiologists. They also suggested additional APC and HCPCS 
code-specific assignments that are addressed below. The stakeholder and 
other commenters asked that CMS not adopt the proposed restructuring, 
and instead adopt their suggested APC structure, which would 
consolidate the imaging APCs, but would maintain separate APCs for 
echocardiography services that do not include x-ray, CT, and MRI 
services. Other commenters also requested that CMS not adopt the 
restructured imaging APCs. Some of these commenters suggested 
alternatives, such as maintaining separate APCs for ultrasound tests, 
but the commenters' primary focus was the payment rates and APC 
assignments of specific codes, which we discuss in detail below.
    Response: We appreciate the stakeholder's and the commenters' 
support. We agree with the stakeholder that the term ``Imaging'' is 
more accurate for the titles for this series of APCs instead of the 
term ``Diagnostic Radiology.'' Therefore, we are modifying our proposal 
and changing the titles of this diagnostic radiology series of APCs to 
``Level X Imaging'' (either without contrast or with contrast). 
Regarding the commenters' request for further explanation on the 
clinical similarity of the services assigned to the imaging APCs, we 
remind commenters that we proposed to reassign the interventional 
radiology procedures to vascular procedure APCs (APCs 5181, 5182, 
5183), recognizing the greater clinical similarity of the reassigned 
interventional services to the vascular/catheterization procedures that 
are currently assigned to the vascular procedure APCs. The remaining 
services that are assigned to the restructured imaging APCs are all 
diagnostic imaging services that almost all belong to one of the 
following four primary, well-established imaging modalities: x-ray, 
ultrasound, computed tomography (CT), or magnetic resonance (MR). When 
these services are performed in the hospital outpatient department, a 
technician (sometimes aided by a physician) captures the images by 
operating one of the types of equipment used for x-ray, ultrasound, CT, 
or MR. These imaging services are assigned to an APC in either the 
``without contrast'' imaging series or the ``with contrast'' imaging 
series, as required by section 1833(t)(2)(G) of the Act. Assignment of 
an imaging service to a specific APC within each of these two imaging 
series (with or without contrast) depends upon the use (or non-use) of 
a contrast agent and the geometric mean cost of the service, with the 
range of geometric mean costs within an APC governed by the 2 times 
rule. It is not relevant to the structure of the APC groupings that 
physicians of different specialties interpret certain tests (for 
example, cardiologists generally interpret imaging of the heart, 
radiologists interpret most other imaging tests, orthopedic surgeons 
interpret extremity images, and neurologists interpret brain images, 
among others). Furthermore, APC groupings in general do not necessarily 
correspond to groupings of procedures that are performed by a given 
physician

[[Page 79629]]

specialty. Some of the APC groupings resemble to some extent 
traditional physician specialty classifications (for example, the 
urology series of APCs), but many others do not. We believe that 
imaging services, which are diagnostic tests including x-rays, 
ultrasounds (including echocardiography), CT scans, and MRIs are 
sufficiently clinically similar for APC grouping purposes. We also 
believe that there is no special advantage to the current CY 2016 
scheme that subdivides imaging services into subclasses for x-rays, 
ultrasounds, etc. The commenters believed that their suggested 
restructured APCs that were presented to CMS included APCs that grouped 
these four modalities together (except echocardiography). We believe 
that the proposed structure of the imaging services APCs satisfies the 
requirements of section 1833(t)(2)(B) of the Act with greater 
flexibility (versus the current structure) and without unnecessarily 
restrictive groupings limited to clinically insignificant traditional 
modality classifications (for example, CT and x-ray, among others). We 
see no compelling reason to separate echocardiography procedures, an 
imaging test of the heart, from other imaging tests in the APC 
groupings. Furthermore, all other nonimaging diagnostic tests are 
grouped in APCs (APCs 5721 through 5724) that are separate and distinct 
from the imaging services APCs because we believe that these nonimaging 
diagnostic tests are sufficiently clinically dissimilar to imaging 
tests to warrant separate APCs.
    Comment: One commenter objected to the proposed exception to the 2 
times rule for APC 5521 (Level 1 Diagnostic Radiology without 
Contrast), and requested that we explain the basis for the exception 
further. The commenter also requested that CMS reassign CPT code 75571 
from APC 5521 to a higher paying APC for CY 2017.
    Response: We explain the basis for the 2 times rule and the 
proposed exceptions in the CY 2017 OPPS/ASC of the proposed rule (81 FR 
45644 through 45645). Table 9 of the CY 2017 OPPS/ASC of the proposed 
rule listed the proposed APC exceptions to the 2 times rule for CY 2017 
(81 FR 45645). The proposal to grant an exception to the 2 times rule 
for APC 5521 followed from a request made prior to the proposed rule. 
At that time, the request was that CMS reassign CPT code 75571 from APC 
5731 (Level 1 Minor Procedures) to an imaging APC based on greater 
clinical similarity to other CT services assigned to the imaging APCs. 
We agreed with the request and proposed to reassign CPT code 75571 to 
APC 5521, which is the lowest cost imaging APC in the series. Because 
CPT code 75571 has such a low geometric mean cost ($22.87), its 
assignment to any imaging APC, even the lowest cost imaging APC 5521 
(with a geometric mean cost of $61.53), results in a 2 times rule 
violation. We proposed to make an exception to the 2 times rule for APC 
5521 for CY 2017 because we believed that, for clinical reasons, CPT 
code 75571 should be assigned to an imaging APC with the other CT 
services. Therefore, we are finalizing our proposal, without 
modification, to reassign CPT code 75571 to APC 5521 as a result of the 
low geometric mean cost of the procedure. The payment rate for CPT code 
75571 increases from $12.70 in CY 2016 to $59.84 in CY 2017.
    Comment: Several commenters objected to the proposed assignment of 
CPT code 77080 (Dual-energy X-ray absorptiometry (DXA), bone density 
study, 1 or more sites; axial skeleton (e.g., hips, pelvis, spine)) to 
APC 5521. The proposed assignment would reduce the payment rate for 
this procedure from its current CY 2016 payment rate of $100.69 to 
$63.33 in CY 2017. The commenters believed that the payment reduction 
could impair access to this valuable preventive service. The commenters 
requested that CMS assign CPT code 77080 to a higher paying imaging 
APC, along with other services that have greater resource similarity to 
the procedure described by CPT code 77080.
    Response: We agree with the commenters. Therefore, we are modifying 
our proposal, and assigning CPT code 77080 to APC 5522 (Level 2 
Diagnostic Radiology without Contrast) for CY 2017. CPT code 77080 has 
a geometric mean cost of $91.08, which increases the probability of a 2 
times rule violation when compared to the second lowest-cost 
significant procedure assigned to APC 5521, the procedure described by 
CPT code 71010, which has a geometric mean cost of $46.11. We note that 
we are not comparing the geometric mean cost of CPT code 77080 to that 
of CPT code 75571, which is a significant procedure assigned to APC 
5521 and that has a geometric mean cost of $22.87, for a 2 times rule 
violation because as described above, this procedure code assignment 
was the basis for the exception from the 2 times rule for APC 5521 in 
the proposed rule. In summary, we are assigning CPT code 77080 to APC 
5522, with a final payment rate of $112.69 for CY 2017.
    Comment: Several commenters objected to the proposed assignment of 
HCPCS code G0297 (Low dose CT scan (LDCT) for lung cancer screening) to 
APC 5521 because it would reduce the payment rate for this procedure 
from $112.49 in CY 2016 to $63.33 in CY 2017. The commenters expressed 
concern that such a payment reduction could result in fewer Medicare 
beneficiaries receiving this service. The commenters also expressed 
concern about the APC assignment of HCPCS code G0296 (Counseling visit 
to discuss need for lung cancer screening (LDCT) using low dose CT scan 
(service is for eligibility determination and shared decision making)) 
to APC 5821 (Level 1 Health and Behavior Services). The commenters 
believed that the proposed assignment also would result in a payment 
reduction from $69.65 in CY 2016 to $25.09 in CY 2017, and could impair 
access to this cancer screening service. The commenters requested that 
CMS assign these services to higher paying APCs in the CY 2017 final 
rule with comment period.
    Response: We agree, in part, with the commenters. There were no 
claims data for these services in CY 2016. Therefore, the CY 2016 APC 
assignments reflected our best estimate at an appropriate APC 
assignment in the absence of cost information. For CY 2017, we have 
cost information for each of these services from the CY 2015 claims 
data. For HCPCS code G0296, the final rule geometric mean cost is 
$130.44, but with only 21 single claims. Therefore, we believe that 
this service should be assigned to APC 5822 (Level 2 Health and 
Behavior Services), with a payment rate of $70.23. We believe that the 
services in APC 5822 have greater resource similarity to the procedure 
described by HCPCS code G0296 than the services assigned to APC 5821. 
We will reevaluate the APC assignment of this procedure for the CY 2018 
rulemaking. For HCPCS code G0297, the CY 2017 final rule geometric mean 
cost is $49.38. APC 5521, to which we proposed to assign HCPCS code 
G0297, has a geometric mean cost of $65.16. The next higher level APC 
in the imaging without contrast APC series, APC 5522, has a geometric 
mean cost of $119.56. Because the geometric mean cost of HCPCS code 
G0297 is more comparable to the geometric mean cost of APC 5521 than 
APC 5522, we believe that resource homogeneity is better supported by 
the assignment of HCPCS code G0297 to APC 5521. Therefore, in summary, 
we are modifying our proposal and assigning HCPCS code G0296 to APC 
5822. However, we are finalizing our proposal, without modification, to 
assign HCPCS code G0297 to APC 5521 for CY 2017.
    Comment: One commenter requested that CMS not reassign CPT code 
78811

[[Page 79630]]

(Positron emission tomography (PET) imaging; limited area (e.g., chest, 
head/neck) from APC 5594 (Level 4 Nuclear Medicine and Related 
Services) to APC 5593 (Level 3 Nuclear Medicine and Related Services) 
for CY 2017. The commenter believed that the reassignment is premature 
because of the lack of sufficient claims data to support the 
reassignment from the CY 2016 assignment to APC 5594.
    Response: We disagree with the commenter. Although there are only 
117 single claims for this service in the final rule data, we believe 
that this is a sufficient number upon which to base an APC assignment. 
The geometric mean cost of CPT code 78811 has been consistent for the 
past 2 years. In CY 2016 the geometric mean cost was $912.62 (based on 
112 single claims), and the geometric mean cost for CY 2017 is $918.39 
(based on 117 single claims). Furthermore, the geometric mean cost of 
CPT code 78811 is significantly lower than the geometric mean cost of 
APC 5593 ($1,170.73). Therefore, we believe that APC 5593 is the most 
appropriate APC assignment for CPT code 78811.
    Comment: A few commenters requested that CMS maintain the CY 2016 
APC assignment for CPT code 75563 (Cardiac magnetic resonance imaging 
for morphology and function without contrast material(s), followed by 
contrast material(s) and further sequences; with stress imaging) to APC 
5593 (Level 3 Nuclear Medicine and Related Services), instead of its 
proposed assignment to APC 5573 (Level 3 Diagnostic Radiology with 
Contrast). The commenters expressed concern that the proposed payment 
reduction from $1,108 to $777 could reduce access to this imaging test. 
The commenters believed that CPT code 75563 has greater clinical and 
resource similarity to the services in APC 5593 than the services in 
APC 5573. In particular, the commenters asserted that CPT code 75563 is 
similar to CPT code 78452 (Myocardial perfusion imaging, tomographic 
(SPECT) (including attenuation correction, qualitative or quantitative 
wall motion, ejection fraction by first pass or gated technique, 
additional quantification, when performed); multiple studies, at rest 
and/or stress (exercise or pharmacologic) and/or redistribution and/or 
rest reinjection) because both tests are performed under a stress 
protocol. The commenter also requested that CMS reassign CPT code 75557 
(Cardiac magnetic resonance imaging for morphology and function without 
contrast material) from APC 5523 (Level 3 Imaging without Contrast) to 
APC 5591 (Level 1 Nuclear Medicine and Related Services). The commenter 
believed that such a reassignment would improve clinical and resource 
similarity with regard to CPT code 75557. Another commenter requested 
that CMS not assign any non-nuclear medicine services to the nuclear 
medicine APC series.
    Response: We agree with the commenter that requested that we not 
assign any of these magnetic resonance procedure codes to nuclear 
medicine APCs. For instance, APC 5593 contains procedures that describe 
nuclear medicine tests, and CPT code 75563 is a specific type of MRI 
and not a nuclear medicine test. Also, the geometric mean cost of CPT 
code 75563 is $745 and the geometric mean cost of the APC to which it 
is assigned, APC 5573, is $781. These geometric mean costs are very 
similar. However, the geometric mean cost of APC 5593 is $1,171, which 
is significantly higher than the geometric mean cost of CPT code 75563. 
Therefore, assigning CPT code 75563 to APC 5593 would assign the 
procedure to an APC with clinically dissimilar nuclear medicine tests 
and resource dissimilar tests that have a geometric mean cost of $1,171 
(as compared to the $745 geometric mean cost of CPT code 75563). 
Therefore, we are finalizing our proposal, without modification, to 
assign CPT code 75563 to APC 5573. Similarly, the procedure described 
by CPT code 75557 is not a nuclear medicine test and, therefore, should 
not be assigned to a nuclear medicine APC such as APC 5591. The 
geometric mean cost of CPT code 75557 is $266, and the geometric mean 
cost of the APC to which it is assigned (APC 5523) is $223. Therefore, 
we believe that APC 5523 is an appropriate APC assignment for CPT code 
75557 from a resource perspective. Also, there are many other MRI 
procedure codes, like CPT code 75557, assigned to APC 5523. In 
addition, we are reassigning a related code, CPT code 75559 (Cardiac 
magnetic resonance imaging for morphology and function without contrast 
material; with stress imaging), from APC 5592 (Level 2 Nuclear Medicine 
and Related Services) to APC 5523 (Level 3 Imaging without Contrast). 
The geometric mean costs of these two APCs are comparable, but because 
the procedure described by CPT code 75559 is not a nuclear medicine 
test, we believe that APC 5523 is a more appropriate APC assignment 
than APC 5592 for reasons of clinical similarity.
    Comment: One commenter requested that CMS reassign CPT code 70559 
(Magnetic resonance (e.g., proton) imaging, brain (including brain stem 
and skull base), during open intracranial procedure (e.g., to assess 
for residual tumor or residual vascular malformation); without contrast 
material(s), followed by contrast material(s) and further sequences) 
from APC 5181 (Level 1 Vascular Procedures) to an imaging APC because 
the commenter believed that an imaging APC would be more clinically 
appropriate than a vascular procedures APC.
    Response: We agree with the commenter that CPT code 70559 should be 
assigned to an imaging APC because this service is more similar to 
other imaging services than to the procedures assigned to APC 5181. 
Therefore, we are modifying our proposal, and reassigning CPT code 
70559 to APC 5571 (Level 1 Imaging with Contrast).
    Comment: A few commenters requested that CMS reassign four HCPCS/
CPT codes from APC 5572 (Level 2 Diagnostic Radiology with Contrast) to 
APC 5573 (Level 3 Diagnostic Radiology with Contrast):
     HCPCS code C8929 (Transthoracic echocardiography, with 
contrast, or without contrast followed by with contrast, real-time with 
image documentation (2D), includes M-mode recording, when performed, 
complete, with spectral Doppler echocardiography, and with color flow 
Doppler echocardiography);
     CPT code 73722 (Magnetic resonance (e.g., proton) imaging, 
any joint of lower extremity; with contrast material(s));
     CPT code 73222 (Magnetic resonance (e.g., proton) imaging, 
any joint of upper extremity; with contrast material(s)); and
     CPT code 72126 (Computed tomography, cervical spine; with 
contrast material).
    These commenters believed that the procedures described by these 
four codes have greater clinical and resource similarity to the 
procedures assigned to APC 5573.
    Response: We agree, in part, with the commenters. In particular, we 
believe that HCPCS code C8929 belongs in the same APC with the other 
echocardiography with contrast services, which is APC 5573, based on 
clinical and resource similarity resulting from the use of contrast. We 
also believe that the geometric mean costs of CPT code 73722 ($559.13) 
and CPT code 73222 ($606.13) support the assignment of these procedures 
to APC 5573, which has a geometric mean cost of $675.23. However, the 
final rule geometric mean cost for CPT code 72126 is $363.15. 
Therefore, we believe that APC 5572 is the more appropriate APC 
assignment for this procedure.

[[Page 79631]]

    Comment: A few commenters requested that CMS reassign HCPCS codes 
G0105 (Colorectal cancer screening; colonoscopy on individual at high 
risk) and G0121 (Colorectal cancer screening; colonoscopy on individual 
not meeting criteria for high risk) from APC 5525 (Level 5 Diagnostic 
Radiology without Contrast) to a more clinically appropriate 
gastroenterology APC.
    Response: We agree with the commenters that a gastroenterology APC 
would be more clinically appropriate for these colonoscopy services. 
Therefore, we are modifying our proposal, and reassigning HCPCS codes 
G0105 and G0121 to APC 5311 (Level 1 Lower GI Procedures). With the 
reassignment of HCPCS codes G0105 and G0121 from APC 5525 to APC 5311, 
only five procedures remain in APC 5525. We believe that these 
remaining five procedures (four of which are non-contrast 
echocardiography services) can be grouped into APC 5524 (Level 4 
Diagnostic Radiology without Contrast), which will be renamed Level 4 
Imaging without Contrast. APC 5524 contains other clinically similar 
non-contrast echocardiography services and the reassignment of these 
five procedures comports with the provision of the 2 times rule. 
Therefore, we also are reassigning CPT codes 75984, 93312, 93313, 
93315, and 93318 from APC 5525 to APC 5524, and deleting APC 5525.
    Comment: Some commenters requested that several procedures be 
reassigned to the next higher level imaging APC within the APC series. 
The commenters believed that reassignment of these procedures would 
improve resource homogeneity within these APCs. These procedures and 
our responses to this request are listed in Table 19 below.

                                   Table 19--Services Requested To Be Reassigned to the Next Higher Level Imaging APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Proposed  CY  Proposed CY    CMS response  (agree or disagree     Final  CY    Final  CY
            CPT code                    Long descriptor           2017 SI      2017 APC             with commenter)              2017  SI     2017  APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
70545..........................  Magnetic resonance                      S          5571  Disagree...........................            S          5571
                                  angiography, head; with
                                  contrast material(s).
70548..........................  Magnetic resonance                      S          5571  Disagree...........................            S          5571
                                  angiography, head; with
                                  contrast material(s).
70557..........................  Magnetic resonance (e.g.,               S          5523  Disagree...........................            S          5523
                                  proton) imaging, brain
                                  (including brain stem and
                                  skull base), during open
                                  intracranial procedure
                                  (e.g., to assess for
                                  residual tumor or residual
                                  vascular malformation);
                                  without contrast material.
71270..........................  Computed tomography, thorax;           Q3          5571  Disagree...........................           Q3          5571
                                  without contrast material,
                                  followed by contrast
                                  material(s) and further
                                  sections.
76010..........................  Radiologic examination from            Q1          5521  Disagree...........................           Q1          5521
                                  nose to rectum for foreign
                                  body, single view, child.
76498..........................  Unlisted magnetic resonance             S          5521  Disagree...........................            S          5521
                                  procedure (e.g.,
                                  diagnostic, interventional).
76641..........................  Ultrasound, breast,                    Q1          5521  Agree..............................           Q1          5522
                                  unilateral, real time with
                                  image documentation,
                                  including axilla when
                                  performed; complete.
76642..........................  Ultrasound, breast,                    Q1          5521  Disagree...........................           Q1          5521
                                  unilateral, real time with
                                  image documentation,
                                  including axilla when
                                  performed; limited.
76816..........................  Ultrasound, pregnant uterus,           Q1          5521  Agree..............................           Q1          5522
                                  real time with image
                                  documentation, follow-up
                                  (e.g., re-evaluation of
                                  fetal size by measuring
                                  standard growth parameters
                                  and amniotic fluid volume,
                                  re-evaluation of organ
                                  system(s) suspected or
                                  confirmed to be abnormal on
                                  a previous scan),
                                  transabdominal approach,
                                  per fetus.
76821..........................  Doppler velocimetry, fetal;            Q1          5521  Agree..............................           Q1          5522
                                  middle cerebral artery.
76857..........................  Ultrasound, pelvic                     Q3          5521  Agree..............................           Q3          5522
                                  (nonobstetric), real time
                                  with image documentation;
                                  limited or follow-up (e.g.,
                                  for follicles).
C8903..........................  Magnetic resonance imaging             Q3          5571  Disagree...........................           Q3          5571
                                  with contrast, breast;
                                  unilateral.
C8918..........................  Magnetic resonance                     Q3          5571  Disagree...........................           Q3          5571
                                  angiography with contrast,
                                  pelvis.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Response: For the procedures in the above table that we disagreed 
with the commenter regarding the most appropriate APC assignment, the 
geometric mean cost of each of these procedure codes is very similar to 
the geometric mean cost of the APC to which we proposed to reassign the 
procedure in the proposed rule. Therefore, we are finalizing our 
proposal, without modification, to reassign these proposed procedures 
to the proposed APCs indicated. For the procedure codes in the table 
above that we are modifying our proposal to reassign to a different APC 
than that which was proposed, the geometric mean cost of the procedure 
is more consistent with the next higher level APC to which we agree 
supports a more appropriate APC assignment.

[[Page 79632]]

    Comment: One commenter requested that CMS reassign several 
procedures to APCs other than any of the imaging APCs. The commenter 
believed that these procedures are not clinically similar to the other 
imaging services assigned to the imaging APCs. These procedure codes 
and our responses are listed in Table 20 below.
    Response: We refer readers to the table below for the final CY 2017 
APC assignments for the suggested procedure codes. We agree with the 
commenter that all of the suggested procedures should be reassigned to 
a different APC, except for the procedures described by CPT code 62303 
and HCPCS code C9733. We believe that these two procedure codes 
describe imaging tests and, therefore, are properly assigned to an APC 
in the imaging APC series.

                                      Table 20--Additional Services Requested To Be Reassigned to Non-Imaging APCS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Proposed CY  Proposed CY    CMS response (agree or disagree      Final CY      Final CY
        CPT/ HCPCS code                 Long descriptor           2017 SI      2017 APC             with commenter)               2017 SI      2017 APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
36002..........................  Injection procedures (e.g.,             S          5524  Agree..............................            T          5181
                                  thrombin) for percutaneous
                                  treatment of extremity
                                  pseudoaneurysm.
43752..........................  Naso- or oro-gastric tube              Q3          5523  Agree..............................           Q1          5735
                                  placement, requiring
                                  physician's skill and
                                  fluoroscopic guidance
                                  (includes fluoroscopy,
                                  image documentation and
                                  report).
43756..........................  Duodenal intubation and                Q1          5524  Agree..............................           Q1          5301
                                  aspiration, diagnostic,
                                  includes image guidance;
                                  single specimen (e.g., bile
                                  study for crystals or
                                  afferent loop culture).
47531..........................  Injection procedure for                Q2          5524  Agree..............................           Q2          5341
                                  cholangiography,
                                  percutaneous, complete
                                  diagnostic procedure
                                  including imaging guidance
                                  (e.g., ultrasound and/or
                                  fluoroscopy) and all
                                  associated radiological
                                  supervision and
                                  interpretation; existing
                                  access.
62303..........................  Myelography via lumbar                 Q2          5524  Disagree...........................           Q2          5524
                                  injection, including
                                  radiological supervision
                                  and interpretation;
                                  thoracic.
75801..........................  Lymphangiography, extremity            Q2          5524  Agree..............................           Q2          5181
                                  only, unilateral,
                                  radiological supervision
                                  and interpretation.
91200..........................  Liver elastography,                    Q1          5521  Agree..............................           Q1          5721
                                  mechanically induced shear
                                  wave (e.g., vibration),
                                  without imaging, with
                                  interpretation and report.
93982..........................  Noninvasive physiologic                Q1          5521  Agree..............................           Q1          5721
                                  study of implanted wireless
                                  pressure sensor in
                                  aneurysmal sac following
                                  endovascular repair,
                                  complete study including
                                  recording, analysis of
                                  pressure and waveform
                                  tracings, interpretation
                                  and report.
C9733..........................  Non-ophthalmic fluorescent             Q2          5523  Disagree...........................           Q2          5523
                                  vascular angiography.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter requested that CMS reassign CPT code 91200 
from APC 5521 to APC 5721, and modify the proposed status indicator 
assignment from ``Q1'' (conditionally packaged) to ``S'' (Paid under 
OPPS; separate APC payment.) in order to separately pay for the test 
under all circumstances.
    Response: Although we agree with the commenter regarding the APC 
assignment for clinical similarity purposes, we disagree with the 
commenter regarding the status indicator assignment. The procedure 
described by CPT code 91200 is an ancillary ultrasound diagnostic test, 
not unlike the ultrasound tests that were packaged as a part of our 
ancillary services packaging policy in CY 2015. (We refer readers to 
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819) for a 
further discussion of the ancillary services packaging policy.) 
Therefore, we are finalizing our proposal, without modification, to 
assign CPT code 91200 to APC 5721, with a status indicator of 
assignment of ``Q1'' for CY 2017.
    Comment: A few commenters requested that CMS modify the status 
indicator assignment for HCPCS code C9733 from ``Q2'' to a separately 
payable status indicator (for example, status indicator ``S''). The 
commenters noted that status indicator ``Q2'' indicates that payment 
for the procedure described by HCPCS code C9733 is conditionally 
packaged when provided in conjunction with other procedures assigned to 
status indicator ``T,'' which are primarily surgical procedures.
    Response: We have responded to this comment in past rules. The 
service described by HCPCS code C9733 is primarily an intraoperative 
imaging service. Therefore, it is conditionally packaged under Sec.  
419.2(b)(14), which packages intraoperative items and services. When 
the procedure described by HCPCS code C9733 is not furnished in 
conjunction with a surgical procedure, then the service is paid 
separately. We believe that the OPPS payments, separate or packaged, 
for surgical procedures in which this test is performed in conjunction 
with (for example, breast reconstruction) are more than adequate to 
cover the cost of the service described by HCPCS code C9733 for 
Medicare beneficiaries in need of this service.
    Comment: One commenter requested that CMS assign three procedures 
from APC 5181 (Level 1 Vascular Procedures) to APC 5182 (Level 2 
Vascular Procedures) because the geometric mean costs of these 
procedures are more

[[Page 79633]]

comparable to the geometric mean cost of APC 5182 than that of APC 
5181:
     CPT code 75731 (Angiography, adrenal, unilateral, 
selective, radiological supervision and interpretation);
     CPT code 75746 (Angiography, pulmonary, by nonselective 
catheter or venous injection, radiological supervision and 
interpretation); and
     CPT code 75810 (Splenoportography, radiological 
supervision and interpretation).
    Response: We disagree with the commenter. Based on the CY 2017 
final rule updated claims data, CPT code 75731 only has one single 
claim, CPT code 75746 only has 5 single claims, and CPT code 75810 only 
has 2 single claims. The number of claims for these services is too low 
upon which to base an APC reassignment for better resource homogeneity. 
Therefore, we are finalizing our proposal, without modification, to 
assign these three procedures to APC 5181.
    After consideration of the public comments we received, we are 
finalizing the proposals, with the modifications as described above in 
the responses to the comments on the restructuring and reorganization 
of the imaging APCs. Table 21 below lists the final seven CY 2017 
imaging APCs (not including the four nuclear medicine APCs). All of 
these APCs are assigned to status indicator ``S,'' although payment for 
some of the procedures assigned to these APCs are conditionally 
packaged and are instead assigned to status indicator ``Q1'' or ``Q2.''

                  Table 21--Final CY 2017 Imaging APCs
------------------------------------------------------------------------
                CY 2017 APC                       CY 2017 APC title
------------------------------------------------------------------------
5521......................................  Level 1 Imaging without
                                             Contrast.
5522......................................  Level 2 Imaging without
                                             Contrast.
5523......................................  Level 3 Imaging without
                                             Contrast.
5524......................................  Level 4 Imaging without
                                             Contrast.
5571......................................  Level 1 Imaging with
                                             Contrast.
5572......................................  Level 2 Imaging with
                                             Contrast.
5573......................................  Level 3 Imaging with
                                             Contrast.
------------------------------------------------------------------------

b. Radiation Oncology (APCs 5092, 5611, and 5627)
    Comment: A few commenters disagreed with CMS' proposed reassignment 
of CPT code 19298 (Placement of radiotherapy afterloading brachytherapy 
catheters (multiple tube and button type) into the breast for 
interstitial radioelement application following (at the time of or 
subsequent to) partial mastectomy, includes imaging guidance) to APC 
5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures), with a 
payment rate of approximately $4,395 for CY 2017. In CY 2016, this code 
is assigned to APC 5093 (Level 3 Breast/Lymphatic Surgery and Related 
Procedures), with a payment rate of approximately $7,558. The 
commenters believed that the previous APC assignment to APC 5093 is 
appropriate and requested that CMS continue to assign CPT code 19298 to 
APC 5093 for CY 2017.
    Response: The geometric mean cost for CPT code 19298 decreased from 
approximately $6,269 in CY 2016 to approximately $5,128 for CY 2017. 
This change prompted the proposed reassignment of this code from the 
Level 3 APC to Level 2. We do not believe that the CY 2017 geometric 
mean cost supports continued assignment to APC 5093. After 
consideration of the public comment we received, we are finalizing our 
proposal, without modification, and reassigning CPT code 19298 to APC 
5092 for CY 2017.
    Comment: A few commenters suggested that CMS reassign CPT codes 
77424 (Intraoperative radiation treatment delivery, x-ray, single 
treatment session) and 77425 (Intraoperative radiation treatment 
delivery, electrons, single treatment session) to an APC in the 
radiation therapy series other than APC 5093 (Level 3 Breast/Lymphatic 
Surgery and Related Procedures) because these radiation treatment 
services are not clinically similar to the breast procedures that are 
assigned to APC 5093.
    Response: We agree with the commenters. The assignment of these 
codes to APC 5093 was intended to be temporary until more claims data 
for these codes was available. Based on these codes being radiation 
treatment delivery codes and their geometric mean costs for CPT codes 
77424 (approximately $8,701) and 77425 (approximately $7,172), we are 
reassigning these services to APC 5627 (Level 7 Radiation Therapy), 
with a geometric mean cost of approximately$7,664. We note that if 
planning and preparation and imaging services are repackaged into the 
single session cranial SRS codes (that are assigned to APC 5627) in the 
future, this could cause the geometric mean cost for the single session 
cranial SRS codes to increase such that it may no longer be appropriate 
to group CPT codes 77424 and 77425 with the single session SRS codes in 
the same APC. However, for CY 2017, APC 5627 is the most appropriate 
APC for CPT codes 77424 and 77425, both clinically and from a resource-
cost perspective. The final payment rate for these codes can be found 
in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site).
    Comment: A few commenters requested that CMS create a fourth level 
in the Therapeutic Radiation Treatment Preparation APC series and 
assign CPT code 77301 (Intensity modulated radiotherapy plan, including 
dose-volume histograms for target and critical structure partial 
tolerance specifications) to this new APC. The commenters believed that 
the costs from the claims data for CPT code 77301 are lower than the 
actual current costs because the AMA CPT Editorial Panel bundled 
simulation services (that used to be separately coded) into the payment 
for CPT code 77301.
    Response: We prefer to wait for the actual claims data before 
reassigning a code because the cost of a new bundled code is often 
difficult to predict and often the cost of the new bundled code is 
significantly less than the sum of the costs of the individual codes 
that contribute to the bundle. For CY 2017, we are finalizing our 
proposal to reassign CPT code 77301 to APC 5613.
    Comment: A few commenters requested that CMS not reassign CPT codes 
77370, 77280, and 77333 to APC 5611 (Level 1 Therapeutic Radiation 
Treatment Preparation) for CY 2017. These codes are currently assigned 
to the Level 2 Therapeutic Radiation Treatment Preparation APC (APC 
5612) in CY 2016. The payment would decrease from $167 in CY 2016 to 
$117 in CY 2017.
    Response: As we do annually, we examined the APCs in this series. 
We noticed that the difference in the geometric mean costs between 
Level 1 and 2 was not significant. Therefore, we proposed to 
consolidate these two APCs into a single APC and reduce the number of 
levels in the Therapeutic Radiation Treatment Preparation APC series 
from four to three. We believe that this change promotes resource 
homogeneity without excessive granularity with consecutive levels 
having almost the same mean cost. The range of geometric mean costs for 
significant services in the proposed CY 2017 APC 5611 (Level 1 
Therapeutic Radiation Treatment Preparation) is $101 to $197, which 
comports with the 2 times rule. Therefore, we are finalizing this 
proposed APC structure and CPT codes 77370, 77280, and 77333 are 
assigned to APC 5611 for CY 2017.

[[Page 79634]]

7. Skin Substitutes (APCs 5053 through 5055)
    For CY 2017, we proposed to assign skin substitute procedures to 
APCs 5053 through 5055 (Level 3 through 5 Skin Procedures). The cost of 
the procedures is affected by whether the skin substitute product is 
low cost or high cost, the surface area of the wound, and the location 
of the wound.
    Comment: Commenters disagreed with the proposed APC assignments for 
procedures described by HCPCS code C5277 (Application of low cost skin 
substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, 
genitalia, hands, feet, and/or multiple digits, total wound surface 
area greater than or equal to 100 cm\2\; First 100 cm\2\ wound surface 
area, or 1% of body area of infants and children) to APC 5053 (Level 3 
Skin Procedures) and procedures described by CPT code 15277 
(Application of skin substitute graft to face, scalp, eyelids, mouth, 
neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, 
total wound surface area greater than or equal to 100 cm\2\; First 100 
cm\2\ wound surface area, or 1% of body area of infants and children) 
to APC 5054 (Level 4 Skin Procedures). The commenters stated that the 
proposed payment rates for APC 5053 and APC 5054 do not accurately 
reflect the cost of providing the services described by HCPCS code 
C5277 and CPT code 15277. The commenters further stated that the cost 
of applying a skin substitute product to a larger wound (surface area 
greater than or equal to 100 cm\2\) should be similar, irrespective of 
whether the product is applied to the head, genitalia, hands, or feet 
as compared to the trunk, legs, or arms. The commenters compared the 
differences between procedures described by HCPCS code C5277 and 
procedures described by HCPCS code C5273 (Application of low cost skin 
substitute graft to trunk, arms, legs, total wound surface area greater 
than or equal to 100 cm\2\; First 100 cm\2\ wound surface area, or 1% 
of body area of infants and children). Procedures described by HCPCS 
code C5273 are assigned to APC 5054, which has a higher geometric mean 
cost than APC 5053. The commenters did a similar comparison between 
procedures described by CPT code 15277 and procedures described by CPT 
code 15273 (Application of skin substitute graft to trunk, arms, legs, 
total wound surface area greater than or equal to 100 cm\2\; First 100 
cm\2\ wound surface area, or 1% of body area of infants and children). 
Procedures described by CPT code 15273 are assigned to APC 5055 (Level 
5 Skin Procedures), which has a higher geometric mean cost than APC 
5054. One commenter believed that the low volume of single claims for 
procedures described by HCPCS code C5277 and CPT code 15277 may have 
resulted in inaccurately low geometric mean costs.
    Response: We disagree with the commenters. We reviewed the services 
in both APC 5053 and APC 5054 and found that procedures described by 
HCPCS code C5277 and CPT code 15277 have both clinical and resource 
homogeneity to the other 11 procedures assigned to these two APCs. 
Therefore, there is no justification to assign these procedures to APCs 
with higher geometric mean costs. The final geometric mean cost of 
procedures described by HCPCS code C5277 is approximately $810 (based 
on 26 single claims), which is more comparable to the final geometric 
mean cost of APC 5053 ($466) than the geometric mean cost of APC 5054 
($1,468). Also, regarding the accuracy of the cost data for these 
codes, we again note our longstanding policy provides that, beyond our 
standard OPPS trimming methodology that we apply to those claims that 
have passed various types of claims processing edits, it is not our 
general policy to judge the accuracy of hospital coding and charging 
for purposes of ratesetting. (We refer readers to 75 FR 71838 for a 
detailed discussion.) Therefore, after consideration of the public 
comments we received, we are finalizing our proposal, without 
modification, to assign HCPCS code C5277 to APC 5053 and CPT code 15277 
to APC 5054.
    Comment: Commenters requested that APC 5053 (Level 3 Skin 
Procedures) be divided into two APCs in order to separate more resource 
intensive services using skin substitute products (procedures described 
by HCPCS codes C5271, C5275, and C5277) from other, less resource 
intensive skin procedures. The commenters believed an additional APC 
level within the skin procedures APC series between the current level 3 
and level 4 would more closely reflect the cost of the low cost skin 
substitute application procedures. The commenters also believed that 
the current APC structure incentivizes hospitals to prefer high cost 
skin substitutes over low cost skin substitutes.
    Response: We disagree with the commenters. We do not believe that 
it is necessary to expand the skin procedures APC series to six levels. 
We reviewed the services assigned to APC 5053 and found that all of the 
procedures assigned to the APC have both sufficient clinical and 
resource homogeneity. The highest volume low cost skin substitute 
application procedure, described by HCPCS code C5271 (Application of 
low cost skin substitute graft to trunk, arms, legs, total wound 
surface area up to 100 sq cm; first 25 sq cm or less wound surface 
area), had a final geometric mean cost of $596 (11,256 single claims), 
and the final geometric mean cost of APC 5053 was $466. While the 
geometric mean cost of procedures described by HCPCS code C5271 is 
higher than the geometric mean cost of APC 5053, the difference is well 
within the span of the two times rule.
    In conclusion, we do not believe that there is justification to 
create another level within the skin procedures APC series by dividing 
APC 5053 into two APCs. Therefore, after consideration of the public 
comments we received, we are finalizing our proposal, without 
modification, to maintain the current five levels of skin procedures 
APCs.
8. Urology System Procedures and Services
a. Chemodenervation of the Bladder (APC 5373)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 52287 (Cystourethroscopy, with 
injection(s) for chemodenervation of the bladder) to APC 5373 (Level 3 
Urology and Related Services), with a payment rate of approximately 
$1,642. In addition, we proposed to reassign its status indicator from 
``T'' (Procedure or Service, Multiple Procedure Reduction Applies. Paid 
under OPPS; separate APC payment.) to ``J1'' (Hospital Part B services 
paid through a comprehensive APC) to indicate that all covered Part B 
services on the claim are packaged with the primary ``J1'' service for 
the claim, except for services with OPPS status indicators ``F,'' 
``G,'' ``H,'' ``L,'' and ``U''; ambulance services; diagnostic and 
screening mammography; all preventive services; and certain Part B 
inpatient services.
    We proposed to continue to assign CPT code 52287 to APC 5373 based 
on the claims data used for the proposed rule. Specifically, our 
analysis of the claims data showed a geometric mean cost of 
approximately $2,219 for CPT code 52287 based on 7,464 single claims 
(out of 7,609 total claims), which fits more appropriately in APC 5373, 
whose geometric mean cost is approximately $1,716. We did not propose 
to assign CPT code 52287 to APC 5374 (Level 4 Urology and Related 
Services) because we would have overpaid for the procedure because the 
geometric mean

[[Page 79635]]

cost for this APC is approximately $2,642.
    Comment: One commenter disagreed with the proposed APC assignment 
for CPT code 52287, and requested that CMS reassign the procedure to 
APC 5374. The commenter explained that CPT code 52287 describes a 
procedure that involves the use of the BOTOX[supreg] drug for the 
treatment of overactive bladder (OAB) and detrusor overactivity 
associated with a neurologic condition (NDO). The commenter also stated 
that because of the proposed revision to the code's status indicator 
from ``T'' to ``J1,'' the BOTOX[supreg] used in the procedure would no 
longer be paid separately, whereas in CY 2016 the drug is paid 
separately under HCPCS code J0585 (Injection, onabotulinumtoxin a, 1 
unit). According to the commenter, the resource cost of performing the 
procedure with 200 units of the drug is significantly greater than that 
of furnishing 100 units. Consequently, the commenter stated that the 
payment rate for APC 5373 is inadequate to cover the resource costs 
associated with performing the procedure and furnishing the drug. The 
commenter recommended that CMS reconfigure APCs 5373 and 5374 so that 
all procedures with a geometric mean cost greater than $2,150 are 
assigned to APC 5374, and to reassign CPT code 52287 to APC 5374. 
Alternatively, if CMS does not reassign CPT code 52287 to APC 5374, the 
commenter suggested that CMS establish a complexity adjustment for 
those procedures that involve a dose of 200 units of BOTOX[supreg].
    Response: We believe that APC 5373 is the most appropriate APC 
assignment for CPT code 52287 based on its resource and clinical 
homogeneity to the other procedures within the APC. Based on updated CY 
2015 claims data for this final rule with comment period, the range of 
geometric mean costs for significant procedures assigned to APC 5373 is 
between $1,175 and $2,275. The geometric mean cost of $2,196 for CPT 
code 52287 is within this range. We do not believe that it would be 
appropriate to assign CPT code 52287 to APC 5374, whose geometric mean 
cost is approximately $2,613.
    With respect to the issue of the drug cost, the payment for the 
BOTOX[supreg] drug is included in the payment for the procedure 
described by CPT code 52287. As stated in section II.A.2.c. of this 
final rule with comment period, the payment for procedures assigned to 
a ``J1'' status indicator include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and those drugs that are usually self-
administered (SADs), unless they function as packaged supplies (78 FR 
74868 through 74869, 74909, and 79 FR 66800).
    On the issue of a complexity adjustment, as listed in Addendum J of 
the CY 2017 OPPS/ASC proposed rule, specifically, in the ``Complexity 
Adjustments'' tab of the Excel file, we proposed to reassign CPT code 
52287 to a complexity adjustment APC. In particular, we proposed to 
assign CPT code 52287 to APC 5374 when the procedure is performed in 
conjunction with other procedures during the same hospital stay that 
meet the complexity adjustment criteria discussed in section II.A.2.c. 
of this final rule with comment period.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to assign CPT code 52287 
to APC 5373 for CY 2017. The final status indicator and APC assignments 
and payment rate for this code, where applicable, can be found in 
Addendum B to this final rule with comment period (which is available 
via the Internet on the CMS Web site). The list of the complexity 
adjustments for add-on code combinations for CY 2017, along with all of 
the other complexity adjustments, can be found in Addendum J to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site). Addendum J to this final rule with comment period 
also contains the summary cost statistics for each of the code 
combinations that describe a complex code combination that will qualify 
for a complexity adjustment and will be reassigned to the next higher 
cost C-APC within the clinical family.
b. Temporary Prostatic Urethral Stent (APC 5373)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 53855 (Insertion of a temporary 
prostatic urethral stent, including urethral measurement) to APC 5372 
(Level 2 Urology and Related Services), with a payment rate of 
approximately $561.
    Comment: One commenter disagreed with the proposed assignment of 
CPT code 53855 to APC 5372. The commenter believed that the proposed 
payment rate of approximately $561 for APC 5372 is inadequate to cover 
the cost of providing the service. The commenter stated that the 
payment rate of approximately $1,642 for APC 5373 better supports the 
resource costs and clinical characteristics associated with the 
procedure described by CPT code 53855 and recommended that CMS reassign 
the CPT code to this APC for CY 2017.
    Response: Based on our analysis of the updated CY 2015 hospital 
outpatient claims used for this final rule with comment period, we 
agree with the commenter. Our claims data showed a geometric mean cost 
of approximately $1,860 for CPT code 53855 based on 31 single claims 
(out of 31 total claims), which is similar to the geometric mean cost 
of approximately $1,691 for APC 5373.
    After consideration of the public comment we received, we are 
modifying our proposal and assigning CPT code 53855 to APC 5373 for CY 
2017. The final CY 2017 payment rate for this procedure can be found in 
Addendum B to this CY 2017 OPPS/ASC final rule with comment period 
(which is available via the Internet on the CMS Web site).
c. Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 
5376)
    Currently, there are four procedure codes that describe 
transprostatic urethral implant procedures, specifically, HCPCS codes 
C9739 and C9740, and CPT codes 52441 and 52442. As shown in Table 22 
below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed 
rule, we proposed to continue to assign HCPCS code C9739 to APC 5375 
(Level 5 Urology and Related Services). We also proposed to reassign 
HCPCS code C9740 from New Technology APC 1565 (New Technology--Level 28 
($5001-$5500)) to APC 5376 (Level 6 Urology and Related Services), and 
to reassign the status indicator for HCPCS code C9740 from ``T'' to 
``J1.'' In addition, we proposed to continue to assign CPT codes 52441 
and 52442 to status indicator ``B'' to indicate that these codes are 
not recognized by OPPS when submitted on a hospital outpatient Part B 
bill type (12x and 13x). As we discussed in the CY 2015 OPPS/ASC final 
rule with comment period (79 FR 66853 through 66854), we do not 
recognize CPT codes 52441 and 52442 because the code descriptors do not 
accurately capture the number of implants typically provided in a 
hospital outpatient or ASC setting.

[[Page 79636]]



         Table 22--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transprostatic Urethral Implant Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2016    Proposed  CY    Proposed     CY 2017
            CPT/HCPCS code                      Long descriptors          CY 2016 OPPS    CY 2016        OPPS      2017  OPPS     CY 2017        OPPS
                                                                               SI         OPPS APC     payment         SI         OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
C9739................................  Cystourethroscopy, with insertion           J1          5375    $3,393.73           J1          5375    $3,460.41
                                        of transprostatic implant; 1 to
                                        3 implants.
C9740................................  Cystourethroscopy, with insertion            T          1565     5,250.00           J1          5376     7,389.67
                                        of transprostatic implant; 4 or
                                        more implants.
52441................................  Cystourethroscopy, with insertion            B           N/A          N/A            B           N/A          N/A
                                        of permanent adjustable
                                        transprostatic implant; single
                                        implant.
52442................................  Cystourethroscopy, with insertion            B           N/A          N/A            B           N/A          N/A
                                        of permanent adjustable
                                        transprostatic implant; each
                                        additional permanent adjustable
                                        transprostatic implant (list
                                        separately in addition to code
                                        for primary procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter expressed concern with the proposed 
reassignment of HCPCS code C9740 to APC 5376. The commenter stated that 
the reassignment may not be aligned with the current clinical 
homogeneity of other procedures assigned to APC 5376 because the 
procedure described by HCPCS code C9740 is performed through a natural 
orifice (urethra) and can be performed with local anesthesia. To ensure 
clinical homogeneity within APC 5376, the commenter requested that CMS 
reevaluate the appropriate APC assignment for HCPCS code C9740.
    Response: As we do every year, we review the APC assignments for 
all services and items paid under the OPPS. Based on resource and 
clinical homogeneity, we believe that HCPCS code C9740 is more 
appropriately assigned to the Urology and Related Services APC series. 
We reviewed the procedures assigned to the Urology and Related Services 
APCs and, based on its resource cost and clinical homogeneity, we 
determined that HCPCS code C9740 most appropriately aligns with the 
other procedures in the Level 6 APC within the Urology and Related 
Services APC grouping.
    For the proposed rule, our claims data showed a geometric mean cost 
of approximately $6,312 for HCPCS code C9740 based on 585 single claims 
(out of 606 total claims), which is relatively similar to the geometric 
mean cost of approximately $7,723 for APC 5376. We believe that neither 
APC 5375 (Level 5 Urology and Related Services), whose geometric mean 
cost is approximately $3,617 or APC 5377 (Level 7 Urology and Related 
Services), whose geometric mean cost is approximately $15,377, would 
have been appropriate APC assignments. When compared to the geometric 
mean cost of $6,312 for HCPCS code C9740, an APC assignment to APC 5375 
would underpay for the procedure, while an APC assignment to APC 5377 
would overpay for the service. For the final rule with comment period, 
our updated claims data showed a similar pattern. Specifically, our 
analysis showed a geometric mean cost of approximately $6,167 for HCPCS 
code C9740 based on 691 single claims (out of 701 total claims), which 
is comparable to the geometric mean cost of approximately $7,661 for 
APC 5376. We believe that an APC assignment to either APC 5375, whose 
geometric mean cost is approximately $3,581 or APC 5377, whose 
geometric mean cost is approximately $14,764, would be inappropriate. 
Based on the updated claims data for the final rule with comment 
period, we believe that APC 5376 is the most appropriate APC assignment 
for HCPCS code C9740 based on its clinical homogeneity and resource 
cost compared to the other procedures within this APC.
    Comment: Several commenters agreed with CMS' proposal to continue 
to assign HCPCS code C9739 to APC 5375 and to reassign HCPCS code C9740 
to APC 5376 for CY 2017. The commenters requested that CMS finalize the 
proposal.
    Response: We appreciate the commenters' support. After 
consideration of the public comments we received, we are adopting as 
final, without modification, the proposed APC and status indicator 
assignments for HCPCS codes C9739 and C9740, and CPT codes 52441 and 
52442 for CY 2017. Table 23 below lists the final status indicator and 
APC assignments and payment rates for the transprostatic urethral 
implant procedures for CY 2017. We refer readers to Addendum B of this 
final rule with comment period for the payment rates for all codes 
reportable under the OPPS. Addendum B is available via the Internet on 
the CMS Web site.

           Table 23--Final CY 2017 Status Indicator (SI), APC Assignments and Payment Rates for the Transprostatic Urethral Implant Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                 Final CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
            CPT/HCPCS code                      Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
C9739................................  Cystourethroscopy, with insertion           J1          5375    $3,393.73           J1          5375    $3,482.54
                                        of transprostatic implant; 1 to
                                        3 implants.

[[Page 79637]]

 
C9740................................  Cystourethroscopy, with insertion            T          1565     5,250.00           J1          5376     7,449.52
                                        of transprostatic implant; 4 or
                                        more implants.
52441................................  Cystourethroscopy, with insertion            B           N/A          N/A            B           N/A          N/A
                                        of permanent adjustable
                                        transprostatic implant; single
                                        implant.
52442................................  Cystourethroscopy, with insertion            B           N/A          N/A            B           N/A          N/A
                                        of permanent adjustable
                                        transprostatic implant; each
                                        additional permanent adjustable
                                        transprostatic implant (list
                                        separately in addition to code
                                        for primary procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Other Procedures and Services
a. Cryoablation Procedures (APCs 5114, 5361, 5362, and 5432)
    As part of our standard annual OPPS update process, we review each 
APC assignment for the clinical similarity and resource homogeneity of 
the procedures assigned to each APC. Based on our analysis of the 
hospital outpatient claims data used for the proposed rule, we made 
some modifications to the APC assignments of certain cryoablation 
procedures. Specifically, for the CY 2017 OPPS update, we proposed to 
delete APC 5352 (Level 2 Percutaneous Abdominal/Biliary Procedures and 
Related Procedures), and reassign the cryoablation procedures that were 
previously assigned to this APC to APC 5361 (Level 1 Laparoscopy and 
Related Services). As shown in Table 24 below, and as listed in 
Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to 
reassign CPT codes 20983, 47383, 50593, and 0340T from APC 5352 to APC 
5361. Through our continuing efforts to simplify the APCs through 
consolidation and to improve clinical and resource homogeneity for the 
APCs, we believe that these cryoablation procedures that were 
previously assigned to APC 5352 would be more appropriately assigned to 
APC 5361 based on their geometric mean costs for the CY 2017 OPPS 
update. Further, we believe that the proposed revision appropriately 
categorized these cryoablation procedures in APC 5361 based on clinical 
coherence and resource costs compared to the other procedures in the 
same APC.

                Table 24--Proposed CY 2017 Status Indicators (SI), APC Assignments, and Payment Rates for Certain Cryoablation Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2016    Proposed  CY    Proposed     CY 2017
            CPT/HCPCS code                      Long descriptors          CY 2016 OPPS    CY 2016        OPPS      2017  OPPS     CY 2017        OPPS
                                                                               SI         OPPS APC     payment         SI         OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20983................................  Ablation therapy for reduction or            T          5352    $4,118.23           J1          5361    $4,178.33
                                        eradication of 1 or more bone
                                        tumors (e.g., metastasis)
                                        including adjacent soft tissue
                                        when involved by tumor
                                        extension, percutaneous,
                                        including imaging guidance when
                                        performed; cryoablation.
47383................................  Ablation, 1 or more liver                    T          5352     4,118.23           J1          5361     4,178.33
                                        tumor(s), percutaneous,
                                        cryoablation.
50593................................  Ablation, renal tumor(s),                    T          5352     4,118.23           J1          5361     4,178.33
                                        unilateral, percutaneous,
                                        cryotherapy.
0340T................................  Ablation, pulmonary tumor(s),                T          5352     4,118.23           J1          5361     4,178.33
                                        including pleura or chest wall
                                        when involved by tumor
                                        extension, percutaneous,
                                        cryoablation, unilateral,
                                        includes imaging guidance.
0440T................................  Ablation, percutaneous,                     J1          5361     4,001.15           J1          5361     4,178.33
                                        cryoablation, includes imaging
                                        guidance; upper extremity distal/
                                        peripheral nerve.
0441T................................  Ablation, percutaneous,                     J1          5361     4,001.15           J1          5361     4,178.33
                                        cryoablation, includes imaging
                                        guidance; lower extremity distal/
                                        peripheral nerve.

[[Page 79638]]

 
0442T................................  Ablation, percutaneous,                      T          5352     4,118.23           J1          5361     4,178.33
                                        cryoablation, includes imaging
                                        guidance; nerve plexus or other
                                        truncal nerve (e.g., brachial
                                        plexus, pudendal nerve).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter expressed concern with the proposed 
assignment of the kidney, lung, liver, bone and nerve cryoablation 
procedures, specifically, the procedure codes listed in Table 24, to 
APC 5361. The commenter stated that APC 5361 does not appropriately 
reflect the clinical nature of the procedures and inadequately 
recognizes the resources needed to perform the services. The commenter 
further stated that reassigning the procedures previously assigned to 
APC 5361 results in a lack of clinical coherence because the APC would 
include various diagnostic and therapeutic procedures that consist of a 
wide range of anatomic systems with disparate costs. Consequently, the 
commenter urged CMS to reevaluate the APC assignments for the 
cryoablation procedures listed in Table 24, and suggested that CMS 
either create a new APC that includes both the cryoablation and 
radiofrequency ablation procedures, or reassign the procedures to APCs 
that groups the ablation procedures with other clinically similar 
procedures.
    Response: We reviewed the updated CY 2015 hospital outpatient 
claims data used for this final rule with comment period. Based on our 
review, we agree with the commenter that some of these procedures 
should be reassigned to more appropriate APCs. First, although we have 
no claims data for CPT codes 0440T, 0441T, and 0442T because these 
codes are new for CY 2016, we believe that these procedures more 
appropriately align, based on clinical characteristics, with the 
procedures in APC 5432 (Level 2 Nerve Procedures). Therefore, we are 
reassigning CPT codes 0440T, 0441T, and 0442T to APC 5432 for CY 2017. 
Secondly, based on our analysis, we found a geometric mean of 
approximately $5,416 for CPT code 20983 based on 98 single claims (out 
of 100 total claims), which is similar to the geometric mean of 
approximately $5,367 for APC 5114. Therefore, we are reassigning CPT 
code 20983 to APC 5114. In addition, we found a geometric mean cost of 
approximately $5,944 for CPT code 50593 based on 1,811 single claims 
(out of 1,823 total claims). Furthermore, a high percentage of CPT code 
50593 cases were complexity adjusted to APC 5362 in the proposed rule. 
Given that the geometric mean cost of CPT code 50593 is at the very top 
of the geometric mean cost range for APC 5361 and the need for a 
complexity adjustment for many of the cases into APC 5362, we are 
reassigning CPT code 50593 to APC 5362 for CY 2017. In addition, our 
analysis of the final rule with comment period data showed a geometric 
mean costs for CPT codes 0340T (approximately $5,519) and 47383 
(approximately $5,178) indicates that the proposed rule assignment to 
APC 5361 for these cryoablation procedures is appropriate because their 
geometric mean costs are closer to the geometric mean cost of APC 5361 
(approximately $4,316) than to the geometric mean cost of APC 5362 
(approximately $7,164).
    After consideration of the public comment we received, we are 
adopting as final, without modification, the proposal to assign CPT 
codes 0340T and 47383 to APC 5361. However, we are modifying our 
proposal and reassigning CPT codes 0440T, 0441T, 0442T, 20983, and 
50593 to the final APCs listed in Table 25 below. Table 25 shows the 
final status indicator, APC assignments, and payment rates for the 
cryoablation procedures for CY 2017. We refer readers to Addendum B of 
this final rule with comment period for the payment rates for all codes 
reportable under the OPPS. Addendum B is available via the Internet on 
the CMS Web site.

                  Table 25--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for Certain Cryoablation Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                             CY 2016      CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
            CPT/HCPCS code                      Long descriptors             OPPS SI      OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20983................................  Ablation therapy for reduction or            T          5352    $4,118.23           J1          5114    $5,219.36
                                        eradication of 1 or more bone
                                        tumors (e.g., metastasis)
                                        including adjacent soft tissue
                                        when involved by tumor
                                        extension, percutaneous,
                                        including imaging guidance when
                                        performed; cryoablation.
47383................................  Ablation, 1 or more liver                    T          5352     4,118.23           J1          5361     4,197.36
                                        tumor(s), percutaneous,
                                        cryoablation.
50593................................  Ablation, renal tumor(s),                    T          5352     4,118.23           J1          5362     6,966.89
                                        unilateral, percutaneous,
                                        cryotherapy.

[[Page 79639]]

 
0340T................................  Ablation, pulmonary tumor(s),                T          5352     4,118.23           J1          5361     4,197.36
                                        including pleura or chest wall
                                        when involved by tumor
                                        extension, percutaneous,
                                        cryoablation, unilateral,
                                        includes imaging guidance.
0440T................................  Ablation, percutaneous,                     J1          5361     4,001.15           J1          5432     4,150.11
                                        cryoablation, includes imaging
                                        guidance; upper extremity distal/
                                        peripheral nerve.
0441T................................  Ablation, percutaneous,                     J1          5361     4,001.15           J1          5432     4,150.11
                                        cryoablation, includes imaging
                                        guidance; lower extremity distal/
                                        peripheral nerve.
0442T................................  Ablation, percutaneous,                      T          5352     4,118.23           J1          5432     4,150.11
                                        cryoablation, includes imaging
                                        guidance; nerve plexus or other
                                        truncal nerve (e.g., brachial
                                        plexus, pudendal nerve).
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 
5193)
    For CY 2017, the AMA CPT Editorial Panel deleted CPT codes 36147 
and 36148 and replaced them with nine new codes, effective January 1, 
2017. Table 26 below list the complete descriptors for the deleted and 
replacement codes. We note that the deleted and replacement codes were 
listed in Addendum B and Addendum O to the CY 2017 OPPS/ASC proposed 
rule. Addendum B listed the proposed status indicator assignments for 
the replacement codes and assigned them to comment indicator ``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.), while 
Addendum O listed the placeholder/proposed CY 2017 CPT codes and their 
long descriptors.

 Table 26--Coding Changes for the Dialysis Circuit Procedures Effective
                             January 1, 2017
------------------------------------------------------------------------
 Placeholder/ proposed    Final CY 2017  CPT
   CY 2017 CPT code              code               Long descriptors
------------------------------------------------------------------------
36147.................  36147.................  Introduction of needle
                                                 and/or catheter,
                                                 arteriovenous shunt
                                                 created for dialysis
                                                 (graft/fistula);
                                                 initial access with
                                                 complete radiological
                                                 evaluation of dialysis
                                                 access, including
                                                 fluoroscopy, image
                                                 documentation and
                                                 report (includes access
                                                 of shunt, injection[s]
                                                 of contrast, and all
                                                 necessary imaging from
                                                 the arterial
                                                 anastomosis and
                                                 adjacent artery through
                                                 entire venous outflow
                                                 including the inferior
                                                 or superior vena cava.
36148.................  36148.................  Introduction of needle
                                                 and/or catheter,
                                                 arteriovenous shunt
                                                 created for dialysis
                                                 (graft/fistula);
                                                 additional access for
                                                 therapeutic
                                                 intervention (list
                                                 separately in addition
                                                 to code for primary
                                                 procedure).
369X1.................  36901.................  Introduction of
                                                 needle(s) 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.
369X2.................  36902.................  Introduction of
                                                 needle(s) 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; with
                                                 transluminal balloon
                                                 angioplasty, peripheral
                                                 dialysis segment,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation
                                                 necessary to perform
                                                 the angioplasty.
369X3.................  36903.................  Introduction of
                                                 needle(s) 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; with
                                                 transcatheter placement
                                                 of intravascular
                                                 stent(s) peripheral
                                                 dialysis segment,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation
                                                 necessary to perform
                                                 the stenting, and all
                                                 angioplasty within the
                                                 peripheral dialysis
                                                 segment.
369X4.................  36904.................  Percutaneous
                                                 transluminal mechanical
                                                 thrombectomy and/or
                                                 infusion for
                                                 thrombolysis, dialysis
                                                 circuit, any method,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation,
                                                 diagnostic angiography,
                                                 fluoroscopic guidance,
                                                 catheter placement(s),
                                                 and intraprocedural
                                                 pharmacological
                                                 thrombolytic
                                                 injection(s).

[[Page 79640]]

 
369X5.................  36905.................  Percutaneous
                                                 transluminal mechanical
                                                 thrombectomy and/or
                                                 infusion for
                                                 thrombolysis, dialysis
                                                 circuit, any method,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation,
                                                 diagnostic angiography,
                                                 fluoroscopic guidance,
                                                 catheter placement(s),
                                                 and intraprocedural
                                                 pharmacological
                                                 thrombolytic
                                                 injection(s); with
                                                 transluminal balloon
                                                 angioplasty, peripheral
                                                 dialysis segment,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation
                                                 necessary to perform
                                                 the angioplasty.
369X6.................  36906.................  Percutaneous
                                                 transluminal mechanical
                                                 thrombectomy and/or
                                                 infusion for
                                                 thrombolysis, dialysis
                                                 circuit, any method,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation,
                                                 diagnostic angiography,
                                                 fluoroscopic guidance,
                                                 catheter placement(s),
                                                 and intraprocedural
                                                 pharmacological
                                                 thrombolytic
                                                 injection(s); with
                                                 transcatheter placement
                                                 of an intravascular
                                                 stent(s), peripheral
                                                 dialysis segment,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation
                                                 necessary to perform
                                                 the stenting, and all
                                                 angioplasty within the
                                                 peripheral dialysis
                                                 circuit.
369X7.................  36907.................  Transluminal balloon
                                                 angioplasty, central
                                                 dialysis segment,
                                                 performed through
                                                 dialysis circuit,
                                                 including all imaging
                                                 and radiological
                                                 supervision and
                                                 interpretation required
                                                 to perform the
                                                 angioplasty (List
                                                 separately in addition
                                                 to code for primary
                                                 procedure).
369X8.................  36908.................  Transcatheter placement
                                                 of an intravascular
                                                 stent(s), central
                                                 dialysis segment,
                                                 performed through
                                                 dialysis circuit,
                                                 including all imaging
                                                 radiological
                                                 supervision and
                                                 interpretation required
                                                 to perform the
                                                 stenting, and all
                                                 angioplasty in the
                                                 central dialysis
                                                 segment (List
                                                 separately in addition
                                                 to code for primary
                                                 procedure).
369X9.................  36909.................  Dialysis circuit
                                                 permanent vascular
                                                 embolization or
                                                 occlusion (including
                                                 main circuit or any
                                                 accessory veins),
                                                 endovascular, including
                                                 all imaging and
                                                 radiological
                                                 supervision and
                                                 interpretation
                                                 necessary to complete
                                                 the intervention (List
                                                 separately in addition
                                                 to code for primary
                                                 procedure).
------------------------------------------------------------------------

    As shown in Table 27 below, and as listed in Addendum B of the CY 
2017 OPPS/ASC proposed rule, we proposed to package payment for some of 
these new CY 2017 CPT codes and to also assign the procedures to APC 
5181 (Level 1 Vascular Procedures), 5192 (Level 2 Endovascular 
Procedures), 5193 (Level 3 Endovascular Procedures), or 5194 (Level 2 
Endovascular Procedures). Specifically, we proposed to assign CPT code 
369X1 (CY 2017 CPT code 36901) to APC 5181, CPT codes 396X2 (CY 2017 
CPT code 36902) and 369X4 (CY 2017 CPT code 36904) to APC 5192, CPT 
codes 396X3 (CY 2017 CPT code 36903) and 369X5 (CY 2017 CPT code 36905) 
to APC 5193, and CPT code 369X6 (CY 2017 CPT code 36906) to APC 5194. 
In addition, we proposed to assign CPT codes 369X7 (CY 2017 CPT code 
36907), 369X8 (CY 2017 CPT code 36908), and 369X9 (CY 2017 CPT code 
36909) to status indicator ``N'' (Items and Services Packaged into APC 
Rates) to indicate that these service are paid under OPPS. However, 
their payment is packaged into the payment for other services.

                Table 27--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Dialysis Circuit Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                           CY 2016     Proposed    Proposed     CY 2017
  Proposed  CY 2017  CPT       CY 2017  CPT code          Short descriptors       CY 2016      CY 2016      OPPS       CY 2017      CY 2017      OPPS
           code                                                                   OPPS SI     OPPS APC     payment     OPPS SI     OPPS  APC    payment
                                                                                                            rate                                 rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36147....................  36147....................  Access av dial grft for            T         5181    *$862.51           D          N/A         N/A
                                                       eval.
36148....................  36148....................  Access av dial grft for            N          N/A         N/A           D          N/A         N/A
                                                       proc.
369X1....................  36901....................  Intro cath dialysis              N/A          N/A         N/A           T         5181     $867.68
                                                       circuit.
369X2....................  36902....................  Intro cath dialysis              N/A          N/A         N/A          J1         5192    4,800.45
                                                       circuit.
369X3....................  36903....................  Intro cath dialysis              N/A          N/A         N/A          J1         5193    9,726.54
                                                       circuit.
369X4....................  36904....................  Thrmbc/nfs dialysis              N/A          N/A         N/A          J1         5192    4,800.45
                                                       circuit.
369X5....................  36905....................  Thrmbc/nfs dialysis              N/A          N/A         N/A          J1         5193    9,726.54
                                                       circuit.
369X6....................  36906....................  Thrmbc/nfs dialysis              N/A          N/A         N/A          J1         5194   14,511.21
                                                       circuit.
369X7....................  36907....................  Balo angiop ctr dialysis         N/A          N/A         N/A           N          N/A         N/A
                                                       seg.
369X8....................  36908....................  Stent plmt ctr dialysis          N/A          N/A         N/A           N          N/A         N/A
                                                       seg.
369X9....................  36909....................  Dialysis circuit embolj.         N/A          N/A         N/A           N          N/A         N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter agreed with the proposed APC assignments for 
CPT codes 36902, 36903, 36905, and 36906, and requested that CMS 
finalize the proposal. However, this commenter disagreed with the 
proposed APC assignment for CPT code 36904 and the proposed status 
indicator assignment for CPT codes 36907, 36908, and 36909. In 
particular, the commenter believed that the proposed assignment of APC 
5192 fails to reflect the clinical complexity and resource costs 
associated with performing the procedure described by CPT code 36904. 
The commenter recommended that CMS assign CPT code 36904 to APC 5193 
based on its clinical and resource homogeneity to the other procedures 
in this APC. In addition, the commenter disagreed with the packaging of 
payment for services described by CPT codes 36907, 36908, and 36909 
because these procedures involve substantial device costs. As an 
interim measure, the commenter recommended that the procedure codes be 
assigned to New Technology APC 1564 (New Technology--Level 27 ($4501-
$5000), with a status indicator of ``S'' (Procedure or Service, Not 
Discounted When Multiple. Paid under OPPS; separate APC payment.), 
until sufficient claims data is available on which to base assignment 
of the new codes to a more appropriate clinical APC. If CMS continued 
to believe that

[[Page 79641]]

the New Technology APC assignment is inappropriate, the commenter urged 
CMS to create a composite APC for the dialysis circuit CPT codes.
    Response: We appreciate the commenter's support for the proposed 
APC assignments for CPT codes 36902, 36903, 36905, and 36906. We are 
finalizing our proposal for these codes. However, with respect to the 
proposed assignment of CPT code 36904, we believe that, based on its 
similarity to the other procedures in APC 5192, and a comparison to 
other codes in this series we believe that APC 5192 is the most 
appropriate APC for this procedure. In addition, because CPT codes 
36907, 36908, and 36909 are add-on codes, we assigned these codes to a 
status indicator that indicates packaged payment status. Because of our 
packaging policy for add-on codes, we would not consider these codes 
for a composite APC. We note that since January 1, 2014, payment for 
services described by add-on codes have been packaged under the 
hospital OPPS. As we do every year for all items and services under 
OPPS, we will reevaluate the APC assignments for these services in the 
CY 2018 OPPS rulemaking.
    In summary, after consideration of the public comment received, we 
are finalizing our proposal, without modification, to assign the 
dialysis circuit procedures to the APC and status indicators listed in 
Table 28 below. Table 28 shows the final status indicator, APC 
assignments, and payment rates for the dialysis circuit services for CY 
2017. We refer readers to Addendum B of this final rule with comment 
period for the payment rates for all codes reportable under the OPPS. 
Addendum B is available via the Internet on the CMS Web site.

                  Table 28--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Dialysis Circuit Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           CY 2016                             Final  CY
  Proposed  CY 2017  CPT                                                          CY 2016      CY 2016      OPPS      Final  CY    Final  CY  2017  OPPS
           code             Final  CY 2017  CPT code      Short descriptors       OPPS SI     OPPS APC     payment    2017  OPPS  2017  OPPS    payment
                                                                                                            rate          SI          APC        rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36147....................  36147....................  Access av dial grft for            T         5181     $862.51           D   ..........  ..........
                                                       eval.
36148....................  36148....................  Access av dial grft for            N   ..........  ..........           D   ..........  ..........
                                                       proc.
369X1....................  36901....................  Intro cath dialysis       ...........  ..........  ..........           T         5181     $683.84
                                                       circuit.
369X2....................  36902....................  Intro cath dialysis       ...........  ..........  ..........          J1         5192    4,823.16
                                                       circuit.
369X3....................  36903....................  Intro cath dialysis       ...........  ..........  ..........          J1         5193    9,748.31
                                                       circuit.
369X4....................  36904....................  Thrmbc/nfs dialysis       ...........  ..........  ..........          J1         5192    4,823.16
                                                       circuit.
369X5....................  36905....................  Thrmbc/nfs dialysis       ...........  ..........  ..........          J1         5193    9,748.31
                                                       circuit.
369X6....................  36906....................  Thrmbc/nfs dialysis       ...........  ..........  ..........          J1         5194   14,775.90
                                                       circuit.
369X7....................  36907....................  Balo angiop ctr dialysis  ...........  ..........  ..........           N          N/A         N/A
                                                       seg.
369X8....................  36908....................  Stent plmt ctr dialysis   ...........  ..........  ..........           N          N/A         N/A
                                                       seg.
369X9....................  36909....................  Dialysis circuit embolj.  ...........  ..........  ..........           N          N/A         N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Blood Product Exchange and Related Services (APCs 5241 and 5242)
    For CY 2017, we proposed to assign CPT code 36456 (Partial exchange 
transfusion, blood, plasma or crystalloid necessitating the skill of a 
physician or other qualified health care professional, newborn) 
(described as code 364X1 in the proposed rule) to APC 5241 (Level 1 
Blood Product Exchange and Related Services), with a proposed mean 
geometric mean cost of approximately $364.
    Comment: One commenter disagreed with the CMS proposal to assign 
CPT code 36456 to APC 5241. The commenter stated that APC 5182 (Level 2 
Vascular Procedures) is a more appropriate APC assignment because of 
the clinical similarity and similar resource intensity to other 
services assigned to APC 5182.
    Response: We disagree with the commenter's statement. We do not 
believe that the procedure described by CPT code 36456 is comparable to 
the services in APC 5182 in terms of resource intensity or clinical 
similarity. We do believe that CPT code 36456 is similar to the other 
services assigned to APC 5241, such as CPT code 36450 (Exchange 
transfusion, blood; newborn). When claims data become available for 
this new code, we will consider if assignment to another APC is 
appropriate. After consideration of the public comment we received, we 
are finalizing our proposal to assign CPT code 36456 to APC 5241.
    Comment: For CY 2017, we proposed to assign CPT codes 38230 (Bone 
marrow harvesting for transplantation; allogeneic), 38241 
(Hematopoietic progenitor cell (HPC); autologous transplantation, 38242 
(Allogeneic lymphocyte infusions) and 38243 (HPC Boost) to APC 5242 
(Level 2 Blood Product Exchange and Related Services). This APC has a 
proposed CY 2017 geometric mean cost of approximately $1,129. One 
commenter stated that the proposed payment rate of approximately $1,078 
for this APC was a 66 percent decrease in payment from the final CY 
2016 payment rate. The commenter also noted that the services in this 
APC were not likely to be submitted on a single procedure claim and, as 
a result, the CMS ratesetting methodology may be based on incorrectly 
coded claims. In addition, the commenter requested that CMS consider 
the use of C-APCs to provide for payment for low-volume, clinically 
significant services.
    Response: The commenter is correct that each of these services 
represent a low volume in the OPPS. The geometric mean cost for each of 
the codes is within the geometric mean cost range ($1,111 to $1,518) 
for significant services assigned to APC 5242. We will monitor these 
claims and determine if any future adjustment to the methodology (such 
as the C-APC methodology) would be more appropriate.
d. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 
1537, 5114, and 5414)
    Currently, there are four CPT/HCPCS codes that describe magnetic 
resonance image guided high intensity focused ultrasound (MRgFUS) 
procedures. These codes include CPT codes 0071T, 0072T, and 0398T, and 
HCPCS code C9734. CPT codes 0071T and 0072T are used for the treatment 
of uterine fibroids, CPT code 0398T is used for the treatment of 
essential tremor, and HCPCS code C9734 is used for pain palliation for 
metastatic bone cancer.
    As shown in Table 29 below, and as listed in Addendum B of the CY 
2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT 
codes 0071T and 0072T to APC 5414, with a payment

[[Page 79642]]

rate of approximately $2,074. We also proposed to reassign the APC's 
status indicator to ``J1'' (Hospital Part B services paid through a 
comprehensive APC) to indicate that all covered Part B services on the 
claim are packaged with the payment for the primary ``J1'' service for 
the claim, except for services assigned to OPPS status indicator ``F,'' 
``G,'' ``H,'' ``L'' and ``U''; ambulance services; diagnostic and 
screening mammography; all preventive services; and certain Part B 
inpatient services. In addition, we proposed to reassign HCPCS code 
C9734 from APC 5122 (Level 2 Musculoskeletal Procedures) to APC 5114 
(Level 4 Musculoskeletal Procedures), with a payment rate of 
approximately $5,199. We also proposed to reassign the HCPCS code's 
status indicator from ``T'' to ``J1.''
    Further, we proposed to reassign CPT code 0398T from a nonpayable 
status indicator, specifically, ``E'' (Not paid by Medicare when 
submitted on outpatient claims (any outpatient bill type)) to a 
separately payable APC, specifically, APC 5462 (Level 2 Neurostimulator 
and Related Procedures), with a payment rate of approximately $5,840. 
We note that APC 5462 is assigned to status indicator ``J1.'' This APC 
assignment was based on a comparison to a similar procedure, 
specifically, HCPCS code C9734, with a geometric mean cost of 
approximately $8,565 based on 9 single claims (out of 9 total claims). 
The MRgFUS equipment used in the performance of the procedure described 
by CPT code 0398T is very similar to the MRgFUS equipment used in the 
performance of the procedure described by HCPCS code C9734. Both 
machines are manufactured by the same manufacturer.

   Table 29--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Magnetic Resonance Image Guided High Intensity Focused
                                                             Ultrasound (MRgFUS) Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2016    Proposed  CY    Proposed     CY 2017
           CPT/HCPCS  code                      Long descriptor              CY 2016      CY 2016        OPPS      2017  OPPS     CY 2017        OPPS
                                                                             OPPS SI      OPPS APC     payment         SI         OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0071T................................  Focused ultrasound ablation of               T          5414    $1,861.18           J1          5414    $2,074.22
                                        uterine leiomyomata, including
                                        mr guidance; total leiomyomata
                                        volume less than 200 cc of
                                        tissue.
0072T................................  Focused ultrasound ablation of               T          5414     1,861.18           J1          5414     2,074.22
                                        uterine leiomyomata, including
                                        mr guidance; total leiomyomata
                                        volume greater or equal to 200
                                        cc of tissue.
0398T................................  Magnetic resonance image guided              E           N/A          N/A           J1          5462     5,839.83
                                        high intensity focused
                                        ultrasound (mrgfus),
                                        stereotactic ablation lesion,
                                        intracranial for movement
                                        disorder including stereotactic
                                        navigation and frame placement
                                        when performed.
C9734................................  Focused ultrasound ablation/                 T          5122     2,395.59           J1          5114     5,199.03
                                        therapeutic intervention, other
                                        than uterine leiomyomata, with
                                        magnetic resonance (mr) guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: All of the commenters disagreed with the proposed 
assignment of CPT code 0398T to APC 5462 for CY 2017. The commenters 
stated that the proposed payment severely underestimates the resources 
required to provide the treatment. Some commenters indicated that 
compared to HCPCS code C9734, which requires only one physician and 3 
hours of MRI time, the resources for CPT code 0398T is significantly 
greater and requires the services of a multidisciplinary staff 
(including a neurosurgeon and a radiologist), as well as 6 hours of MRI 
time. Several commenters indicated that MRgFUS for essential tremor is 
a better alternative to deep brain stimulation (DBS) because there is 
no risk of infection or implanted hardware, no need for multiple 
hospital outpatient visits or postoperative programming sessions, and 
lower cost because there is no battery to surgically remove and replace 
every few years. Some commenters pointed out that the cost of providing 
a DBS procedure is between $40,000 and $50,000, while the MRgFUS 
procedure costs approximately $20,000. One commenter stated that the 
capital equipment used in the performance of the procedure described by 
CPT code 0398T is more costly, at approximately $2 million, compared to 
the capital equipment used in the performance of the procedure 
described by HCPCS C9734, which is approximately $750,000. The 
commenter also stated that CPT code 0398T uses additional equipment 
(for example, stereotactic head frame) and supplies resulting in higher 
costs for the procedure. Several commenters expressed concern that the 
proposed payment for CPT code 0398T is inadequate to cover the hospital 
cost of providing the service and recommended that CMS reassign CPT 
code 0398T to either a more appropriate APC that reflects the cost of 
providing the treatment, or to APC 5463 (Level 3 Neurostimulator and 
Related Procedures). Some commenters suggested that a low reimbursement 
rate for the procedure could jeopardize Medicare access to this 
emerging technology.
    Response: CPT code 0398T is a new code for CY 2016. Therefore, we 
do not have available claims data for the CY 2017 ratesetting. HCPCS 
code C9734 describes a similar service that uses the same MRgFUS 
technology, and as noted above, has a geometric mean cost of $8,565. 
However, the manufacturer has indicated that the essential tremor 
MRgFUS service uses a more costly version of the MRgFUS equipment, 
takes longer, and uses some additional supplies and equipment, which 
makes the procedure described by CPT code 0398T more costly than the 
procedure described by HCPCS code C9734. We believe that the procedure 
described by CPT code 0398T can also be compared

[[Page 79643]]

to the procedure described by CPT code 77371 (Radiation treatment 
delivery, stereotactic radiosurgery (SRS), complete course of treatment 
of cranial lesions(s) consisting of 1 session; multi-source Cobalt-60 
based). In particular, both procedures use capital equipment of 
approximately equal cost, both employ a stereotactic head frame to 
treat intracranial lesions, and both require similar staffing. CPT code 
77371 is assigned to APC 5627 (Level 7 Radiation Therapy), with a final 
payment rate of approximately $7,453. The final geometric mean cost of 
CPT code 77371 is $10,105. We believe that the geometric mean cost of 
CPT code 77371 provides an indication of the initial payment rate for 
CPT code 0398T relative to the related service described by HCPCS code 
C9734, for which we have some claims data. Consequently, because there 
is no clinical APC that contains clinically similar and resource-cost 
similar services, we believe that the most appropriate initial 
assignment for CPT code 0398T is APC 1537 (New Technology--Level 37 
($9501-$10000)), which has a final payment rate of approximately 
$9,751. The assignment to APC 1537 will result in a 67-percent increase 
in the CY 2017 payment rate compared to the $5,840 proposed payment 
rate. It is also significantly above the payment rate of approximately 
$5,219 for HCPCS code C9734, to which CPT code 0398T is comparable but 
according to the commenters is more costly.
    Finally, we remind hospitals that, as we do every year, we review 
the APC assignments for all services and items paid under the OPPS. We 
will reevaluate the APC assignment for CPT code 0398T once we have 
claims data for this service.
    Comment: One commenter supported CMS' proposal to reassign HCPCS 
code C9734 to APC 5114, and requested that CMS finalize the proposal.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
modifying our proposal and reassigning CPT code 0398T to APC 1537 for 
CY 2017. In addition, we are finalizing our proposal, without 
modification, to reassign HCPCS code C9734 to APC 5114. Because we did 
not receive any public comments related to CPT codes 0071T and 0072T, 
we are finalizing our proposal, without modification, to continue to 
assign these codes to APC 5414. Table 30 below shows the final status 
indicator and APC assignments and payment rates for the MRgFUS 
procedures for CY 2017. We refer readers to Addendum B of this final 
rule with comment period for the payment rates for all codes reportable 
under the OPPS. Addendum B is available via the Internet on the CMS Web 
site.

    Table 30--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Magnetic Resonance Image Guided High Intensity Focused
                                                             Ultrasound (MRgFUS) Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                          CY 2016 OPPS    CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
           CPT/HCPCS  code                      Long descriptors               SI         OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0071T................................  Focused ultrasound ablation of               T          5414    $1,861.18           J1          5414    $2,084.59
                                        uterine leiomyomata, including
                                        mr guidance; total leiomyomata
                                        volume less than 200 cc of
                                        tissue.
0072T................................  Focused ultrasound ablation of               T          5414     1,861.18           J1          5414     2,084.59
                                        uterine leiomyomata, including
                                        mr guidance; total leiomyomata
                                        volume greater or equal to 200
                                        cc of tissue.
0398T................................  Magnetic resonance image guided              E           N/A          N/A            S          1537     9,750.50
                                        high intensity focused
                                        ultrasound (mrgfus),
                                        stereotactic ablation lesion,
                                        intracranial for movement
                                        disorder including stereotactic
                                        navigation and frame placement
                                        when performed.
C9734................................  Focused ultrasound ablation/                 T          5122     2,395.59           J1          5114     5,219.36
                                        therapeutic intervention, other
                                        than uterine leiomyomata, with
                                        magnetic resonance (mr) guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

e. Neulasta[supreg] On-Body Injector
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to assign new CY 2017 CPT code 96377 (Application of on-body 
injector (includes cannula insertion) for timed subcutaneous injection) 
to status indicator ``N'' (Items and Services Packaged into APC Rates) 
to indicate that the service is paid under OPPS; however, its payment 
is packaged into the payment for other services. We note that CPT code 
93677 was listed as placeholder CPT code 963XX in both Addendum B and O 
of the CY 2017 OPPS/ASC proposed rule. Addendum B listed the short 
descriptor with the proposed status indicator of ``N,'' while Addendum 
O listed the complete long descriptor under placeholder CPT code 963XX.
    Comment: Some commenters disagreed with the proposed status 
indicator assignment of ``N'' for CPT code 963XX (CY 2017 CPT code 
96377), and indicated that this is a primary service, not an add-on 
procedure, that represents a complete and unique drug administration 
service that a hospital performs for the subcutaneous administration of 
Neulasta[supreg] with the on-body injector. The commenters stated that 
the service is similar to the drug administration service described by 
CPT code 96372 (Therapeutic, prophylactic, or diagnostic injection 
(specify substance or drug); subcutaneous or intramuscular), which is 
assigned to APC 5692 (Level 2 Drug Administration) with a proposed 
payment rate of about $53. The commenters indicated that the difference 
between the procedure described by CPT code 96372 and CPT

[[Page 79644]]

code 96377 is the use of an on-body injector for CPT code 96377.
    Response: We do not believe that the resources necessary to deliver 
the Neulasta[supreg] service warrants separate payment under the OPPS. 
Because payment for CPT code 96377 will be packaged, the payment for 
use of the on-body injector will be included in the payment for the 
primary service (for example, chemotherapy administration, clinic 
visit, among others) that is reported in conjunction with CPT code 
96377. Furthermore, we believe that the packaged payment that includes 
payment for the use of the Neulasta[supreg] on-body injector adequately 
covers the costs of the service. After consideration of the public 
comments we received, we are adopting as final, without modification, 
the proposal to assign CPT code 96377 to status indicator ``N'' for CY 
2017.
f. Smoking and Tobacco Use Cessation Counseling (APC 5821)
    As shown in Table 31 below, and as listed in Addendum B of the CY 
2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT 
codes 99406 and 99407 to APC 5821 (Level 1 Health and Behavior 
Services), with a proposed payment rate of approximately $25. In 
addition, we proposed to delete HCPCS codes G0436 and G0437 because 
they were replaced with CPT codes 99406 and 99407. Specifically, we 
stated in the October 2016 Update, Change Request 9768, Transmittal 
3602, dated August 26, 2016, that HCPCS codes G0436 and G0437 were 
deleted on September 30, 2016, because they were replaced with CPT 
codes 99406 and 99407, effective October 1, 2016.

    Table 31--Proposed CY 2017 Status Indicator (SI), APC Assignment, and Payment Rate for the Smoking and Tobacco Use Cessation Counseling Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2016    Proposed  CY    Proposed     CY 2017
           CPT/HCPCS  code                      Long descriptors             CY 2016      CY 2016        OPPS      2017  OPPS     CY 2017        OPPS
                                                                             OPPS SI      OPPS APC     payment         SI         OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
99406................................  Smoking and tobacco use cessation            S          5821       $27.12            S          5821       $25.09
                                        counseling visit; intermediate,
                                        greater than 3 minutes up to 10
                                        minutes.
99407................................  Smoking and tobacco use cessation            S          5821        27.12            S          5821        25.09
                                        counseling visit; intensive,
                                        greater than 10 minutes.
G0436................................  Smoking and tobacco cessation                S          5821        27.12            D   ...........  ...........
                                        counseling visit for the
                                        asymptomatic patient;
                                        intermediate, greater than 3
                                        minutes, up to 10 minutes.
G0437................................  Smoking and tobacco cessation                S          5822        69.65            D   ...........  ...........
                                        counseling visit for the
                                        asymptomatic patient; intensive,
                                        greater than 10 minutes.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter expressed concern that the proposed payment 
rate for APC 5821 did not include the costs associated with HCPCS code 
G0437 because it was previously assigned to APC 5822. The commenter 
requested that CMS reevaluate the payment rate for APC 5821 and to 
include the claims data associated with HCPCS code G0437 in the 
calculation of the geometric mean cost for APC 5821. In addition, 
because the predecessor HCPCS code G0437 was previously assigned to APC 
5822, the commenter believed that CPT code 99407 should also be 
assigned to the same APC. Moreover, the commenter urged CMS to 
crosswalk all deleted codes to the same APC assignment as their 
replacement codes when calculating APC payment rates during the 
transition.
    Response: While we generally crosswalk the APC assignment of 
deleted codes to the same APC as its replacement code, we acknowledge 
that our calculation of the geometric mean cost for APC 5821 in the CY 
2017 OPPS/ASC proposed rule did not include costs associated with HCPCS 
code G0437. We appreciate the commenter bringing this to our attention 
and have corrected this oversight in this final rule with comment 
period. In particular, we are assigning CPT codes 99406 and 99407, and 
HCPCS codes G0436 and G0437 to APC 5821 and are using the geometric 
mean costs of these procedures in determining the final payment rate 
for APC 5821. Based on our analysis of the updated claims data for this 
final rule with comment period, the geometric mean cost of 
approximately $32 for CPT code 99407 based on 2,859 single claims (out 
of 4,148 total claims) is relatively similar to the geometric mean cost 
of approximately $26 for APC 5821. We do not agree with the commenter 
that CPT code 99407 should be assigned to APC 5822 because its 
geometric mean cost of approximately $72 is more than twice the 
geometric mean cost of CPT code 94407. Therefore, based on the resource 
costs and similar characteristics to the other procedures within APC 
5821, we believe that CPT code 99407 is more appropriately assigned to 
this APC.
    Comment: One commenter expressed confusion regarding the reporting 
of CPT codes 99406 and 99407, and requested that CMS clarify whether 
these codes apply to both asymptomatic and symptomatic patients. The 
commenter noted that the descriptor of HCPCS codes G0436 and G0437 
specifically described services for the asymptomatic patient. However, 
the commenter indicated that this distinction is not included in the 
code descriptors for CPT codes 99406 and 99407.
    Response: While not explicit in their code descriptors, CPT codes 
99406 and 99407 apply to both asymptomatic and symptomatic patients. We 
note that the more recent preventive service policy related to these 
codes can be found in section 210.4.1 (Counseling to Prevent Tobacco 
Use (Effective August 25, 2010)) of the Medicare National Coverage 
Determination Manual, which is can be viewed on the CMS Web site at: 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/ncd103c1_part4.pdf, as well as on the Medicare Coverage 
Database Web site at: https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=32. After 
consideration of the public comments we received, we

[[Page 79645]]

are finalizing our proposal, without modification, to continue to 
assign CPT codes 99406 and 99407 to APC 5821 for CY 2017. Table 32 
below shows the final status indicator, APC assignment, and payment 
rate for CPT codes 99406 and 99407 for CY 2017. We refer readers to 
Addendum B of this final rule with comment period for the payment rates 
for all codes reportable under the OPPS. Addendum B is available via 
the Internet on the CMS Web site.

      Table 32--Final CY 2017 Status Indicator (SI), APC Assignment, and Payment Rate for the Smoking and Tobacco Use Cessation Counseling Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016                                Final  CY
                                                                             CY 2016      CY 2016        OPPS       Final  CY    Final  CY    2017  OPPS
           CPT/HCPCS  code                      Long descriptors             OPPS SI      OPPS APC     payment     2017  OPPS    2017  OPPS    payment
                                                                                                         rate          SI           APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
99406................................  Smoking and tobacco use cessation            S          5821       $27.12            S          5821       $25.22
                                        counseling visit; intermediate,
                                        greater than 3 minutes up to 10
                                        minutes.
99407................................  Smoking and tobacco use cessation            S          5821        27.12            S          5821        25.22
                                        counseling visit; intensive,
                                        greater than 10 minutes.
G0436................................  Smoking and tobacco cessation                S          5821        27.12            D   ...........  ...........
                                        counseling visit for the
                                        asymptomatic patient;
                                        intermediate, greater than 3
                                        minutes, up to 10 minutes.
G0437................................  Smoking and tobacco cessation                S          5822        69.65            D   ...........  ...........
                                        counseling visit for the
                                        asymptomatic patient; intensive,
                                        greater than 10 minutes.
--------------------------------------------------------------------------------------------------------------------------------------------------------

g. Radiofrequency Ablation of Uterine Fibroids (APC 5362)
    For CY 2017, the AMA CPT Editorial Panel deleted CPT code 0336T 
(Laparoscopy, surgical, ablation of uterine fibroid(s), including 
intraoperative ultrasound guidance and monitoring, radiofrequency) and 
replacing it with CPT code 58674 (Laparoscopy, surgical, ablation of 
uterine fibroid(s) including intraoperative ultrasound guidance and 
monitoring, radiofrequency), effective January 1, 2017. We proposed to 
assign CPT code 58674 to APC 5362 (Level 2 Laparoscopy and Related 
Services), which is the same APC assignment for the predecessor CPT 
code 0336T. We note that CPT code 58674 was listed as placeholder CPT 
code 585X1 in both Addendum B and O of the CY 2017 OPPS/ASC proposed 
rule. Addendum B listed the short descriptor with the proposed APC 
assignment and payment rate, while Addendum O listed the complete long 
descriptor under placeholder CPT code 585X1. We note that both Addendum 
B and O also assigned this code to comment indicator ``NP'' to indicate 
that we would be accepting comments on the proposed APC assignment for 
the new code.
    Comment: One commenter agreed with the proposed APC assignment for 
new CY 2017 CPT code 58674 to APC 5362 and stated that the assignment 
is consistent with the APC assignment for its predecessor code (CPT 
code 0336T). The commenter indicated that the resources required to 
furnish the service described by CPT code 58674 is similar to the 
resources of the other procedures assigned to APC 5362. Consequently, 
the commenter urged CMS to finalize the proposal.
    Response: We appreciate the commenter's support. As noted by the 
commenter, we assigned new CY 2017 CPT code 58674 to APC 5362 based on 
its similarity to the other procedures within this APC.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to assign CPT code 58674 
to APC 5362. The final status indicator, APC assignment, and payment 
rate for CPT code 58674 can be found in Addendum B to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site).
h. Intrapulmonary Surfactant Administration (APC 5791)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 94610 (Intrapulmonary 
surfactant administration by a physician or other qualified health care 
professional through endotracheal tube) to APC 5791 (Pulmonary 
Treatment), with a proposed payment rate of approximately $161. We also 
proposed to continue to assign CPT code 94610 to OPPS status indicator 
``Q1'' (STV-Packaged Codes) to indicate that the service is 
conditionally packaged.
    Comment: One commenter disagreed with CMS' proposal to assign CPT 
code 94610 to OPPS status indicator ``Q1.'' The commenter indicated 
that this is a primary service, not an ancillary service as designated 
by the status indicator, and recommended that CMS reassign the CPT code 
to OPPS status indicator ``T'' (Procedure or Service, Multiple 
Procedure Reduction Applies. Paid under OPPS; separate APC payment).
    Response: We believe that the commenter may have misunderstood the 
meaning of OPPS status indicator ``Q1.'' Assigning a procedure to OPPS 
status indicator ``Q1'' indicates that payment for the service is 
conditionally packaged under the OPPS. A criterion under the 
conditional packaging policy is that payment for a service is packaged 
when it is provided in combination with a significant procedure on the 
same date of service, but the service is separately paid when it is 
reported on the claim without a significant procedure. Addendum D1 to 
the CY 2017 OPPS/ASC proposed rule (which is available via the Internet 
on the CMS Web site) showed the definition of status indicator ``Q1.''
    In the case of the procedure described by CPT code 94610, payment 
for this service is included in the payment for the significant 
procedure when it is reported in combination with HCPCS codes that are 
assigned to either status indicators ``S,'' ``T,'' or ``V.'' 
Alternatively, the service is separately paid when performed alone, or 
when reported in combination with HCPCS codes that described procedures 
assigned to a status indicator other than ``S,'' ``T,'' or ``V.'' In 
addition, assignment to OPPS status indicator

[[Page 79646]]

``Q1'' indicates that the service or procedure is assigned a composite 
APC payment when billed with specific combinations of services based on 
OPPS composite-specific payment criteria, and payment is packaged into 
a single payment for specific combinations of services. We disagree 
with the commenter that CPT code 94610 should be reassigned to OPPS 
status indicator ``T.'' Based on our understanding of the service, we 
believe that status indicator ``Q1'' is the most appropriate status 
indicator assignment for CPT code 94610 because the service is often 
provided in combination with other services on the same day.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to continue to assign 
CPT code 94610 to APC 5791, and to assign status indicator ``Q1'' to 
the code for CY 2017. The complete list of the OPPS payment status 
indicators and their definitions for CY 2017 is displayed in Addendum 
D1 to this final rule with comment period, which is available on the 
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html. Further, we refer readers to Addendum B of this final 
rule with comment period for the payment rates for all codes reportable 
under the OPPS. Addendum B is available via the Internet on the CMS Web 
site.
i. Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 5051)
    As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 97610 (Low frequency, non-
contact, non-thermal ultrasound, including topical application(s), when 
performed, wound assessment, and instruction(s) for ongoing care, per 
day) to APC 5051 (Level 1 Skin Procedures), with a proposed payment 
rate of approximately $154. In addition, we proposed to continue to 
assign CPT code 97610 to OPPS status indicator ``Q1'' (STV-Packaged 
Codes) to indicate that the service is conditionally packaged.
    Comment: One commenter disagreed with CMS' proposal to assign CPT 
code 97610 to OPPS status indicator ``Q1.'' The commenter indicated 
that this is a primary service, not an ancillary service, and providers 
frequently perform NLFU therapy as a standalone, independent procedure. 
The commenter further stated that CMS' proposed OPPS status indicator 
assignment of ``Q1'' contradicts AMA's guidance in the June 2014 CPT 
Assistant, which clearly describes the service as a standalone 
procedure. The commenter recommended that CMS reassign CPT code 97610 
to OPPS status indicator ``T'' (Procedure or Service, Multiple 
Procedure Reduction Applies. Paid under OPPS; separate APC payment.).
    Response: Assigning CPT code 97610 to OPPS status indicator ``Q1'' 
indicates that payment for the service is conditionally packaged under 
the OPPS. A criterion under the conditional packaging policy is that 
payment for a service is packaged when it is provided in combination 
with a significant procedure on the same date of service, but the 
service is separately paid when it is reported on the claim without a 
significant procedure. Addendum D1 to the CY 2017 OPPS/ASC proposed 
rule (which is available via the Internet on the CMS Web site) showed 
the definition of status indicator ``Q1.''
    We note that payment for the procedure described by CPT code 97610 
is included in the payment for the significant procedure when it is 
reported in combination with HCPCS codes that are assigned to any of 
status indicators ``S,'' ``T,'' or ``V.'' Alternatively, the service is 
separately paid when performed alone, or when reported in combination 
with HCPCS codes that describe procedures assigned to a status 
indicator other than ``S,'' ``T,'' or ``V.'' In addition, assignment to 
OPPS status indicator ``Q1'' indicates that the service or procedure is 
assigned a composite APC payment if billed with specific combinations 
of services based on OPPS composite-specific payment criteria, and 
payment is packaged into a single payment for specific combinations of 
services. Based on our understanding of the service, we believe that 
``Q1'' is the most appropriate status indicator assignment for CPT code 
97610 because the service is provided in combination with other 
services on the same day.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to continue to assign 
CPT code 97610 to APC 5051 and to assign CPT code 97610 to OPPS status 
indicator ``Q1'' for CY 2017. The complete list of the OPPS payment 
status indicators and their definitions for CY 2017 is displayed in 
Addendum D1 to this final rule with comment period, which is available 
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html. Further, we refer readers to Addendum B of this final 
rule with comment period for the payment rates for all codes reportable 
under the OPPS. Addendum B is available via the Internet on the CMS Web 
site.
j. Pulmonary Rehabilitation Services (APCs 5732 and 5733)
    Currently, there are four HCPCS codes that describe pulmonary 
rehabilitation services, specifically, HCPCS codes G0237, G0238, G0239, 
and G0424. As shown in Table 33 below and as listed in Addendum B of 
the CY 2017 OPPS/ASC proposed rule, we proposed to reassign these 
services to APCs 5734 (Level 4 Minor Procedures), 5735 (Level 5 Minor 
Procedures), and 5791 (Pulmonary Treatment). In addition, we proposed 
to continue their status indicator assignment of ``Q1'' to indicate 
that these services are conditionally packaged.

             Table 33--Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                             CY 2016      CY 2016      CY 2016    Proposed  CY    Proposed     CY 2017
              HCPCS code                        Long descriptors             OPPS SI      OPPS APC       OPPS      2017  OPPS     CY 2017        OPPS
                                                                                                       payment         SI         OPPS APC     payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237................................  Therapeutic procedures to                   Q1          5734       $91.18           Q1          5735      $265.56
                                        increase strength or endurance
                                        of respiratory muscles, face to
                                        face, one on one, each 15
                                        minutes (includes monitoring).

[[Page 79647]]

 
G0238................................  Therapeutic procedures to improve           Q1          5733        55.94           Q1          5791       161.29
                                        respiratory function, other than
                                        described by g0237, one on one,
                                        face to face, per 15 minutes
                                        (includes monitoring).
G0239................................  Therapeutic procedures to improve           Q1          5732        30.51           Q1          5734        95.66
                                        respiratory function or increase
                                        strength or endurance of
                                        respiratory muscles, two or more
                                        individuals (includes
                                        monitoring).
G0424................................  Pulmonary rehabilitation,                   Q1          5733        55.94           Q1          5791       161.29
                                        including exercise (includes
                                        monitoring), one hour, per
                                        session, up to two sessions per
                                        day.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters expressed concern with the proposed 
status indicator assignment of ``Q1'' for HCPCS code G0424. The 
commenters stated that Medicare's benefit categories for cardiac and 
pulmonary rehabilitation programs were codified in section 144 of the 
Medicare Improvements for Patients and Providers Act of 2008, which 
provides for payment and coverage of pulmonary and cardiac 
rehabilitation services. Because the payment for this service was 
established under a statutory provision, the commenters believed that 
CMS' proposed status indicator assignment of ``Q1'' for HCPCS code 
G0424 is an oversight. The commenters requested that CMS reconsider the 
issue and revise the status indicator assignment to ``S'' (Procedure or 
Service, Not Discounted When Multiple. Paid under OPPS; separate APC 
payment), similar to the status indicator assignment for the cardiac 
rehabilitation codes.
    Response: We appreciate the commenters' feedback and agree, in 
part, with the commenters' concerns. Consequently, we believe that we 
should reassign HCPCS code G0424 to status indicator ``S.'' In 
addition, we believe that we should reassign HCPCS codes G0237, G0238, 
and G0239 to status indictor ``S'' because these codes also describe 
pulmonary rehabilitation services. However, the rationale for this 
modification of the proposal for these codes is not related to the 
statutory provision of section 144 of the Medicare Improvements for 
Patients and Providers Act of 2008. We believe that pulmonary 
rehabilitation is not typically ancillary to the other HOPD services 
that may be furnished to beneficiaries. Pulmonary rehabilitation is 
typically a course of treatment that is prescribed after a diagnosis is 
made and often after other treatments are initiated or completed.
    Comment: Several commenters supported the proposed APC 
reassignments for HCPCS codes G0237, G0238, G0239, and G0424. These 
commenters indicated that the proposed payment increase for these 
services appears to be driven by more accurate and complete costs 
reports submitted by hospitals providing the service, and recommended 
that CMS finalize the proposed payment rates.
    Response: We appreciate the commenters' support. We note that we 
proposed to reassign the HCPCS codes for these services based on the 
claims data used for the proposed rule that reported these codes as 
being conditionally packaged. Specifically, our analysis revealed a 
geometric mean cost of approximately $293 for HCPCS code G0237, which 
was relatively close to the geometric mean cost of approximately $278 
for APC 5735. We also found that the geometric mean costs of 
approximately $165 for HCPCS code G0238 and approximately $169 for 
HCPCS code G0424 was relatively similar to APC 5791, which had a 
geometric mean cost of approximately $169. In addition, we found that 
the geometric mean cost of approximately $121 for HCPCs code G0239 was 
comparable to the geometric mean cost of approximately $100 for APC 
5374. However, based on our review of the updated CY 2015 claims data 
used for this final rule with comment period, which included the status 
indicator revision from ``Q1'' to ``S'' for these codes, we found the 
geometric mean costs for HCPCS codes G0237, G0238, G0239, and G0424 to 
be significantly lower than the proposed rule geometric mean costs. 
This is due to significantly reduced packaged costs from other services 
after the status indicator was changed from ``Q1'' to ``S.'' We also 
note that the proposed rule claims data were based on claims submitted 
from January 1, 2015, through December 31, 2015, and processed through 
December 31, 2015, while the final rule with comment period claims data 
are based on claims submitted from January 1, 2015, through December 
31, 2015, and processed through June 30, 2016. Based on our analysis of 
the final rule with comment period claims data, we found a geometric 
mean cost of approximately $24 for HCPCS code G0237, approximately $22 
for HCPCS code G0238, approximately $33 for HCPCS code G0239, and 
approximately $44 for HCPCS code G0424. As a result of our findings, we 
are revising the APC assignments for HCPCS codes G0237, G0238, and 
G0239. Specifically, we found the geometric mean costs for HCPCS code 
G0237 ($24), G0238 ($22), and G0239 ($33) to be comparable to the 
geometric mean cost for APC 5732 ($29), while the geometric cost of 
HCPCS code G0424 ($44) was similar to that of APC 5733 ($56). Based on 
our analysis of the updated claims data used for the final rule with 
comment period, we believe that the revised APC assignments for the 
pulmonary rehabilitation services better reflect their clinical 
coherence and resource costs.
    In summary, after consideration of the public comments we received 
and our analysis of the updated claims data for this final rule with 
comment period, we are modifying our proposal and reassigning HCPCS 
codes G0237, G0238, G0239, and G0424 to status indicator ``S.'' In 
addition, we are modifying our

[[Page 79648]]

proposal and reassigning HCPCS codes G0237, G0238, and G0239 to the 
final APCs listed in Table 34 below. Table 34 lists the final status 
indicator, APC assignments, and payment rates for the pulmonary 
rehabilitation services for CY 2017. We refer readers to Addendum B of 
this final rule with comment period for the payment rates for all codes 
reported under the OPPS. Addendum B is available via the Internet on 
the CMS Web site.

               Table 34--Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2016      Final  CY    Final  CY    Final  CY
              HCPCS code                        Long descriptors             CY 2016      CY 2016        OPPS      2017  OPPS    2017  OPPS   2017  OPPS
                                                                             OPPS SI      OPPS APC     payment         SI           APC        payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237................................  Therapeutic procedures to                   Q1          5734       $91.18            S          5732       $28.37
                                        increase strength or endurance
                                        of respiratory muscles, face to
                                        face, one on one, each 15
                                        minutes (includes monitoring).
G0238................................  Therapeutic procedures to improve           Q1          5733        55.94            S          5732        28.37
                                        respiratory function, other than
                                        described by g0237, one on one,
                                        face to face, per 15 minutes
                                        (includes monitoring).
G0239................................  Therapeutic procedures to improve           Q1          5732        30.51            S          5732        28.37
                                        respiratory function or increase
                                        strength or endurance of
                                        respiratory muscles, two or more
                                        individuals (includes
                                        monitoring).
G0424................................  Pulmonary rehabilitation,                   Q1          5733        55.94            S          5733        54.53
                                        including exercise (includes
                                        monitoring), one hour, per
                                        session, up to two sessions per
                                        day.
--------------------------------------------------------------------------------------------------------------------------------------------------------

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
    Section 1833(t)(6)(B)(iii) of the Act sets forth the period for 
which a device category eligible for transitional pass-through payments 
under the OPPS may be in effect. The implementing regulation at 42 CFR 
419.66(g) provides that this pass-through payment eligibility period 
begins on the date CMS establishes a particular transitional pass-
through category of devices. 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 note that in this 
final rule with comment period, in accordance with section 
1833(t)(6)(B)(iii)(II) of the Act, we are adopting a policy to base 
pass-through status expiration for a device category on the first date 
on which pass-through payment is made under the OPPS.) 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. 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 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, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45649), we proposed, 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. We stated in the proposed rule that the other 
three codes listed will continue with pass-through status in CY 2017. 
We did not receive any public comments on this proposal. Therefore, we 
are finalizing our proposal to expire device pass-through payments for 
the device described by HCPCS code C2624, effective January 1, 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

[[Page 79649]]

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 
meet 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 through 70418). 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 or to discuss application criteria, 
including the substantial clinical improvement criterion.
b. Applications Received for Device Pass-Through Payment for CY 2017
    We received three applications by the March 1, 2016 quarterly 
deadline, which was the last quarterly deadline in time to be included 
for the CY 2017 OPPS/ASC proposed rule. None of these three 
applications were 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), 
if any, 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 payment 
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, as detailed in the CY 
2017 OPPS/ASC proposed rule (81 FR 45650 through 45653).
(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

[[Page 79650]]

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 the 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). In the CY 2017 OPPS/ASC proposed rule (81 FR 45650), 
we invited public comment on whether BioBag[supreg] should be eligible 
under Sec.  419.66(b) to be considered for device pass-through payment.
    Comment: One commenter, the manufacturer, submitted comments on 
whether BioBag[supreg] should be considered to be a surgical supply 
similar to a surgical dressing that facilitates either mechanical or 
autolytic debridement. The commenter stated that BioBag[supreg] is a 
``treatment for active and physical wound debridement'' that does not 
function like an autolytic or mechanical debridement, but more like a 
sharp debridement, surgical debridement or water-jet. The commenter 
also noted that BioBag[supreg] is individualized to the patient and has 
a limited viability window, and that ordering, manufacturing, storage 
and handling are different than for a supply.
    Response: For purposes of the device pass-through payment process, 
we are persuaded by this additional information, and we no longer 
consider the BioBag[supreg] product to be an ineligible supply under 
Sec.  419.66(b)(4)(ii) of the regulations because the BioBag[supreg] is 
not ``furnished incident to a service,'' as described in Sec.  
419.66(b)(4)(ii).
    With respect to the existence of a previous pass-through device 
category that describes the BioBag[supreg], the applicant suggested a 
category descriptor of ``Larval therapy for the debridement of necrotic 
non-healing skin and soft tissue wounds.'' We stated in the proposed 
rule that we have not identified an existing pass-through payment 
category that describes the BioBag[supreg], but we welcomed public 
comments on this issue.
    We did not receive any public comments on this issue and have not 
identified an existing pass-through payment category that describes 
BioBag[supreg].
    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 79651]]

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 stated in the 
proposed rule that we are not yet convinced that the BioBag[supreg] 
provides a substantial clinical improvement over other treatments for 
wound debridement. We invited public comments on whether the 
BioBag[supreg] meets the substantial clinical improvement criterion.
    Comment: One commenter, the manufacturer, disagreed with CMS' 
review of the three cited articles from the initial application (Tian, 
Dumville, Mudge) and suggested that these articles prove substantial 
clinical improvement. Specifically, the commenter noted that the meta-
analysis by Tian suggests that findings of lower amputation rates, less 
antibiotic use, increased healing rates and increased healing times for 
larval therapy over conventional treatments are statistically 
significant, although the conclusion states that more evidence is 
needed; and that the randomized controlled trial by Mudge showed that 
successful wound debridement was 96.9 percent with larvae compared to 
34.4 percent with hydrogel. (However, the commenter noted this trial 
was performed with BioFoam, which is a variation of the current 
BioBag[supreg] product, but stated that the two were similar.) In 
addition, the commenter stated that larval therapy demonstrated healing 
9 days faster than hydrogel, although it was not believed to be 
statistically significant by the authors in the Dumville trial.
    Several commenters representing health care professionals who have 
an interest in wound management supported the BioBag[supreg] 
application. These commenters provided testimonials of their or their 
patients' favorable experience with larval therapy. However, these 
commenters did not provide empirical data pertaining to substantial 
clinical improvement.
    Response: We appreciate the commenters' responses on the 
BioBag[supreg] application. However, none of the commenters provided 
new empirical evidence that demonstrates clinical superiority of the 
BioBag[supreg] over existing treatment options. At this time, we have 
not been able to determine that the BioBag[supreg] represents a 
substantial clinical improvement relative to existing therapies 
currently available for wound care.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the BioBag[supreg] for 
CY 2017.
(2) EncoreTM Suspension System
    Siesta Medical, Inc. submitted an application for a new device 
pass-through category for the Encore Suspension System (hereinafter 
referred to as the EncoreTM System). According to the 
application, the EncoreTM System is a kit of surgical 
instruments and implants that are used to perform an adjustable hyoid 
suspension. In this procedure, the hyoid bone (the U-shaped bone in the 
neck that supports the tongue) and its muscle attachments to the tongue 
and airway are pulled forward with the aim of increasing airway size 
and improving airway stability in the retrolingual and hypopharyngeal 
airway (airway behind and below the base of tongue). This procedure is 
indicated for the treatment of mild or moderate obstructive sleep apnea 
(OSA) and/or snoring, when the patient is unable to tolerate continuous 
positive airway pressure (CPAP). The current alternative to the hyoid 
suspension is the hyo-thyroid suspension technique (hyothyroidpexy). 
The EncoreTM System is designed for hyoid bone suspension to 
the mandible bone using bone screws and suspension lines. The 
EncoreTM System kit contains the following items:
     Integrated suture passer pre-loaded with polyester suture;
     Three bone screws and two bone screw inserters;
     Suspension line lock tool;
     Threading tool for suspension lines; and
     Four polyester suspension lines.
    With regard to the newness criterion, the EncoreTM 
System received FDA clearance through the section 510(k) process on 
March 26, 2014. Accordingly, it appears that the EncoreTM 
System is new for purposes of evaluation for device pass-through 
payments.
    Several components of the EncoreTM System appear to be 
either instruments or supplies, which are not eligible for pass-through 
according to Sec.  419.66(b)(4)(i) and (ii). For instance, the suture 
passer is an instrument and the suture is a supply, the bone screw 
inserters are instruments, the suspension line lock tool is an 
instrument, the threading tool for suspension lines is an instrument, 
and the polyester suspension lines are similar to sutures and therefore 
are supplies. With respect to the presence of a previously established 
code, the only implantable devices in the kit are the bone screws, and 
by the applicant's own admission the bone screws are described by the 
existing pass-through category HCPCS code C1713 (Anchor/screw for 
opposing bone-to-bone or soft tissue-to-bone (implantable)). In the CY 
2017 OPPS/ASC proposed rule (81 FR 45651), we invited public comments 
on whether the EncoreTM System bone screws are described by 
a previously existing category and also whether the remaining kit 
components are supplies or instruments.
    Comment: One commenter, the manufacturer, stated that the 
EncoreTM bone screws are designed with unique strength, 
profile and adjustability functions for the EncoreTM System, 
and therefore the bone screws are not adequately described by HCPCS 
code C1713. In addition, the commenter stated that the remaining kit 
components are custom designed for the procedure, would not be 
available otherwise within the operating room, and, therefore, would 
not meet the criteria for supplies and instruments, as specified in 
Sec.  419.66(b)(4)(i)(ii).
    Response: We note that manufacturers frequently package a number of 
individual items used with a device for a particular procedure into a 
kit. Hospitals may not bill for transitional pass-through payments for 
supplies that may be contained in kits (Medicare Claims Processing 
Manual (Pub. 100-04, Chapter 4, Section 60.4)). We continue to believe 
that the suture passer, the bone screw inserters, the suspension line 
lock tool, and the threading tool for suspension lines are all 
instruments and that the sutures and polyester suspension lines are 
supplies, even though they may have been customized for the procedure. 
Regarding the bone screws, we continue to believe that the bone screws 
are described by HCPCS code C1713 because, although customized, the 
bone screws anchor/

[[Page 79652]]

screw for opposing bone-to-bone (hyoid bone to mandible bone).
    With regard to the cost criterion, the applicant stated that the 
EncoreTM System would be used in the procedure described by 
CPT code 21685 (Hyoid myotomy and suspension). CPT code 21685 is 
assigned to APC 5164 (Level 4 ENT Procedures) with a CY 2016 payment 
rate of $1,616.90, and the device offset is $15.85. The price of the 
EncoreTM System as stated in the application is $2,200. To 
meet the cost criterion, there are three cost significance subtests 
that must be met and the calculations are noted below. The first cost 
significance is that the device cost needs to be at least 25 percent of 
the applicable APC payment rate to reach cost significance: $2,200/
$1,616.90 x 100 percent = 136 percent. Thus, the EncoreTM 
System meets the first cost significance test. The second cost 
significance test is that the device cost needs to be at least 125 
percent of the offset amount (the device-related portion of the APC 
found on the offset list): $2,200/$15.85 x 100 percent = 13880 percent. 
Thus, the EncoreTM System meets the second cost significance 
test. The third cost significance test is that the difference between 
the estimated average reasonable cost of the devices in the category 
and the portion of the APC payment amount determined to be associated 
with the device in the associated APC exceeds 10 percent of the total 
APC payment: ($2,200--$15.85)/$1,616.90 x 100 percent = 135 percent. 
Thus, the EncoreTM System meets the third cost significance 
test. Based on the costs submitted by the applicant and the 
calculations noted earlier, the EncoreTM System meets the 
cost criterion. However, as stated in the proposed rule, 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).
    We did not receive any public comments related to the cost 
criterion of the EncoreTM System application. As noted 
earlier in this section, the applicant stated that the 
EncoreTM System would be used in the procedure described by 
CPT code 21685 (Hyoid myotomy and suspension). CPT code 21685 is 
assigned to APC 5164 (Level 4 ENT Procedures) with a CY 2016 payment 
rate of $1,616.90, and the device offset is $15.85. The applicant also 
stated that the price of the EncoreTM System is $2,200. 
Based on our determination earlier in this section of this final rule 
with comment period, the device is described by HCPCS code C1713 and 
the bone screws and other kit supplies are supplies and instruments. 
Because of this determination, the cost of the device and the other 
components in the kit cannot be included in the device costs used to 
determine whether the device meets the cost criterion. Accordingly, the 
EncoreTM System does not meet the cost threshold.
    With regard to the substantial clinical improvement criterion, the 
applicant provided a thorough review of the hyoid myotomy with 
suspension and other surgical procedures that treat mild or moderate 
obstructive sleep apnea. However, specific data addressing substantial 
clinical improvement with the EncoreTM System were 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 1 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 established 
surgical procedure. The EncoreTM System is a new kit of 
surgical instruments and implantable materials that are used to perform 
this procedure. According to the EncoreTM System's section 
510(k) Summary, ``[t]he fundamental scientific technology and 
technological characteristics of the EncoreTM System are the 
same as the predicate devices,'' which includes the Medtronic AirVance 
System (another surgical kit used on CPT code 21685). The applicant 
claimed several advantages of the EncoreTM System over the 
AirVance System that relate to greater ease of use for the surgeon and 
better long-term stability. However, there are no studies comparing the 
EncoreTM System to the AirVance System. There are no 
clinical data provided by the applicant to suggest that the 
EncoreTM System kit provides a substantial clinical 
improvement over other instruments/implants that are used to perform 
Hyoid myotomy and suspension. In the proposed rule, we invited public 
comments on whether the EncoreTM System meets the 
substantial clinical improvement criterion.
    Comment: One commenter stated that the EncoreTM System 
has ``provided improved and more consistent results than previous hyoid 
suspension techniques'' and that it is reasonable to assume that a 
system that provides significantly improved control of the hyoid bone 
suspension location and greater long-term stability of this surgically 
modified hyoid bone location will lead to improved and less variable 
clinical results for the patients treated, including reducing the 
mortality rate, future hospitalization, and the need for future 
additional interventions. Numerous commenters who used the 
EncoreTM System supported the application and stated that, 
in their experience, the system provided a substantial clinical 
improvement for performing hyomandibular suspension and was superior to 
the hyo-thyroid technique. These commenters did not provide any new 
empirical data in support of the application.
    Response: As stated in the proposed rule, there were no clinical 
data provided by the applicant to suggest that the EncoreTM 
System kit provides a substantial clinical improvement over other 
instruments/implants that are used to perform Hyoid myotomy and 
suspension. While the commenters provided some suggestions that the 
EncoreTM System kit had clinical merits, these suggestions 
were anecdotal and largely based on assumptions, not actual empirical 
clinical evidence. Because no new significant information or data were 
provided through the public comments, we are not able to determine that 
the EncoreTM System represents a substantial clinical 
improvement relative to existing medical treatments.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the 
EncoreTM System for CY 2017.
(3) Endophys Pressure Sensing System (Endophys PSS) or Endophys 
Pressure Sensing Kit
    Endophys Holdings, LLC. submitted an application for a new device 
pass-

[[Page 79653]]

through category for the Endophys Pressure Sensing System or Endophys 
Pressure Sensing Kit (hereinafter referred to as the Endophys PSS). The 
applicant suggested a category descriptor within either the HCPCS code 
C18XX series or the HCPCS code C26XX series and the device was 
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. In the CY 2017 OPPS/ASC proposed 
rule (81 FR 45652), we invited public comment on whether Endophys PSS 
is described by a previously existing category.
    Comment: One commenter, the manufacturer, disagreed with CMS that 
the Endophys PSS is described by HCPCS code C1894 and states that HCPCS 
code C1894 ``describes a device that does not look like the Endophys 
PSS, does not provide continuous intraarterial blood pressure readings 
equivalent to a radial arterial line, is not used or monitored by a 
physician in a similar manner.'' The commenter noted that the design 
for Endophys PSS is patented. The commenter also noted that FDA has 
assigned new product codes to the Endophys PSS that are not similar to 
devices described by HCPCS code C1894.
    Response: We continue to believe that HCPCS code C1894 accurately 
describes the Endophys PSS because it is a type of introducer/sheath 
(but with a built-in pressure transducer). Also, a new product code 
from the FDA, which is used by the FDA to classify and track a medical 
device, is not relevant in CMS' consideration of whether the device is 
described by an existing HCPCS C-code. The FDA may provide new product 
codes for items that we consider to be described more broadly and with 
an existing HCPCS C-code.
    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. In the 
proposed rule, we invited public comments on this issue.
    We did not receive any public comments on whether the Endophys PSS 
meets the cost criterion. We continue to believe that the Endophys PSS 
meets the cost criterion.
    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

[[Page 79654]]

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 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 stated in the 
proposed rule that we have not been persuaded that the threshold for 
substantial clinical improvement has been met. We invited public 
comments on whether the Endophys PSS meets the substantial clinical 
improvement criterion.
    Comment: One commenter, the manufacturer, submitted a new 
publication \4\ that compared a set of patients' radial artery 
catheterization (RAC) blood pressure measurements, sphygmomanometer 
readings, and measurements from the Endophys PSS. Study results 
suggested that the Endophys PSS correlated with the RAC and the blood 
pressure cuff. The study authors conclude that because the Endophys PSS 
has ``competitive functionality to that seen with a dedicated radial 
artery catheter for blood pressure monitoring and is available 
immediately on sheath insertion without the added risk of [RAC] . . . , 
potential complications from RAC could be avoided.'' In addition, in 
its comment, the commenter noted that validation of the patient benefit 
due to the lack of a second arterial line for blood pressure monitoring 
in a randomized clinical trial may not meet the criteria of a well-
designed clinical investigation and cited three considerations for why 
this is the case. The commenter noted that the ``clinical evidence is 
abundant in the published literature reporting the incidence of radial 
arterial catheterization complications, cost, and patient morbidity. 
Time saved by eliminating a second RA placement while providing 
equivalent and continuous arterial pressure readings is obvious, and 
has cost benefits beyond the purely medical benefits discussed above.'' 
The commenter further noted that patients who received Endophys PSS 
``did not require a RA catheter placement, no serious complications 
were reported, and that the procedure was completed achieving the 
therapeutic objective. Reports were received across the centers noting 
when using accurate continuous arterial pressures the clinician was 
alerted to serious changes in blood pressure requiring immediate 
attention. In the absence of the Endophys PSS, the variance would not 
have been identified causing the patient to suffer complications.''
---------------------------------------------------------------------------

    \4\ Purdy PD, South C. Klucznik RP et al. J NeuroIntervent Surg. 
Published online first July 16, 2016 doi:10.1136/neurintsurg-2016-
012536).
---------------------------------------------------------------------------

    Response: We appreciate the submission of the new study as well as 
the public comment. We note that the study appears to show correlation 
on blood pressure readings between the Endophys PSS and RAC, and we 
believe that a clinical trial of the Endophys PSS versus RAC examining 
complication rates would be necessary to validate the theory of 
reduction in complication rates with use of the Endophys PSS. 
Accordingly, we do not believe the study supports a definitive 
conclusion that this device provides a substantial clinical improvement 
over existing modalities.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the Endophys PSS for 
CY 2017.
3. 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. In the CY 2017 OPPS/ASC proposed 
rule (81 FR 45653), we proposed 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 invited public comments on our 
proposal.
    Comment: Many commenters supported the proposal. The commenters' 
statements of support included that the proposed policy recognizes that 
the quarterly implementation date may not be aligned with market 
availability and starting the device pass-through eligibility period on 
date of first payment would allow for more robust data collection for 
the purposes of setting future APC rates to accurately include the 
device costs.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal to amend Sec.  419.66(g) such that it provides 
that the pass-through eligibility period begins on the first date on 
which pass-through payment is made.
4. Policy 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

[[Page 79655]]

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 payment status effective on April 
1 would receive 2 years and 3 quarters of pass-through payment status, 
while a pass-through device with pass-through payment status effective 
on October 1 would receive 2 years and 1 quarter of pass-through 
payment status.
b. CY 2017 Policy
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45653), we proposed, 
beginning with pass-through devices newly approved in CY 2017 and 
subsequent calendar years, to allow for a quarterly expiration of pass-
through payment status for devices to afford a pass-through payment 
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 payment status would expire on September 
30, 2020. As stated in the proposed rule, 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 payment period for all pass-through devices would better insure 
robust data collection and more representative procedure payments once 
the pass-through payment devices are packaged. We invited public 
comments on this proposal.
    Comment: Many commenters, including MedPAC, supported the proposal. 
Some commenters suggested that, by maximizing the timeframe for receipt 
of device pass-through payment, there would be more robust cost data 
that can be utilized for setting future APC rates to accurately include 
the device costs.
    Response: We appreciate the commenters' support.
    Comment: One commenter asked whether CMS intends to adjust payment 
rates mid-year to include the costs of newly packaged devices upon 
expiration of device pass-through payments, when a device pass-through 
payment status expires mid-year. The commenter was concerned that 
hospitals might not receive adequate payment for the costs of a device, 
unless the payment was also adjusted, when the device pass-through 
payment status expired.
    Response: We do not generally adjust payment rates mid-year and do 
not anticipate doing so for this proposal. Under our final policy, we 
will continue to include all device costs in the associated 
procedure(s) for ratesetting purposes. The final CY 2017 OPPS policy 
represents an extension of the timeframe for which device pass-through 
payment policy applies but does not affect the claims available for 
ratesetting purposes. We note that our not adjusting rates mid-year 
will not result in double payment for devices. While the device 
maintains pass-through payment status, we will reduce APC payment by 
the device offset and add the device pass-through payment; once the 
device pass-through payment status expires, hospitals will bill for and 
receive the full APC payment, which includes packaged device costs.
    Comment: Several commenters requested that CMS consider amending 
the proposal in order to implement the proposed policy retroactively to 
previously approved devices that were proposed to continue receiving 
device pass-through payments in CY 2017. The commenters stated that 
this recommended change would extend the timeframe for receipt of 
device pass-through payments to current applicants that have already 
been awarded device pass-through payment status and anticipate receipt 
of device pass-through payments in CY 2017.
    Response: As proposed, the policy begins with pass-through devices 
newly approved in CY 2017, and we are not going to this policy for 
devices that received pass-through payment approval prior to CY 2017.
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposal to allow for quarterly 
expiration of pass-through payment status for devices, beginning with 
newly approved pass-through payment devices in CY 2017 and subsequent 
calendar years, to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through payment 
devices.
5. 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 pass-through payment 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 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

[[Page 79656]]

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 the CY 2017 OPPS/ASC 
proposed rule indicated that about two-thirds of providers have an 
``Implantable Devices Charged to Patients'' CCR. At the time of our 
analysis for the proposed rule, for the hospitals that have an 
``Implantable Devices Charged to Patients'' CCR, the median was 0.3911, 
compared with a median hospital-wide CCR of 0.2035.
b. CY 2017 Policy
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45654), we proposed 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 invited public comments on this proposal.
    Comment: Many commenters, including MedPAC, supported the proposal. 
Commenters generally agreed that use of the ``Implantable Devices 
Charged to Patients'' CCR would result in more accurate measurement of 
costs for pass-through medical devices, by reducing the effects of 
charge compression when applying the hospital-wide CCR.
    Response: We appreciate the commenters' support.
    Comment: One commenter suggested that CMS modify the proposal to 
allow use of the ``Medical Supplies Charged to Patients'' CCR, if the 
hospital does not have an ``Implantable Devices Charged to Patients'' 
CCR. The commenter stated that this CCR would be a more accurate cost 
calculation than the hospital-wide CCR.
    Response: In the FY 2009 IPPS final rule (73 FR 48458 through 
48467), we created a cost center for ``Medical Supplies Charged to 
Patients,'' which generally includes low cost supplies, and another 
cost center for ``Implantable Devices Charged to Patients,'' which 
generally includes 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. By splitting 
medical supplies and implantable devices into two cost centers, some of 
the effects of charge compression were mitigated. We note that the 
intent of the ``Medical Supplies Charged to Patients'' CCR is to 
capture the costs and charges for low cost supplies which would not 
include implantable devices. Accordingly, in the absence of an 
``Implantable Devices Charged to Patients'' CCR, we believe that the 
hospital-wide CCR would be an appropriate alternative since the 
hospital-wide CCR should reflect any implantable device costs that were 
incurred.
    Comment: One commenter stated that providers who have not complied 
with the requirement to create an ``Implantable Devices Charged to 
Patients'' cost center should not receive any indirect payment benefits 
from their noncompliance.
    Response: We note that we provide some flexibility in how hospitals 
address their cost reporting. As noted in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60344), ``We typically do not specify a 
revenue-code-to-cost center crosswalk that hospitals must adopt to 
prepare their cost reporting, recognizing hospitals' need to interpret 
. . . cost reporting requirements within the context of their own 
financial systems.''
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposal to use the ``Implantable 
Devices Charged to Patients'' CCR instead of the average hospital-wide 
CCR to calculate transitional pass-through payments for devices, 
beginning with device pass-through payments in CY 2017. If the CCR for 
the ``Implantable Devices Charged to Patients'' CCR is not available 
for a particular hospital, we will instead use the average hospital-
wide CCR to calculate pass-through payments.
6. 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. CY 2017 Policy
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45654), for CY 2017, 
we proposed 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 the 
proposed rule and of this final rule with comment period for a 
discussion of this proposal. Otherwise, as stated in the proposed rule, 
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

[[Page 79657]]

category. The list of device offsets for all device procedures is 
posted on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    We are finalizing, without modification, our proposal to calculate 
the portion of the otherwise applicable Medicare OPD fee schedule 
amount for each device-intensive procedure payment rate that can be 
reasonably attributed to (that is, reflect) the cost of an associated 
device at the HCPCS code level rather than at the APC level. We refer 
readers to section IV.B. of this final rule with comment period for a 
discussion of the proposal to calculate device offsets at the HCPCS 
level. 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. 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 final rule with 
comment period. 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. 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. In the CY 2017 OPPS/ASC proposed rule (81 FR 45654), 
for CY 2017, we proposed to modify the methodology for assigning 
device-intensive status. Specifically, for CY 2017, we proposed 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 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 2017 
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 
the proposed rule, respectively. We proposed 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.
    Comment: The majority of commenters supported the proposal to 
revise the device-intensive calculation methodology and calculate at 
the HCPCS code level rather than at the APC level. One commenter 
believed that device-intensive procedures should not be assigned to an 
APC that includes procedures that are not device-intensive. A few 
commenters asked that CMS provide further detail into how device 
offsets are calculated, and provide examples of how this proposed 
change might impact existing APCs for both OPPS and ASC payment prior 
to implementing. One commenter requested that CMS make further 
refinements to the methodology if needed to ensure the full breadth of 
implantable device and supply costs are being captured and recommended 
moving forward that CMS routinely release the device offset 
calculations with each year's OPPS/ASC proposed rule. Another commenter 
requested that CMS create two different device offsets based on 
differing calculations, with the proposed device offset methodology 
used to calculate a ``device offset for device intensive policies'' 
(which would be used to determine if a procedure is device intensive or 
not) and an alternate methodology used to calculate a ``device offset 
for pass-through payment policy'' (which would be used to calculate the 
portion of the otherwise applicable Medicare OPD fee schedule amount 
for device pass-through status).
    Response: We appreciate the commenters' support. We disagree with 
the commenter's belief that device-intensive procedures should not be 
assigned to an APC that includes procedures that are not device-
intensive. Under our proposed policy, the APC placement of a device-
intensive

[[Page 79658]]

procedure will have no bearing on the procedure's device-intensive 
designation. The device offset is the estimated portion of the payment 
for a procedure that is attributable to the device. We remind 
commenters that the list of device offsets for all device procedures is 
posted on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In response 
to the request to create an additional device offset for pass-through 
payment policy, in addition to a device offset based on the proposed 
device offset methodology, we do not see the need for the creation of a 
second device offset. We believe that a device offset calculated based 
on the proposed device offset methodology is appropriate and an 
accurate proxy for a procedure's device costs when calculating the 
portion of the otherwise applicable Medicare OPD fee schedule amount.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2017, 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.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, we proposed 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, as stated in the proposed rule (81 FR 
45655), 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 was included in a new Addendum P to the proposed rule (which 
is available via the Internet on the CMS Web site).
    Comment: A number of commenters supported CMS' proposal to apply a 
default device offset of at least 41 percent to new implant procedures 
with the possibility for higher device offset if supported by device 
costs. Some commenters in support of the proposal asked that CMS 
specify how additional information can be submitted, including the 
deadline for submission, the type of information that can be submitted 
and who it can be submitted by to have CMS consider a higher offset 
percentage for a new implant procedure. One commenter did not support 
the proposal under which every new HCPCS code that describes procedures 
requiring implantation of a device should be assigned a default device 
offset of 41 percent. This commenter stated that CMS should ensure that 
all new procedures requiring implantation of a device require use of a 
device that is described by a device HCPCS code that satisfies the 
device edit for device intensive procedures, before assigning a default 
device offset of 41 percent and recognizing the new implantation 
procedure as a device intensive procedure.
    Response: We appreciate the commenters' support. Additional 
information for our consideration of an offset percentage higher than 
the default of 41 percent for new HCPCS codes describing procedures 
requiring the implantation (or in some cases the insertion) of a 
medical device that do not yet have associated claims data, such as 
pricing data or invoices from a device manufacturer, 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 
21244-1850, or electronically at [email protected]. Additional 
information can be submitted prior to issuance of an OPPS/ASC proposed 
rule or as a public comment in response to an issued OPPS/ASC proposed 
rule. Device offset percentages will be set in each year's final rule. 
In response to the commenter who did not support this proposal, we note 
that we are creating a new category HCPCS C-code (described in section 
IV.B.3. of this final rule with comment period) for providers to report 
when a device implantation or insertion procedure uses a device that is 
not described by a specific Level II HCPCS C-code so that these device 
intensive procedures can satisfy the device edit policy.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2017 to apply 
device-intensive status with a default device offset set at 41 percent 
for new HCPCS codes describing procedures requiring the implantation of 
a medical device that do not yet have associated claims data until 
claims data are available to establish the HCPCS code-level device 
offset for the procedures. For CY 2017, we also are finalizing our 
proposal, without modification, that in certain rare instances, we may 
temporarily assign a higher offset percentage if warranted by 
additional information.
3. 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 discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45655), 
as part of our proposal described in section IV.B.2. of the 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 proposed 
to modify our existing device edit policy. Specifically, for CY 2017 
and subsequent years, we proposed 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 proposed that any device code, when reported on a claim 
with a device-

[[Page 79659]]

intensive procedure, would satisfy the edit.
    Comment: A number of commenters urged CMS to restore the specific 
device-to-procedure and procedure-to-device edits that CMS used to 
apply and not keep the current ``any device'' code policy. One 
commenter asked that CMS require hospitals to report all devices, not 
just those associated with procedures that CMS has already determined 
to be device intensive. Another commenter requested that CMS create a 
miscellaneous C-code for providers to report when a device used does 
not have a specific Level II HCPCS Category C-code.
    Response: As we stated in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66794), we continue to believe that the 
elimination of device-to-procedure edits and procedure-to-device edits 
is appropriate due to the experience hospitals now have in coding and 
reporting these claims fully. More specifically, for the more costly 
devices, we believe the C-APCs will reliably reflect the cost of the 
device if charges for the device are included anywhere on the claim. We 
remind commenters that, under our current policy, hospitals are still 
expected to adhere to the guidelines of correct coding and append the 
correct device code to the claim when applicable. We also remind 
commenters that, as with all other items and services recognized under 
the OPPS, we expect hospitals to code and report their costs 
appropriately, regardless of whether there are claims processing edits 
in place. We agree with the commenter that we should create a 
miscellaneous HCPCS C-code for providers to report when a device used 
does not have a specific Level II HCPCS C-code. Therefore, effective 
January 1, 2017, we are creating HCPCS code C1889 (Implantable/
insertable device for device intensive procedure, not otherwise 
classified) to recognize devices implanted or inserted during a device-
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code.
    After consideration of the public comments we received, we are 
finalizing our proposal for CY 2017 and subsequent years 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. For CY 2017 and subsequent years, we also are 
finalizing our proposal that any device code, when reported on a claim 
with a device-intensive procedure, will satisfy the edit. In addition, 
we are creating HCPCS code C1889 to recognize devices furnished during 
a device intensive procedure that are not described by a specific Level 
II HCPCS Category C-code. Reporting HCPCS code C1889 with a device 
intensive procedure will satisfy the edit requiring a device code to be 
reported on a claim with a device-intensive procedure.
4. 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 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. Policy for CY 2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45656), for CY 2017, 
we proposed 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 proposed 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 proposed to continue to 
reduce the OPPS

[[Page 79660]]

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 proposed 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 proposed 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.
    Comment: One commenter recommended that CMS reinstate the procedure 
code list that is subject to the no cost/full credit and partial credit 
devices.
    Response: As stated in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70424), we no longer believe it is necessary to restrict 
the application of our policy to reduce the OPPS payment by the full or 
partial credit a provider receives for a replaced device to a specific 
list of devices. Therefore, we no longer believe it is necessary to 
specify a list of devices to which the OPPS payment adjustment for no 
cost/full credit and partial credit devices would apply.
    After consideration of the public comments we received, for CY 
2017, we are finalizing our proposed 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 
finalized policy to recognize the newly defined (individual HCPCS level 
device offset greater than 40 percent) device-intensive procedures. 
Specifically, for CY 2017, we are finalizing our proposal 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. In 
addition, for CY 2017 and subsequent years, we are finalizing our 
proposal to use the following three criteria for determining the 
procedures to which our final policy will 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.
5. 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, as stated in the CY 2017 OPPS/
ASC proposed rule (81 FR 45656), we proposed 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 proposed 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 
proposed 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 median cost for the 
procedure described by CPT code 0308T was approximately $17,965 (the 
median cost was incorrectly stated in the proposed rule as $15,567). 
The proposed CY 2017 payment rate (calculated using the median cost and 
the claims that reported the device consistent with our device edit 
policy for device intensive procedures) was approximately $17,189. We 
invited public comments on this proposal.
    Comment: The majority of commenters supported the proposal to base 
payment on the median cost instead of the geometric mean cost for any 
device-intensive procedure that is assigned to an APC with fewer than 
100 total claims (for all of the services assigned to the APC). One 
commenter recommended that CMS consider whether refinements to the low-
volume, device-intensive procedure policy are

[[Page 79661]]

appropriate in future rulemaking, such as using the claims volume at 
the HCPCS level rather than the APC level.
    Response: We appreciate the commenters' support. At this time, we 
believe it is only appropriate to calculate the payment rate using 
median cost instead of the geometric mean for a device-intensive 
procedure that is assigned to a clinical APC with fewer than 100 total 
claims for all procedures in the APC.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, 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. 
The CY 2017 final rule geometric mean cost for the procedure described 
by CPT code 0308T (based on 19 claims containing the device HCPCS C-
code in accordance with the device-intensive edit policy) is 
approximately $21,302, and the median cost is approximately $19,521. 
The final CY 2017 payment rate (calculated using the median cost) is 
approximately $18,984.

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this final rule with comment period, the 
term ``biological'' is used because this is the term that appears in 
section 1861(t) of the Act. ``Biological'' as used in this final rule 
with comment period includes (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 hospital outpatient services under 
Medicare Part B for which payment was made on the first date the 
hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996 and whose cost is ``not insignificant'' 
in relation to the OPPS payments for the procedures or services 
associated with the new drug or biological. For pass-through payment 
purposes, radiopharmaceuticals are included as ``drugs.'' As required 
by statute, transitional pass-through payments for a drug or biological 
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a 
period of at least 2 years, but not more than 3 years, after the 
payment was first made for the product as a hospital outpatient service 
under Medicare Part B. CY 2017 pass-through drugs and biologicals and 
their designated APCs are assigned status indicator ``G'' in Addenda A 
and B to this final rule with comment period (which are available via 
the Internet on the CMS Web site).
    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. 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 final rule with comment period, the term 
``ASP methodology'' and ``ASP-based'' are inclusive of all data sources 
and methodologies described therein. Additional information on the ASP 
methodology can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Policy Change 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45657), we proposed, 
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

[[Page 79662]]

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 invited public 
comments on this proposal.
    Comment: Several commenters supported CMS' proposal to expire pass-
through status and payment for pass-through drugs on a quarterly basis 
rather than an annual basis such that pass-through status would be as 
close as possible to 3 years for all pass-through drugs and 
biologicals. Some commenters recommended that CMS apply the proposed 
policy to all drugs with pass-through payment status in CY 2017 to 
prevent disparate treatment of such drugs based on their pass-through 
approval date.
    Response: We appreciate commenters' support. In response to 
commenters' recommendation to expire pass-through status and payment 
for pass-through drugs on a quarterly basis rather than an annual basis 
for all drugs with pass-through payment status in CY 2017, we note that 
the annual expiration of pass-through payment status for all drugs 
currently assigned pass-through payment status under the OPPS was 
finalized in previous years' OPPS/ASC rulemaking and was not proposed 
to be altered in our CY 2017 proposal.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, 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 drugs, biologicals, and radiopharmaceuticals.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2016
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45657), we proposed 
that the pass-through status of 15 drugs and biologicals would expire 
on December 31, 2016, as listed in Table 13 of the proposed rule (81 FR 
45658). 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 payment status on or before January 1, 2015. With the exception 
of those groups of drugs and biologicals that are always packaged when 
they do not have pass-through payment 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 payment 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 $110 for CY 2017), as discussed further in 
section V.B.2. of this final rule with comment period. In the CY 2017 
OPPS/ASC proposed rule (81 FR 45658), we proposed that if the estimated 
per day cost for the drug or biological is less than or equal to the 
applicable OPPS drug packaging threshold, 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 
proposed to provide separate payment at the applicable relative ASP-
based payment amount (which was proposed at ASP+6 percent for CY 2017, 
and is finalized at ASP+6 percent for CY 2017, as discussed further in 
section V.B.3. of this final rule with comment period).
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal, without modification, to expire the 
pass-through payment status of the 15 drugs and biologicals listed 
below in Table 35 on December 31, 2016.

  Table 35--Drugs and Biologicals for Which Pass-Through Payment Status
                        Expires December 31, 2016
------------------------------------------------------------------------
                                          Final CY 2017
 CY 2017 HCPCS code      CY 2017 long         status       Final CY 2017
                          descriptor        indicator           APC
------------------------------------------------------------------------
C9497...............  Loxapine,                       K             9497
                       inhalation
                       powder, 10 mg.
J1322...............  Injection,                      K             1480
                       elosulfase alfa,
                       1 mg.
J1439...............  Injection, ferric               N              N/A
                       carboxymaltose,
                       1 mg.
J1447...............  Injection, TBO-                 N              N/A
                       Filgrastim, 1
                       microgram.
J3145...............  Injection,                      N              N/A
                       testosterone
                       undecanoate, 1
                       mg.
J3380...............  Injection,                      K             1489
                       vedolizumab, 1
                       mg.
J7181...............  Injection, factor               N              N/A
                       xiii a-subunit,
                       (recombinant),
                       per iu.
J7200...............  Factor ix                       N              N/A
                       (antihemophilic
                       factor,
                       recombinant),
                       Rixubus, per i.u.
J7201...............  Injection, factor               N              N/A
                       ix, fc fusion
                       protein
                       (recombinant),
                       per iu.
J7205...............  Injection, factor               K             1656
                       viii fc fusion
                       (recombinant),
                       per iu.
J7508...............  Tacrolimus,                     N              N/A
                       extended
                       release,
                       (astagraf xl),
                       oral, 0.1 mg.
J9301...............  Injection,                      N              N/A
                       obinutuzumab, 10
                       mg.
J9308...............  Injection,                      K             1488
                       ramucirumab, 5
                       mg.
J9371...............  Injection,                      K             1466
                       Vincristine
                       Sulfate
                       Liposome, 1 mg.
Q4121...............  Theraskin, per                  N              N/A
                       square
                       centimeter.
------------------------------------------------------------------------


[[Page 79663]]

    The final packaged or separately payable status of each of these 
drugs or biologicals is listed in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Payment Status in CY 2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45658), we proposed 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, 2015, and July 1, 2016, were 
listed in Table 14 of the proposed rule (81 FR 45659). The APCs and 
HCPCS codes for these drugs and biologicals approved for pass-through 
payment status through July 1, 2016 were assigned status indicator 
``G'' in Addenda A and B to the 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 proposed to continue to pay for 
pass-through drugs and biologicals at ASP+6 percent, equivalent to the 
payment rate these drugs and biologicals would receive in the 
physician's office setting in CY 2017. We proposed 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 was proposed 
at ASP+6 percent, and the portion of the otherwise applicable OPD fee 
schedule that the Secretary determines is appropriate, which was 
proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure 
(including contrast agents; diagnostic radiopharmaceuticals, and stress 
agents); and drugs and biologicals that function as supplies when used 
in a surgical procedure), we proposed that their pass-through payment 
amount would be equal to ASP+6 percent for CY 2017 because, if not for 
their pass-through status, payment for these products would be packaged 
into the associated procedure.
    In addition, we proposed to continue to update pass-through payment 
rates on a quarterly basis on the CMS Web site during CY 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 proposed 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 proposed to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which was proposed at ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
proposed to provide pass-through payment at WAC+6 percent, the 
equivalent payment provided to pass-through drugs and biologicals 
without ASP information. If WAC information also is not available, we 
proposed to provide payment for the pass-through radiopharmaceutical at 
95 percent of its most recent AWP.
    Comment: Several commenters supported CMS' proposal to continue to 
provide payment at ASP+6 percent for drugs, biologicals, contrast 
agents, and radiopharmaceuticals that are granted pass-through payment 
status. Some commenters requested that CMS provide an additional 
payment for radiopharmaceuticals that are granted pass-through payment 
status.
    Response: We appreciate the commenters' support. Regarding the 
commenters' request that CMS provide an additional payment for 
radiopharmaceuticals that are granted pass-through payment status, we 
note that, for CY 2017, consistent with our CY 2016 payment policy for 
diagnostic and therapeutic radiopharmaceuticals, we proposed to provide 
payment for both diagnostic and therapeutic radiopharmaceuticals with 
pass-through payment status based on the ASP methodology. As stated 
earlier, the ASP methodology, as applied under the OPPS, uses several 
sources of data as a basis for payment, including the ASP, the WAC if 
the ASP is unavailable, and 95 percent of the radiopharmaceutical's 
most recent AWP if both the ASP and WAC are unavailable. For purposes 
of pass-through payment, we consider radiopharmaceuticals to be drugs 
under the OPPS. Therefore, if a diagnostic or therapeutic 
radiopharmaceutical receives pass-through payment status during CY 
2017, we proposed to follow the standard ASP methodology to determine 
its pass-through payment rate under the OPPS to account for the 
acquisition and pharmacy overhead costs. We continue to believe that a 
single payment is appropriate for diagnostic radiopharmaceuticals with 
pass-through payment status in CY 2017, and that the payment rate of 
ASP+6 percent (or WAC or AWP if ASP is not available) is appropriate to 
provide payment for both a radiopharmaceutical's acquisition and 
pharmacy overhead costs. We refer readers to section V.B.3. of this 
final rule with comment period for further discussion of payment for 
therapeutic radiopharmaceuticals based on ASP information submitted by 
manufacturers. We also refer readers to the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Feefor-ServicePayment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1656-FC.html.
    After consideration of the public comments we received, we are 
finalizing our proposal to provide payment for drugs, biologicals, 
diagnostic and therapeutic radiopharmaceuticals, and contrast agents 
that are granted pass-through payment status based on the ASP 
methodology. If a diagnostic or therapeutic radiopharmaceutical 
receives pass-through payment status during CY 2017, we will follow the 
standard ASP methodology to determine the pass-through payment rate 
that drugs receive under section 1842(o) of the Act, which is ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
will provide pass-through payment at WAC+6 percent, the equivalent 
payment provided to pass-through drugs and biologicals without ASP 
information. If WAC information also is not available, we will provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP. The 47

[[Page 79664]]

drugs and biologicals that continue to have pass-through payment status 
for CY 2017 or have been granted pass-through payment status as of 
January 2017 are shown in Table 36 below.

                   Table 36--Drugs and Biologicals With Pass-Through Payment Status in CY 2017
----------------------------------------------------------------------------------------------------------------
                                                                                 CY 2017  status
    CY 2016  HCPCS code         CY 2017  HCPCS code     CY 2017 long descriptor      indicator      CY 2017 APC
----------------------------------------------------------------------------------------------------------------
A9586.....................  A9586.....................  Florbetapir f18,                      G             1664
                                                         diagnostic, per study
                                                         dose, up to 10
                                                         millicuries.
N/A.......................  A9588.....................  Fluciclovine f-18,                    G             9052
                                                         diagnostic, 0.1 mCi.
N/A.......................  A9587.....................  Gallium Ga-68,                        G             9056
                                                         dotatate, diagnostic,
                                                         1 mCi.
N/A.......................  C9140.....................  Injection, Factor VIII                G             9043
                                                         (antihemophilic
                                                         factor, recombinant)
                                                         (Afstyla), 1 I.U.
C9137.....................  J7207.....................  Injection, Factor VIII                G             1844
                                                         (antihemophilic
                                                         factor, recombinant)
                                                         PEGylated, 1 I.U.
C9138.....................  J7209.....................  Injection, Factor VIII                G             1846
                                                         (antihemophilic
                                                         factor, recombinant)
                                                         (Nuwiq), per i.u.
C9139.....................  J7202.....................  Injection, Factor IX,                 G             9171
                                                         albumin fusion protein
                                                         (recombinant),
                                                         Idelvion, 1 i.u.
C9349.....................  Q4172.....................  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, 1               G             9460
                                                         mg.
C9461.....................  A9515.....................  Choline C 11,                         G             9461
                                                         diagnostic, per study
                                                         dose.
C9470.....................  J1942.....................  Injection, aripiprazole               G             9470
                                                         lauroxil, 1 mg.
C9471.....................  J7322.....................  Hyaluronan or                         G             9471
                                                         derivative, Hymovis,
                                                         for intra-articular
                                                         injection, 1 mg.
C9472.....................  J9325.....................  Injection, talimogene                 G             9472
                                                         laherparepvec, 1
                                                         million plaque forming
                                                         units (PFU).
C9473.....................  J2182.....................  Injection, mepolizumab,               G             9473
                                                         1 mg.
C9474.....................  J9205.....................  Injection, irinotecan                 G             9474
                                                         liposome, 1 mg.
C9475.....................  J9295.....................  Injection, necitumumab,               G             9475
                                                         1 mg.
C9476.....................  J9145.....................  Injection, daratumumab,               G             9476
                                                         10 mg.
C9477.....................  J9176.....................  Injection, elotuzumab,                G             9477
                                                         1 mg.
C9478.....................  J2840.....................  Injection, sebelipase                 G             9478
                                                         alfa, 1 mg.
C9479.....................  J7342.....................  Instillation,                         G             9479
                                                         ciprofloxacin otic
                                                         suspension, 6 mg.
C9480.....................  J9352.....................  Injection, trabectedin,               G             9480
                                                         0.1 mg.
C9481.....................  J2786.....................  Injection, reslizumab,                G             9481
                                                         1 mg.
C9482.....................  C9482.....................  Injection, sotalol                    G             9482
                                                         hydrochloride, 1 mg.
C9483.....................  C9483.....................  Injection,                            G             9483
                                                         atezolizumab, 10 mg.
N/A.......................  J0570.....................  Buprenorphine implant,                G             9058
                                                         74.2 mg.
J0596.....................  J0596.....................  Injection, c-1 esterase               G             9445
                                                         inhibitor (human),
                                                         Ruconest, 10 units.
J0695.....................  J0695.....................  Injection, ceftolozane                G             9452
                                                         50 mg and tazobactam
                                                         25 mg.
J0875.....................  J0875.....................  Injection, dalbavancin,               G             1823
                                                         5 mg.
J1833.....................  J1833.....................  Injection,                            G             9456
                                                         isavuconazonium
                                                         sulfate, 1 mg.
J2407.....................  J2407.....................  Injection, oritavancin,               G             1660
                                                         10 mg.
J2502.....................  J2502.....................  Injection, pasireotide                G             9454
                                                         long acting, 1 mg.
J2547.....................  J2547.....................  Injection, peramivir, 1               G             9451
                                                         mg.
J2860.....................  J2860.....................  Injection, siltuximab,                G             9455
                                                         10 mg.
J3090.....................  J3090.....................  Injection, tedizolid                  G             1662
                                                         phosphate, 1 mg.
N/A.......................  J7179.....................  Injection, von                        G             9059
                                                         willebrand factor
                                                         (recombinant),
                                                         (Vonvendi), 1 i.u.
                                                         vwf:rco.
J7313.....................  J7313.....................  Injection, fluocinolone               G             9450
                                                         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, belinostat,                G             1658
                                                         10 mg.
J9039.....................  J9039.....................  Injection,                            G             9449
                                                         blinatumomab, 1 mcg.
J9271.....................  J9271.....................  Injection,                            G             1490
                                                         pembrolizumab, 1 mg.
J9299.....................  J9299.....................  Injection, nivolumab, 1               G             9453
                                                         mg.
Q5101.....................  Q5101.....................  Injection, Filgrastim                 G             1822
                                                         (G-CSF), Biosimilar, 1
                                                         microgram.
Q9950.....................  Q9950.....................  Injection, sulfur                     G             9457
                                                         hexafluoride lipid
                                                         microsphere, per ml.
C9459.....................  Q9982.....................  Flutemetamol F18,                     G             9459
                                                         diagnostic, per study
                                                         dose, up to 5
                                                         millicuries.
C9458.....................  Q9983.....................  Florbetaben F18,                      G             9458
                                                         diagnostic, per study
                                                         dose, up to 8.1
                                                         millicuries.
----------------------------------------------------------------------------------------------------------------

5. 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

[[Page 79665]]

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 comment period (80 FR 70430 
through 70432). In the CY 2017 OPPS/ASC proposed rule (81 FR 45660), 
for CY 2017, as we did in CY 2016, we proposed 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 were the same as for CY 2016 (80 FR 70430). Also, the 
proposed APCs to which a stress agent payment offset or a skin 
substitute payment offset were also the same as for CY 2016 (80 FR 
70431 through 70432). The proposed APCs to which a contrast agent 
payment offset may be applicable are APCs 5571 through 5573 (Levels 1-3 
Diagnostic Radiology with Contrast), which were listed in Addendum A to 
the proposed rule (which is available via the Internet on the CMS Web 
site).
    We proposed 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.
    Comment: One commenter recommended that CMS consider the drug 
offset amount at the HCPCS level to improve accuracy in isolating 
potentially duplicative packaged payments.
    Response: We thank the commenter for this recommendation. We do not 
believe that the suggested change is necessary at this time. However, 
we may consider it in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2017 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 as we did 
in CY 2016. We also are finalizing our proposal 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.

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

1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. 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 the CY 2017 OPPS/ASC 
proposed rule (81 FR 45660), 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 
proposed a packaging threshold for CY 2017 of $110.
    Following the finalized CY 2007 methodology, for this CY 2017 OPPS/
ASC final rule with comment period, we used the most recently available 
four quarter moving average PPI levels to trend the $50 threshold 
forward from the third quarter of CY 2005 to the third quarter of CY 
2017 and rounded the resulting dollar amount ($111.65) 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 series code WPUSI07003) from CMS' Office of 
the Actuary (OACT). Therefore, for this CY 2017 OPPS/ASC final rule 
with comment period, using the CY 2007 OPPS methodology, we are 
establishing a packaging threshold for CY 2017 of $110.
b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, 
Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the 
Cost Threshold (``Threshold-Packaged Drugs'')
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45660), 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 the proposed rule, or for the following policy-
packaged items that we proposed 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

[[Page 79666]]

(70 FR 68636 through 68638). For each drug and biological HCPCS code, 
we used an estimated payment rate of ASP+6 percent (which is the 
payment rate we proposed for separately payable drugs and biologicals 
for CY 2017, as discussed in more detail in section V.B.2.b. of the 
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 proposed 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 the proposed rule (which 
are available via the Internet on the CMS Web site) because these were 
the most recent data available for use at the time of development of 
the proposed rule. These data also were the basis for drug payments in 
the physician's office setting, effective April 1, 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 proposed 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 displayed in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site) for proposed payment in CY 2017.
    Comment: A few commenters opposed the proposed OPPS packaging 
threshold of $110 for CY 2017. These commenters recommended that CMS 
freeze the packaging threshold at the current level ($100) or eliminate 
the packaging threshold and provide separate payment for all drugs with 
HCPCS codes.
    Response: We have received and addressed a similar comment in 
numerous OPPS/ASC rulemakings in the past. As we stated in the CY 2007 
OPPS/ASC final rule with comment period (71 FR 68086), we believe that 
packaging certain items is a fundamental component of a prospective 
payment system, that updating the packaging threshold of $50 for the CY 
2005 OPPS is consistent with industry and government practices, and 
that the PPI for Prescription Drugs is an appropriate mechanism to 
gauge Part B drug inflation. Therefore, because packaging is a 
fundamental component of a prospective payment system that continues to 
provide important flexibility and efficiency in the delivery of high 
quality hospital outpatient services, we are not adopting the 
commenters' recommendations to pay separately for all drugs, 
biologicals, and radiopharmaceuticals for CY 2017, or to eliminate the 
packaging threshold, or to freeze the packaging threshold at $100.
    After consideration of the public comments we received, and 
consistent with our methodology for establishing the packaging 
threshold using the most recent PPI forecast data, we are adopting a CY 
2017 packaging threshold of $110. 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 final rule with comment period, we 
used ASP data from the 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 
used these data for budget neutrality estimates and impact analyses for 
this CY 2017 OPPS/ASC final rule with comment period.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B for this final rule with 
comment period are based on ASP data from the third quarter of CY 2016. 
These data are the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting using the ASP 
methodology, effective October 1, 2016. These payment rates will 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 proposed to recalculate their mean unit cost from all 
of the CY 2015 claims data and updated cost report information 
available for this CY 2017 final rule with comment period to determine 
their final per day cost.
    Consequently, as stated in the CY 2017 OPPS/ASC proposed rule (81 
FR 45661), the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for the final rule with comment 
period. Under such circumstances, in the CY 2017 OPPS/ASC proposed 
rule, we proposed to continue to follow the established policies 
initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more 
equitably pay for those drugs whose cost fluctuates relative to the 
proposed CY 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).
    We did not receive any public comments on our proposal to 
recalculate the mean unit cost for items that do not currently have an 
ASP-based payment rate from all of the CY 2015 claims data and updated 
cost report information available for this CY 2017 final rule with 
comment period to determine their final per day cost. We also did not 
receive any public comments on our proposal to continue to follow the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780), when the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for the final rule with comment 
period. Therefore, for CY 2017, we are finalizing these two CY 2017 
proposals without modification.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned briefly earlier, in the OPPS we package several 
categories of drugs, biologicals, and radiopharmaceuticals regardless 
of the cost of the products. Because the products are packaged 
according to the policies in 42 CFR 419.2(b), we refer to these 
packaged drugs, biologicals, and radiopharmaceuticals as ``policy-
packaged'' drugs, biologicals, and radiopharmaceuticals. Each of these

[[Page 79667]]

policies are either longstanding or based on longstanding principles 
and inherent to the OPPS and are as follows:
     Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
     Intraoperative items and services (Sec.  419.2(b)(14));
     Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including but 
not limited to, diagnostic radiopharmaceuticals, contrast agents, and 
pharmacologic stress agents (Sec.  419.2(b)(15)); and
     Drugs and biologicals that function as supplies when used 
in a surgical procedure (including, but not limited to, skin 
substitutes and similar products that aid wound healing and implantable 
biologicals) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than that at Sec.  
419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with 
comment period: ``We consider all items related to the surgical outcome 
and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and some other products. The category 
described by Sec.  419.2(b)(16) includes skin substitutes and some 
other products. We believe it is important to reiterate that cost 
consideration is not a factor when determining whether an item is a 
surgical supply (79 FR 66875).
    Comment: A few commenters objected to the packaging of diagnostic 
radiopharmaceuticals and contrast agents under Sec.  419.2(b)(15). They 
argued that the service payments that include the payment for the 
radiopharmaceutical or contrast agent do not cover the cost of 
expensive diagnostic radiopharmaceuticals or contrast agents. The 
commenters believed that separate payment should be made for these 
products.
    Response: The packaging policy for these products has been in 
effect since CY 2008. We refer readers to the CY 2008 OPPS final rule 
(72 FR 66635 through 66646) for an extensive discussion of the original 
packaging policy for diagnostic radiopharmaceuticals and contrast 
agents, and to the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74927 through 74930) for a discussion of the packaging of diagnostic 
radiopharmaceuticals and contrast agents under Sec.  419.2(b)(15); that 
is, the broader packaging policy for drugs and biologicals that 
function as supplies when used in a diagnostic test or procedure. We 
are not changing this packaging policy for CY 2017.
    Comment: One commenter, the manufacturer of the stress agent 
Lexiscan[supreg] (regadenoson), disagreed with CMS' policy of packaging 
stress agents under Sec.  419.2(b)(15). The commenter reiterated 
comments that it has made in the past since CMS packaged stress agents 
in CY 2014 (78 FR 74927 through 74930). The commenter believed that 
this packaging policy may create a financial incentive for hospitals to 
utilize a low-cost stress agent instead of a high-cost stress agent 
and/or encourage hospitals to reduce appropriate patient care. The 
commenter requested that CMS create separate APCs for diagnostic tests 
that use high cost drugs.
    Response: We have responded to this comment in previous final rules 
(for example, the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74928 through 74929) and the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70347)). We have no reason to believe that any 
stress agent that a hospital chooses, regardless of the cost, will not 
be entirely medically appropriate for the patient. The commenter did 
not provide any specific information to suggest that a high-cost stress 
agent (for example, regadenoson) is more clinically appropriate than a 
low-cost stress agent (for example, adenosine) in certain patients. In 
fact, we are aware of some evidence that may suggest that the opposite 
is true (Brink, H.L., Dickerson, J.A., Stephens, J.A. and Pickworth, 
K.K. (2015), Comparison of the Safety of Adenosine and Regadenoson in 
Patients Undergoing Outpatient Cardiac Stress Testing. Pharmacotherapy, 
35: 1117-1123. Available at: American College of Cardiology Web site 
at: https://www.acc.org/latest-in-cardiology/journal-scans/2016/01/15/13/40/adenosine-versus-regadenoson-in-cardiac-stress).
    To the extent that this stress agent packaging policy encourages 
hospitals to utilize the cheaper stress agent--adenosine--instead of 
regadenoson (as the commenter speculated that it has), we believe that 
this is a positive effect of the stress agent packaging policy. One 
important purpose of these packaging policies is to provide hospitals 
with the financial incentive to choose less expensive alternative 
drugs, devices, and supplies, as clinically appropriate. In the 
preambles of our past rulemakings, we have repeatedly stated the 
following axiom: ``Where there are a variety of devices, drugs, items, 
supplies, etc. that could be used to furnish a service, some of which 
are more expensive than others, packaging encourages hospitals to use 
the most cost-efficient item that meets the patient's needs, rather 
than to routinely use a more expensive item, which often results if 
separate payment is provided for the items'' (78 FR 74925). The 
potential effect of this policy that the commenter is concerned about 
(hospitals choosing a lower cost stress agent) is precisely the outcome 
that we hope to encourage through this packaging policy. Therefore, we 
believe that this packaging policy supports medically necessary and 
efficient patient care. We believe that creating separate APCs for 
diagnostic tests that use high-cost stress agents could undermine this 
goal and, therefore, is not warranted at this time.
    Comment: One commenter, the manufacturer of the drug 
Omidria[supreg], did not want CMS to package the drug Omidria[supreg] 
(described by HCPCS code C9447, with status indicator ``N'') under 
Sec.  419.2(b)(14) or (b)(16), after pass-through payment status 
expires at the end of CY 2017 (80 FR 70347). Specifically, the 
commenter opposed packaging this drug with cataract surgery effective 
beginning in CY 2018 and subsequent years. The commenter believed that 
the surgical supply packaging policy inadvertently conflicts with CMS' 
broader policies targeting therapeutic products, unintentionally 
creates financial disincentives for hospitals and ASCs to use 
Omidria[supreg], and is overly broad. The commenter pointed out that 
studies have shown that the use of Omidria[supreg] can reduce 
complications during cataract surgery, and therefore Omidria[supreg] 
provides a distinct therapeutic benefit independent of the procedural 
benefits achieved without Omidria[supreg]. The commenter recommended 
that CMS exclude from the surgical supply packaging policy all drugs 
and biologicals that have ``a therapeutic indication that provides a 
benefit independent of the procedure performed without the drug or 
biological and that may substitute for one or more other subsequent 
interventions that would otherwise be separately paid by CMS.'' 
Presumably, according to the commenter, if CMS adopted such an 
exclusion, it would result in the continued separate

[[Page 79668]]

payment for Omidria[supreg] after pass-through payment status expires.
    Response: We appreciate the commenters' concerns and believe that 
some additional explanation might be of use. We believe that this 
comment reflects a misunderstanding of our OPPS packaging policy that 
packages drugs and biologicals that function as supplies when used in a 
surgical procedure. We have reviewed Omidria[supreg]'s indications and, 
based on those indications, it is unclear what the commenter means when 
it requested that CMS exclude drugs from the packaging policy that have 
``a therapeutic indication that provides a benefit independent of the 
procedure performed without the drug or biological and that may 
substitute for one or more other subsequent interventions that would 
otherwise be separately paid by CMS.'' Omidria[supreg] supplements the 
drugs delivered as preoperative eye drops to dilate the pupil to either 
improve or prolong dilation in certain cases. The benefit of 
Omidria[supreg] is the facilitation of cataract surgery. The surgical 
supply packaging policy for drugs and biologicals that function as 
surgical supplies is intended to apply broadly to drugs and biologicals 
that are used in surgery or that are used to achieve the surgical 
objective. In the CY 2014 OPPS/ASC final rule with comment period, in 
discussing the surgical supplies packaging policy as it applies to 
another drug used in an eye surgery, we stated that ``we believe 
packaging is appropriate for items and services that are integral or 
ancillary or supportive or dependent or adjunctive to the primary 
procedure. Therefore, items and services that fall within any of these 
categories may be properly packaged in the OPPS'' (78 FR 74938). Any 
and all of these descriptive terms apply to Omidria[supreg], which is 
integral and ancillary and supportive and dependent and adjunctive to 
cataract surgery. The commenter believes that the packaging policy 
unintentionally creates financial disincentives for hospitals and ASCs 
to use Omidria[supreg]. We view the financial effect of the packaging 
policy differently. We believe this approach promotes efficient 
resource use in hospitals and ASCs. We believe that once its pass-
through payment status expires, Omidria[supreg] should be packaged as 
are all of these other surgical supplies. In summary, in the CY 2016 
OPPS/ASC final rule with comment period, we finalized a policy to 
package the drug Omidria[supreg] (described by HCPCS code C9447) after 
pass-through payment status expires under our policy that packages 
drugs and biologicals that function as supplies when used in a surgical 
procedure. This policy will take effect on January 1, 2018.
    Comment: One commenter, the manufacturer of the drug Cysview 
(described by HCPCS code C9275) requested that CMS withdraw the 
packaging policy described by 42 CFR 419.2(b)(15), which packages 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
in a diagnostic test or procedure, and pay separately for its drug, 
Cysview. The commenter pointed out that CMS acknowledged in the CY 2004 
OPPS proposed rule that ``. . . packaging payments adversely affect 
beneficiary access to medically necessary services'' (68 FR 47995). The 
commenter also asserted that this packaging policy has had a negative 
effect on the quality of patient care because it has created a 
significant financial disincentive for hospitals to purchase Cysview. 
In addition, the commenter stated that Cysview costs $810, but because 
the APC payment amount for the cystoscopy procedures in which Cysview 
is used is based on the average costs of many different procedures 
(most of which do not use Cysview), the cost of Cysview is highly 
diluted and therefore the cystoscopy procedure payments do not fully 
reflect the cost of Cysview.
    Response: We begin with the complete quote from the CY 2004 OPPS 
proposed rule from which the commenter extracted its partial quote 
described earlier. The full quote is as follows: ``Packaging costs into 
a single aggregate payment for a service, procedure, or episode of care 
is a fundamental principle that distinguishes a prospective payment 
system from a fee schedule. In general, packaging the costs of items 
and services into the payment for the primary procedure or service with 
which they are associated encourages hospital efficiencies and also 
enables hospitals to manage their resources with maximum flexibility. 
Notwithstanding our commitment to package as many costs as possible, we 
are aware that packaging payments for certain drugs and 
radiopharmaceuticals, especially those that are particularly expensive 
or rarely used, might result in insufficient payments to hospitals, 
which could adversely affect beneficiary access to medically necessary 
services'' (68 FR 47995) (emphasis added). Separate payment for all 
products, items, devices, among others, that are the components of a 
primary service furnished to a patient in the hospital would be 
inconsistent with a prospective payment system--doing so would make the 
OPPS essentially a fee schedule in which every coded item resulted in 
additional payment. Furthermore, the latter part of the quoted 
statement refers only to particularly expensive or rarely used drugs, 
and Cysview is neither. Cysview has a fairly broad indication as an 
adjunct to white light cystoscopy, and $810 is not ``particularly 
expensive'' for an OPPS drug (many of which cost several thousands of 
dollars). However, we do note that the price of Cysview has increased 
38 percent in the last 5 years (from approximately $588 in 2012). 
Finally, the commenter stated that the relevant bladder cancer APCs are 
APC 5373 (Level 3 Urology and Related Services) and APC 5374 (Level 4 
Urology and Related Services), and that these APCs contain the 
procedure codes that primarily use Cysview when blue light cystoscopy 
is performed. Both of these APCs are being finalized as C-APCs for CY 
2017. Part of the C-APC methodology is to package all drugs except for 
those in pass-through payment status, and this methodology would apply 
to Cysview because it is not in drug pass-through payment status. 
Therefore, aside from the diagnostic test supplies packaging policy, 
Cysview would be packaged when used with any procedure assigned to a C-
APC.
    In summary, We are not adopting any changes based on the comments 
received on these three policy-packaged drugs--Lexiscan[supreg], 
Omidria[supreg], and Cysview--for CY 2017.
d. 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 in the CY 
2017 OPPS/ASC proposed rule (81 FR 45661 through 45662), we proposed 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

[[Page 79669]]

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 proposed 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 proposed to assign skin substitutes that exceed either the 
MUC threshold or the PDC threshold to the high cost group. We proposed 
to assign skin substitutes with a MUC or a PDC that does not exceed 
either the MUC threshold or the PDC threshold to the low cost group. 
For this CY 2017 OPPS/ASC final rule with comment period, we analyzed 
updated CY 2015 claims data to calculate the MUC threshold (a weighted 
average of all skin substitutes' MUCs) and the PDC threshold (a 
weighted average of all skin substitutes' PDCs). The final CY 2017 MUC 
threshold is $33 per cm\2\ (rounded to the nearest $1) (proposed at $25 
per cm\2\) and the final CY 2017 PDC threshold is $716 (rounded to the 
nearest $1) (proposed at $729).
    For CY 2017, as in CY 2016, we proposed 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 stated in 
the proposed rule that we would use WAC+6 percent or 95 percent of AWP 
to assign a product to either the high cost or low cost category. We 
also stated in the proposed rule that 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 proposed 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 the 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 this CY 2017 final rule with comment 
period. Table 15 of the CY 2017 OPPS/ASC proposed rule (81 FR 45661 
through 45662) displayed the proposed CY 2017 high cost or low cost 
category assignment for each skin substitute product.
    Comment: One commenter notified CMS of an error in the calculation 
of the MUC threshold reported in the CY 2017 OPPS/ASC proposed rule (81 
FR 45661), and stated that the values for the MUC threshold are 
different from the values for the PDC threshold. The commenter also 
requested that skin substitute products that were assigned to the high 
cost group because of the incorrect lower MUC threshold in the proposed 
rule, and that would have been classified in the low cost group if the 
corrected higher MUC threshold had been used in the proposed rule, be 
reassigned to the low cost group in the final rule.
    Response: We reviewed our calculations and agreed with the 
commenter that the MUC threshold was incorrect in the proposed rule. We 
also found a calculation error with the PDC threshold. We have 
corrected our calculations and used more recent claims data from CY 
2015 to revise the MUC threshold and the PDC threshold for this final 
rule with comment period.
    We disagree with the request of the commenter to move skin 
substitute products back to the low cost group because of the erroneous 
calculation of a lower MUC threshold in the proposed rule. The policy 
we proposed to continue from CY 2016, and which we are finalizing for 
CY 2017, retains a skin substitute product in the high cost group if 
the product was assigned to the high cost group in CY 2016 and exceeded 
either the MUC threshold or the PDC threshold of the proposed rule for 
CY 2017. The policy does not make exceptions due to calculation errors 
or revisions by CMS. We will follow this policy and retain all skin 
substitute products in the high cost group that were assigned to the 
high cost group in CY 2016 and exceeded either the MUC threshold or the 
PDC threshold of the proposed rule for CY 2017.
    Comment: One commenter provided information to support that HCPCS 
code Q4163 (Amnion bio and woundex sq cm) should be assigned to the 
high cost skin substitute group. The commenter stated that HCPCS code 
Q4163 is a relatively new skin substitute product and there was not 
sufficient claims data or pricing information available for the product 
when the CY 2017 OPPS/ASC proposed rule was released. The commenter 
stated that regulatory guidance requires CMS to assign a nonpass-
through skin substitute product to the low cost group when there are no 
available cost data. The commenter supplied wholesale acquisition cost 
(WAC) and average wholesale price (AWP) data for HCPCS code Q4163 
showing that HCPCS code Q4163 should be assigned to the high cost 
group.
    Response: We reviewed WAC and ASP data for HCPCS code Q4163, and we 
agree with the findings of the commenter. After consideration of the 
public comment we received about HCPCS code Q4163, in this final rule 
with comment period, we are assigning HCPCS code Q4163 to the high cost 
skin substitute group for CY 2017.
    Comment: One commenter requested that PuraPly (described by HCPCS 
code Q4172; previously HCPCS code C9349) have its pass-through payment 
status end as of December 31, 2016, and not continue through CY 2017. 
The commenter stated that PuraPly received its pass-through payment 
status in January 2015 and will have 2 full years of pass-through 
payment status by December 2016. The commenter also asserted that 
PuraPly was not a new skin substitute product when approved for pass-
through payment status in the CY 2015 OPPS/ASC final rule with comment 
period. The commenter provided evidence that PuraPly, called by its 
previous name, FortaDerm, was introduced to the market as early as 
2002.
    Response: We disagree with the commenter. PuraPly (described by 
HCPCS code Q4172; previously HCPCS code C9349) was given pass-through 
payment status under the pass-through payment policy and process for 
drugs and biologicals that was in effect prior to CY 2015. Pass-through 
payment status products covered by the policy receive pass-through 
payments for at least 2 years but for no more than 3 years from the 
date the first OPPS payment for the product is generated. The assertion 
by the commenter that PuraPly will have reached 2 years of pass-through 
payment status by the end of December 2016 is incorrect. PuraPly will 
not achieve 2 years of pass-through

[[Page 79670]]

payment status until at least January 2017. The pass-through payment 
policy for drugs and biologicals that was in effect at the beginning of 
CY 2015 only allows changes to a pass-through payment designation for a 
product at the beginning of a calendar year. Therefore, PuraPly must 
continue to have pass-through status for all of CY 2017. The evidence 
presented by the commenter that PuraPly was available commercially in 
2002 is not relevant, as the product (under any name) did not have 
pass-through payment status prior to 2015, and there was no newness 
criterion for drug and biological pass-through payment status 
eligibility at the time of the PuraPly (formerly FortaDerm) pass-
through payment application evaluation.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to continue pass-through 
status for PuraPly (HCPCS code Q4172; previously HCPCS code C9349) for 
CY 2017.
    Comment: A few commenters supported the current methodology used by 
CMS to assign skin substitute products into high cost and low cost 
categories. Commenters appreciated that either the MUC threshold or the 
PDC threshold could be used to qualify skin substitute products as high 
cost. The commenter stated that including the PDC threshold reduces the 
risk that products with larger sizes would be assigned to the low cost 
category because of a low MUC. One commenter suggested that using the 
PDC threshold alone may improve on the current methodology. Another 
commenter supported the policy assigning skin substitute products to 
the high cost group that exceeded the MUC threshold or the PDC 
threshold in the CY 2016 final rule and in the CY 2017 proposed rule, 
even if analysis for the CY 2017 final rule indicate a product should 
be assigned to the low cost group.
    Response: We appreciate the commenters' support. We agree that 
using either a MUC methodology or a PDC methodology along with the 
policy of automatically assigning skin substitute products to the high 
cost group if they were identified as high cost for both the CY 2016 
final rule and the CY 2017 proposed rule stabilizes cost group 
assignments.
    Comment: Several commenters expressed concerns about aspects of the 
current CMS methodology for payment for the use of skin substitute 
products. The commenters stated that one issue is the accurate 
reporting of the cost of skin substitute products. The commenters 
believed that many providers report lower utilization of skin 
substitutes than what providers are actually using, which leads to 
lower payment rates. Some commenters were generally opposed to 
packaging or bundling skin substitute products with other services 
because of concerns that the cost of skin substitute products is not 
accurately accounted for in the packaged or bundled rates. Commenters 
continued to have concerns about the payment for wounds larger than 100 
cm\2\ that they believed are too low even after the addition of PDC 
methodology to determine if a skin substitute product should be in the 
high cost group.
    Several commenters also suggested changes to the system of 
assigning skin substitutes to either a high cost or low cost category. 
Suggestions included creating a three-tiered system to more accurately 
reflect the prices of individual products, monitoring the current 
methodology to determine if it was leading to lower reimbursements, and 
improving transparency by making available MUC and PDC calculations and 
claims data by product.
    Some commenters made a more general request for overall stability 
with skin substitute methodology and alternate ways to calculate the 
cost of products to compare to the MUC and PDC thresholds without using 
OPPS claims data. The most common suggestion was to use average sales 
price (ASP) + 6 percent as a primary source of cost data instead of 
using ASP + 6 percent when no claims data are available for a product.
    Response: We appreciate the feedback we received from the 
commenters. However, we believe the current cost estimation and payment 
policies for skin substitutes reasonably reflect the costs incurred to 
administer these products. Therefore, after consideration of the public 
comments we received, we are finalizing our proposal to maintain 
current policies regarding the payment of skin substitute products for 
CY 2017 without additional modifications.
    Comment: One commenter requested that CMS alter CPT coding 
instructions that prohibits wound healing products in the form of a 
gel, liquid, foam, ointment, powder, among others (a form other than a 
graft-type sheet) from using the skin substitute application CPT codes 
or that CMS pay separately for these products in the OPPS.
    Response: Skin substitutes and all of their variations and related 
wound products, regardless of the form or physical state, are packaged 
in the OPPS as surgical supplies under 42 CFR 419.2(b)(16). Skin 
substitutes is a broad class of wound products that includes all of the 
products in the HCPCS skin substitute Q code series and all related 
products. We cannot change AMA CPT coding guidance. We can (if we 
choose to do so) provide coding instructions or guidance specifically 
for Medicare coding and payment purposes. We believe that the AMA 
coding guidance for the skin substitute codes is sufficient as 
currently written. The skin substitute graft materials are applied to a 
wound in a manner that is different from how a liquid or particulate 
material is applied. In general, there are not very many codes for the 
application of topical medications such as liquids, creams or ointments 
because what the applier has to do to put the medication or other 
medical product on a patient's skin does not typically rise to the 
level of a service that would need to be described by a code depicting 
the professional services of a health care provider. In other words, it 
is generally a very minor activity that requires little time, effort or 
skill, and often such products are self-administered. Regarding the 
request that we pay separately for liquid, gel, particulate, powder, or 
other forms of skin substitutes, we do not agree with this request. It 
is common in the OPPS that the use of a surgical supply (whether 
expensive or not) does not correspond to a specific procedure code with 
a payment that covers the full cost of the supply. In this case, access 
to particular skin substitute products is generally not our concern 
because there are so many different skin substitute products available 
to Medicare beneficiaries in the HOPD that adequate treatment for 
wounds under the current payment scheme should always be available.
    After consideration of the public comments we received, we are 
finalizing as proposed our high cost/low cost skin substitute 
methodology as described above. Table 37 below displays the CY 2017 
high cost or low cost category assignment for each skin substitute 
product.

[[Page 79671]]



 Table 37--Skin Substitute Assignments to High Cost and Low Cost Groups
                               for CY 2017
------------------------------------------------------------------------
                                                     CY 2017  High/low
  CY 2017 HCPCS code    CY 2017 short descriptor        assignment
------------------------------------------------------------------------
C9363.................  Integra Meshed Bil Wound  High.
                         Mat.
Q4100.................  Skin Substitute, NOS....  Low.
Q4101.................  Apligraf................  High.
Q4102.................  Oasis Wound Matrix......  Low.
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 Matrix..  Low.
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 Biodexcel,  High.
                         1cm.
Q4138.................  Biodfence DryFlex, 1cm..  High.
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 sq   High.
                         cm.
Q4151.................  AmnioBand, Guardian 1 sq  High.
                         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 square    Low.
                         cm.
Q4162.................  Amnio bio and woundex     Low.
                         flow.
Q4163.................  Amnion bio and woundex    High.
                         sq cm.
Q4164.................  Helicoll, per square cm.  High.
Q4165.................  Keramatrix, per square    Low.
                         cm.
Q4166.................  Cytal, per square cm....  Low.
Q4167.................  Truskin, per square cm..  Low.
Q4168.................  Amnioband, 1 mg.........  Low.
Q4169.................  Artacent wound, per       Low.
                         square cm.
Q4170.................  Cygnus, per square cm...  Low.
Q4171.................  Interfyl, 1 mg..........  Low.
Q4172*................  PuraPly, PuraPly antimic  High.
Q4173.................  Palingen or palingen      Low.
                         xplus, per sq cm.
Q4175.................  Miroderm, per square cm.  Low.
------------------------------------------------------------------------
* Pass-through payment status in CY 2017.


[[Page 79672]]

e. 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, in the CY 2017 
OPPS/ASC proposed rule (81 FR 45662), we proposed to continue our 
policy to make packaging determinations on a drug-specific basis, 
rather than a HCPCS code-specific basis, for those HCPCS codes that 
describe the 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 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 
the 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 
was displayed in Table 16 of the CY 2017 OPPS/ASC proposed rule (81 FR 
45663).
    We did not receive any public comments on this proposal. Therefore, 
for CY 2017, we are finalizing our CY 2017 proposal, without 
modification, 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. Table 38 below displays the final packaging status 
of each drug and biological HCPCS code to which the finalized 
methodology applies for CY 2017.

   Table 38--HCPCS Codes to Which the CY 2017 Drug-Specific Packaging
                    Determination Methodology Applies
------------------------------------------------------------------------
    CY 2017 HCPCS code        CY 2017 long descriptor       CY 2017 SI
------------------------------------------------------------------------
C9257.....................  Injection, bevacizumab,                   K
                             0.25 mg.
J9035.....................  Injection, bevacizumab, 10                K
                             mg.
J1460.....................  Injection, gamma globulin,                K
                             intramuscular, 1 cc.
J1560.....................  Injection, gamma globulin,                K
                             intramuscular over 10 cc.
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.).
J8520.....................  Capecitabine, oral, 150 mg.               N
J8521.....................  Capecitabine, oral, 500 mg.               N
J7515.....................  Cyclosporine, oral, 25 mg..               N
J7502.....................  Cyclosporine, oral, 100 mg.               N
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.
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.
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.
J1020.....................  Injection,                                N
                             methylprednisolone
                             acetate, 20 mg.
J1030.....................  Injection,                                N
                             methylprednisolone
                             acetate, 40 mg.
J1040.....................  Injection,                                N
                             methylprednisolone
                             acetate, 80 mg.
J9250.....................  Methotrexate sodium, 5 mg..               N
J9260.....................  Methotrexate sodium, 50 mg.               N
------------------------------------------------------------------------


[[Page 79673]]

2. Payment for Drugs and Biologicals Without Pass-Through Status That 
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other 
Separately Payable and Packaged Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or is a drug or biological for which payment 
was made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY 2006 and subsequent years be equal to the average 
acquisition cost for the drug for that year as determined by the 
Secretary, subject to any adjustment for overhead costs and taking into 
account the hospital acquisition cost survey data collected by the 
Government Accountability Office (GAO) in CYs 2004 and 2005, and later 
periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary. 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 the CY 2017 OPPS/
ASC proposed rule (81 FR 45664), we proposed to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    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. CY 2017 Payment Policy
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45664), for CY 2017 
and subsequent years, we proposed 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 
proposed that the ASP+6 percent payment amount for separately payable 
drugs and biologicals requires no further adjustment and represents the 
combined acquisition and pharmacy overhead payment for drugs and 
biologicals. We also proposed that payments for separately payable 
drugs and biologicals are included in the budget neutrality 
adjustments, under the requirements in section 1833(t)(9)(B) of the 
Act, and that the budget neutral weight scaler is not applied in 
determining payments for these separately paid drugs and biologicals.
    Comment: The majority of commenters supported CMS' proposal to 
continue to pay for separately payable drugs and biologicals based on 
the statutory default rate of ASP+6 percent. One commenter recommended 
that CMS increase payment for separately payable drugs and biologicals 
without pass-through payment status to adequately cover providers' 
acquisition and pharmacy overhead costs.
    Response: We thank commenters for their support. We continue to 
believe that ASP+6 percent based on the statutory default is 
appropriate for payment of separately payable drugs and biologicals for 
CY 2017 and that this percentage amount adequately covers acquisition 
and overhead cost. We see no evidence that an additional payment for 
overhead is required for separately payable drugs, biologicals, and 
therapeutic radiopharmaceuticals for CY 2017.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). The ASP+6 
percent payment amount for separately payable drugs and biologicals 
requires no further adjustment and represents the combined acquisition 
and pharmacy overhead payment for drugs and biologicals for CY 2017. In 
addition, we are finalizing our proposal that payment for separately 
payable drugs and biologicals be included in the budget neutrality 
adjustments, under the requirements of section 1833(t)(9)(B) of the 
Act, and that the budget neutral weight scaler is not applied in 
determining payment of these separately paid drugs and biologicals.
    We note that separately payable drug and biological payment rates 
listed in Addenda A and B to this final rule with comment period 
(available via the Internet on the CMS Web site), which illustrate the 
final CY 2017 payment of ASP+6 percent for separately payable

[[Page 79674]]

nonpass-through drugs and biologicals and ASP+6 percent for pass-
through drugs and biologicals, reflect either ASP information that is 
the basis for calculating payment rates for drugs and biologicals in 
the physician's office setting effective October 1, 2016, or WAC, AWP, 
or mean unit cost from CY 2015 claims data and updated cost report 
information available for this final rule with comment period. 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 final rule with comment period for which there 
was no ASP information available for October 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 final rule 
with comment period (reflecting October 2016 ASP data) that do not have 
ASP information available for the quarter beginning in January 2017. As 
stated in the CY 2017 OPPS/ASC proposed rule (81 FR 45664), these drugs 
and biologicals will then be paid based on mean unit cost data derived 
from CY 2015 hospital claims. Therefore, the payment rates listed in 
Addenda A and B to this final rule with comment period are not for 
January 2017 payment purposes and are only illustrative of the CY 2017 
OPPS payment methodology using the most recently available information 
at the time of issuance of this final rule with comment period.
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). In the CY 2017 OPPS/ASC proposed rule (81 
FR 45664), for CY 2017, we proposed to continue this same payment 
policy for biosimilar biological products.
    We received several public comments on the proposed HCPCS coding 
and modifiers for biosimilar biological products. As proposed, under 
the OPPS, we will use the HCPCS codes and modifiers for biosimilar 
biological products based on the policy established under the CY 2016 
MPFS final rule with comment period. Therefore, we are considering the 
public comments received on biosimilar biological product HCPCS coding 
and modifiers in response to the CY 2017 OPPS/ASC proposed rule to be 
outside the scope to the proposed rule and we are not addressing them 
in this CY 2017 OPPS/ASC final rule with comment period. We refer 
readers to the CY 2017 MPFS final rule with comment period.
    We are finalizing our proposal, without modification, to pay for 
biosimilar biological products based on the payment allowance of the 
product as determined under section 1847A of the Act. In addition, we 
are finalizing our proposal, without modification, to subject nonpass-
through biosimilar biological products to our annual threshold-packaged 
policy.
3. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45664), for CY 2017, 
we proposed 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 proposed 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 proposed to rely on CY 2015 mean unit cost data derived 
from hospital claims data for payment rates for therapeutic 
radiopharmaceuticals for which ASP data are unavailable and to update 
the payment rates for separately payable therapeutic 
radiopharmaceuticals according to our usual process for updating the 
payment rates for separately payable drugs and biologicals on a 
quarterly basis if updated ASP information is available. For a complete 
history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65811), the CY 2006 OPPS final rule with 
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60524). The proposed CY 2017 payment rates for 
nonpass-through, separately payable therapeutic radiopharmaceuticals 
were in Addenda A and B to the proposed rule (which are available via 
the Internet on the CMS Web site).
    Comment: Commenters supported CMS' proposal to pay for separately 
payable therapeutic radiopharmaceuticals under the statutory default 
payment rate of ASP+6 percent if ASP data are submitted to CMS.
    Response: We appreciate the commenters' support. We continue to 
believe that providing payment for therapeutic radiopharmaceuticals 
based on ASP or mean unit cost if ASP information is not available 
would provide appropriate payment for these products. When ASP data are 
not available, we believe that paying for therapeutic 
radiopharmaceuticals using mean unit cost will appropriately pay for 
the average hospital acquisition and associated handling costs of non-
pass-through separately payable therapeutic radiopharmaceuticals. As we 
stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60523), although using mean unit cost for payment for therapeutic 
radiopharmaceuticals when ASP data are not available is not the usual 
OPPS process (the usual process relies on alternative data sources such 
as WAC or AWP when ASP information is temporarily unavailable, prior to 
defaulting to the mean unit cost from hospital claims data), we 
continue to believe that WAC or AWP is not an appropriate proxy to 
provide OPPS payment for average therapeutic radiopharmaceutical 
acquisition cost and associated handling costs when manufacturers are 
not required to submit ASP data. Payment based on WAC or AWP under the 
established

[[Page 79675]]

OPPS methodology for payment of separately payable drugs and 
biologicals is usually temporary for a calendar quarter until a 
manufacturer is able to submit the required ASP data in accordance with 
the quarterly ASP submission timeframes for reporting under section 
1847A of the Act. Because ASP reporting for OPPS payment of separately 
payable therapeutic radiopharmaceuticals is not required, a 
manufacturer's choice to not submit ASP could result in payment for a 
separately payable therapeutic radiopharmaceutical based on WAC or AWP 
for a full year, a result that we believe would be inappropriate.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to pay all 
non-pass-through, separately payable therapeutic radiopharmaceuticals 
at ASP+6 percent. We also are finalizing our proposal to continue to 
rely on CY 2015 mean unit cost data derived from hospital claims data 
for payment rates for therapeutic radiopharmaceuticals for which ASP 
data are unavailable. The CY 2017 final rule payment rates for nonpass-
through separately payable therapeutic radiopharmaceuticals are 
included in Addenda A and B to this final rule with comment period 
(which are available via the Internet on the CMS Web site).
4. 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, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45665), for CY 2017, we proposed to continue to provide an 
additional $10 payment for radioisotopes produced by non-HEU sources.
    Comment: Some commenters supported CMS' proposal to provide an 
additional $10 payment for radioisotopes produced by non-HEU sources 
and asked that CMS work with stakeholders regarding a phase-out plan 
based on utilization and adoption of non-HEU technetium by the 
radiopharmaceutical manufacturers. Another commenter requested that CMS 
provide an explanation for not applying an annual inflation update to 
the $10 payment for radioisotopes produced by non-HEU sources, provide 
details on plans to offset nuclear medicine procedures by the amount of 
cost paid through the non-HEU policy, and make available to the public 
data regarding claims submitted to date under this policy. The 
commenter also stated that CMS should assess whether the beneficiary 
copayment policy is adversely impacting patient access.
    Response: We appreciate commenters' support. As stated earlier, we 
support efforts by all of the involved stakeholders to convert all 
medical radioisotope production to non-HEU sources. Regarding the 
comment requesting that we increase the $10 payment for HCPCS code 
Q9969 (by an inflation update or some other amount) for CY 2017, we 
currently lack sufficient additional information to suggest that an 
add-on payment greater than $10 would be more appropriate. Regarding 
the request for payment information for services described by HCPCS 
code Q9969, the following are the most currently available total 
Medicare payments for services described by HCPCS code Q9969 for each 
year in which it has been in effect: CY 2013 ($17,164); CY 2014 
($66,609); and CY 2015 ($106,584). Also, we do not believe that 
beneficiary copayments for services described by HCPCS code Q9969 are 
adversely impacting beneficiary access to any medically necessary 
services. The 20-percent copayment amount on the $10 total payment for 
HCPCS code Q9969 is only $2. Any Medicare beneficiary who is unable to 
afford this $2 copayment would almost certainly have some form of 
government assistance that would cover this copayment amount. 
Therefore, we do not believe that the copayment requirements for 
services described by HCPCS code Q9969 are negatively impacting access 
to medical care for Medicare beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue the policy 
of providing an additional $10 payment for radioisotopes produced by 
non-HEU sources for CY 2017, which will be the fifth year in which this 
policy is in effect in the OPPS. We will continue to reassess this 
policy annually, consistent with the original policy in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68321).
5. 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45665), for CY 2017, 
we proposed 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

[[Page 79676]]

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 was 
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 
were not able to include the actual updated furnishing fee in the 
proposed rules. Therefore, in accordance with our policy, as finalized 
in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), 
we proposed to announce the actual figure for the percent change in the 
applicable CPI and the updated furnishing fee calculated based on that 
figure through applicable program instructions and posting on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    Comment: One commenter supported CMS' proposal to continue its 
longstanding policy for payment of the furnishing fee for blood 
clotting factors administered or dispensed in the hospital outpatient 
department at the same level as in the physician office setting.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to provide payment for 
blood clotting factors under the same methodology as other separately 
payable drugs and biologicals under the OPPS and to continue payment of 
an updated furnishing fee. We will announce the actual figure of the 
percent change in the applicable CPI and the updated furnishing fee 
calculation based on that figure through the applicable program 
instructions and posting on the CMS Web site.
6. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims 
Data
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45665), for CY 2017, 
we proposed 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 was listed in Addendum B to the proposed rule, 
which is available via the Internet on the CMS Web site.
    We did not receive any specific public comments regarding our 
proposed payment for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes, but without OPPS hospital claims 
data. Therefore, we are finalizing our CY 2017 proposal without 
modification, including our proposal to assign drug or biological 
products status indicator ``K'' and pay for them separately for the 
remainder of CY 2017 if pricing information becomes available. The 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 final rule with comment 
period, which is available via the Internet on the CMS Web site.

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

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing an estimate of pass-through spending in CY 
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 the CY 2017 OPPS/ASC proposed rule (81 
FR 45666), for CY 2017, we proposed 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 
proposed 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

[[Page 79677]]

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 proposed to pay for most nonpass-through separately payable drugs 
and biologicals under the CY 2017 OPPS at ASP+6 percent, and because we 
proposed to pay for CY 2017 pass-through drugs and biologicals at ASP+6 
percent, as we discussed in section V.A. of the proposed rule, our 
estimate of drug and biological pass-through payment for CY 2017 for 
this group of items was $0, as discussed below.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents without pass-through payment 
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 the proposed rule and this final rule with comment period. 
In the CY 2017 OPPS/ASC proposed rule (81 FR 45666), we proposed 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 was not $0, as 
discussed below. In section V.A.5. of the proposed rule, we discussed 
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 proposed to offset the amount of 
pass-through payment for the policy-packaged drug or biological. For 
these drugs or biologicals, the APC offset amount is the portion of the 
APC payment for the specific procedure performed with the pass-through 
drug or biological, which we refer to as the policy-packaged drug APC 
offset amount. If we determine that an offset is appropriate for a 
specific policy-packaged drug or biological receiving pass-through 
payment, we proposed 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. Estimate of Pass-Through Spending

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45666), we proposed 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 estimated 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 
estimated 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 estimated that the device described by HCPCS code 
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 proposed an estimate for the first group of devices of $102.7 
million.
    We did not receive any public comments on our proposed estimate for 
the first group of devices that included HCPCS codes C1822, C2623 and 
C2613. Therefore, we are finalizing the proposed estimate for this 
first group of devices of $102.7 million for CY 2017.
    In estimating our proposed CY 2017 pass-through spending for device 
categories in the second group, we included: device categories that we 
knew at the time of the development of the proposed rule will be newly 
eligible for pass-through payment in CY 2017; additional device 
categories that we estimated 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. In the CY 
2017 OPPS/ASC proposed rule (81 FR 45667), we proposed to use the 
general methodology described in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66778), while also taking into account recent 
OPPS experience in approving new pass-through device categories. For 
the proposed rule, the estimate of CY 2017 pass-through spending for 
this second group of device categories was $10 million.
    We did not receive any public comments on our proposed estimate for 
the second group of devices. Therefore, we are finalizing the proposed 
estimate for this second group of devices of $10 million for CY 2017.
    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

[[Page 79678]]

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 estimated 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 proposed 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 the 
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.
    We did not receive any public comments on our proposed spending 
estimate for this first group of drugs and biologicals. For this final 
rule with comment period, we calculated a CY 2017 spending estimate for 
this first group of drugs and biologicals of approximately $20.2 
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 proposed to use utilization estimates 
from pass-through applicants, pharmaceutical industry data, clinical 
information, recent trends in the per unit ASPs of hospital outpatient 
drugs, and projected annual changes in service volume and intensity as 
our basis for making the CY 2017 pass-through payment estimate. We also 
proposed to consider the most recent OPPS experience in approving new 
pass-through drugs and biologicals. Using our proposed methodology for 
estimating CY 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.
    We did not receive any public comments on our proposed methodology 
or the proposed spending estimate for this second group of drugs. 
Therefore, for CY 2017, we are continuing to use the general 
methodology described above. For this final rule with comment period, 
we calculated a CY 2017 spending estimate for this second group of 
drugs and biologicals of approximately $17.7 million.
    In summary, in accordance with the methodology described earlier in 
this section, for this final rule with comment period, we estimate that 
total pass-through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2017 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2017 is 
approximately $150.6 million (approximately $112.7 million for device 
categories and approximately $37.9 million for drugs and biologicals), 
which represents 0.24 percent of total projected OPPS payments for CY 
2017. Therefore, we estimate that pass-through spending in CY 2017 will 
not amount to 2.0 percent of total projected OPPS CY 2017 program 
spending.

VII. OPPS Payment for Hospital Outpatient Visits and Critical Care 
Services

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45667), for CY 2017, 
we proposed to continue with and did not propose 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 proposed 
to continue with and did not propose 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). In the proposed rule, we sought public comments on any 
changes to these codes that we should consider for future rulemaking 
cycles. We encouraged those parties who comment to provide the data and 
analysis necessary to justify any proposed changes.
    We did not receive any public comments on this proposal. Therefore 
we are finalizing our CY 2017 proposal, without modification, to 
continue our current clinic and ED hospital outpatient visits and 
critical care services payment policies.

VIII. 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 
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

[[Page 79679]]

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 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 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

[[Page 79680]]

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 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 the 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. PHP APC Update for CY 2017

1. PHP APC Changes and Effects on Geometric Mean Per Diem Costs
    For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45669 
through 45673), we proposed 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 proposed 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).
a. Changes to PHP APCs
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45669 through 45673), 
we proposed 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 proposed to replace existing 
CMHC 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 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 proposed to combine the geometric 
mean per diem costs for the existing Level 1 and Level 2 PHP APCs for

[[Page 79681]]

CMHCs (APC 5851 and APC 5852, respectively) to calculate the proposed 
geometric mean per diem costs for proposed new PHP APC 5853 for CMHCs 
using only CY 2015 CMHC claims data and the most recent cost data, 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 using only CY 
2015 hospital-based PHP claims data and the most recent cost data, for 
CY 2017 and subsequent years. We discuss these computations in section 
VIII.B.2 of this preamble. The proposed geometric mean per diem costs 
were shown in Table 19 in section VIII.B.2. of the proposed rule.
    Comment: MedPAC supported the proposal to combine the existing 
Level 1 and Level 2 APCs into a single new APC for providing 3 or more 
services. MedPAC stated that the logic in payment rates is vital to 
having a meaningful payment system, and further added that payment 
rates that are higher for an APC that provides fewer of the same types 
of services as another APC is not reasonable. However, several 
commenters opposed the proposal.
    One commenter stated that the proposal would violate the Mental 
Health Parity and Addiction Equity Act of 2008 (MHPAEA, Pub. L. 110-
343) because it limits mental health care to a cap of 3 or fewer 
treatment groups per day and reduces payments to below payments for 
comparable acute care services.
    One commenter urged CMS to monitor the effects of combining the 
existing two-tiered APCs into a single PHP APC, by provider type, to 
ensure that these changes do not cause or contribute to any unintended 
consequences such as reducing access to PHP services, or incentivizing 
reductions in services provided under the single APC.
    Response: We appreciate the commenters' support. We agree that it 
is reasonable to combine similar costs and services into the same APC 
payment. It is also worth noting that in CY 2014, when we requested 
public comments on possible future initiatives, we received several 
public comments requesting a single APC payment for PHP services (78 FR 
75051).
    We also agree that it is possible that the combined PHP APCs could 
incentivize a reduction in services under a single APC, with PHP 
providers providing more days with only 3 services per day, but 
receiving an APC payment that is heavily weighted toward providing 4 or 
more services. We have monitored utilization of 3-service days over the 
years, and found that 3-service days are appropriately infrequent. In 
the updated CY 2015 claims data reviewed for this final rule with 
comment period, we found that 5 percent of CMHC paid days and 12 
percent of hospital-based PHP paid days indicated that exactly 3 
services were provided. In addition, given the intensive nature of 
partial hospitalization services and that PHP services are provided in 
lieu of inpatient hospitalization, we have a longstanding eligibility 
requirement that PHP beneficiaries require at least 20 hours per week 
in services, as evidenced in their plan of care. We discuss this 
requirement more fully in section VIII.B.1.b. of this final rule with 
comment period. We will be monitoring PHP claims beginning in January 
2017, to determine whether PHP participants are receiving at least 20 
hours per week in partial hospitalization services. In particular, we 
will monitor whether the frequency of providing 3-service days 
increases now that the payment incentive to provide 4 or more services 
per day, as opposed to 3 services per day, has been removed through 
combining the two PHP APCs. Payments for claims will not be affected at 
this time. Rather, our goal is to implement claims edits in the future 
to ensure that eligible Medicare beneficiaries are receiving the 
intense level of services that the statute and regulations require PHPs 
to provide. We are soliciting public comments on what facility types, 
treatment patterns, and other indicators are most important to monitor 
to ensure adequate provision of services.
    We disagree with the commenter who believed that combining the 
existing two-tiered PHP APCs would violate the provisions of the 
MHPAEA. The MHPAEA generally prevents group health plans and health 
insurance issuers that provide mental health or substance use disorder 
benefits from imposing less favorable benefit limitations on those 
benefits than on medical/surgical benefits. The mental health parity 
requirements of MHPAEA do not apply to Medicare. More information is 
available about the MHPAEA on the CMS Web site at: https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/mhpaea_factsheet.html.
    In addition, we believe that the commenter is misinterpreting the 
proposal in stating that combining the two-tiered PHP APCs, by provider 
type, limits outpatient mental health care to a cap of 3 or fewer group 
therapy treatments per day. The combined PHP APCs will generate 
payments for 3 or more services per day, not for 3 or fewer services 
provided per day. A different policy, the outpatient mental health 
treatment cap, limits the maximum payment for a day of individually 
billed outpatient mental health services to the highest hospital-based 
PHP APC per diem, and is derived from the most recent provider claims 
and cost data. It does not cap the number of services that can be 
provided to a beneficiary. Beneficiaries may receive as many services 
as are reasonable and necessary for their treatment. As noted in the 
April 7, 2000 OPPS final rule (65 FR 18454 through 18455), our 
rationale for implementing the mental health treatment cap was that the 
costs associated with administering a PHP represent the most resource-
intensive of all outpatient mental health treatment services. 
Therefore, we do not believe it would be appropriate to pay more for a 
day of individually billed outpatient mental health services than what 
is paid for a day providing 3 or more partial hospitalization services. 
We also are concerned that a provider may disregard a patient's need 
for the intensive active treatment offered by a PHP and opt to bill for 
individual services. The geometric mean per diem payment amount 
represents the cost of an average day of partial hospitalization 
services (the data used to calculate the geometric mean per diem costs 
were derived from all of the PHP data and include the most and least 
intensive days). It would not be appropriate for a provider to obtain 
more payment through component billing.
    For CY 2017, the outpatient mental health treatment cap will be 
equal to the combined PHP APC 5863 geometric mean per diem rate for 
hospital-based PHPs. Because 88 percent of hospital-based PHP service 
days provide 4 or more services, the mental health cap is heavily 
weighted toward the cost of providing 4 or more services per day. This 
cap is applied to each day of outpatient mental health treatment 
provided outside of the PHP benefit.
    After consideration of the public comments we received, we are 
finalizing our proposal to replace existing CMHC APCs 5851 (Level 1 
Partial Hospitalization (3 services) for CMHCs) and 5852 (Level 2 
Partial Hospitalization (4 or more services) for CMHCs) with new CMHC 
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

[[Page 79682]]

or more services) for Hospital-Based PHPs) with new hospital-based PHP 
APC 5863 (Partial Hospitalization (3 or More Services Per Day)). We 
also are finalizing our proposal 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 final geometric mean per 
diem costs for new PHP APC 5853 for CMHCs using only CY 2015 CMHC 
claims data and the most recent cost data, 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 final geometric mean per diem costs for new PHP APC 5863 for 
hospital-based PHPs using only CY 2015 hospital-based PHP claims data 
and the most recent cost data, for CY 2017 and subsequent years.
    As we previously noted, we believe that these finalized policies 
will best reflect actual geometric mean per diem costs in the future; 
provide more predictable geometric mean per diem costs, particularly 
given the small number of CMHCs; simplify and reduce administrative 
burden by only having one APC for each provider type; 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), and which were noted in the CY 2017 
OPPS/ASC proposed rule (81 FR 45670 through 45672), and occurred again 
in geometric mean per diem cost calculations for this final rule with 
comment period as described in section VIII.B.1.b. of this final rule 
with comment period. The CY 2017 final geometric mean per diem costs 
are shown in Table 41 in section VIII.B.2. of this final rule with 
comment period. As noted earlier, we are soliciting public comments on 
how we can best target monitoring efforts to ensure adequate provision 
of services by hospital-based PHPs and CMHC.
b. Rationale for Changes in PHP APCs
    One of the primary reasons for our decision to replace the existing 
Level 1 and Level 2 PHP APCs with a single PHP APC, by provider type, 
is because the new PHP APCs will 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 is 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 is $281.35 (proposed at $241.08) and 
the CY 2017 Level 2 hospital-based PHP APC geometric mean per diem cost 
is $210.50 (proposed at $187.06), which again demonstrates an 
inversion.
    For the CY 2017 OPPS/ASC proposed rule, we analyzed the CY 2015 
hospital-based PHP claims data used for the 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.
    For this CY 2017 final rule with comment period, we found that the 
inversion of the Level 1 and Level 2 hospital-based PHP geometric mean 
per diem costs was caused by 3 providers with high-cost Level 1 service 
days, accounting for 16 percent of all Level 1 service days, and 1 low-
cost provider accounting for 15 percent of all Level 2 service days. 
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 
policy to combine 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 3 services to Medicare beneficiaries. In 
our CY 2009 OPPS/ASC final rule with comment period, we noted that PHP 
service days that provide exactly 3 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 of the proposed rule to determine if a 
significant portion of PHP service days only provided exactly 3 
services (81 FR 45671). Table 17 showed that the frequency of claims 
reporting PHP service days providing exactly 3 services (Level 1 
services) has decreased greatly from 73 percent of CMHC service days in 
the CY 2009 rulemaking to 4 percent of CMHC service days in the CY 2017 
proposed rule, 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 the CY 2017 proposed rule. We have updated this table, as shown 
below, to reflect updated CY 2015 claims data used for this final rule 
with comment period, and found that 5 percent of CMHC service days and 
12 percent of hospital-based PHP service days have exactly 3 services 
provided. Level 1 PHP service days represent a small portion of PHP 
service days, particularly for CMHCs, as shown in Table 39 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.

[[Page 79683]]

The utilization data in Table 39 indicate that for the CY 2017 
rulemaking year, the Level 2 CMHC service days and the hospital-based 
PHP Level 2 service days are 95 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 separate rate when 
4 or more services are provided compared to when only 3 services are 
provided. Our 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 new PHP APCs 5853 and 5863 result in 
appropriate per diems based on costs for providing 3 or more services 
per day. We are sensitive to the fact that our payment policy may have 
influenced this change in service provision because providers were able 
to obtain higher payment for providing 4 or more services than for 
providing only 3 services. Therefore, as discussed earlier, we remain 
concerned that providers may inappropriately provide too few services 
to beneficiaries enrolled in PHPs, and we are working expeditiously to 
implement coding edits that will better monitor whether PHP providers 
are furnishing at least 20 hours of services per week, which eligible 
beneficiaries require.
    Table 39 below reflects the utilization data used for this CY 2017 
final rule with comment period, using the updated CY 2015 claims data.

Table 39--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 Final CY 2015 Claims Data
----------------------------------------------------------------------------------------------------------------
                                                                                  Hospital-based  Hospital-based
        Rulemaking year            Claims year     CMHC Level 1    CMHC Level 2     PHP Level 1     PHP Level 2
                                                     days (%)        days (%)        days (%)        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.........               5              95              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 
decision to replace the existing two-tiered PHP APCs with new PHP APCs 
5853 and 5863 will provide payment for providing 3 or more services per 
day by CMHCs and hospital-based PHPs, respectively. Therefore, this 
flexibility in scheduling will remain.
    Another primary reason for our decision 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 will reduce these cost fluctuations 
and provide more stability in the PHP APC geometric mean per diem 
costs.
    We also note that our decision 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 service 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 
policy 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 expect 
that the resource use (that is, the geometric mean per diem cost) for 
providing partial hospitalization services under Level 1 will represent 
approximately 75 percent or less of the resource use for providing 
partial hospitalization services under Level 2, by provider type. Table 
18 of the proposed rule showed 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

[[Page 79684]]

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 of the proposed rule 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. In the CY 2017 
OPPS/ASC proposed rule, we welcomed public comments that could help 
explain the difference. However, we did not receive any public comments 
on this issue.
    The data trends reflected in Table 40 below, which is an update of 
Table 18 in the proposed rule based on final CY 2015 claims data for 
this final rule with comment period, continue to support the proposals 
we made, and our decision to change from a two-tiered APC system for 
CMHCs and for hospital-based PHPs to a combined APC for providing 3 or 
more services per day for each provider type.

              Table 40--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            94.4
 costs/Level 2 PHP APC per diem
 costs..........................
Hospital-based PHPs; Level 1 PHP            79.2            89.0            91.6         * 110.0        ** 133.7
 APC per diem costs/Level 2 PHP
 APC per diem costs.............
----------------------------------------------------------------------------------------------------------------
* Based on CY 2015 final claims data.
** 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. Using the updated CY 2015 claims data 
for this final rule with comment period, we found that individual 
therapy was provided less frequently on days where exactly 3 services 
were provided by hospital-based PHPs (in 4.0 percent of PHP APC Level 1 
service days and in 6.2 percent of PHP APC Level 2 service days). 
However, we found that individual therapy was provided more frequently 
under the Level 1 CMHC service days than under the Level 2 CMHC service 
days (7.9 percent versus 4.4 percent). The greater frequency of CMHCs' 
providing more costly individual therapy under Level 1 PHP service days 
should increase resource use for these service days, narrowing the cost 
difference between Level 1 and Level 2 CMHC service days. This result 
reflects the updated claims data used for this final rule with comment 
period.
    As we 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 to mitigate the policy concerns noted above, as we 
proposed, we are replacing the Level 1 and Level 2 PHP APCs, for each 
provider type, with a single PHP APC by provider type for CY 2017 and 
subsequent years.
    Our decision 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 decision 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 decision 
to combine the PHP APCs two-tiered payment structure by provider type 
will more appropriately pay providers for partial hospitalization 
services provided to Medicare beneficiaries and avoid cost inversions 
in the future. Our decision to combine the PHP APC payment tiers, by 
provider type, also will provide more predictable geometric mean 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 policy 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 policy 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 creating new CMHC 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 APCs 5851 and 5852 for CY 2017 and subsequent years. We also are 
creating 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 final geometric mean per diem cost for new CMHC APC 5853 
and the final geometric mean per diem cost for new hospital-based PHP 
APC 5863 in section VIII.B.2. of this final rule with comment period.
    By finalizing these proposals, we will 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 partial hospitalization 
services are intensive outpatient services, our regulations at 
Sec. Sec.  410.43(a)(3) and (c)(1) require that PHP beneficiaries need 
at least 20 hours of services each week and that PHPs furnish services 
in accordance with the plan of care

[[Page 79685]]

reflecting that need. 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 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 ensure that they 
furnish appropriate services under PHPs which, according to our 
regulations at Sec.  410.43(c), are intended for patients who require a 
minimum of 20 hours per week of therapeutic services as evidenced in 
their plan of care, and which, according to our regulations at Sec.  
424.24(e), require that the services be furnished in accordance with a 
plan of care that sets forth the frequency and duration of the 
services, taking into account a reasonable expectation of improvement 
in the patient's condition. We will communicate how we intend to 
undertake such enhanced monitoring in subregulatory guidance within the 
next year.
    Finally, we are concerned about the low frequency of providing 
individual therapy, which we noted earlier in this section, and we will 
be monitoring its provision. The PHP is intensive by nature, and PHP 
services are provided in lieu of inpatient hospitalization. 
Furthermore, section 1861(ff) of the Act describes the items and 
services to be included in a PHP, including individual and group 
therapy. Therefore, we believe that appropriate treatment for PHP 
patients includes 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.
    Comment: One commenter believed that the combined PHP APCs do not 
appear to have included all of the data from the original Level 1 and 
Level 2 PHP APCs, and would result in a payment reduction because of 
implementation of the new policy.
    Response: As described earlier, the combined PHP APCs' geometric 
mean costs used available CY 2015 claims data and were calculated by 
following the existing methodology for ratesetting, except that the 
geometric mean per diem costs for each provider type were calculated 
for days providing 3 or more partial hospitalization services, rather 
than calculated separately for days with exactly 3 services, and for 
days with 4 or more services. The combined PHP APCs' geometric mean 
costs are similar to a weighted average of actual provider costs. 
Therefore, the total payments resulting from the combined PHP APC 
geometric mean per diem cost, by provider type, would be roughly equal 
to the total payments resulting from the two-tiered PHP APC per diem 
costs, by provider type. As such, combining the PHP APCs geometric mean 
per diem costs does not reduce total costs or total payments by 
provider type. We refer readers to section VIII.B.2. for more detailed 
specifics on the CY 2017 PHP geometric mean per diem cost calculations.
    Comment: A few commenters stated that the current two-tiered 
payment structure fostered a continuum of care, and contended that CMS' 
current policy of distinguishing 3 services per day and 4 or more 
services per day offers the flexibility of intermediate levels of care 
between outpatient, office-based visits, and inpatient psychiatric 
care, and further are differentiated from each other by the provider 
community as ``Intensive Outpatient Programs'' (IOPs) and PHPs, 
respectively. The commenters believed that, consequently, replacing the 
two-tiered payment methodology with a single APC and calculating the 
geometric mean per diem costs for 3 or more services per day would not 
recognize the importance and need for the continuum of care.
    Response: We are concerned about the potential misuse of the PHP 
benefit. A few commenters indicated that some in the provider community 
recognize an IOP level of care. However, there is no Medicare benefit 
category for IOPs. Therefore, we cannot recognize or pay for what 
providers term ``IOPs'' using the PHP benefit. If the individual 
services that make up these IOPs meet all applicable requirements for 
non-PHP outpatient services, including coding definitions, and are 
reasonable and necessary, then conceivably these services could be 
billed individually under the OPPS. IOPs are typically not only less 
intensive than PHPs, but, as previously noted, are also a nonexistent 
Medicare category. In equating IOPs with the statutorily mandated PHP 
benefit, we believe commenters misunderstood the purpose of the PHP 
benefit. Specifically, a PHP requires physician certification that the 
individual would need inpatient psychiatric care if the partial 
hospitalization services were not provided, as described in Sec.  
424.24(e) of the regulations. Furthermore, as required by section 
1861(ff) of the Act and by Sec.  424.24(e) of the regulations, a PHP 
must be prescribed by a physician, and the services provided under the 
physician's care must be certified and recertified as being reasonable 
and necessary and under a plan of treatment that sets forth the 
duration and frequency of services, taking into account a reasonable 
expectation of improvement in the patient's condition. If a beneficiary 
is certified for PHP but provided services that meet some lesser level 
of care, this action could be some indication of fraud. We plan to work 
with the MACs in order to better educate providers on PHP requirements.
    Finally, combining the PHP APCs does not affect the continuum of 
care available to Medicare beneficiaries seeking treatment for mental 
health issues. Our decision to combine the PHP APCs for Level 1 and 
Level 2 services into a single APC for 3 or more services per day, by 
provider type, is simply a change in how we pay for PHP services, and 
does not affect access to mental health care or the ways that non-PHP 
patients may receive mental health services.
    Comment: One commenter stated that the requirement for a minimum of 
20 hours per week of therapeutic services conflicts with accepted 
treatment parameters and other managed care options, where attendance 
and minimum hours are not required. The commenter believed that the 20 
hour per week minimum imposes a burden on older patients, is not 
necessary to receive a positive outcome, provides no flexibility, would 
result in a patient attending the program 5 days a week and, therefore, 
creates a barrier to providing the most appropriate treatment for a 
patient's needs.
    Response: When Congress established the PHP benefit in statute, it 
described a PHP as an intensive program that is provided in lieu of 
inpatient treatment (we refer readers to sections 1835(a)(2)(F), 
1861(ff)(2), and 1861(ff)(3)(A) of the Act). Congress provided 
discretion to the Secretary to determine the frequency of PHP services. 
In our CY 2009 rulemaking, we promulgated regulations to establish an 
eligibility requirement at 42 CFR 410.43(c)(1), which states that PHPs 
are intended for patients who require a minimum of 20 hours per week of 
therapeutic services as evidenced in their plan of care. Under Sec.  
410.43(a)(3), we also require PHP services to be furnished in 
accordance with the plan of care and a physician certification.
    Because a PHP is intended for patients who would otherwise be in an 
inpatient psychiatric setting, and who require an intensive level of 
services of at least 20 hours per week, it is not an

[[Page 79686]]

appropriate program for patients who need less intensive mental health 
services. Medicare provides a number of ways in which patients can 
receive covered mental health services, which range from inpatient 
psychiatric care, to PHPs, to other outpatient care provided by 
physicians or other health professionals in a variety of settings. Our 
Medicare Benefit Policy Manual (IOM 100-02, Chapter 6) states that PHP 
patients must be able to cognitively and emotionally participate in the 
active treatment process, and to tolerate the intensity of a PHP 
program (we refer readers to section 70.3, Chapter 6 of IOM 100-02, 
which is available via the Internet on the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c06.pdf). It is possible that mental health treatment provided 
outside of the PHP benefit may be a more appropriate venue for some 
patients for whom the 20 hour per week minimum requirement is deemed to 
be burdensome.
    We are concerned that some PHPs are admitting patients who do not 
meet the eligibility requirements required by the statute. Many of 
these PHPs are not providing at least 20 hours per week of services to 
their patients. As such, in March 2016, we issued a MedLearn Special 
Edition article to notify PHPs of edits to the claims processing 
system, which would begin July 1, 2016, and would systematically 
enforce our existing regulations related to the 20-hour per week 
minimum requirement. However, in early July 2016, we inactivated the 
edits, effective July 1, 2016, so that we could consider adding more 
flexibility to the editing process. (We refer readers to MedLearn 
Matters SE1607, which is available via the Internet on the CMS Web site 
at: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1607.pdf.)
    In addition, we are considering proposing clarifications to our 
regulations in our CY 2018 rulemaking to more strongly tie a 
beneficiary's receipt of at least 20 hours per week of partial 
hospitalization services under a PHP to payment for those services. We 
are informing hospital-based PHPs and CMHCs so that they can review 
their admission procedures, and ensure that the patients they serve are 
truly eligible for the PHP benefit. In this final rule with comment 
period, we are requesting public comments on the advantages, 
disadvantages, and potential challenges of strengthening the tie 
between payment and furnishing at least 20 hours of services per week 
to eligible beneficiaries, for consideration in our development of the 
CY 2018 rulemaking. Individuals should submit their comments as 
indicated under the DATES section of this final rule with comment 
period. Finally, as noted previously in this section, we will monitor 
PHP claims, beginning in January 2017, to determine whether PHP 
beneficiaries are receiving at least 20 hours per week of partial 
hospitalization services.
    PHP services can be extremely beneficial to eligible patients and, 
at the same time, can provide a more cost-effective method for 
providing care outside of an inpatient setting. We are working to 
protect vulnerable beneficiaries with mental health conditions by 
helping to ensure that eligible beneficiaries receive the level of care 
that is appropriate to the PHP setting.
c. Alternatives Considered
    As we discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45672 
through 45673), 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 
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 have proposed 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, and providers and their 
representative associations have informed us, 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 the CY 2017 rulemaking. This suggested that adjusting data trims 
may not be an effective method for resolving the inversion. 
Nevertheless, we reconsidered our analysis of the preliminary 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 did not propose to change the existing CCR>5 trim 
on hospital-based PHP service days for our CY 2017 ratesetting.
    Comment: One commenter recommended that CMS maintain the two-tiered 
system, but combine the APCs for CMHCs and hospital-based PHPs. The 
commenter noted that CMHCs and hospital-based PHPs provide the exact 
same services, but are paid differently, although the commenter 
acknowledged that hospital-based PHPs have higher costs, largely due to 
overhead allocation. The commenter believed that the APCs distinguished 
by provider type ``punish'' rather than reward CMHCs for being more 
cost-effective than hospital-based PHPs. The commenter believed that 
freestanding CMHCs should not be paid less than hospital-based PHPs, 
and noted that, in 2015, MedPAC recommended that Congress decrease or 
eliminate the payment differences between hospital outpatient 
departments and physician offices. The commenter stated that setting 
CMHCs' payment rates based on the small

[[Page 79687]]

number of remaining CMHCs does not reflect the actual cost of providing 
these services.
    Response: The OPPS system pays for outpatient services, including 
partial hospitalization services. This system bases payment on the 
geometric mean per diem costs of providing services using provider data 
from claims and cost reports. We calculate the PHP APC geometric mean 
per diem costs based on the data provided for each type of provider to 
determine payment for these services. We believe that this system 
provides appropriate payment for partial hospitalization services based 
on actual provider costs. The final PHP APC geometric mean per diem 
costs for CY 2017 reflect the costs of what providers expend to 
maintain such programs, as reported on their claims and cost reports.
    We believe the commenter has misunderstood MedPAC's recommendation 
in its March 2015 Report to Congress. MedPAC recommended that payment 
rates be adjusted for more costly hospital outpatient departments so 
that they more closely align with those of less costly freestanding 
physician offices providing the same services (Medicare Payment 
Advisory Commission Report to the Congress: Medicare Payment Policy, 
Chapter 3, ``Hospital Inpatient and Outpatient Services,'' page 51, 
March 2015). Congress has since addressed a portion of this 
recommendation in section 603 of the Bipartisan Budget Act of 2015. We 
refer readers to section X.A. of this final rule with comment period 
for a full discussion of the provisions of section 603. The provisions 
of section 603 do not apply to CMHCs because CMHCs are not a department 
of a hospital. The difference in payment between CMHCs and hospital-
based PHPs is based upon differences in resource use (or costs). When 
Congress required the Secretary to implement an outpatient prospective 
payment system, it required that this payment system group clinically 
similar covered services with respect to resource use (section 
1833(t)(2) of the Act). Because CMHCs and hospital-based PHPs resource 
uses are different, these two provider types are paid under different 
APCs, based on their actual resource use.
    Because the cost of providing partial hospitalization services 
differs significantly by site of service, we established different PHP 
payment rates for hospital-based PHPs and CMHCs in the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994). However, we 
allowed a 2-year transition to CMHC payment rates based solely on CMHC 
data. With respect to the continued use of PHP APC geometric mean per 
diem costs for determining payment rates by provider type (rather than 
median costs, which commenters mistakenly referenced), we refer readers 
to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68406 
through 68412) for a discussion of the implementation of this policy. 
The resulting payment rates reflect the geometric mean cost of what 
providers expend to maintain such programs, based on data provided by 
CMHCs and hospital-based PHPs, which we believe is an improvement over 
the two-tiered methodology calculated based on median costs using only 
hospital-based data.
    Comment: One commenter suggested that CMS consider paying PHPs 
using a quality-based payment system, and that CMS use value-based 
purchasing.
    Response: We responded to a similar public comment in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70462) and refer readers 
to a summary of that comment and our response. To reiterate, sections 
1833(t)(2) and 1833(t)(9) of the Act set forth the requirements for 
establishing and adjusting OPPS payment rates, which include PHP 
payment rates. Section 1833(t)(17) of the Act authorizes the Hospital 
OQR Program, which applies a payment reduction to subsection (d) 
hospitals that fail to meet program requirements. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41040), we considered future inclusion of, and 
requested comments on, the following quality measures addressing PHP 
issues that would apply in the hospital outpatient setting: (1) 30-day 
Readmission; (2) Group Therapy; and (3) No Individual Therapy. We also 
refer readers to the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66957 through 66958) for a more detailed discussion of PHP 
measures considered for inclusion in the Hospital OQR Program in future 
years. The Hospital OQR Program does not apply to CMHCs. Further, 
currently, there is no statutory language explicitly authorizing a 
value-based purchasing program for PHPs.
2. Development of the PHP APC Geometric Mean Per Diem Costs and Payment 
Rates
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45667 through 45678), 
for CY 2017 and subsequent years, we proposed to follow the detailed 
PHP ratesetting methodology described in section VIII.B.2. of the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70462 through 
70466) to determine the PHP APCs' geometric mean per diem costs and to 
calculate the payment rates for the new single hospital-based PHP APC 
and CMHC APC. However, as discussed in section VIII.B.1. of this CY 
2017 final rule with comment period, in support of our CY 2017 policies 
to establish single PHP APCs for hospital-based PHPs and CMHCs, we also 
are combining the geometric mean per diem costs for the two existing 
hospital-based PHP APCs to calculate a geometric mean per diem cost for 
new hospital-based 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 between these two APCs, we 
proposed 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 new hospital-based PHP APC 5863. We 
then proposed to continue to follow the existing methodology described 
in section VIII.B.2.e. of the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70465 through 70466) to its end to calculate the 
geometric mean per diem cost for new hospital-based PHP APC 5863. 
Therefore, the geometric mean per diem cost for new hospital-based 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 proposed to combine the geometric mean per diem costs 
for the two existing CMHC APCs to calculate a geometric mean per diem 
cost for new CMHC APC 5853. Currently, CMHC service days with exactly 3 
service units (based on allowable PHP HCPCS codes) are assigned to 
Level 1 CMHC APC 5851, and CMHC service days with 4 or more service 
units (based on allowable PHP HCPCS codes) are assigned to Level 2 CMHC 
APC 5852. Under our CY 2017 proposal, instead of separating the service 
days between these two APCs, we proposed to combine the service days so 
that CMHC service days that provide 3 or more service units (based on 
allowable PHP HCPCS codes) are assigned to proposed new CMHC APC 5853. 
We then proposed 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 70465 through 70466) to its end 
to

[[Page 79688]]

calculate the geometric mean per diem cost for new CMHC APC 5853. 
Therefore, the geometric mean per diem cost for new CMHC APC 5853 would 
be based upon actual CMHC claims and costs for CMHC service days 
providing 3 or more services.
    To prevent confusion, we referred to the per diem costs listed in 
Table 19 of the proposed rule as the proposed CMHC or hospital-based 
PHP APC per diem costs or the proposed CMHC or hospital-based PHP APC 
geometric mean per diem costs. We referred to the CMHC or hospital-
based PHP per diem payment rates listed in Addendum A to the proposed 
rule (which is available via the Internet on the CMS Web site) as the 
proposed CMHC or hospital-based PHP APC per diem payment rates or the 
proposed CMHC or hospital-based PHP APC geometric mean per diem payment 
rates. The CMHC or hospital-based PHP APC per diem costs are the 
provider-specific costs derived from the most recent claims and cost 
data. The CMHC or hospital-based PHP APC per diem payment rates are the 
national unadjusted payment rates calculated from the CMHC or hospital-
based PHP APC per diem costs, after applying the OPPS budget neutrality 
adjustments described in section II.A.4. of this final rule with 
comment period.
    We proposed 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 
70455 through 70462) for CY 2016 and subsequent years.
a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments
    For the proposed rule, prior to calculating the proposed geometric 
mean per diem cost for new CMHC APC 5853, we prepared the data by first 
applying trims and data exclusions, and assessing CCRs as described in 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 
through 70465), so that ratesetting is not skewed by providers with 
extreme data. Under the 2 standard deviation trim policy, 
we excluded 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, in the proposed rule, 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 
(81 FR 45674). We also applied 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 four providers from ratesetting whose data would have skewed 
the calculated proposed geometric mean per diem cost downward.
    In accordance with our PHP ratesetting methodology, in the proposed 
rule, we also removed 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 CY 2017 proposed rule 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 CY 2017 proposed rule 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 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 proposed rule 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 CMHC 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.
    For the CMHC final rule results, we used updated CY 2015 final 
claims data. The final CY 2015 Outpatient Standard Analytic File used 
for CY 2017 ratesetting showed that 52 CMHCs had claims in CY 2015. As 
described in the discussion of the PHP ratesetting process in the CY 
2016 final rule (80 FR 70462 through 70467), in section II.A. of this 
final rule with comment period, and in the OPPS Claims Accounting 
Document under supporting documentation ``Downloads'' for the CY 2017 
OPPS/ASC final rule with comment period (available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html), in developing the claims eligible for ratesetting we 
excluded CMHCs with outlier overall CCRs (1 CMHC). After making this 
exclusion, our updated CY 2015 claims data showed 51 CMHCs with claims 
that were eligible for ratesetting. We then applied our ratesetting 
trims and exclusions. Our 2 standard deviation trim policy 
excluded 3 CMHCs with geometric mean per diem costs per day below the 
trim's lower limit of $39.77, and 1 CMHC with geometric mean per diem 
costs per day above the trim's upper limit of $403.50. This 2 standard deviation trim removed 4 CMHCs from our final rule 
ratesetting whose data would have skewed the calculation of the final 
geometric mean per diem cost. For this final rule with comment period, 
we also applied the OPPS 3 standard deviation trim on CCRs 
to exclude any data from CMHCs with CCRs above or below this range, but 
no CMHCs were excluded as a result.
    In accordance with our PHP ratesetting methodology, we also removed 
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 this CY 
2017 final rule ratesetting, 2 CMHCs were excluded because they were 
missing wage index data for all of their 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 through 70464). Our longstanding PHP OPPS ratesetting methodology 
defaults any CMHC CCR>1 to the statewide hospital ancillary CCR (80 FR 
70457). In this CY 2017 final rule ratesetting, we identified 1 CMHC 
that had a CCR>1. This CMHC's CCR was 1.185 and was defaulted to its 
appropriate statewide hospital ancillary CCR for CY 2017 final rule 
ratesetting purposes.
    These data preparation steps adjusted the CCR for 1 CMHC and 
excluded 6 CMHCs, resulting in the inclusion of a total of 45 CMHCs in 
our CY 2017 final rule ratesetting modeling, and the removal of 2,395 
CMHC claims from the 18,990 total CMHC claims used.
    After applying all of the above trims, exclusions, or adjustments, 
the geometric mean per diem cost for all

[[Page 79689]]

CMHCs for providing 3 or more services per day (new CMHC APC 5853) is 
$124.92 (compared to the proposed $135.30).
b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
    For the CY 2017 proposed rule, 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 through 
70465) so that our ratesetting is not skewed by providers with extreme 
data. Before any trimming or exclusions, in the proposed rule there 
were 404 hospital-based PHP providers in the claims data. For hospital-
based PHP providers, we applied a trim on hospital service days when 
the CCR was greater than 5 at the cost center level. The CCR>5 hospital 
service day trim removed 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 excluded CMHC 
providers that failed the trim, the CCR>5 trim excluded 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 from our proposed rule ratesetting. 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 our proposed rule ratesetting. In addition, the OPPS 
3 standard deviation trim on costs per day removed four 
providers from proposed rule ratesetting.
    Finally, in our proposed rule ratesetting, we excluded 13 hospital-
based PHP providers that reported zero daily costs on their claims, in 
accordance with our proposed rule 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 
proposed rule ratesetting. After completing these data preparation 
steps, we calculated the 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 (new hospital-based PHP 
APC 5863) was $192.57.
    The proposed CY 2017 PHP APC geometric mean per diem costs for the 
new CMHC and hospital-based PHP APCs were shown in Table 19 of the 
proposed rule (81 FR 45674). The proposed PHP APC payment rates were 
included in Addendum A to the proposed rule (which is available via the 
Internet on the CMS Web site).
    For this final rule with comment period, for hospital-based PHPs, 
we used updated CY 2015 final claims data. The final CY 2015 Outpatient 
Standard Analytic File showed that 482 hospital-based PHPs had claims 
in CY 2015. As described in the discussion of the PHP ratesetting 
process in the CY 2016 final rule with comment period (80 FR 70462 
through 70467), in section II.A. of this final rule with comment 
period, and in the OPPS Claims Accounting Document under supporting 
documentation ``Downloads'' for the CY 2017 OPPS/ASC final rule with 
comment period (available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html), in developing the claims 
eligible for ratesetting, we excluded providers paid outside of the 
OPPS (39 hospital-based PHPs), providers without cost report data (9 
hospital-based PHPs), and providers with outlier overall CCRs (14 
hospital-based PHPs). After making those exclusions, the updated CY 
2015 claims data for this final rule with comment period showed 420 
hospital-based PHP providers that were eligible for ratesetting. We 
then applied our ratesetting trims and exclusions.
    For hospital-based PHP providers, for this final rule with comment 
period, we applied a trim on hospital service days when the CCR was 
greater than 5 at the cost center level. Applying this trim removed 
service days from 8 hospital-based PHP providers with CCRs ranging from 
5.411 to 17.603. However, all of the service days for these 8 hospital-
based PHP providers had at least one service associated with a CCR>5, 
so the trim removed these providers entirely from ratesetting. Also, 
the OPPS 3 standard deviation trim on costs per day removed 
1 provider with costs per day over $4,000 from this final rule 
ratesetting.
    For this final rule with comment period, we also excluded 15 
hospital-based PHP providers that reported zero daily costs on all of 
their claims, in accordance with our PHP ratesetting policy (80 FR 
70465). Finally, we excluded 1 hospital-based PHP without valid wage 
index data. Therefore, we excluded a total of 25 hospital-based PHP 
providers, resulting in 395 hospital-based PHP providers in the data 
used for ratesetting. After completing these data preparation steps, we 
calculated the geometric mean per diem cost for new hospital-based PHP 
APC 5863 for hospital-based PHP services. The final geometric mean per 
diem cost for hospital-based PHP providers that provide 3 or more 
services per service day (new hospital-based PHP APC 5863) is $213.14 
(compared to the proposed $192.57).
    Currently, the highest hospital-based PHP per diem rate, which for 
CY 2016 was the Level 2 hospital-based PHP per diem rate for APC 5862, 
serves as the cap for all non-PHP outpatient mental health services 
provided in a single service day. Because we are finalizing our 
proposal to replace the existing two-tiered PHP APCs structure with a 
single APC grouping for these services by specific provider type, the 
outpatient mental health treatment cap for CY 2017 is the geometric 
mean per diem rate for new hospital-based PHP APC 5863.
    In the CY 2017 OPPS/ASC proposed rule, we solicited comments on our 
proposals related to CMHCs and hospital-based PHP APC geometric mean 
per diem cost calculations and data exclusions.
    Comment: Several commenters expressed concern that the proposed CY 
2017 PHP APC geometric mean per diem costs and payment rates were lower 
than the current CY 2016 PHP APC geometric mean per diem costs and 
payment rates, and stated that the proposed payment rates would not 
provide adequate payment of these services.
    Several commenters suggested an alternative payment methodology. 
Some commenters suggested that CMS delay implementation of the CY 2017 
PHP APC per diem payment rates until it can capture and adequately 
cover hospital-based PHP costs, or that CMS ``freeze'' the CY 2017 PHP 
APC per diem payment rates at the CY 2016 level. Several commenters 
recommended that CMS use a median cost phase-in of at least 3 years to 
allow PHP providers to assess their programs and make necessary 
changes, using a rolling average of the per diem costs. One commenter 
stated that this method could minimize the major fluctuations in the 
payment rates from year to year and provide a more stable basis for 
hospitals and CMHCs when budgeting and planning. Another commenter 
stated that the decrease in the PHP APC payment rate would discourage 
hospitals from offering the PHP benefit to Medicare beneficiaries, 
ultimately creating a barrier to access to these services, which could 
place the

[[Page 79690]]

population at risk. Some commenters stated that the payment rate 
reduction would impair services and affect the provider network of both 
service organization types, or that the lower payment rates will force 
providers to restructure their organization and programs. Other 
commenters stated that a payment reduction will force providers to cut 
costs, staff and programming, which would cause them to assist fewer 
people, and would lead to higher ED visits. Another commenter stated 
that providers would be unable to absorb the impact of the reduction. 
Some commenters noted that PHP costs had increased due to rising wages, 
the new CMHC conditions of participation (CoPs), and a reduction in bad 
debt reimbursement.
    One commenter mentioned that since last year, another 11 CMHCs 
closed or discontinued PHP services, and the policy would further 
decrease valuable resources for the mentally ill. Several commenters 
believed that PHPs will continue to decrease in numbers without 
adequate payment. One commenter stated that establishing payment rates 
that are lower than geometric mean costs is a disincentive for PHPs to 
continue providing services. Another commenter stated that the 13 
percent reduction in hospital-based PHP geometric mean per diem payment 
rates may prohibit high quality providers from continuing to provide 
PHP services and exacerbate existing access constraints. A number of 
commenters noted that PHPs are a vital part of the mental health care 
continuum, and noted the benefits of the program, which include 
providing needed care to a vulnerable population, avoiding more costly 
and less efficient emergency department visits and more costly 
inpatient stays, and increasing the time between readmission.
    Response: We appreciate the commenters' input regarding the CY 2017 
proposed PHP APC payment rates. The final hospital-based PHP APC 
geometric mean per diem cost for new APC 5863 is higher than the 
proposed hospital-based PHP per diem cost ($213.14 for this final rule 
versus $192.57 in the proposed rule). However, the final CMHC geometric 
mean per diem cost for new APC 5853 is lower than the proposed CMHC 
geometric mean per diem costs ($124.92 for this final rule versus 
$135.30 in the proposed rule). As we explained in the CY 2014 OPPS/ASC 
final rule (78 FR 75049), our calculation of geometric mean per diem 
costs is based on the actual provider-reported claims and cost data 
and, therefore, represents the cost of providing PHP services, 
including, for example, rising staff wages. The resulting PHP APC 
geometric mean per diem costs and specific payment amounts and the APC 
payment structure reflect the cost providers expend to maintain such 
programs. While we proposed the geometric mean per diem costs in this 
section, section 1833(t)(9)(B) of the Act requires that we apply a 
budget neutrality adjustment before determining final payment rates, as 
described in section II.A.4. of this final rule with comment period. 
That adjustment can result in geometric mean per diem payment rates 
that are higher or lower than the calculated geometric mean per diem 
costs. It is also important to note that the reduction to bad debt 
reimbursement was a result of provisions of section 3201 of the Middle 
Class Tax Extension and Job Creation Act of 2012. The reduction to bad 
debt impacted all providers eligible to receive bad debt reimbursement, 
as discussed in the CY 2013 ESRD final rule (77 FR 67518).
    We remind PHPs that the services of physicians, clinical 
psychologists, clinical nurse specialists (CNSs), nurse practitioners 
(NPs), and physician assistants (PAs) furnished to partial 
hospitalization patients will continue to be billed separately as 
professional services and costs for these professional services are not 
considered to be partial hospitalization services. Therefore, payment 
for partial hospitalization services represents the provider's overhead 
costs, support staff, and the services of clinical social workers 
(CSWs) and occupational therapists (OTs), whose professional services 
are considered to be partial hospitalization services for which payment 
is made to the provider (65 FR 18452). We encourage CMHCs and hospital-
based PHPs to review their cost reporting procedures, to ensure that 
they are accurately reporting PHP costs on their cost reports, and 
hospital-based PHPs to follow the revenue-code-to-cost-center 
hierarchy.
    We recognize the commenters' concern regarding variance in payment 
rates from year to year. As we explained in the CY 2014 OPPS/ASC final 
rule (78 FR 75049), payment rates for PHP services fluctuate from year 
to year based on a variety of factors, including direct changes to the 
PHP APC per diem payment rate, changes to the OPPS, and provider-driven 
changes. Over the past several years, we have made changes to the PHP 
APC per diem payment rates to more accurately align the payments with 
costs. The changes have included establishing separate APCs and 
associated per diem payment rates for CMHCs and hospital-based 
providers based on each provider's costs. We also believe that 
combining the two tiers into one payment tier for 3 or more services 
will reduce fluctuations and better stabilize the payment rate 
variance. Combining the tiers systematically addresses chronic issues 
with inverted costs leading to inverted payment rates and creates a 
more stable geometric mean per diem cost, given the small number of PHP 
providers.
    Regarding the recommendation to use median cost, we note that, 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 PHP APCs, on geometric mean costs rather than on 
the median costs (77 FR 68406 through 68412). The use of geometric mean 
data supports our goal of aligning resource use with appropriate 
payment.
    In response to commenters' suggestions to delay implementation of 
the CY 2017 per diem payment rates, or to ``freeze'' the PHP APC per 
diem payment rates at the CY 2016 level, as we discussed in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75049), we cannot 
establish payment rates that do not accurately reflect current claims 
and cost report data. Providers attest to the accuracy of the cost 
reports from which we obtain PHP claims and cost data. In addition, the 
ratesetting methodology for calculating OPPS APC payment rates as 
stated in the regulations at 42 CFR 419.31 does not allow us to take an 
average of prior year and current PHP per diem payment rate data to 
determine the PHP geometric mean per diem payment rates. Rather, the 
regulations at Sec.  419.31(b)(1) require us to use the most current 
available cost data in ratesetting. Therefore, we cannot delay or 
``freeze'' the CY 2017 PHP APC per diem payment rates, or base the 
calculations upon an average of multiple years of data.
    We appreciate the commenters' input regarding the effect any 
reduction in PHP payment rates would have on access to care. As noted 
earlier, the final PHP geometric mean per diem cost increased for 
hospital-based PHPs, but decreased for CMHCs. Our calculated geometric 
mean per diem costs are based on the actual provider-reported claims 
and cost data and, therefore, represent the cost of providing PHP 
services.
    We are working to strengthen continued access to the PHP benefit 
for eligible beneficiaries. For example, in CY 2016 ratesetting, we 
conducted an extensive analysis of the ratesetting process, and 
discovered errors providers

[[Page 79691]]

had made in claims coding of revenue and HCPCS codes that were leading 
to lower geometric mean per diem costs. In the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70462 through 70467), we also included 
a detailed description of the ratesetting process to help PHPs record 
costs correctly so that we can more fully capture PHP costs in 
ratesetting.
    To address fluctuations in payments and to protect ratesetting from 
aberrant data, we also implemented trims on the PHP data used in 
ratesetting in the CY 2016 rulemaking. For example, the CMHC 2 standard deviation trim has protected CMHCs by removing from 
ratesetting several providers with aberrantly low costs per day, which 
would have lowered total CMHC geometric mean per diem costs, and thus 
lowered CMHC geometric mean per diem payment rates.
    We agree that PHPs serve a vulnerable population, and appreciate 
the care that PHPs provide to Medicare beneficiaries. We also believe 
that PHPs can help patients avoid emergency department visits and 
inpatient stays in a cost-efficient fashion. We remain concerned about 
access to PHP services, and particularly about the declining numbers of 
CMHCs. We will continue to explore policy options for strengthening the 
PHP benefit.
    Comment: A few commenters stated that the lack of a required 
standardized PHP cost center on the Medicare cost report may be 
creating some cost-finding nuances in the cost report itself (for 
example, inaccurate step-down of overhead cost allocations to the PHP 
program, diluted CCRs by the comingling of PHP and ``Intensive 
Outpatient Program (IOP)'' on the cost report, among others) that may 
have contributed to this decreased PHP median [sic] cost. These 
commenters believed that the cost decreases observed with hospital-
based PHP costs may not be ``real'' cost decreases, but rather a result 
of Medicare cost accounting.
    Response: We agree that if PHP costs are combined with other less 
intensive outpatient mental health treatment costs in the same cost 
center, the CCR could be diluted, leading to lower geometric mean per 
diem costs being calculated. We will analyze this further and consider 
adding a cost center to the hospital cost report for PHP costs only.
    After consideration of the public comments we received, we are 
finalizing our proposals to replace the four PHP APCs (5851, 5852, 
5861, and 5862) with the two new PHP APCs (5853 and 5863) and to 
calculate the geometric mean per diem costs using the most recent 
claims and cost data for each provider type. The final CY 2017 PHP APC 
geometric mean per diem costs for the new CMHC and hospital-based PHP 
APCs are shown in Table 41 below. The final PHP APC payment rates are 
included in Addendum A to this final rule with comment period (which is 
available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).

         Table 41--CY 2017 PHP APC Geometric Mean Per Diem Costs
------------------------------------------------------------------------
                                                              PHP APC
          CY 2017 APC                  Group title        geometric mean
                                                          per diem costs
------------------------------------------------------------------------
5853..........................  Partial Hospitalization          $124.92
                                 (3 or more services per
                                 day) for CMHCs.
5863..........................  Partial Hospitalization           213.14
                                 (3 or more services per
                                 day) for hospital-based
                                 PHPs.
------------------------------------------------------------------------

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 rule with comment period (80 FR 70462 through 70466). 
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 final rule with comment period 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 final rule with comment period, 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 final rule with comment period 
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. 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45675 through 45678), 
we proposed 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

[[Page 79692]]

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. This policy 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 proposed to designate less than 0.01 percent of the estimated 1.0 
percent outlier threshold for CMHCs. As we do for each rulemaking 
cycle, we have updated the CMHC CCRs and claims data used to model the 
PHP payments rates.
    Based on our simulations of CMHC payments for CY 2017, in the 
proposed rule, we proposed to continue to set the cutoff point for CY 
2017 at 3.4 times the highest CMHC APC payment rate implemented for 
that calendar year, which for CY 2017 is the payment rate for new CMHC 
APC 5853. In addition, we proposed to continue to apply the same 
outlier payment percentage that applies to hospitals. Therefore, for CY 
2017, we proposed to continue to pay 50 percent of CMHC 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 new CMHC 
APC 5853 exceeds 3.4 times the proposed payment rate for proposed new 
CMHC 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 new 
CMHC APC 5853.
    In section II.G. of the proposed rule, for the hospital outpatient 
outlier payment policy, we proposed to set a fixed dollar threshold in 
addition to an APC multiplier threshold. APC 5853 is the only APC for 
which CMHCs may receive payment under the OPPS, and is for providing a 
defined set of services which are relatively low cost when compared to 
other OPPS services. As such, it is not necessary to also impose a 
fixed dollar threshold on CMHCs. Therefore, we did not propose to set a 
dollar threshold for CMHC outlier payments.
    In summary, in this section, we proposed to continue to calculate 
our CMHC outlier threshold and CMHC outlier payments according to our 
established policies.
    We did not receive any public comments on these proposals, and are 
finalizing them without modification.
2. CMHC Outlier Cap
a. Summary of Proposal
    As discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45675 
through 45678), 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 small outlier payments 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. The 36 percent is a stark contrast 
to the OPPS outlier threshold of 1 percent of total OPPS payments, 
especially because the CMHC threshold is 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, specifically for exceptionally high-cost cases, 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 cases. 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 the 
CMHC APC 0173 payment 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. In CY 2014, these three CMHCs had a total average cost per 
day of $1,065, which exceeded the FY 2014 unadjusted 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 payment 
rate includes payment for fewer items and services than the inpatient 
psychiatric facility daily payment rate, we believe that the cost of a 
day of outpatient PHP services 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 CCR. The 
CCR 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). 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 accurately paying CMHCs 
participating in Medicare. Therefore, we are addressing outlier 
payments resulting from inflated costs. By continuing this pattern of 
inflated charges for partial hospitalization services, CMHCs will 
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.
    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 greater than or equal to 30 
percent of their total per diem payments was $3,233, which was nearly 8 
times greater than the average charge

[[Page 79693]]

per day for the CMHCs that received outlier payments that were less 
than 30 percent of their total per diem payments. In our review of CY 
2015 claims data for the CY 2017 OPPS/ASC proposed rule, the average 
charge per day for the CMHCs that received outlier payments greater 
than or equal to 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 that were less than 30 
percent of their total per diem payments.
    In our review of CY 2015 claims data for the CY 2017 proposed 
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 greater 
than or equal to 30 percent of their total payments, which suggests a 
continuing, if not 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 cases. 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 proposed 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 proposed 
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 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 ensure that any outlier cap 
policy would not disadvantage CMHCs with truly high-cost cases that 
merit an outlier payment, while also protecting the benefit from making 
payments for outlier cases that exceed the marginal cost of care. In 
the CY 2017 OPPS/ASC proposed rule, we used CY 2015 claims data to 
perform a detailed impact analysis of CMHC outlier payments. That 
analysis showed that 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 that were greater than or equal to 
30 percent of their total CMHC payments in CY 2015, and 5 CMHCs that 
received outlier payments that were less than 30 percent of their total 
CMHC payments in CY 2015.
    In the CY 2017 proposed rule, the 5 CMHCs that received outlier 
payments that were less than 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 of the proposed rule (81 FR 45677).
    Table 20 of the proposed rule showed that 4 out of the 5 CMHCs that 
received outlier payments that were less than 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 fifth 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 was 
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 (approximately $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 that were less than 30 percent of their total per diem

[[Page 79694]]

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 4 CMHCs that received outlier payments that were greater than or 
equal to 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 proposed 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 invited public comments on the CMHC provider-level outlier cap 
percentage. We also proposed 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 did not receive any public comments on these proposals.
b. CY 2017 Final Rule Update and Policy
    Updated analysis using CY 2015 final claims data for this CY 2017 
final rule with comment period continued to show that Medicare paid 
CMHCs $3.2 million in outlier payments, with over 99 percent of those 
payments made to 4 CMHCs. These outlier payments were 23 percent of all 
CMHC total per diem payments, and ranged from 42 percent to 163 percent 
of the individual CMHC's total per diem payments. The updated CY 2015 
data showed that out of 52 CMHCs with paid claims in CY 2015, 9 CMHCs 
received outlier payments.
    Five CMHCs with outlier payments that were less than 30 percent of 
their total per diem payments received a total of $11,643 in outlier 
payments. Four CMHCs with outlier payments that were greater than or 
equal to 30 percent of their total per diem payments received $3.2 
million in outlier payments, which was 99.6 percent of all CMHC outlier 
payments made in CY 2015. The average charge per day for the 4 CMHCs 
that received outlier payments that were greater than or equal to 30 
percent of their total per diem payments was $1,566, which was 3 times 
greater than the average charge per day for the 5 CMHCs that received 
outlier payments that were less than 30 percent of their total per diem 
payments.
    We tested the effects of CMHC outlier caps ranging from 3 percent 
to 10 percent on these two groups of CMHCs using the final CY 2015 
claims data as shown in Table 42 below. 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. 
Because 4 out of the 5 CMHCs that received outlier payments that were 
less than 30 percent of their total per diem payments received outlier 
payments that were less than 1 percent of their total per diem 
payments, Table 42 below shows that these providers would be unaffected 
by a CMHC outlier payment cap. The fifth CMHC with outlier payments 
that were less than 30 percent of its total per diem payments received 
outlier payments that were 8.0 percent of its total per diem payments. 
This CMHC would not have been affected by an 8 percent or 10 percent 
CMHC outlier payment cap applied at the provider level because its 
outlier payments did not exceed 8 or 10 percent.

                                           Table 42--Effect of CMHC Outlier Cap Simulation on Outlier Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Simulated CMHC outlier payments using final CY 2015 claims data
                                                             -------------------------------------------------------------------------------------------
                                                                Total per      Actual
                                                                  diem        outlier       3% cap       5% cap       6% cap       8% cap      10% cap
                                                                payments      payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
All 52 CMHCs................................................   $14,022,861   $3,245,624  ...........  ...........  ...........  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Outlier Payments <30% of Total Per Diem Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Actual Payments (n = 5)...............................    $1,419,316       11,643  ...........  ...........  ...........  ...........  ...........
Simulated Outlier Payments..................................  ............  ...........       $4,869       $7,581       $8,936      $11,643      $11,643
Reduction in Outlier Payments...............................  ............  ...........       $6,775       $4,063       $2,707  ...........  ...........
% Reduction.................................................  ............  ...........        58.2%        34.9%        23.2%         0.0%         0.0%
CMHCs Affected..............................................  ............  ...........            1            1            1  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Outlier Payments =30% of Total Per Diem Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Actual Payments (n = 4)...............................    $3,154,279   $3,233,981  ...........  ...........  ...........  ...........  ...........
Simulated Outlier Payments..................................  ............  ...........      $94,628     $157,714     $189,257     $252,342     $315,428
Reduction in Outlier Payments...............................  ............  ...........   $3,150,996   $3,087,910   $3,056,367   $2,993,282   $2,930,196
% Reduction.................................................  ............  ...........        97.4%        95.5%        94.5%        92.6%        90.6%
CMHCs Affected..............................................  ............  ...........            4            4            4            4            4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As noted in the CY 2017 OPPS/ASC proposed rule, 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. The updated CY 2015 claims data for 
this final rule with comment period shows that an 8-percent CMHC 
outlier payment cap would mitigate potential inappropriate outlier 
billing vulnerabilities by limiting

[[Page 79695]]

the impact of inflated CMHC charges on outlier payments. The 8-percent 
cap would have reduced outlier payments to the CMHCs that received 
outlier payments that were greater than or equal to 30 percent of their 
total per diem payments in CY 2015 by $3.0 million dollars, or 92.6 
percent, without affecting any of the CMHCs that received outlier 
payments that were less than 30 percent of their CY 2015 total per diem 
payments.
    We did not receive any public comments on our proposals and are 
finalizing them as proposed. As we noted in the proposed rule, our 
existing outlier reconciliation policy will continue to remain in 
effect with the final 8 percent CMHC outlier payment cap serving as a 
complement. We also are finalizing our proposed revision of 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 also 
monitor these policy effects. Also, we will analyze CMHC outlier 
payments at the provider level, relative to the 8 percent CMHC outlier 
cap. Finally, we will continue to utilize program integrity efforts, as 
necessary, for those CMHCs receiving excessive outlier payments.
3. Implementation Strategy for the 8-Percent Cap on CMHC Outlier 
Payments
    CMS envisions that the 8-percent CMHC cap on outlier payments will 
be managed by the claims processing system. We will provide detailed 
information on our implementation strategy through sub-regulatory 
channels. However, to foster a clearer understanding of the 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 will 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 will determine 
whether or not a given provider-specific outlier payment exceeds the 8-
percent cap on a ``rolling'' basis. Under such an implementation 
approach, for each CMHC, the claims processing system will maintain a 
running tally of the YTD total CMHC per diem payments. The claims 
processing system will ensure that each time an outlier claim for a 
CMHC is processed, actual outlier payments will never exceed 8 percent 
of the CMHC's YTD total payments. While a CMHC will receive its per 
diem payment timely, the outlier portion of the claim will be paid as 
the CMHC's YTD payments support payment of the outlier. As part of our 
routine claims processing, we will utilize a periodic review process 
under which outlier payments that were withheld will subsequently be 
paid if the CMHC's total payments have increased to the point that its 
outlier payments can be made. This process will result in additional 
cash flow to CMHCs. As noted previously, we will also 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 will 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 Policies
    In summary, for CY 2017, we are finalizing our proposals 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 and 
change the regulations at Sec.  419.43(d) accordingly;
     Continue to set the cutoff point for CMHC outlier payments 
in CY 2017 at 3.4 times the highest CMHC APC payment rate implemented 
for that calendar year, which for CY 2017 is new CMHC 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 policies will minimize the 
impact of inflated CMHC charges on outlier payments, 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.

IX. Procedures That Will Be Paid Only as Inpatient Procedures

A. Background

    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full historical discussion of 
our longstanding policies on how we identify procedures that are 
typically provided only in an inpatient setting (referred to as the 
inpatient 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 will be paid 
by Medicare in CY 2017 as inpatient only procedures is included as 
Addendum E to this final rule with comment period (which is available 
via the Internet on the CMS Web site).

B. Changes to the Inpatient Only (IPO) List

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45678 through 45679), 
for CY 2017, we proposed 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 proposed 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

[[Page 79696]]

separately in addition to code for primary procedure));
     CPT code 22842 (Posterior segmental instrumentation (eg., 
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 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 listed above 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 proposed 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 (that is, 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 proposed 
that the two laryngoplasty procedure codes would be assigned to APC 
5165 (Level 5 ENT Procedures) with status indicator ``J1.''
    Comment: Several commenters supported the proposal to remove CPT 
codes 22840, 22842, 22845, 22858, 31584, and 31587 from the IPO list 
for CY 2017. One commenter opposed the proposal to remove these codes 
from the IPO list, stating that although the spine codes were add-on 
codes for procedures currently performed in the HOPD, these codes 
represented variations in the instrumentation used which made them more 
complex than the base code procedures. The commenter also believed that 
the two laryngoplasty codes were too complex to be performed in the 
HOPD.
    Another commenter opposed the removal of CPT codes 31584 and 31587 
from the IPO list, stating that these procedures often require 
prolonged use of intravenous pain medications and close monitoring of 
drainage tubes. The commenter also stated that both procedures 
frequently involve patient admission to the intensive care unit 
postoperatively, as they warrant assessments of respiratory status and 
oxygenation at frequent intervals to evaluate for postoperative 
swelling.
    Response: We appreciate the commenters' support. We disagree with 
the commenter that CPT codes 22840, 22842, 22845, 22858, 31584, and 
31587 should remain on the IPO list. As discussed in the CY 2017 OPPS/
ASC proposed rule (81 FR 45678 through 45679), we believe that these 
codes satisfy criterion 3 for removal from the IPO list; that is, being 
a procedure that is related to codes that we have already removed from 
the IPO list. We remind the commenter and the public that removal of a 
code from the IPO list does not mean that all procedures described by 
the code or even a majority of procedures must or should be performed 
in the outpatient setting. Removal of a procedure from the IPO list 
only means that the procedure is no longer precluded from being paid 
under the OPPS if it is performed in the outpatient setting. The cases 
that the commenters are concerned about can all still be performed on 
an inpatient basis if appropriate.
    Comment: Several commenters disagreed with the proposal to package 
the four spine codes proposed to be removed from the IPO list with 
associated procedure and assign them status indicator ``N.'' The 
commenters requested that CMS allow for separate payment for these 
procedures.
    Response: As specified in 42 CFR 419.2(b)(18), services described 
by add-on codes are packaged costs that are integral, ancillary, 
supportive, dependent, or adjunctive to performing a procedure or 
furnishing a service on an outpatient basis. The procedures described 
by the four spinal codes are all procedures described by add-on codes. 
The costs for the procedures described by these codes are included in 
the payment rate for the related procedure or service. Therefore, we 
will not provide separate payment for these codes.
    Comment: Other commenters requested that the following additional 
codes be removed from the IPO list:
     CPT code 22585 (Arthrodesis, anterior interbody, including 
disc space preparation, discectomy, osteophytectomy, and decompression 
of spinal cord and/or nerve roots; each additional interspace (List 
separately in addition to code for primary procedure));
     CPT code 22633 (Arthrodesis, combined posterior or 
posterolateral technique with posterior interbody technique including 
laminectomy and/or discectomy sufficient to prepare interspace (other 
than for decompression), single interspace and segment; lumbar;
     CPT code 22850 (Removal of posterior nonsegmental 
instrumentation (eg., Harrington rod);
     CPT code 23472 (Arthroplasty, glenohumeral joint; total 
shoulder (glenoid and proximal humeral replacement (eg., total 
shoulder); and
     CPT code 27130 (Arthroplasty, acetabular and proximal 
femoral prosthetic replacement (total hip arthroplasty), with or 
without autograft or allograft.
    Response: We agree with the commenter at this time only for removal 
of the procedure described by CPT code 22585, which is an add-on code, 
from the IPO list. The base code for CPT code 22585, CPT code 22554 
(Arthrodesis, anterior interbody technique, including minimal 
discectomy to prepare interspace (other than for decompression); 
cervical below C2), is assigned to APC 5115 (Level 5 Musculoskeletal 
Procedures). We believe that cases involving CPT codes 22554 and 22585 
are sufficiently comparable to cases involving only CPT code 22554, 
such that it is appropriate to remove CPT code 22585 from the IPO list. 
Because CPT code 22585 is an add-on code, it is being assigned status 
indicator ``N.'' After reviewing the clinical characteristics of these 
procedures described by CPT codes 22633, 22850, 23472, and 27130, we do 
not believe that removal from the IPO list is warranted at this time.
    After consideration of the public comments we received, we are 
removing CPT codes 22585, 22840, 22842, 22845, 22858, 31584, and 31587 
from the IPO

[[Page 79697]]

list for CY 2017. The complete list of codes (the IPO list) that will 
be paid by Medicare in CY 2017 as inpatient only procedures is included 
as Addendum E to this final rule with comment period (which is 
available via the Internet on the CMS Web site).

C. Response To 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 described by CPT code 27447 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 postacute 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 (77 FR 45153), we proposed to 
remove the procedure described by CPT code 27447 from the IPO list. 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 
furnishing a TKA procedure 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 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.

[[Page 79698]]

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. In the CY 2017 OPPS/ASC proposed 
rule (81 FR 45680), we solicited comment from the public 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
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45680), we sought 
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 sought 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 sought public 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 sought public comment on how to reflect the 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 sought 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

[[Page 79699]]

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.
    Comment: Numerous comments responded to CMS' solicitation for 
discussion of the removal of TKA from the IPO list. The overwhelming 
majority of the commenters (which included organizations and 
individuals) supported removing TKA from the IPO list. The commenters 
who supported the removal of TKA from the IPO list included ASCs, 
therapeutic professional associations, hospital associations, as well 
as many surgeons. A number of facilities indicated that they were 
currently performing TKA procedures on an outpatient basis in both the 
HOPD and ASC on non-Medicare patients. Several organizations cited 
innovations such as less invasive surgical techniques, improved 
perioperative anesthesia, alternative postoperative pain management, 
expedited rehabilitation protocols, and the similarity of the TKA 
procedure to other procedures currently being performed as outpatient 
services (namely CPT code 27446 (Unicompartmental Knee Arthroplasty)) 
as reasons to remove the procedure from the IPO list. Most 
organizations in support of the removal of TKA from the IPO list noted 
that an appropriate patient selection protocol should be used to 
determine the patients who are best suited for outpatient joint 
replacement. Some commenters requested that total hip arthroplasty and 
total shoulder replacement procedures also be removed from the IPO 
list.
    A few commenters representing professional organizations, health 
systems, and hospital associations, opposed the removal of a TKA 
procedure from the IPO list. These commenters believed that the 
increased likelihood that Medicare patients have comorbidities that 
require the need for intensive rehabilitation after a TKA procedure 
preclude this procedure from being performed in the outpatient setting. 
They also stated that most outpatient departments are not currently 
equipped to provide TKA procedures to Medicare beneficiaries, which 
require exceptional patient selection, exceptional surgical technique, 
and a carefully constructed postoperative care plan. One commenter 
opined that only exceptional surgeons can perform outpatient TKA 
procedures, and, for this reason, CMS should not pay for TKA procedures 
performed in an outpatient setting. One commenter believed that the 
procedure described by CPT code 27446 can be performed through a much 
smaller and limited incision than required by CPT code 27447 and, 
therefore, was a less complex procedure.
    Other commenters were concerned about the implications that the 
removal of the TKA procedure from the IPO list would have for the 
pricing methodologies, target pricing, and reconciliation process of 
the procedure in certain Medicare payment models (that is, the 
Comprehensive Care for Joint Replacement and the Bundled Payments for 
Care Improvement models). They requested modifications to these models 
if the TKA procedure is removed from the IPO list.
    Response: We thank the stakeholder public for the many detailed 
comments on this topic. We will consider all of these comments in 
future policy making.

X. 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 Off-
Campus Provider-Based Departments of a Hospital

1. Background
    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 
physicians' office. Medicare pays a higher amount for services 
furnished to beneficiaries in the off-campus department of a hospital 
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 
higher total beneficiary cost-sharing than if the service had been 
furnished in a physician's office.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45681), we discussed 
the provision of section 603 of the Bipartisan Budget Act of 2015 (Pub. 
L. 114-74), enacted on November 2, 2015, which 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 sections 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) of the Act 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 the proposed rule and 
this final rule with comment period, 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(t) of the Act--one amending paragraph (1)(B) 
and the other adding new paragraph (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 (21)(A) of such section) that are furnished on or 
after January 1, 2017 by an off-campus PBD, as defined in paragraph 
(21)(B) of such section. The second amendment added a new paragraph 
(21) to section 1833(t) of the Act, which defines the terms 
``applicable items and services'' and ``off-campus outpatient 
department of a provider,'' requires the Secretary to make payments for 
such applicable items and services furnished by an off-campus PBD under 
an applicable payment system (other than OPPS), 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 for applicable items and services, 
applicable payment system, and off-campus outpatient department of a 
provider, and information required to be reported.
    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

[[Page 79700]]

date of enactment of Pub. L. 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) of such section, an 
off-campus PBD that was billing under section 1833(t) with respect to 
covered OPD services furnished prior to the date of enactment of Public 
Law 114-74, that is, November 2, 2015. In the CY 2017 OPPS/ASC proposed 
rule, we proposed 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, 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45681), we proposed to 
make a number of proposals to implement section 603 of Public Law 114-
74. Broadly, we proposed 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, we proposed policies that would 
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 excepted off-campus PBDs); and 
describe the applicable payment system for nonexcepted items and 
services. In addition, we solicited 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 the 
proposals in the proposed rule. We stated in the proposed rule that we 
had considered this stakeholder feedback in developing the proposed 
policies.
    Comment: Numerous commenters urged CMS to delay implementation of 
the section 603 provisions to allow the agency additional time to 
develop policies that would not impose undue burden on CMS and 
hospitals. The commenters stated that if all of the proposals related 
to section 603 are adopted as final without modification, hospitals may 
not be able to continue to provide the current level of health care 
necessary in their communities. Commenters who support a delay posited 
that the delay would provide additional time to collect data that would 
inform ``implementation'' of section 603. In addition, commenters 
stated that there is precedence for CMS to delay implementation of 
legislative provisions, even if the legislation includes a deadline for 
enactment. The commenters cited the following as examples of CMS 
delaying implementation of legislative provisions:
     Hospital Outpatient Prospective Payment System for 18 
months, from January 1, 1999 to July 1, 2000;
     Ambulance Fee Schedule for 27 months, from January 1, 2000 
to April 1, 2002; and
     Medicare Clinical Diagnostic Laboratory Tests Payment 
System for 12 months, from January 1, 2017 to January 1, 2018.
    Response: As discussed in detail later in this final rule with 
comment period, we are not delaying implementation of the section 603 
provisions of Public Law 114-74, and are finalizing implementation of 
the provisions, effective January 1, 2017, in this final rule with 
comment period. In addition, in an interim final rule with comment 
period presented under section X.B. of this document, we are 
establishing payment rates under the MPFS to be used by hospitals for 
billing for nonexcepted items and services. With respect to the comment 
that a delay would enable CMS to collect appropriate data; we disagree. 
As discussed in section X.A.3.b.(2) of this final rule with comment 
period and also in the interim final rule with comment period in 
section X.B. of this document, we are establishing a modifier for use 
by hospitals to bill on their claim to identify nonexcepted items and 
services beginning January 1, 2017. These claims-based data will prove 
useful for making payment for nonexcepted items and services under the 
MPFS beginning in January 2017 and will be helpful over time as 
Medicare is able to collect and analyze hospital data on nonexcepted 
items and services and use that information to refine payment for 
nonexcepted items and services. Accordingly, we do not agree with 
commenters that a delay is appropriate. Moreover, we note that the law 
requires the section 603 provisions to take effect January 1, 2017.
    Comment: MedPAC commended CMS' effort to ``rigorously implement'' 
section 603 and further stated that if CMS finalized the proposed 
policies, it believed the policies would have the potential to reduce 
the financial burden on taxpayers and beneficiaries, although there 
would likely be substantial administrative burdens on the agency, its 
contractors and providers. Other commenters generally supported the 
proposed policies and believed that the proposals would reduce the 
incentive for hospitals to purchase physician's offices and convert 
them to HOPDs without changing their location or patient population.
    Response: We appreciate the commenters' support. We summarize and 
respond to public comments on specific proposals within the appropriate 
sections below.
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

[[Page 79701]]

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 versus if those same services were furnished in a 
physician's office. 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 of Public Law 114-74 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 (generally within 250 yards) 
is 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 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 will 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 off-campus PBD in which services were furnished, 
nor does it distinguish between multiple off-campus PBDs of the same 
hospital. As discussed in section X.A.2.e. of this

[[Page 79702]]

final rule with comment period, in the CY 2017 OPPS/ASC proposed rule, 
we solicited public comments on the type of information that would be 
needed to identify nonexcepted off-campus PBDs for purposes of section 
603, although we did not propose to collect such information for CY 
2017.
b. 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 this 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), in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45683), we proposed 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 proposed 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 an ED as described in the regulations at 
42 CFR 489.24(b).
    Comment: Many commenters supported CMS' proposal to exempt 
application of the section 603 payment provisions to EDs. These 
commenters stated that CMS correctly interpreted the statutory 
provisions and agreed with the CMS proposal to exclude all services, 
emergency and nonemergency, furnished in a dedicated ED of a hospital.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
adopting as final, without modification, our proposal to exempt all 
items and services (emergency and nonemergency) furnished in an ED from 
the provisions of section 603, as long as the department maintains its 
status as an ED under the regulation at Sec.  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 (1)(B)(v) and (21) of such section as a department of a 
provider (as defined at 42 CFR 413.65(a)(2) as that term is in effect 
as of the date of enactment of Public Law 114-74), 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 stated in the 
CY 2017 OPPS/ASC proposed rule that we believe the statutory language 
refers to such departments as defined by the regulations at Sec.  
413.65 as they existed as of the date of enactment of Public Law 114-
74, which was November 2, 2015. The existing regulatory definition at 
Sec.  413.65(a)(2) 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.
    In the proposed rule, we did not propose to change the existing 
definition of ``campus'' located at Sec.  413.65(a)(2) of our 
regulations. We stated that we 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.
    In accordance with section 1833(t)(21)(B)(i)(I) of the Act, in the 
CY 2017 OPPS/ASC proposed rule (81 FR 45683), we proposed 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.
    Comment: Several commenters supported the decision by CMS to not 
modify existing provider-based regulations. They stated that it is 
advisable to continue to use the current definition of facilities that 
are considered to be on-campus versus off-campus, including the use of 
both the 250 yards rule, as well as allowing the CMS Regional Offices 
to continue to provide case-specific discretion for making such 
determinations. Other commenters requested revisions to the definitions 
at Sec.  413.65(a)(2). Many of these commenters suggested using a 
``reasonable proximity'' test for ``campus'' or to emphasize the 
ability of CMS Regional Offices to allow for expanded campuses. Other 
commenters requested that certain types of providers be exempted from 
the general 250 yard limitation. Some commenters requested that CMS 
remove the Regional Office's discretion and not consider any location 
outside the 250 yard radius as part of a campus. Several commenters 
requested that CMS provide additional subregulatory guidance concerning 
the existing definition of ``campus'' and ``main building.''
    Response: We continue to believe that the current regulatory 
definition of campus at Sec.  413.65(a)(2), including the ability for 
the CMS Regional Offices to exercise discretion, allows a flexible and 
realistic approach to the configurations a hospital may adopt. Because 
we did not propose any changes to the existing definition of 
``campus,'' we are not changing the definition at this time.

[[Page 79703]]

While implementation of the provisions of section 603 has added 
significantly more focus and attention on provider-based criteria, we 
note that the CMS Regional Offices have been making on-campus and off-
campus provider-based determinations for many years, with relatively 
few instances where there has not been consensus as to whether a 
facility was on-campus or off-campus. As we gain experience with the 
implementation of section 603, our preference is to make any necessary 
adjustments to provider-based policies at Sec.  413.65 through separate 
notice-and-comment rulemaking.
    After consideration of the public comments we received, we are 
finalizing the proposed policy that on-campus PBDs and the items and 
services provided by such departments 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 PBDs located on the 
campus of a provider, section 1833(t)(21)(B)(i)(II) of the Act excludes 
off-campus PBDs 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 ``multi-campus'' hospitals, as discussed 
previously, under current provider-based rules, a hospital is not 
allowed to have more than one single ``main'' campus for each hospital. 
Therefore, in the CY 2017 OPPS/ASC proposed rule (81 FR 45683 through 
45684), when determining whether an off-campus PBD meets the exception 
set forth at section 1833(t)(21)(B)(i)(II) of the Act, we proposed that 
the off-campus PBD must be located at or within the distance of 250 
yards from a remote location of a hospital facility. We stated that 
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.
    Comment: A number of commenters requested specific clarifications 
of remote-location definitions. In particular, the commenters requested 
that CMS better define the exact methodology a hospital should use to 
determine the 250 yard criterion. Commenters also requested 
verification that if any portion of an outpatient facility is within 
250 yards of the remote location, the entire facility can be considered 
excepted from section 603 payment implications.
    Response: We note that all remote locations of a hospital, as well 
as any nearby outpatient departments, continue to be considered as 
``off-campus'' under regulations at Sec.  413.65. A remote location is 
not a ``campus'' as that term is currently defined in Sec.  413.65, and 
we did not propose any changes to the definitions in Sec.  413.65. 
Therefore, as stated in the proposed rule, we interpreted the distance 
(described in such definition of campus) from a remote location of a 
hospital facility (as defined in Sec.  413.65(a)(2)) to be 250 yards. 
Because neither section 1833(t)(21)(B)(i)(II) of the Act, as added by 
section 603 of Public Law 114-74, nor the provider-based regulations 
specify the specific point from which to measure (for example, the main 
entrance), we interpret this to mean that a hospital may measure 250 
yards from any point of the physical facility that serves as the site 
of services of the remote location to any point in the PBD. We believe 
this implementation is consistent with how CMS has historically 
implemented the 250-yard criterion when making on-campus determinations 
under Sec.  413.65.
    After consideration of the public comments we received, we are 
finalizing the policy as proposed. Off-campus PBDs that are located at 
or within 250 yards of a remote location of a hospital facility, as 
defined in Sec.  413.65(a)(2), will be excepted from application of 
sections 1833(t)(1)(B)(v) and (t)(21) of the Act.
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. In the CY 
2017 OPPS/ASC proposed rule (81 FR 45684), we proposed 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 (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.
    In the proposed rule, we noted that we had 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.
    We also noted that providers also 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 and that 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. In the proposed rule, we stated our 
belief 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 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.

[[Page 79704]]

    Below we discuss the proposals we made in the proposed rule 
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.
(1) Relocation of Off-Campus PBDs Excepted Under Section 
1833(t)(21)(B)(ii) of the Act
    In the proposed rule, we stated that 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 were concerned that if we 
proposed 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 stated in the proposed rule, we believe that section 603 of 
Public Law 114-74 applies to off-campus PBDs as they existed at the 
time of enactment and 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 proposed that, for purposes of paragraphs (1)(B)(v) and 
(21) of section 1833(t) 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 under our proposal. Once an excepted off-campus PBD has 
relocated, we proposed that both the off-campus PBD itself and the 
items and services provided at that off-campus PBD would no longer be 
excepted, and instead, would be subject to paragraphs (1)(B)(v) and 
(21) of section 1833(t) of the Act.
    In the proposed rule, we noted that hospitals had 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. In the CY 2017 OPPS/ASC proposed rule, we solicited 
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 that would allow off-campus PBDs to relocate in very 
limited situations, and that would 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 sought 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 circumstances would be.
    Comment: Numerous commenters opposed CMS' proposal to limit 
excepted off-campus PBDs to the physical address on the provider's 
hospital enrollment form as of November 1, 2015. The commenters stated 
that a PBD that moves or relocates from its physical address after 
November 2, 2015, should not lose its excepted status, given the many 
circumstances that may necessitate a hospital to move or relocate, 
temporarily or permanently, such as lease expiration, building safety 
code compliance, building deterioration, population shifts, natural 
disaster, seismic requirements, and other situations beyond a 
hospital's control. Many commenters stated that CMS' proposal is overly 
restrictive and that CMS does not have the authority to apply payment 
reductions to hospitals that move or relocate because section 603 does 
not explicitly discuss or address relocation. These commenters believed 
that Congress intended the section 603 provisions to apply to new off-
campus PBDs and not to relocation of existing off-campus PBDs. The 
commenters requested that CMS allow flexibility such that excepted off-
campus PBDs could move or relocate for any reason without jeopardizing 
payment under the OPPS. Several commenters opposed CMS' consideration 
of a disaster/extraordinary circumstance exception process similar to 
the Hospital VBP Program because they believed excepted off-campus PBDs 
should be allowed to relocate for any reason without permission or 
approval from CMS.
    Some commenters were opposed to the relocation proposal and 
suggested that, if CMS moves forward with adopting a limitation on 
relocation of existing PBDs, CMS clearly define relocation exceptions. 
In particular, the commenters recommended that CMS allow excepted PBDs 
to relocate without the loss of excepted status under the following 
circumstances:
     Relocation to comply with Federal and State requirements;
     Relocation of an HOPD that has been destroyed or 
substantially damaged in a disaster or emergency;
     Temporary relocation of an HOPD in order to allow 
rebuilding, updating or retrofitting of its infrastructure;
     Relocation due to the HOPD losing its lease;
     Relocating a HOPD in order to provide access to care in an 
underserved area; and
     Relocation due to a shifting/growing patient population.
    Response: We disagree that, in the context of section 603, an off-
campus PBD should be allowed to relocate for any reason and continue to 
be paid under the OPPS. In the proposed rule, we cited our concern that 
without limitations on relocation, hospitals would be able to relocate 
excepted off-campus PBDs to larger facilities, purchase additional 
physician practices, and move these practices into the larger relocated 
facilities that would continue to be paid under the OPPS.
    As previously stated, we believe that section 603 applies to off-
campus PBDs as they existed at the time the law was enacted. That is, 
we believe that the statutory language provides for payment to continue 
under the OPPS for 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 at Sec.  413.65 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. To allow excepted off-campus PBDs to relocate under every 
circumstance and continue to be paid OPPS rates would allow hospitals 
to continue the practices we believe section 603 was intended to curb. 
Allowing unlimited relocation of an off-campus PBD would potentially 
result in relocation to larger facilities, with different equipment and 
staff and unbridled expansion of service lines. Among other changes, 
its composition

[[Page 79705]]

could result in an off-campus PBD that is remarkably different than it 
was prior to November 2, 2015, the date of enactment of Public Law 114-
74.
    With respect to exercising flexibility in interpreting the statute, 
we are adopting an exceptions process to our relocation proposal that 
is limited to extraordinary circumstances outside a hospital's control, 
which is described later in this section. We believe that this final 
policy adds some additional flexibility from what we proposed, which 
was 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 addition, with respect to the comment about 
defining criteria under which exceptions for relocation might be made, 
we note that it is not feasible to establish criteria that would apply 
to every type of extraordinary circumstance that may arise. 
Accordingly, we believe providing an exhaustive list of scenarios for 
which relocation is necessary would be contrary to the notion of added 
flexibility.
    Comment: Several commenters suggested two alternatives to CMS' 
relocation proposal that would grant more flexibility to hospitals that 
may need to relocate for reasons seen and unforeseen. One suggested 
alternative was to allow relocation so long as the total number of off-
campus PBDs for a hospital did not increase relative to the number 
prior to enactment of section 603. A second suggested alternative was 
that CMS develop a ``substantially similar'' test to determine if a 
relocated location is actually new. Commenters suggested that the 
substantially similar test could be similar to the critical access 
hospital (CAH) relocation requirements as defined in regulations at 42 
CFR 485.610(d).
    Response: We appreciate the commenters' feedback. As discussed 
earlier in section X.A.1. of this final rule with comment period, we 
believe that one of the primary goals of section 603 of Public Law 114-
74 is to remove the difference in payment for outpatient services 
furnished in freestanding facilities and nonexcepted off-campus PBDs. 
Also, in the proposed rule, we stated our concern with establishing 
relocation policies that could result in an unintentional loophole and 
therefore undermine what we believe is the intent of the law. We 
disagree with the commenters' recommendation to allow relocation based 
on CAH relocation requirements because it could allow fairly unlimited 
relocation and expansion as long as 75 percent of the services/staff 
continue to be present in the expanded service area. In addition, this 
recommendation has significant operational and enforcement challenges 
and would require significant administrative resources to evaluate 
exception requests, including data analysis to ensure criteria are met. 
Likewise, while ``capping and freezing'' the total number of off-campus 
PBDs a hospital could have to the number of off-campus PBDs the 
hospital had prior to enactment of section 603 would limit the total 
number of off-campus PBDs to those that existed prior to enactment, we 
believe it would not address the previously stated concerns that a 
hospital could use relocation to expand to a new type of department 
that furnishes a higher volume and a wider variety of services with 
staff, personnel, and equipment that the off-campus PBD that was 
billing prior to enactment of section 603 previously did not have. 
Therefore, we do not agree with either suggestion.
    Comment: Several commenters and MedPAC supported CMS' relocation 
proposal but recommended that CMS allow excepted off-campus PBDs to 
relocate for acts of nature, either temporarily or permanently, without 
loss of excepted status.
    Response: We appreciate the commenters' support and agree that 
excepted off-campus PBDs should be permitted to relocate for 
extraordinary circumstances outside their control, such as natural 
disasters, significant seismic building codes, or significant public 
health and public safety issues, without loss of excepted status. 
Accordingly, we are adopting a policy in this final rule with comment 
period to allow an excepted off-campus PBD to relocate in the limited 
instances of extraordinary circumstances outside of the hospital's 
control, such as natural disasters, significant seismic building code 
requirements, or significant public health and public safety issues, 
that necessitate moving to a new building (either temporarily or 
permanently) without losing its excepted status. Exceptions to the 
relocation policy will be evaluated on a case-by-case basis by the 
appropriate CMS Regional Office. We note that such exceptions will be 
both limited and rare because we do not wish to allow this 
extraordinary circumstances exception to undermine the goal of limiting 
the growth and expansion of excepted off-campus PBDs. We intend to 
issue subregulatory guidance on the extraordinary circumstances 
process. Technical details will be addressed in that guidance.
    Comment: Some commenters raised the question of whether an on-
campus PBD that was billing under the OPPS prior to November 2, 2015, 
would maintain excepted status if the PBD moved off-campus after the 
date of enactment of Public Law 114-74.
    Response: In this scenario, an on-campus PBD that relocates off-
campus would be subject to sections 1833(t)(1)(B)(v) and (t)(21) of the 
Act in CY 2017 and subsequent years. We believe that section 603 
applies to off-campus PBDs as they existed at the time the law was 
enacted. Therefore, while an on-campus PBD as of November 2, 2015 would 
be treated as an excepted off-campus PBD, the subsequent relocation of 
that PBD off-campus would result in the PBD no longer being paid under 
the OPPS.
    Comment: Several commenters recommended that, if CMS were to adopt 
a relocation exceptions process, the process to obtain an exception be 
administratively simple and timely. Specifically, the commenters 
suggested two approaches to establishing a relocation exceptions 
process: First, CMS could modify the Medicare 855 enrollment form and 
the online Medicare Provider Enrollment, Chain, and Ownership System 
(PECOS) so that the hospital would notify CMS of the reason for a 
relocation of an excepted off-campus PBD by choosing among the list of 
preapproved exceptions. Second, CMS Regional Offices could have 
discretionary authority to approve additional relocation exceptions for 
excepted off-campus PBDs in other reasonable, but unforeseen, 
circumstance.
    Response: We agree that the relocation exceptions process should be 
as administratively simple as possible. As mentioned earlier, the 
appropriate CMS Regional Office will evaluate relocation requests on a 
case-by-case basis. We will take these comments into consideration 
prior to issuing subregulatory technical guidance.
    After consideration of the public comments received, we are 
finalizing our proposed policy on relocation, with modification to 
allow excepted off-campus PBDs to relocate temporarily or permanently, 
without loss of excepted status, for extraordinary circumstances 
outside of the hospital's control, such as natural disasters, 
significant seismic building code requirements, or significant public 
health and public safety issues. This policy is intended to be applied 
in a limited and rare manner to ensure that excepted off-campus PBDs do 
not leverage these

[[Page 79706]]

requirements to subvert the intent of section 603. CMS Regional Offices 
will evaluate and approve or deny these relocation requests. We will 
provide instruction through subregulatory guidance on the process to 
request a relocation exception. CMS Regional Offices will make 
determinations for relocation exception requests.
(2) Expansion of Clinical Family of Services at an Off-Campus PBD 
Excepted Under Section 1833(t)(21)(B)(ii) of the Act
    In the CY 2017 OPPS/ASC proposed rule, we noted that we had 
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, 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.
    In the proposed rule, we stated that we believe 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 at Sec.  
413.65(a)(2) of a department of a provider. Thus, we proposed that the 
excepted off-campus PBD items and services that would continue to be 
paid under the OPPS would be limited to 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 proposed 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 by section 603 of Public Law 114-74 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 newly acquired physicians' offices or new off-campus PBDs 
established after the date of enactment of section 603. In the proposed 
rule, we indicated that we were 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 proposed, 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 in 
Table 21 of the proposed rule (81 FR 45685 through 45686)) such a 
department was billing for under the OPPS and were furnished prior to 
November 2, 2015. We proposed 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 the proposed rule. We note that we proposed 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 proposed that service types be defined 
by the 19 clinical families of hospital outpatient service types 
described in Table 21 of the proposed rule (81 FR 45685 through 45686). 
Moreover, we proposed 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 
proposed 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 referred readers to Addendum B to the proposed 
rule (which is available via the Internet on the CMS Web site) for 
which HCPCS codes mapped to each clinical family of services. We stated 
that if we added a new HCPCS code or APC in future years, we would 
provide mapping to these clinical families of services, where relevant.
    In addition, we considered, but did not propose, 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 
sought 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.
    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 proposed to pay for expanded items and services that are 
furnished at excepted off-campus PBDs, that is, are nonexcepted items 
and services.
    We sought public comments on these proposals. In addition, we 
sought 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.
    Comment: A large number of commenters opposed CMS' proposals 
related to service expansion. The commonly cited concerns among the 
commenters who opposed the proposed policy were as follows:
     The statutory language included in section 603 does not 
address changes in service-mix by excepted off-campus PBDs. These 
commenters stated that CMS exceeded its authority to state that 
Congress established both excepted facilities and excepted items and 
services that those facilities may provide.
     Limitations on service line expansion does not reflect 
that health care is ever evolving and new therapies and services may be 
developed that do

[[Page 79707]]

not fit squarely in the proposed clinical families. Commenters stated 
that CMS' proposal would hinder beneficiary access to innovative 
technologies if an excepted off-campus PBD is penalized financially for 
keeping up with the practice of medicine.
     The term ``clinical families of service'' appears to be a 
new term created by CMS for the purpose of implementing section 603. 
Commenters expressed concern that, because the clinical families are 
defined by APC groupings, it would be difficult for CMS and hospitals 
to manage changes in the composition of APCs and HCPCS code changes 
contained in those APCs.
     Operational challenges and administrative burden seem 
significant for both CMS and hospitals. Commenters believed that CMS' 
proposal is unnecessarily complex and will create challenges for CMS to 
operationalize, track, manage, and enforce particularly because 
hospitals do not report or attest to the types of services furnished at 
each off-campus PBD.
    In addition, MedPAC recommended an alternative approach that it 
suggested would also meet the intent of section 603 by minimizing the 
incentive of hospitals to purchase independent physician practices and 
convert them to off-campus PBDs. MedPAC recommended that CMS establish 
a baseline service volume for each applicable off-campus PBD and cap 
services, regardless of clinical family, at that limit. When the 
hospital reaches the annual cap for that location, CMS would no longer 
pay OPPS rates for those services. The annual cap could be updated 
based on the annual updates to the OPPS payment rates. However, MedPAC 
noted that, in order for CMS to implement this approach, CMS would have 
to collect information on OPPS payments to each excepted off-campus PBD 
from November 2, 2014 through November 1, 2015 to establish a baseline.
    Response: We appreciate the detailed comments that were submitted. 
We disagree that section 603 does not provide us the authority to adopt 
a policy that would limit OPPS payment to the type of services that had 
been furnished and billed at an off-campus PBD prior to enactment of 
Public Law 114-74. Further, we believe the statute gives us the 
authority to limit the volume of services furnished to the level that 
was furnished prior to the date of enactment; however, we did not 
propose to do so. However, we are interested in feedback from 
stakeholders in this final rule with comment period about how such a 
policy would work, and we intend to monitor for potential shifting of 
services to excepted off-campus PBDs, including on-campus PBDs. As 
mentioned in the proposed rule, we were 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 prevent. 
Nonetheless, we agree with commenters, including MedPAC, that our 
proposed policy could be operationally complex and could pose an 
administrative burden to hospitals, CMS, and our contractors to 
identify, track, and monitor billing for clinical services. Further, we 
believe that the relocation policy for excepted off-campus PBDs, when 
coupled with the final service expansion policy we are adopting in this 
final rule with comment period, will help ensure that off-campus PBDs 
excepted from application of sections 1833(t)(1)(B)(v) and (t)(21) of 
the Act will not be able to circumvent applicability of payment under 
section 1833(t)(21) of the Act. In response to the comments about the 
need to allow services to evolve over time to meet community needs, we 
recognize that community needs may evolve over time. However, to the 
extent that the community needs are of the service type that could be 
furnished by either a hospital or a different provider supplier type, 
we do not believe that our proposed policy would have hindered access 
to needed services in the community. Accordingly, we are not finalizing 
this proposal at this time. However, we intend to monitor service line 
growth and, if appropriate, may propose to adopt a limitation on the 
expansion of services or service lines in future rulemaking. In that 
event, we will consider the commenters' concerns expressed in comments 
received on the proposed clinical families of service in development of 
any future rulemaking on service expansion.
    After consideration of the public comments we received, we are not 
finalizing our proposed policy to limit service line expansion. 
Therefore, an excepted off-campus PBD will receive payments under the 
OPPS for all billed items and services, regardless of whether it 
furnished such items and services prior to the date of enactment of 
Public Law 114-74, as long as the excepted off-campus PBD remains 
excepted; that is, it meets the relocation and change of ownership 
requirements adopted in this final rule with comment period. As 
mentioned earlier in this section, we intend to monitor this issue and 
continue to consider how a potential limitation on expansion would 
work. To that end, we would appreciate receiving feedback from 
stakeholders on how either a limitation on volume of services, as 
MedPAC described in its comments, or a limitation on lines of service, 
as we laid out in the proposed rule, would work in practice. 
Specifically, we are interested in what data are currently available or 
could be collected that would allow us to implement a limitation on 
service expansion. We also are interested in suggestions for changes to 
the clinical families of services that we set forth in Table 21 of the 
proposed rule as we move forward (81 FR 45685 through 45686).
(3) Other Related Public Comments
    Comment: A few commenters requested clarification on whether the 
section 603 provisions apply to Federally Qualified Health Centers 
(FQHCs) that meet provider-based criteria set forth in 42 CFR 413.65(n) 
and are paid under the OPPS. In addition, the commenters stated that 
even if the section 603 policies would apply, CMS has the authority to 
exempt FQHCs from policies related to implementation of section 603 
using equitable adjustment authority as defined in section 
1833(t)(2)(E) of the Act. Commenters requested that CMS invoke the 
equitable adjustment authority and continue to pay FQHCS that meet the 
criteria at Sec.  413.65(n) under the OPPS in spite of the section 603 
provisions.
    Response: Section 603 of Public Law 114-74 generally provides that 
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) of the Act 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.
    Under existing regulations at 42 CFR 413.65(n), a FQHC or FQHC 
look-alike facility that has, since April 7, 1995, furnished only 
services that were billed as if they had been furnished by a department 
of a provider will continue to be treated, for purposes of the 
provider-based regulations, as a

[[Page 79708]]

department of a provider without regard to whether it complies with the 
criteria for provider-based status, as long as it was qualified as an 
FQHC (not including tribal/Indian facilities which are subject to 
413.65(m)) or FQHC look-alike on or before April 7, 2000. (An ``FQHC 
look-alike'' is an organization that has been identified by HRSA as 
meeting the definition of ``Health Center'' under section 330 of the 
PHS Act, but does not receive grant funding under section 330.)
    Section 603 does not apply to FQHCs that are paid under the FQHC 
Prospective Payment System methodology at section 1834(k) of the Act. 
However, section 603 provisions would apply to any entity that is paid 
under section 1833(t), including a provider-based FQHC under Sec.  
413.65(n), because a provider-based FQHC is considered a department of 
a provider under the OPPS.
    The commenter mentioned section 1833(t)(2)(E) of the Act, which 
provides that the Secretary shall establish, in a budget neutral 
manner, other adjustments under the OPPS as determined to be necessary 
to ensure equitable payments. In other words, section 1833(t)(2)(E) of 
the Act provides the authority to make a payment adjustment under the 
OPPS. While section 1833(t)(2)(E) of the Act does provide fairly broad 
authority to make such a payment adjustment, we do not believe this 
authority extends to exempting a class of off-campus PBDs from 
application of a separate statutory provision that specifically 
prohibits payment under the OPPS itself; that is, there would be no 
OPPS payment to which a payment adjustment could be made.
    Comment: Several commenters requested clarification on whether the 
section 603 provisions apply to off-campus PBDs of hospitals operated 
by the Indian Health Service (IHS) or by a tribe or tribal 
organization.
    Response: Hospitals that are operated by the IHS, tribes, or tribal 
organizations are paid under section 1880 of the Act. As mentioned, 
section 603 of Public Law 114-74 amended sections 1833(t)(l)(B) and 
(t)(21) of the Act and only applies to those entities paid under 
section 1833(t) of the Act. Section 603 does not change payment to the 
IHS, tribes, and tribal organization eligible for payment under section 
1880 of the Act.
    Comment: Numerous commenters acknowledged that the CY 2017 OPPS/ASC 
proposed rule did not include a proposal for the treatment of off-
campus PBDs mid-build or under development at the time Public Law 114-
74 was enacted on November 2, 2015. Commenters contended that PBDs 
under construction or in the development phase could not have 
reasonably foreseen the restrictions put in place by section 603. The 
commenters further believed that, in the absence of reasonable 
knowledge or notice that such restrictions would ever be put in place 
at the time plans were completed for and construction begun on the new 
off-campus departments, these facilities will be inadvertently 
disadvantaged financially because they will not be paid under the OPPS. 
As such, commenters requested that CMS either delay implementation of 
section 603 to allow Congress time to pass H.R. 5273--Helping Hospitals 
Improve Patient Care Act of 2016 or add ``mid-build'' or ``under 
development'' PBDs to the types of excepted off-campus PBDs.
    Response: While we understand the commenters' concerns that 
hospitals could not have reasonably predicted or expected that new off-
campus PBDs would not be paid under the OPPS, section 603 does not 
provide an exception for off-campus PBDs that were mid-build at the 
time of enactment. Therefore, we did not propose to include mid-build 
or under development off-campus PBDs among the types of excepted off-
campus PBDs. In addition, we are required to implement the provisions 
of section 603 to provide payments for nonexcepted items and services 
furnished by nonexcepted off-campus PBDs under the applicable payment 
system other than the OPPS beginning January 1, 2017.
    Comment: Several commenters believed that CMS misinterpreted the 
statute when the agency proposed to limit the definition of an excepted 
off-campus PBD to those that submitted a bill for covered outpatient 
services under the OPPS furnished prior to November 2, 2015. Commenters 
believed that CMS' proposal is based on a narrow read of the statute 
and that Congress did not intend the billing function to be the 
deciding factor in determining the exceptions requirement. Instead, the 
commenters requested that CMS consider a more flexible interpretation 
and except off-campus PBDs that satisfy any of the following scenarios:
     Off-campus PBDs fully operational but not yet treating 
patients on or before November 2, 2015;
     Off-campus PBDs fully operational and treating patients on 
or before November 2, 2015, but billing department not yet fully 
functional; and
     Off-campus PBDs fully operational and treating patients on 
or before November 2, 2015, but internal process for billing claims 
includes a standard review period before the claims are submitted to 
Medicare.
    Response: We disagree with the commenters' request to except off-
campus PBDs that were operational and not yet treating patients by 
November 2, 2015. We believe that the exception under section 
1833(t)(21)(B)(ii) of the Act, as added by section 603, is limited to 
those off-campus PBDs that were ``billing under this subsection with 
respect to covered OPD services furnished prior to [November 2, 
2015].'' However, we agree with commenters' that one interpretation of 
the statute could allow for an exception for off-campus PBDs that 
furnished a covered OPD service prior to November 2, 2015, but had not 
submitted a bill to Medicare for such service prior to November 2, 
2015. We are finalizing our interpretation as proposed, with 
modification, which means that off-campus PBDs would be eligible to 
receive OPPS payment as excepted off-campus PBDs for services that were 
furnished prior to November 2, 2015, and billed under the OPPS in 
accordance with timely filing limits.
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 does not result in any material 
change of provider-based status. A provider-based approval letter for 
such a department will 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45686), we proposed 
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. Under 
our proposal, if the provider agreement is terminated, all excepted 
off-campus PBDs and the excepted items and services furnished

[[Page 79709]]

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 
proposed that individual excepted off-campus PBDs cannot be transferred 
from one hospital to another and maintain excepted status. We solicited 
public comments on these proposals.
    Comment: A few commenters supported CMS' proposal that an excepted 
off-campus PBD would continue to be excepted after a change in 
ownership in which the buyer accepts assignment of the provider 
agreement. However, many commenters opposed the proposals regarding 
change of ownership on the grounds that the section 603 provisions do 
not specifically address change of ownership. The commenters asserted 
that, had Congress intended payment reductions for purchases or 
acquisitions of existing off-campus PBDs by a different hospital, 
Congress would have included it in the law. Several commenters stated 
that hospitals in financial difficulty that plan to close their 
inpatient hospital beds will offer to transfer their HOPDs to better-
performing hospitals in order to ensure that critical hospital-based 
outpatient services are still accessible to patients in the community. 
Similarly, commenters expressed concern that the change of ownership 
proposals could have an unintended consequence for hospitals that 
downsize from providing inpatient and outpatient services to outpatient 
services only or that close inpatient hospital beds but want to retain 
the outpatient off-campus PBD. Commenters believed that such 
acquisitions or reconfigurations within a health system may not be 
financially feasible if the excepted off-campus PBD were to lose 
payment under the OPPS. To remedy their concerns, the commenters 
requested that CMS permit individual off-campus PBDs to retain their 
excepted status even if bought individually by another provider.
    Response: We disagree with the commenters who believe that we do 
not have the authority or are prohibited from addressing change of 
ownership as part of our implementation of section 603. For hospitals 
that participate in Medicare, CMS has a longstanding policy codified in 
regulation at 42 CFR 489.18 and Manual Publication 100-07, Chapter 3, 
Sections 3210 through 3210.5(C) that addresses change of ownership 
including merger/acquisitions and consolidations, and the effect on the 
Medicare provider agreement. Our change of ownership proposals to 
implement the section 603 provisions are modeled after longstanding 
payment policy across several payment systems in which assets/
liabilities are transferred to the new owner only if the new owner 
accepts the existing provider agreement. If a hospital is sold or 
merges with another hospital, a PBD's provider-based status generally 
transfers to the new ownership as long as the transfer would not result 
in any material change of provider-based status. In addition, provider-
based status is defined as the relationship between a facility and a 
main hospital provider, not an asset that can be transferred from one 
provider to another. Therefore, because provider-based status is a 
relationship with the main hospital provider, it is not practical to 
allow the sale of an individual PBD even if the main hospital is 
closing or downsizing. For example, a hospital owner that decides to 
combine two certified hospitals under one Medicare provider agreement, 
with one CMS Certification Number (CCN) would lose excepted status if 
the off-campus PBD was not enrolled as a provider-based department of 
the resulting combined hospital and billing under the OPPS for covered 
items and services furnished prior to November 2, 2015.
    After consideration of the public comments we received, we are 
finalizing our proposals without modification. Specifically, we are 
allowing excepted status for the off-campus PBD to 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 will no longer be excepted for purposes of paragraphs (1)(B)(v) 
and (21) of section 1833(t) of the Act. Finally, an individual excepted 
off-campus PBDs cannot be transferred from one hospital to another and 
maintain excepted status.
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.
    As we discussed in the CY 2017 OPPS/ASC proposed rule, 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 the time of 
development of the proposed rule, we were 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 sought 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 sought 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 in Table 21 of the 
proposed rule) that were provided by the excepted off-campus PBD prior 
to the November 2, 2015 date of enactment. We indicated that 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.
    Comment: Commenters believed that CMS would not be able to 
distinguish between individual off-campus PBDs of a hospital nor would 
CMS be able to determine if an individual off-campus PBD billed for 
certain services prior to enactment based on currently available data. 
Some commenters believed that an additional data collection would be 
needed to ascertain this information before CMS could effectively 
implement

[[Page 79710]]

its proposed policy. Another commenter suggested that CMS collect 
information to separately identify each off-campus PBD location, the 
date that each off-campus PBD began billing Medicare, the provider 
number of the parent hospital, and the clinical family of services the 
off-campus PBD was providing before enactment. This commenter suggested 
that this information should be made public for use by oversight 
agencies and policy analysts.
    Some commenters asked CMS to analyze whether additional data 
collection is necessary given the burden for providers. Other 
commenters believed that the CMS proposals on relocation and expansion 
of services would require significant data collection to implement. 
Commenters believed the data collection burden provided good reason for 
CMS to alter its proposals for relocation and expansion of services.
    Response: We thank the commenters for their input. As with OPPS 
payments generally, we rely on hospitals to bill all HCPCS codes 
accurately in accordance with their code descriptors and CPT and CMS 
instructions, and to report charges on claims and charges and costs on 
their Medicare hospital cost report appropriately. We note that 
hospital billing, in general, relies upon hospitals to appropriately 
identify items and services for which they are claiming payment under 
the Medicare program, including use of modifiers as appropriate. From a 
monitoring and enforcement perspective, we intend to follow traditional 
practices, including prepayment and postpayment reviews to the extent 
applicable to ensure that hospitals are correctly identifying 
nonexcepted items and services. We expect that existing protocols used 
by program integrity entities will continue to be used to monitor and 
enforce appropriate billing of nonexcepted items and services. 
Hospitals will be expected to maintain documentation sufficient to 
prove that an off-campus PBD is an excepted off-campus PBD; that is, 
was an off-campus PBD billing for covered OPD services furnished prior 
to November 2, 2015. We note that, because multiple off-campus PBDs may 
bill under the same CMS Control Number (CCN), Medicare billing data may 
not be sufficient to prove that an off-campus PBD was billing Medicare 
for covered OPD services furnished prior to November 2, 2015.
    In addition, we plan to issue instructions to the Medicare 
contractors to update their systems using enrollment data that would 
identify each off-campus PBD by physical address and by the date it was 
added to the hospital's enrollment.
    Comment: One commenter suggested that CMS wait to require 
additional data collection until after it had the opportunity to 
analyze data provided by the mandatory use of the ``PO'' modifier to 
indicate off-campus OPPS services that began in CY 2016.
    Response: We appreciate the commenter's feedback. As the commenter 
mentioned, use of the ``PO'' modifier became mandatory for services 
furnished on or after January 1, 2016 (it was voluntary in 2015) for 
all off-campus PBDs other than remote locations, satellite facilities, 
and EDs. We are monitoring data that include the ``PO'' modifier and 
intend to continue to monitor the data. In addition, we are 
establishing a new modifier ``PN'' that will be required to be billed 
with nonexcepted items and services. This new modifier is discussed in 
greater detail later in this section, is also discussed in the interim 
final rule with comment period in section X.B. of this document, and 
will be discussed in subregulatory guidance.
    Comment: MedPAC and other commenters suggested that CMS create new 
claim line modifiers to indicate when an item or service is an excepted 
or nonexcepted service. MedPAC suggested that such modifiers would help 
ensure program integrity. In addition, MedPAC suggested that CMS 
establish modifiers to indicate when a service is provided in a 
dedicated ED and whether the dedicated ED is on-campus or off-campus, 
citing its June 2016 report in which it quantified the recent growth in 
the number of off-campus EDs billing Medicare and the inability of the 
Medicare program to distinguish between on-campus and off-campus ED 
services. In addition, MedPAC suggested that CMS seek legislative 
authority to impose strict penalties on hospitals that inappropriately 
bill for nonexcepted services under the OPPS and that these claims 
should be subject to the False Claims Act.
    Response: We appreciate MedPAC's detailed comments on these issues. 
We have established a new claim line modifier for nonexcepted items and 
services (``PN'') that can be used to identify and pay nonexcepted 
items and services billed on an institutional claim. This modifier will 
be effective for items and services furnished on or after January 1, 
2017, and is discussed in more detail in section X.A.3.b.(2) of this 
final rule with comment period. We have not established a modifier 
specific to services provided at an off-campus dedicated ED at this 
time and note that EDs, whether they are on- campus or off-campus, are 
excepted from section 603. The comment suggesting that we seek 
legislative authority to impose penalties against hospitals that 
inappropriately bill for nonexcepted services is outside the scope of 
the proposed rule.
3. Payment for Items and Services Furnished in Off-Campus PBDs to Which 
Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted 
Items and Services Furnished by 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 HCPCS 
code of the item or service is assigned. The OPPS includes payment for 
most hospital outpatient services, except those identified in section 
I.C. of this final rule. Section 1833(t)(1)(B) of the Act generally 
outlines what are covered OPD services eligible for 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) of the Act, as added by section 603 of Public Law 114-
74, 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 items and 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

[[Page 79711]]

payment is also made to the facility (i.e., the facility rate); and 
another that assumes the professional furnishes and incurs the full 
costs associated with furnishing the service (that is, 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 facility allowed amount. Because 
the sum of the OPPS payment and the MPFS facility payment 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 and 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 when those 
physician practices are converted to PBDs have been the topic of 
several reports in the popular media and by governmental agencies. For 
example, 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 
transaction (or combination of transactions) through which a hospital 
acquires a physician practice. 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 at a freestanding facility such as a 
physician's office. These types of reports highlight the types of 
concerns we believe Congress may have been trying to address with 
section 603 of Public Law 114-74.
    As we stated in the CY 2017 OPPS/ASC proposed rule, as we developed 
our proposal to implement section 603, we took into consideration the 
concerns described above, the specific statutory language, and the 
discretion provided in that statutory language. As described in detail 
earlier and below, paragraphs (1)(B)(v) and (21) of section 1833(t), as 
added by section 603 of Public Law 114-74, provide that certain items 
and services furnished by certain off-campus PBDs (that is, nonexcepted 
items and services furnished by nonexcepted 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 ``nonexcepted items and 
services.'' Section 1833(t)(21)(C) of the Act provides that payments 
for these nonexcepted items and services furnished by a nonexcepted 
off-campus PBD 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 noted our intention to provide a mechanism for a hospital 
to bill and receive payment for nonexcepted items and services 
furnished by an off-campus PBD under an applicable payment system that 
is not the OPPS in the proposed rule, we further noted that there was 
no straightforward way to do that before January 1, 2017. As discussed 
elsewhere in this final rule with comment period, we also proposed the 
MPFS to be the applicable payment system for nonexcepted items and 
services furnished and billed by off-campus PBDs. We stated in the 
proposed rule that, 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. In the proposed rule, we did not suggest these operational 
issues are insurmountable, but we indicated that they are multifaceted 
and will require time and care to resolve. As such, we did not propose 
a mechanism for an off-campus PBD to bill and receive 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 
proposed to specify that the applicable payment system for purposes of 
section 1833(t)(21)(C) of the Act is the MPFS. We indicated that while 
we did 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 were actively exploring options that would allow 
off-campus PBDs to bill for these services under another payment system 
and be paid at the applicable rate under such system beginning in CY 
2018. We solicited public comment on the

[[Page 79712]]

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 stated that we intended the policy we proposed to be a 
temporary, 1-year solution until we could 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. The public comments we received on this proposal will be 
discussed in the following sections that discuss each aspect of the 
proposed payment policy in detail.
b. 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45688), 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. 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 section 1833(t) (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.\5\ We believe that this 
trend has continued. In September 2016, the Physicians Advocacy 
Institute collaborated with Avalere Health to study recent physician 
employment trends.\6\ Avalere analyzed a database that contains 
physician and practice location information on hospital/health system 
ownership and linked data with the CMS National Plan & Provider 
Enumeration System. The findings showed that hospital ownership of 
physician practices has increased by 86 percent and the percent of 
hospital-employed physicians increased by almost 50 percent from July 
2012 to July 2015.
---------------------------------------------------------------------------

    \5\ 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).
    \6\ Avalere Health Study. Physician Practice Acquistion Study: 
National and Regional Employment Changes. Prepared for Physicians 
Advocacy Institute. September 2016.
---------------------------------------------------------------------------

    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, in the CY 2017 OPPS/ASC proposed rule, we 
proposed to designate the applicable payment system for the payment of 
the majority of nonexcepted items and services to be the MPFS. 
Specifically, we proposed 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.
    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. We 
stated in the proposed rule that 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 indicated 
in the proposed

[[Page 79713]]

rule that we believe it would be necessary to establish a new provider/
supplier type (for nonexcepted off-campus PBDs) that could bill and be 
paid under the MPFS for nonexcepted items and services using the 
professional claim. At the time of the proposed rule, we did not 
propose new mechanisms to allow an off-campus PBD to bill and receive 
payment from Medicare for these nonexcepted items and services as 
currently enrolled as a hospital based department. However, as 
described in detail later in this section, we solicited comments 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, we proposed 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 also noted 
that, for CY 2017, no mechanism would allow an off-campus PBD to bill 
under the MPFS for nonexcepted items and services for which coding and 
billing rules would otherwise allow payment (such as the technical 
component of diagnostic tests or radiation treatment delivery 
services). We sought comment on the kinds of changes that would need to 
be made in order to allow off-campus PBDs to bill for these kinds of 
services in the future. We noted that the hospital may continue to bill 
for services that are not paid under the OPPS, such as laboratory 
services.
    Comment: Many commenters disagreed that the MPFS should be the 
applicable payment system and suggested that the ASC payment system, a 
combination of the ASC payment system and the MPFS, or an entirely new 
Part B payment system should be the applicable payment system for 
nonexcepted items and services. Many of these commenters believed that 
the applicable payment system could be an entirely new payment system 
that is an amalgamation of current Part B payment systems (the ASC 
payment system, the MPFS, and the OPPS) that selects whichever current 
system best applies for the applicable service. Commenters noted that, 
for many surgical services, the ASC payment system would better reflect 
facility costs than the MPFS. MedPAC discouraged CMS from creating a 
new provider/supplier type. MedPAC and other commenters agreed with the 
proposal to establish the MPFS as the applicable payment system for 
nonexcepted services. Other commenters suggested that the MPFS is an 
appropriate applicable payment system because it reduces cost of 
services for beneficiaries and creates more equitable payments between 
off-campus PBDs and nonprovider-based clinics that bill under the MPFS 
instead of the OPPS.
    Response: We thank commenters for their feedback. After considering 
the public comments on the proposed rule, we continue to believe that 
the MPFS is the appropriate applicable payment system for nonexcepted 
items and services. As previously mentioned, many of the services 
furnished in off-campus PBDs are also furnished in the physician office 
setting. We reiterate that 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. In addition, the findings 
of the recent Avalere Health study mentioned earlier showed that 
hospital ownership of physician practices has increased by 86 percent 
and the percent of hospital-employed physicians increased by almost 50 
percent from July 2012 to July 2015. As mentioned previously in this 
section, MedPAC commended CMS for the effort to rigorously implement 
section 603 and stated that, if finalized, the proposals would have the 
potential to reduce the financial burden on taxpayers and 
beneficiaries, although there would likely be substantial 
administrative burdens on the agency and its contractors and providers. 
Furthermore, preliminary data billed by off-campus departments with the 
``PO'' modifier indicate that most items and services furnished in 
those departments are the types of services that are also commonly 
furnished in the physician office setting. The most commonly billed 
item or service was for an evaluation and management visit, followed by 
diagnostic and imaging services, drugs or biologicals and drug 
administration. We believe that adopting the MPFS as the applicable 
payment system is the most appropriate system for these nonexcepted 
off-campus PBDs items and services and is appropriate to implement 
section 603. However, we are modifying our proposal regarding payment 
for nonexcepted items and services, as discussed in section X.A.3.a.(2) 
of this final rule with comment period.
(2) Definition of Applicable Items and Services and Section 603 
Amendment to Section 1833(t)(1)(B) of the Act and 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 (1)(B)(v) and paragraph 
(21) of section 1833(t) to mean items and services (other than those 
furnished by a dedicated emergency department). Paragraph (1)(B)(v) of 
such section 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 (21)(B) of such section. Thus, such applicable 
items and services are not eligible for payment under the OPPS because 
they are not covered OPD services. Under our proposals in the CY 2017 
OPPS/ASC proposed rule, we explained that 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, we stated 
in the proposed rule that instead of being eligible for payment under 
the OPPS as covered OPD services, paragraph (21)(C) of section 1833(t) 
of the Act 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, 
under our proposed rule, the payment requirement under paragraph 
(21)(C) of section 1833(t) pf the Act 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). However, we note here that the proposed payment 
policy will not apply to expanded items and services because we are not 
finalizing our proposal with respect to expanded clinical families of 
services furnished by excepted off-campus PBDs.
(b) Payment Policy for CY 2017
    In accordance with sections 1833(t)(1)(B)(v) and 1833(t)(21)(C) of 
the Act, we specified in the CY 2017 OPPS/ASC proposed rule that 
payment for nonexcepted items and services as defined in section X.A.2. 
of the proposed rule will no longer be made under the OPPS, effective 
January 1,

[[Page 79714]]

2017. Instead, we proposed 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 in the proposed rule, we do not believe that, under current 
systems, an off-campus PBD could be paid for its facility services 
under the MPFS, but we noted that we would actively explore options 
that would allow for this beginning in CY 2018. Alternatively, we noted 
that an off-campus PBD continues to 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 the time of development of the proposed rule, we did not propose 
a change in payment policy under the MPFS regarding these nonexcepted 
items and services. However, in the CY 2017 MPFS proposed rule, we 
proposed 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. 
(We refer readers to the CY 2017 MPFS final rule with comment period 
for a discussion of the final policies for CY 2017.) 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 is paid to the 
facility under the applicable institutional payment system.
    As we noted in the proposed rule, 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 in the CY 2017 OPPS/ASC proposed 
rule to pay under the MPFS for all nonexcepted items and services 
furnished to beneficiaries could result in hospitals establishing 
business arrangements with the physicians or nonphysician practitioners 
who bill under the MPFS. In the proposed rule, we solicited 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 solicited 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 practitioners who 
refer to them. We stated that 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.
    In the proposed rule, we noted 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 was 
proposed for deletion for CY 2017, and this deletion is being finalized 
in this final rule with comment period. We refer readers to section 
II.A.3.b.(2) of this final rule with comment period for a discussion of 
this policy.
     Molecular pathology laboratory tests and advanced 
diagnostic laboratory tests (ADLTs) (section II.A.3.b.(3) of this final 
rule with comment period).
     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 the Medicare 
Provider 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

[[Page 79715]]

provider-based to a hospital, we noted in our proposal that a 
nonexcepted off-campus PBD would be eligible for PHP payment if the 
entity enrolls and bills as a CMHC. We noted that a hospital may choose 
to enroll a nonexcepted off-campus PBD as a CMHC, provided it meets all 
Medicare requirements and conditions of participation. While a hospital 
could still choose this option, we are modifying this proposal in order 
to provide for payment for PHP services furnished by a nonexcepted off-
campus PBD under the MPFS as explained later in this interim final rule 
with comment period.
    Comment: Many commenters opposed the payment proposal for 
nonexcepted items and services because they believed it would make no 
payment to hospitals for the nonexcepted items and services they 
furnish to Medicare beneficiaries. These commenters specifically noted 
that, under the proposal, no payment would be made to the nonexcepted 
off-campus PBD of the hospital for the nursing, laboratory, imaging, 
chemotherapy, surgical services, and many other reasonable and 
necessary services they provide to Medicare beneficiaries. The 
commenters believed that such a payment policy is unjustified. In 
addition, these commenters believed that CMS has a mechanism at its 
disposal that it could use to pay hospitals directly for nonexcepted 
services under the MPFS and urged CMS to work to be able to use this, 
or another, mechanism to provide reasonable payment to hospitals. The 
commenters stated that CMS must delay implementation of its site-
neutral policies until it does so. In addition, the commenters objected 
to the notion that an off-campus PBD would have to enroll as a 
different provider/supplier type in order to bill for its services.
    Many commenters raised concerns regarding the impact of the fraud 
and abuse laws on hospitals and physicians in the event that CMS 
finalizes the proposals. Commenters identified perceived legal and 
operational impediments associated with the payment policies as they 
affect nonexcepted off-campus OPDs. Specifically, the commenters were 
concerned that the proposed payment policies, if finalized, would 
require hospitals to enter into financial relationships with referring 
physicians that cannot satisfy the requirements of an applicable 
exception to the physician self-referral law, resulting in a violation 
of that law's referral and claims submission prohibitions and 
subjecting hospitals to False Claims Act liability. Some commenters 
expressed doubt that, even if hospitals and physicians could structure 
their business arrangements to avoid noncompliance with the physician 
self-referral law and Federal anti-kickback statute, they could do so 
by January 1, 2017 when the payment policies would go into effect. As a 
result, according to the commenters, beneficiary access could be 
limited if off-campus PBDs were forced to close or remain ``frozen'' as 
of November 2, 2015 due to their inability to comply with the physician 
self-referral law or Federal anti-kickback statute. A few commenters 
believed that the impact and effect of the proposals would be 
particularly burdensome in rural areas where, often, the only available 
services are provided by hospitals. Other commenters expressed concerns 
about the impact of certain State laws, such as fee-splitting and 
corporate practice of medicine prohibitions, on the ability of 
hospitals and physicians to implement changes in their business and 
employment arrangements in order to comply with the proposed payment 
policies if finalized. One commenter expressed concerns about potential 
False Claims Act liability if a physician were to submit a claim with 
the place of service noted as ``non-facility'' (in accordance with the 
CMS billing and claims submission rules under the proposed payment 
policy) when the service was, in fact, furnished in an nonexcepted off-
campus PBD.
    Response: We appreciate the commenters' consideration of our 
proposals regarding the impact of the Federal fraud and abuse laws on 
hospitals and physicians should we finalize our proposals. We reiterate 
our belief that our proposal to make payment under the MPFS at the 
nonfacility rate for CY 2017 only would result in site neutral payment 
between physician offices and hospitals for furnished nonexcepted items 
and services, and we disagree that our proposal was ``unjustified.'' 
However, we agree with the commenters that our proposed payment 
policies could have required hospitals and physicians to establish 
financial relationships that implicate the physician self-referral law 
and Federal anti-kickback statute for CY 2017 only. Further, we 
recognize the difficulties that would be faced by hospitals and 
physicians in establishing financial relationships that comply with the 
physician self-referral law and other fraud and abuse laws (mentioned 
earlier) under our proposed payment methodology for nonexcepted items 
and services. Therefore, we are not finalizing our proposal. Instead, 
we are issuing an interim final rule with comment period under section 
X.B. of this document (and in conjunction with this final rule with 
comment period) to establish rates under the MPFS that will be paid for 
nonexcepted items and services furnished by off-campus PBDs, effective 
for services furnished on or after January 1, 2017. Because we are 
providing for payment directly to hospitals that furnish services to 
beneficiaries in nonexcepted off-campus PBDs, we believe that the 
commenters' concerns regarding the application of the Federal fraud and 
abuse laws are moot. Specifically, we refer readers to our commentary 
in the CY 2016 MPFS final rule with comment period (80 FR 71321) where 
we discuss the application of the physician self-referral law in 
``split billing'' arrangements under which a hospital bills the 
Medicare program under the OPPS for the resources and services that it 
furnishes to a beneficiary in a PBD (that is, the facility fee) and the 
referring physician bills the Medicare program under the MPFS for only 
the professional services that he or she furnishes to the beneficiary 
in a PBD.
    Details about the specific payment that will be made for these 
services are included in the interim final rule with comment period 
under section X.B. of this document.
    Comment: Many commenters who did not support the proposed payment 
policy and who suggested that CMS delay implementation of the section 
603 provisions requested that CMS convene a stakeholder workgroup or 
gather stakeholder input and expert advice on an alternative payment 
policy. Some commenters suggested that CMS pay providers the technical 
component of services from the MPFS. Many hospital commenters believed 
that the MPFS nonfacility rate is insufficient to pay for services 
provided at hospital facilities. Some commenters objected to the idea 
of nonexcepted off-campus PBDs having to enroll as another provider/
supplier type to receive Medicare payment, especially if the CY 2017 
policy is a transition to a more permanent policy in CY 2018. Some 
commenters suggested paying hospitals through the institutional claim 
at MPFS rates. Other commenters suggested adopting the ASC payment 
system as the applicable payment system instead of the MPFS.
    Some commenters recommended that CMS adopt an alternative payment 
policy that would allow the off-campus PBD to bill under the OPPS using 
a modifier that would trigger payment based on the practice expense for 
the service under the MPFS. Commenters believed that this alternative 
would allow facility payment for services provided until CMS develops a 
new

[[Page 79716]]

payment system or billing mechanism. Other commenters noted that 
hospital-billed therapy and laboratory services are currently paid 
under other fee schedules and stated that Medicare already has the 
ability to pay for nonexcepted items and services billed on the 
institutional claim.
    Response: We thank commenters for their feedback. We do not believe 
a delay in implementation is necessary. We also note that delaying the 
provision for a year would not only result in not meeting the statutory 
deadline for implementing section 603, but also a year's loss of 
savings to the Medicare Part B program, which the CMS Office of the 
Actuary estimates to be $50 million for CY 2017 in this final rule.
    We are issuing an interim final rule with comment period under 
section X.B. of this document to establish new MPFS rates for 
nonexcepted items and services furnished in an off-campus PBD. 
Providers will be able to bill for nonexcepted items and services on 
the institutional claim utilizing new claim line modifier ``PN'' to 
indicate that an item or service is a nonexcepted item or service. We 
consider these rates to be site-of-service specific rates for the 
technical component of MPFS services.
    As described in the interim final rule with comment period, for CY 
2017, the newly established MPFS rate for nonexcepted items and 
services will be based upon OPPS rates. That is, several payment 
policies that apply under the OPPS, including C-APCs and OPPS packaging 
logic, are being adopted under the newly established site-of-service 
MPFS rates. Because we do not currently have site-of-service specific 
data from nonexcepted off-campus PBDs on which to base these rates for 
CY 2017, we conducted an analysis of off-campus PBD payment data from 
2016 and compared these payment data to MPFS rates. As discussed in 
detail in the interim final rule with comment period under section X.B. 
of this document, we are using a rate that is 50 percent of the OPPS 
rate for each nonexcepted item or service, with some exceptions, as the 
interim technical component of MPFS services for items or services 
provided at a nonexcepted PBD. We are seeking public comments on the 
new payment mechanisms and rates detailed in the interim final rule 
with comment period and, based on these comments, will make adjustments 
as necessary to the payment mechanisms and rates through rulemaking 
that could be effective in CY 2017.
    We agree with the commenters who recommended that we pay for 
nonexcepted items and services using the technical component of the 
facility MPFS rate. Specifically, we are establishing, under the 
interim final rule with comment period, policies under the MPFS that 
will allow nonexcepted off-campus PBDs to be paid the site-specific 
technical component for services beginning in CY 2017. As discussed in 
the interim final rule with comment period, the initial payment rates 
will be made based on the general relationship between OPPS and MPFS 
rates for comparable services. Therefore, we note that payments under 
our interim final rule policy may not be exactly equal to payment under 
the technical component of MPFS for any specific item or service. Over 
time, we believe this billing and payment mechanism will provide 
information that will help us to refine and improve the accuracy of 
payment for these services under the MPFS. We will continue to pay for 
therapy and preventive services, as well as separately payable drugs, 
at the MPFS rate because nonexcepted off-campus PBDs would bill under 
the MPFS.
    The new rates under the MPFS will incorporate several important 
exceptions to the general payment methodologies. These exceptions are 
described in the interim final rule with comment period. Briefly, 
because payment for Part B drugs is prescribed under section 1842(o) 
and 1847A of the Act and separately payable Part B drugs are paid at 
the same rate under the OPPS and the MPFS, which is a longstanding 
policy determination rather than a statutory requirement, we are not 
reducing the payment rate for separately payable Part B drugs. 
Similarly, we will use the existing MPFS rate for items and services 
that are currently paid the MPFS rate under the OPPS, including the 
majority of therapy and preventive services.
    We believe that these payment policies address the majority of 
issues and concerns raised by commenters. Accordingly, we do not 
believe it is necessary to establish a formal stakeholder workgroup. 
However, we continue to be interested in feedback and comments from all 
interested parties on the payment policies we have set forth in the 
interim final rule with comment period, especially comments related to 
stakeholders' preference for the approach being adopted in the interim 
final rule with comment period as well as potential other approaches, 
or ratesetting methodologies based on readily available data.
    Comment: Many commenters noted that, under the proposed rule, there 
would be services for which no payment would be available because there 
is no payment rate for these services under the MPFS or because these 
services are furnished ``incident to'' physician services. Commenters 
noted that these services included drug administration, Part B drugs, 
clinical laboratory services, observation services, partial 
hospitalization services, and services that do not have nonfacility 
RVUs under the MPFS. Commenters expressed concern that the proposed 
payment policy would result in impracticable payment options for these 
services would lead to access issues for beneficiaries.
    Commenters specifically noted that outpatient services furnished 
``incident-to'' physicians' services are only priced in the nonfacility 
setting under the MPFS. The commenters added that payment for these 
services is provided under the OPPS, not the MPFS, when these services 
are provided in an outpatient setting. The commenters suggested that 
payment to the practitioner for ``incident to'' services furnished in a 
nonexcepted off-campus PBD would run counter to CMS' ``incident to'' 
regulations at 42 CFR 410.26 (b)(1), which state that services and 
supplies must be furnished in a noninstitutional setting to 
noninstitutional patients. The commenters suggested that these 
regulations indicated that there would be no payment for ``incident-
to'' services provided by non-excepted PBDs under the proposed policy, 
as payment could not be made to the PBD nor the practitioner for these 
services.
    Response: We thank the commenters for their feedback. As discussed 
in the interim final rule with comment period, we are implementing a 
policy that will allow hospitals to bill for nonexcepted items and 
services, including many of the types of services that commenters 
mentioned, under newly established rates under the MPFS that are being 
adopted in the interim final rule with comment period.
    Comment: Several commenters disagreed with the payment proposal as 
it relates to PHP services. These commenters stated that the proposal 
would provide no payment for PHP services which would disrupt the 
continuity of care that is provided by hospital-based PHPs and restrict 
access to PHP services. Several commenters urged CMS to apply the 
authority under section 1833(t)(2)(E) of the Act, thereby allowing 
nonexcepted off-campus PBD PHPs to continue being paid under OPPS. Many 
commenters believed that Congress did not intend for PHP to no longer 
be paid when furnished at nonexcepted off-campus PBDs. In addition, the 
commenters noted that

[[Page 79717]]

application of the MPFS to nonexcepted off-campus PBDs would require 
hospitals to hire additional physicians in order to meet the MPFS 
supervision requirements and completely restructure residency programs 
so that attending physicians meet the requirements to provide 
``personally performed services'' to obtain payment under the MPFS. The 
commenters believed this would radically alter the residency training 
programs and impose extraordinary new costs to hire attending 
supervisors to attend to patients with trainees.
    Several commenters disagreed with the notion of enrolling as a CMHC 
in order to receive payment, stating that hospital-based PHPs and CMHCs 
are inherently different in structure, operation, and reimbursement, 
and noting that the conditions of participation for hospital 
departments and CMHCs are different.
    Response: Sections 1833(t)(1)(B)(v) and (t)(21) do not exempt PHP 
services from application of section 603. In response to the commenters 
who requested that we apply section 1833(t)(2)(E) of the Act to exclude 
PHP services from application under section 603, while section 
1833(t)(2)(E) of the Act does provide fairly broad authority to make 
``other adjustments as determined to be necessary to ensure equitable 
payments,'' we do not believe this authority extends to exempting a 
class of hospital off-campus PBDs from application of a separate 
statutory provision specifically prohibiting payment under the OPPS 
itself. In other words, for these PHP services provided by hospital-
based PHPs to which sections 1833(t)(1)(B)(v) and (t)(21) of the Act 
apply, there would be no OPPS payment to which a payment adjustment 
could be made.
    In addition, we are adopting as final our proposal that the 
applicable payment system is the MPFS. As noted in the interim final 
rule with comment period in section X.B. of this document, PHP services 
are payable to hospitals only under the OPPS. As we have for certain 
other nonexcepted items and services, we are identifying the MPFS as 
the applicable payment system for PHP services furnished by a 
nonexcepted off-campus PBD, and we are setting the MPFS payment rate 
for these PHP services as the rate that would be paid to a CMHC. 
Therefore, hospital-based PHPs to which sections 1833(t)(1)(B)(v) and 
(t)(21) of the Act apply will continue to be able to bill and be paid 
for the furnishing of those services. Alternatively, as we proposed, 
these PBDs may choose to enroll as a CMHC in order to continue to 
provide PHP services and receive Medicare payment. We acknowledge that 
CMHCs and hospital-based PHPs have differences in structure, operation, 
and payment, and that there can be advantages to providing PHP care 
through a hospital-based PHP. In the CY 2017 OPPS/ASC proposed rule (81 
FR 45681), we noted that when a beneficiary receives services in an 
off-campus department of a hospital, the Medicare payment for those 
services is generally higher than when those same services are provided 
in a physician's office. Similarly, when partial hospitalization 
services are provided in a hospital-based PHP, Medicare pays more than 
when those same services are provided by a CMHC. CMHCs are freestanding 
providers that are not part of a hospital, and that have lower cost 
structures than hospital-based PHPs. This is similar to the differences 
between freestanding entities paid under the MPFS that furnish other 
services also provided by hospital-based entities. We believe that 
paying for nonexcepted hospital-based partial hospitalization services 
at the lower CMHC per diem rate is in alignment with section 603 of 
Public Law 114-74, while also preserving access to the PHP benefit. As 
we noted in section VIII.B.1 of this final rule with comment period, 
Medicare beneficiaries with mental health needs can access outpatient 
care in a variety of ways, including individual mental health services 
that are reasonable and medically necessary. Therefore, we believe that 
beneficiaries will still have access to mental health care.
    In regards to the comment that the application of the MPFS to 
nonexcepted off-campus PBDs would require hospitals to hire additional 
physicians in order to meet the MPFS supervision requirements, the 
requirements for supervision are the same whether the PHP is on-campus 
or off-campus. The amendments made by section 603 of Public Law 114-74 
did not change the status of these PBDs; only the status of and payment 
mechanisms for the services they furnished changed.
    Comment: Many commenters stated that it was important that 
hospitals be able to bill for the facility portion of payment on the 
institutional claim. These commenters noted that hospital claim systems 
are designed to utilize the institutional claim and suggested that if 
CMS proposed that hospitals utilize the practitioner claim for these 
services, it would represent a significant burden for providers. Some 
commenters noted that the statute that amended section 1833(t)(21)(D) 
of the Act to allow the Secretary to collect information from hospitals 
to implement this provision included the parenthetical phrase ``(which 
may include reporting of information on a hospital claim using a code 
or modifier)''; these commenters suggested that this parenthetical 
phrase indicates that Congress envisioned that nonexcepted items and 
services would be billed on a hospital claim. Commenters inquired 
whether and how nonexcepted items and services would be included in the 
3-day payment window if the nonexcepted items and services were billed 
on a practitioner claim. Commenters suggested that supplemental payers 
may have difficulty processing claims that have hospital outpatient 
services billed on both an institutional claim and a practitioner 
claim. Commenters also suggested there may be implications for the 
Health Insurance Portability and Accountability Act (HIPAA) transaction 
standards if institutional services are billed on a professional claim. 
Some commenters noted that if nonexcepted items and services are not 
billed on an institutional claim, these services would not appear on 
Provider Statistical and Reimbursement reports. MedPAC and other 
commenters suggested that nonexcepted items and services should be 
included on hospital cost reports because CMS has indicated that it 
will view nonexcepted off-campus PBDs as part of the hospital.
    Response: We thank commenters for their feedback. We do not 
interpret section 1833(t)(21)(D) of the Act to mean that the statute 
requires that nonexcepted items and services be billed on an 
institutional claim. Rather, it explicitly provides the Secretary the 
authority to collect data from hospitals for purposes of implementing 
section 603 through means such as a modifier on the hospital claim. As 
discussed in the interim final rule with comment period, we are 
implementing a policy that will allow hospitals to identify and bill 
for nonexcepted items and services on the institutional claim with 
HCPCS modifier ``PN''. Hospital outpatient services identified with the 
modifier will continue to be reflected on Provider Statistical and 
Reimbursement reports. We believe implementation of this policy will 
obviate the commenters' concerns with the possibility that facility 
costs for nonexcepted items and services would not be billed and 
reflected as reimbursable costs on the Medicare hospital cost report.
    Comment: Several commenters requested that specific services paid 
under the OPPS be exempt from application of this provision, either 
because the service is most commonly performed in the outpatient 
setting or because of the importance of the service.

[[Page 79718]]

    Response: We thank the commenters for their feedback. We do not 
believe the statute allows us to exempt items and services from 
application of this provision unless the items or services are 
specifically mentioned in section 1833(t)(21) of the Act as exempt from 
application of this provision, such as those furnished in a dedicated 
ED. We reiterate that we are adopting MPFS rates for nonexcepted items 
and services in the interim final rule with comment period in section 
X.B. of this document. We refer readers to the interim final rule with 
comment period for details on payment for various categories of items 
and services.
    Comment: Many commenters requested that CMS clarify how payment for 
laboratory services and Part B drugs would be made for nonexcepted 
items and services.
    Response: As discussed in the interim final rule with comment 
period in section X.B. of this document, laboratory services that are 
separately paid under the CLFS under standard OPPS policy will be 
separately paid under the CLFS. Laboratory services that are packaged 
under standard OPPS policy will continue to be packaged under the newly 
established MPFS rate for nonexcepted items and services. Part B drugs 
that are separately payable under the OPPS will still be paid 
separately under the newly established policy using the Part B drug 
pricing methodologies under sections 1842(o) and 1847A of the Act. That 
is, in accordance with a longstanding policy rather than a statutory 
requirement, we generally pay separately payable Part B drugs at ASP + 
6 percent. Drugs that are packaged into OPPS services are not 
separately paid under the current OPPS rates and will not be separately 
paid under the newly established MPFS rates.
    Comment: Many commenters noted that the proposed rule did not 
specifically address whether nonexcepted off-campus PBDs would be 
eligible as ``child sites'' under HRSA's 340B drug program. These 
commenters noted that, under the proposal, most nonexcepted items and 
services would not be billed on the institutional claim and therefore 
would not automatically be recorded as a reimbursable cost center on 
the cost report, which under HRSA's methodology would make them 
eligible for the 340B drug program. Most of these commenters indicate 
that nothing in section 603 mentions the 340B drug program and that, as 
a result, the 340B drug program should not be affected by the 
implementation of section 603. These commenters suggested that CMS 
specifically indicate in the final rule that we do not intend for 
implementation of section 603 to affect the 340B drug program. Other 
commenters suggested that the intention of the statute was to remove 
incentives to provide care in the outpatient setting that could be 
provided in a physician's office, and thus that CMS indicate that 
nonexcepted off-campus PBDs should not be eligible for the 340B drug 
program. Some commenters suggested that nonexcepted off-campus PBDs 
should be considered PBDs of hospitals, but that their costs should not 
show up as payable on a cost report, and that, as such, they should not 
be eligible for the 340B drug program.
    Response: We note that, under our finalized policy, services 
provided at nonexcepted off-campus PBDs will continue to be reported on 
the hospital cost report. We refer interested parties to HRSA for 
questions on when drugs qualify for discounts under the 340B program. 
To the extent that our final payment policies necessitate a change for 
hospital cost reporting, we will issue guidance, as applicable, in 
subregulatory guidance.
(3) Comment Solicitation on Allowing Direct Billing and Payment for 
Nonexcepted Items and Services in CY 2018
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45690), for 
nonexcepted items and services furnished in an off-campus PBD, we 
solicited public comments on developing a new billing and payment 
policy proposal for CY 2018. Specifically, we solicited 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 off-campus PBD 
meets all the applicable MPFS requirements. Under this scenario, we 
envisioned 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 participation 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 noted 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 
sought public comments on whether or not there are administrative 
impediments for hospitals billing for such services. We sought 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 solicited 
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.
    Comment: MedPAC recommended that CMS not create a new provider/
supplier type for nonexcepted off-campus PBDs because this would add 
unnecessary complexity. MedPAC suggested that, instead, CMS continue 
its proposed 2017 policy of paying the practitioner under the MPFS at 
the nonfacility rate. Many commenters noted the difficulty providers 
would have in implementing the proposed temporary payment policy for CY 
2017, then adapting their systems to receive facility payments for 
nonexcepted items and services under the practitioner claim process in 
CY 2018. Other commenters suggested that CMS include a proposed CY 2018 
payment policy for nonexcepted items and services in the CY 2017 final 
rule, in order for providers to have a better idea of what the CY 2018 
payment policy would require while providers are adapting their systems 
for the CY 2017 payment policy.
    Response: We thank commenters for their feedback. As discussed in 
the interim final rule with comment period in section X.B. of this 
document, we are implementing a policy that will allow providers to 
bill for nonexcepted items and services on the institutional claim. We 
appreciate commenters' feedback about billing for facility costs for 
nonexcepted items and services on the professional claim. We intend to 
continue open communication with stakeholders on an ongoing basis and 
will take these comments into consideration for future rulemaking as we 
develop and refine the payment mechanisms under the newly established 
MPFS policies.
4. Beneficiary Cost-Sharing
    Under our proposed policy in the CY 2017 OPPS/ASC proposed rule, 
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, the beneficiary cost-sharing for 
such nonexcepted items and services would

[[Page 79719]]

generally be equal to the beneficiary cost-sharing if the service was 
provided at a freestanding facility.
    Comment: Some commenters suggested that if, in CY 2018, CMS 
provided a way for providers to bill for nonexcepted items and services 
utilizing a practitioner claim, this may prove to be confusing to 
beneficiaries, who could then receive up to three bills for copayments: 
One from the provider for excepted services billed on the institutional 
claim; one from the provider for nonexcepted services billed on the 
practitioner claim; and one from the practitioner billed on the 
practitioner claim.
    Response: We thank commenters for their feedback. As discussed 
earlier, we are implementing a policy that will allow providers to bill 
for nonexcepted items and services on the institutional claim, and we 
believe implementation of this policy will obviate the concerns the 
commenters noted above. We note that, under the interim final rule with 
comment period in section X.B. of this document, beneficiary cost-
sharing will generally be equal to that which applies under the MPFS.
5. Summary of Finalized Policies
    Under our finalized policy, all excepted off-campus PBDs will be 
permitted to continue to bill for the furnishing of 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, the date of enactment of Public Law 114-74, provided 
that the excepted off-campus PBD does not impermissibly relocate from 
the same physical address of the PBD on the provider enrollment form as 
of November 2, 2015 (with limited exceptions for extraordinary 
circumstances), or experience an impermissible change of ownership 
(CHOW). That is, an excepted off-campus PBD will lose its status as 
excepted (that is, the off-campus PBD will be considered a new 
nonexcepted off-campus PBD) if the excepted off-campus PBD changes 
location or changes ownership. An off-campus PBD that experiences a 
CHOW will continue its excepted status only if the new hospital owners 
acquire the main hospital and adopt the existing Medicare provider 
agreement.
    Items and services furnished in a new nonexcepted off-campus PBD 
(that is, one that was not billing under the OPPS for covered OPD 
services furnished prior to November 2, 2015) will be nonexcepted items 
and services, no longer eligible for payment under the OPPS.
    Beginning in CY 2017, 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 
nonexcepted departments will be paid based on the professional claim 
and will be paid at the facility rate for services for which they are 
permitted to bill, consistent with the established policy of applying 
the MPFS facility rate to the professional when Medicare makes a 
corresponding payment to the facility for the same service. 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 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 a group 
practice).
    In response to public comments and due to concerns that our 
proposed payment policy may result in beneficiaries being unable to 
access needed medical services and administrative complexities for 
hospitals and physicians, we have decided to issue an interim final 
rule with comment period (in section X.B. of this document) to 
establish new MPFS rates for nonexcepted items and services. Under this 
final policy, a hospital will bill for nonexcepted items and services 
on the institutional claim and must identify that such items and 
services are nonexcepted through use of claim line modifier ``PN.'' 
This ``PN'' modifier will be used to trigger payment under the newly 
adopted PFS rates for nonexcepted items and services. Additional 
details about these payment rates are included in the interim final 
rule with comment period in section X.B. of this document.
    As we and our contractors conduct audits of hospital billing, we 
and our contractors will examine whether nonexcepted off-campus PBDs 
are billing correctly for nonexcepted items and services. We expect 
hospitals to maintain proper documentation showing which individual 
off-campus PBDs were billing Medicare prior to November 2, 2015, and to 
make this documentation available to us and our contractors upon 
request.
6. Changes to Regulations
    To implement the provisions of section 1833(t) of the Act, as 
amended by section 603 of Public Law 114-74, in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45691), we proposed 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 furnished by an off-campus provider-based 
department 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, and also the definition of 
``excepted off-campus provider-based department''.
    In response to public comments, we are modifying paragraph (v) of 
Sec.  419.22 as specified in the interim final rule with comment period 
under section X.B. of this document and finalizing the addition of a 
new Sec.  419.48 that sets forth the definition of excepted items and 
services and off-campus PBDs and codifies the MPFS, generally, as the 
applicable payment system.
7. Other Technical Clarification Requests
    Comment: Several hospitals with high Medicaid populations expressed 
concern that State Medicaid programs may adopt site neutral payment 
policies. The commenters acknowledged that the site neutral policies 
included in the CY 2017 OPPS/ASC proposed rule are focused on the 
Medicare program, but urged CMS to direct States not to apply site 
neutral payment policies to State Medicaid programs.
    Response: We appreciate the commenters' concern with protecting 
access to hospital services for Medicaid recipients. As noted earlier, 
the section 603 provisions amended section 1833(t) of the Act, which 
authorizes Medicare payment to hospital outpatient departments. Our 
final policies to implement the amendments made by section 603 will 
provide a Medicare payment for nonexcepted items and services furnished 
by nonexcepted off-campus PBDs. We refer commenters to the Center for 
Medicaid and CHIP Services for questions on similar section 603 
provisions for State Medicaid programs.

[[Page 79720]]

B. Interim Final Rule With Comment Period: Establishment of Payment 
Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items 
and Services Furnished by Nonexcepted Off-Campus Provider-Based 
Departments of a Hospital

1. Background
    This interim final rule with comment period is being issued in 
conjunction with a final rule discussed under section X.A. of this 
document which implements section 603 of the Bipartisan Budget Act of 
2015 (Pub. L. 114-74). Specifically, this provision amended the OPPS 
statute at section 1833(t) by amending paragraph (1)(B) and adding a 
new paragraph (21). Sections 1833(t)(1)(B)(v) and (t)(21) of the Act 
require that certain items and services furnished in certain off-campus 
provider-based departments (PBDs) (collectively referenced here as 
nonexcepted items and services furnished by nonexcepted off-campus 
PBDs) shall not be considered covered OPD services for purposes of 
OPPS, and payment for those nonexcepted items and services shall be 
made ``under the applicable payment system'' beginning January 1, 2017. 
In the CY 2017 OPPS/ASC proposed rule (81 FR 45681), we proposed to 
implement section 603, and we proposed that the MPFS would be the 
``applicable payment system'' for the majority of the items and 
services furnished by nonexcepted off-campus PBDs. In this final rule 
with comment period, we are finalizing that proposal. As such, for 
purposes of payment for nonexcepted items and services, the applicable 
payment system is the MPFS. In the CY 2017 OPPS/ASC proposed rule, we 
noted that, due to concerns with the significant changes that would 
need to be made to complex Medicare billing and claims systems, we 
would not be able to operationalize a mechanism to make payment to the 
off-campus PBD for nonexcepted items and services under a payment 
system other than the OPPS by January 1, 2017. Therefore, in that 
proposed rule, we noted that we intended the payment proposal to be a 
temporary 1-year policy, applicable in CY 2017 only, while we continued 
to explore operational changes that would allow nonexcepted items and 
services to be billed by the off-campus PBD under the applicable 
payment system, which, in the majority of cases, would be the MPFS (81 
FR 45687 through 45689).
    We are finalizing, with modifications, our proposal to implement 
section 603 of Public Law 114-74 in the CY 2017 OPPS/ASC final rule 
with comment period and refer readers to section X.A. of that final 
rule with comment period for a detailed discussion. As part of that 
discussion, we indicate that, in response to public comments received 
on the proposed payment policies for nonexcepted items and services, we 
are issuing this interim final rule with comment period to establish 
payment policies under the MPFS for nonexcepted items and services 
furnished on or after January 1, 2017. We thank commenters for their 
insightful comments during the proposed rule process and intend to 
continue open communication with stakeholders on an ongoing basis as we 
develop and refine the payment mechanisms for CY 2017 and for future 
years.
    The following discussion establishes policies for nonexcepted items 
and services furnished by nonexcepted off-campus PBDs and billed by 
hospitals for payment under the MPFS. We are seeking public comments on 
the new payment mechanisms and rates detailed in this interim final 
rule with comment period and, based on these comments, will make 
adjustments as necessary to the payment mechanisms and rates through 
rulemaking that could be effective in CY 2017.
2. Payment Mechanisms
a. Relevance of the MPFS for Payment for Nonexcepted Items and Services
    Under the MPFS, Medicare makes payment to physicians, nonphysician 
practitioners, and other suppliers for physicians' services as 
specified in section 1848 of the Act. In accordance with section 
1848(b) and (c) of the Act, MPFS payment is based on the relative value 
of the resources involved in furnishing particular services. Because 
Medicare makes separate payment under institutional payment systems 
(such as the OPPS) for the facility costs associated with many of the 
same services, we establish two different MPFS payment rates for many 
of these services--one that applies when the service is furnished in a 
location where a facility bills and is paid for the service under a 
Medicare payment system other than the MPFS (the facility rate), and 
another that applies when the billing practitioner or supplier 
furnishes and bills for the entire service (the nonfacility rate). The 
nonfacility rate is developed based on the assumption that the 
practitioner or other supplier typically bears the practice expense 
costs such as labor, medical supplies, and medical equipment associated 
with the service. The facility rate is developed based on the 
assumption that the practitioner or other supplier is not typically 
bearing the cost of these direct practice expenses, and that the costs 
of resources such as labor, medical supplies, and medical equipment are 
borne by another entity to which Medicare makes payment under a 
different payment system.
    When services are furnished in a facility that is paid under the 
MPFS, other coding and billing mechanisms are used to distinguish 
between the portion of the service furnished by the practitioner and 
the portion furnished by the facility. For example, both radiologists 
and independent diagnostic testing facilities (IDTFs) furnish and are 
paid for diagnostic imaging tests under the MPFS. Payment under the 
MPFS for most codes that describe diagnostic imaging tests is, 
consequently, ``split'' into the professional component and the 
technical components of the service. The payment for the professional 
component is based on the practitioner'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 payment for the 
technical component of the service is based on the relative cost of the 
other resources involved in furnishing the service, such as clinical 
staff who perform the test, medical equipment, medical supplies, and 
overhead expenses involved with imaging acquisition; and the technical 
component payment is only billed and paid when the service is furnished 
in a setting in which Medicare does not make an institutional payment 
for the service through another payment system.
    For example, an MRI for a beneficiary may be furnished by an IDTF 
that owns and operates the capital equipment required to furnish the 
service. This IDTF would bill under the MPFS for its portion of the 
service furnished (acquiring the image), by submitting a claim using 
the appropriate HCPCS code describing the test with the ``-TC'' 
modifier, signifying a bill for the technical component of the service. 
The interpretation of the same test for the same patient might be 
furnished by a radiologist who would bill separately under the MPFS for 
the professional component of the test by submitting a claim using the 
HCPCS code with the ``26'' modifier, signifying a bill for the 
professional component of the service. Alternatively, both the 
professional and the technical components of the test could be 
furnished at the office of a radiologist who owns and operates the 
capital equipment. In this case, the radiologist would bill under the 
MPFS using the same HCPCS code without either of the modifiers, 
signifying a

[[Page 79721]]

``global'' bill for the service that includes both the professional and 
the technical components of the service. Under the MPFS ratesetting 
process, this global payment rate is automatically valued as the sum of 
the relevant professional and technical components. When the imaging 
acquisition (technical component) is furnished in a setting to which 
Medicare makes a separate payment to the facility under a payment 
system other than the MPFS, the technical component is not paid under 
the MPFS because the practitioner or supplier did not incur the cost of 
furnishing the technical component. Rather, payment for this component 
of the service is paid through the other applicable payment system.
    Similar to IDTFs, radiation treatment centers are a type of 
supplier paid under the MPFS for the kinds of services they furnish. 
However, billing for radiation treatment services hinges on different 
coding conventions. For radiation treatment services, there are 
separate HCPCS codes that describe and distinguish the professional 
aspects of radiation treatment services (such as treatment planning) 
and the technical aspects of radiation treatment (such as application 
of the therapeutic radiation). When the radiation treatment delivery is 
furnished in a setting where Medicare makes a separate payment to the 
facility under a different payment system, these services are generally 
not paid under the MPFS because the practitioner or supplier did not 
incur the cost of furnishing the technical aspects of the service. 
Rather, payment is made for these services to the facility under the 
other applicable payment system. In both cases, the coding and billing 
mechanisms allow for practitioners to be paid for their professional 
services under the MPFS, and for other billing entities to be paid for 
their facility services under either the MPFS or another applicable 
payment system for the portion of the service they furnish.
b. Operational Considerations
    When we developed our proposal to identify the MPFS as the 
applicable payment system for nonexcepted items and services furnished 
by nonexcepted off-campus PBDs, we recognized that these nonexcepted 
off-campus PBDs, similar to IDTFs and radiation treatment centers 
currently paid under the MPFS, furnish certain components of services 
that are sometimes paid under the MPFS. In addition, similar to IDTFs 
and radiation treatment centers, these nonexcepted off-campus PBDs 
likely incur costs that are, in many cases, complementary to the costs 
of the practitioners who furnish professional services. Consequently, 
we surveyed the necessary operational changes that would be necessary 
to allow hospitals to bill directly under the MPFS for these 
nonexcepted items and services using the same billing mechanisms 
currently available to IDTFs and radiation treatment centers. We sought 
to identify the scope of changes that would be required that would 
allow nonexcepted off-campus PBDs to bill in the same manner as these 
entities currently bill. After examining the claims processing, cost 
reporting, and enrollment records changes that would be necessary, we 
concluded that it would not be possible to implement these billing 
process modifications for nonexcepted items and services furnished by 
nonexcepted off-campus PBDs for CY 2017.
    After we considered the public comments we received on the payment 
proposal for CY 2017 which did not provide for direct billing by, or 
payment to, the nonexcepted off-campus PBDs for their services, we 
recognized that establishing the MPFS as the ``applicable payment 
system'' for nonexcepted items and services furnished by nonexcepted 
off-campus PBDs without implementing simultaneous billing mechanisms 
for nonexcepted items and services furnished by hospitals under the 
MPFS may result in significant negative consequences, such as 
implications under the physician self-referral and anti-kickback laws 
and existing ``incident to'' regulations, thereby leading to an 
inability for either the physician or the hospital to bill for certain 
nonexcepted items and services. While we believe that many of these 
issues would only be present in the context of the temporary payment 
policy that we proposed for CY 2017, we were concerned that if we were 
to finalize the payment proposal without modification, the potential 
implications of the issues raised by commenters could result in 
possible access to care issues for Medicare beneficiaries in CY 2017. 
At the same time, we recognize that many off-campus PBDs that would 
bill for nonexcepted items and services incur costs involved in 
furnishing a broader range of services paid under the MPFS than those 
services provided in IDTFs and radiation therapy centers. Therefore, we 
determined that it was necessary, for CY 2017, to establish MPFS rates 
for the technical component of nonexcepted items and services furnished 
by nonexcepted off-campus PBDs, in order to provide hospitals a 
mechanism to bill and be paid.
c. General MPFS Coding and Billing Mechanisms
    Coding and payment policies under the MPFS have long recognized the 
differences between the portions of services for which direct costs 
generally are incurred by practitioners and the portions of services 
for which direct costs generally are incurred by facilities. At 
present, the coding and relative value units (RVUs) established for 
particular groups of services under the MPFS generally reflect such 
direct cost differences. As described earlier, we establish separate 
nonfacility and facility RVUs for many HCPCS codes describing 
particular services paid under the MPFS. For many other services, we 
establish separate RVUs for the professional component and the 
technical component of the service described by the same HCPCS code. 
For yet other services, we establish RVUs for the different HCPCS codes 
that segregate and describe the discrete professional and technical 
aspects of particular services.
    After consideration of the public comments we received in response 
to our proposed payment policies for nonexcepted items and services 
that are subject to sections 1833(t)(1)(B)(v) and (21) of the Act (81 
FR 45688 through 45690), we continue to believe that it is currently 
operationally infeasible for nonexcepted off-campus PBDs to bill under 
the MPFS for the subset of MPFS services for which there is a 
separately valued technical component (either through a ``TC'' value or 
through unique HCPCS codes). In addition, we believe that hospitals 
that furnish nonexcepted items and services are likely to furnish a 
broader range of services than other provider or supplier types for 
which there is currently a separately valued technical component under 
the MPFS. Therefore, we believe it is necessary for CY 2017 to 
establish a new set of payment rates under the MPFS that reflects the 
relative resource costs of furnishing the technical component of a 
broad range of services to be paid under the MPFS specific to one site 
of service (the off-campus PBD of a hospital) with packaging (bundling) 
rules that are significantly different from current MPFS rules.
    The variety of coding and billing mechanisms used under the MPFS 
evolved over time based on the practice patterns of the practitioners 
and suppliers paid under the MPFS, and we believe that the change in 
policy to shift payment to these nonexcepted off-campus PBDs from the 
OPPS to the MPFS similarly requires accommodation of their practice

[[Page 79722]]

patterns under the MPFS. Because we are finalizing our proposal to 
establish the MPFS as the applicable payment system for nonexcepted 
items and services furnished by nonexcepted off-campus PBDs in section 
X.A. of the CY 2017 OPPS/ASC final rule with comment period, we believe 
that it is necessary to establish a mechanism for CY 2017 under the 
MPFS for these entities to bill and be paid under the MPFS for the 
component of the services they furnish to Medicare beneficiaries. We 
also believe that, in accordance with the effective date specified in 
section 603 of Public Law 114-74, this billing mechanism must be 
effective for January 1, 2017. In accordance with the MPFS, the payment 
rates under this mechanism should reflect the estimated relative 
resource costs involved in furnishing these services compared to other 
MPFS services based on the information we have available to us at this 
time.
    The changes implemented through this interim final rule with 
comment period are intended to provide a billing mechanism for 
hospitals to report and be paid for nonexcepted items and services 
furnished by nonexcepted off-campus PBDs to Medicare beneficiaries in 
CY 2017. In principle, the coding and billing mechanisms required to 
make appropriate payment to hospitals are parallel to those currently 
used to make payment for the technical component of diagnostic tests 
and for codes that describe technical radiation treatment services. 
However, hospitals are generally more likely to furnish a wider range 
of items and services than those items and services for which there 
currently are separate values for the professional component and the 
technical component of services under the MPFS. Therefore, the new 
payment rates for the nonexcepted items and services billed by 
hospitals under the MPFS will establish a means to report the technical 
aspect of all applicable items and services under the MPFS, not merely 
the ones with currently separate values for the component rates.
    However, we do not believe that the establishment of these payment 
mechanisms and rates should be disruptive to other practitioners and 
suppliers paid under the MPFS for CY 2017. In addition, we note that 
there is no current payment rate under the MPFS that is based on the 
existing packaging (bundling) rules for hospitals paid under the OPPS. 
Therefore, we are not implementing any change to the current payment 
rules, rates, or mechanisms used by other practitioners and suppliers 
that bill under the MPFS. Instead, the rates and policies established 
by this interim final rule with comment period implement a payment 
mechanism under the MPFS intended to reflect the relative resource 
costs incurred in furnishing the technical component of services in a 
specific site of service (the nonexcepted off-campus PBD) using the 
current packaging policies used in the hospital outpatient setting.
    In concept, this new payment rate parallels the current technical 
component for diagnostic tests furnished under the MPFS and the 
technical component codes currently used under the MPFS, as well as the 
facility fees paid under a Medicare institutional payment system, such 
as the OPPS. However, the payment amounts established under this 
interim final rule with comment period are intended to reflect the 
estimated relative resource costs of furnishing services only under the 
MPFS using the packaging rules unique to the hospital outpatient 
setting.
    Because section 603 of Public Law 114-74 did not change the fact 
that nonexcepted off-campus PBDs are still departments of a hospital, 
despite no longer being able to be paid under the OPPS for nonexcepted 
items and services, and in order to implement the statutory payment 
changes by the effective date of section 603 of Public Law 114-74 of 
January 1, 2017, we believe it is appropriate to establish a mechanism 
to allow nonexcepted off-campus PBDs that furnish nonexcepted items and 
services to bill in the same way as other hospital outpatient 
departments through use of the institutional claims processing systems 
in order to be paid under the MPFS for CY 2017. That is, nonexcepted 
off-campus PBDs will continue to bill on the institutional claim that 
will pass through the Outpatient Code Editor and into the OPPS PRICER 
for calculation of payment under the MPFS. It is not operationally 
feasible to revise the Multi-Carrier System (MCS), which is used to 
process professional claims, to accept and process institutional claims 
by January 1, 2017. We also considered adopting a mechanism whereby the 
hospital would bill under the MPFS on the professional claim, but due 
to operational challenges that are not possible to adequately address 
by January 1, 2017, we are not adopting such a policy in this interim 
final rule with comment period. In addition, as described later in this 
interim final rule with comment period, we believe it is necessary for 
now to apply to the payments for nonexcepted items and services the 
same hospital wage index that would otherwise apply if the off-campus 
PBD was billing for excepted items and services. Therefore, we are 
implementing a set of MPFS payment rates that are specific to and can 
only be reported by hospitals reporting nonexcepted items and services 
on the institutional claim form in CY 2017.
    We also are making a conforming change to our regulations at 42 CFR 
414.22(b)(5)(ii) by deleting the paragraph that limits the number of 
practice expense RVUs that can be applied for services that have only 
technical component practice expense RVUs or only professional 
component practice expense RVUs; evaluation and management services, 
such as hospital or nursing facility visits, that are furnished 
exclusively in one setting; and major surgical services.
3. Establishment of Payment Rates
    We have long acknowledged our concerns regarding some of the 
information currently used to develop RVUs for payment rates under the 
MPFS (for example, in the CY 2015 MPFS final rule with comment period 
(79 FR 67568)). We believe that, for nonexcepted items and services 
furnished by an off-campus PBD, the quality of the data currently used 
to develop payment rates under the OPPS, including hospital claims data 
and cost reporting, far exceeds the quality of data currently used for 
MPFS payments. In fact, the narrower the gap between the OPPS and MPFS 
packaging and billing rules and/or the better we are able to estimate 
the effect of that gap, the greater the potential would be to utilize 
the OPPS data in the MPFS ratesetting in future years. Nevertheless, it 
is not currently appropriate to use the OPPS data for services 
furnished, for example, in physicians' offices, given the significant 
differences in packaging and billing rules that remain in place, and 
the fact that we have not yet sufficiently been able to estimate the 
effect of those differences.
    However, given that for CY 2017 we are implementing a set of MPFS 
payment rates that are specific to and can only be reported by 
hospitals reporting nonexcepted items and services on the institutional 
claim form, we do believe it would be appropriate to use the OPPS data 
to establish code-level relativity between these services when 
furnished in hospital outpatient departments. Given the current 
superiority of the OPPS data for these services, and its 
straightforward applicability when used in conjunction with the OPPS 
packaging and billing rules, we are establishing a payment mechanism 
for CY 2017 under the MPFS that, at the code level, is based on

[[Page 79723]]

the relative payment rates and packaging and billing rules for these 
services as paid under the OPPS. However, the mechanism will only use 
the OPPS payment rates to the extent that they serve to establish 
appropriate payment under the MPFS based on the relative resources 
involved, in accordance with those packaging rules. Similarly, there 
are specific policies and adjustments that currently apply under the 
OPPS that we are incorporating into the MPFS, exclusively for this 
site-specific payment rate. In other words, in order to maintain the 
integrity of the code-specific relativity of current payments under the 
OPPS as we shift payment for services furnished by nonexcepted off-
campus PBDs to the MPFS, we are adopting under the MPFS a set of OPPS 
payment adjustments as MPFS policies for these payments. We believe 
this will maintain the code-level relativity that is essential to the 
MPFS and provide an operational means to implement the amendments made 
by section 603 of Public Law 114-74 by making payment to hospitals for 
these nonexcepted items and services furnished.
    However, establishing the relativity among the nonexcepted items 
and services billed by hospitals under the MPFS is only one aspect of 
establishing the necessary relativity of these services under the MPFS 
more broadly. We still need to estimate the relativity of these 
services compared to MPFS services furnished in other settings. In 
other words, we need to make our current best estimate of the more 
general relativity between the technical component of MPFS services 
furnished in nonexcepted off-campus PBDs and all other MPFS services 
furnished in other settings. As described more fully below, using the 
limited information available to us at this time, we estimate that, for 
CY 2017, scaling the OPPS payment rates by 50 percent will strike an 
appropriate balance that avoids potentially underestimating the 
relative resources involved in furnishing services in nonexcepted off-
campus PBDs as compared to the services furnished in other settings for 
which payment is made under the MPFS. Specifically, we are establishing 
site-specific rates under the MPFS for the technical component of the 
broad range of nonexcepted items and services furnished by nonexcepted 
off-campus PBDs to be paid under the MPFS that will be based on the 
OPPS payment amount for these same services, scaled downward by 50 
percent. We discuss below how we arrived at this adjustment percentage 
for CY 2017.
a. Methodology
    We began by analyzing hospital outpatient claims data from January 
1 through August 26, 2016, that contained the ``PO'' modifier 
signifying that they were billed by an off-campus department of a 
hospital paid under the OPPS other than a remote location, a satellite 
facility, or a dedicated emergency department (ED). We note that the 
use of the ``PO'' modifier was a new mandatory reporting policy for CY 
2016. In development of this interim final rule with comment period, we 
analyzed available ``PO'' modifier claims data billed from January 
through August 2016. We limited our analysis to those claims billed on 
the 13X Type of Bill because those claims are used for Medicare Part B 
billing under the OPPS. We then identified the top (most frequently 
billed) 25 ``major codes'' that were billed by claim line; that is, 
items and services that were separately payable or conditionally 
packaged. Specifically, we restricted our analysis to codes with OPPS 
status indicators'' J1'', ``J2'', ``Q1'', ``Q2'', ``Q3'', ``S'', ``T'', 
or ``V''. We did not include separately payable drugs or biologicals in 
this analysis because those drugs or biologicals are paid the same rate 
whether they are furnished in the physician office setting or the 
hospital setting, and because we are not adopting a percentage 
reduction to separately payable drugs and biologicals under this 
interim final rule with comment period. Similarly, we excluded codes 
assigned an OPPS status indicator ``A'' because the services described 
by these codes are already paid at a rate under a fee schedule other 
than the OPPS and payment for those nonexcepted items and services will 
not be changed under the rates being established under this interim 
final rule with comment period. Next, for the same major codes (or 
analogous codes in the rare instance that different coding applies 
under the OPPS than the MPFS), we compared the CY 2016 payment rate 
under the OPPS to a CY 2016 payment rate under the MPFS attributable to 
the nonprofessional resource costs involved in furnishing the services.
    The most frequently billed service with the ``PO'' modifier is 
described by HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), which is paid under APC 5012; 
the total number of CY 2016 claim lines for this service is 
approximately 6.7 million as of August 2016. In CY 2016, the OPPS 
payment rate for APC 5012 is $102.12. Because there are multiple CPT 
codes (CPT codes 99201 through 99215) used under the MPFS for billing 
this service, an exact comparison between the $102.12 OPPS payment rate 
for APC 5012 and the payment rate for a single CPT code billed under 
the MPFS is not possible. However, for purposes of this analysis, we 
examined the difference between the nonfacility payment rates and the 
facility payment rates under the MPFS for CPT codes 99213 and 99214, 
which are the billing codes for a Level III and a Level IV office 
visit. While we do not have data to precisely determine the equivalent 
set of MPFS visit codes to use for the comparison, we believe that, 
based on the distribution of services billed for the visit codes under 
the MPFS and the distribution of the visit codes under the OPPS from 
the last time period the CPT codes were used under the OPPS in CY 2014, 
these two codes provide reliable points of comparison. For CPT code 
99213, the difference between the nonfacility payment rate and the 
facility payment rate under the MPFS in CY 2016 is $21.86, which is 21 
percent of the OPPS payment rate for APC 5012 of $102.12. For CPT code 
99214, the difference between the nonfacility payment rate and the 
facility payment rate under the MPFS in CY 2016 is $29.02, which is 28 
percent of the OPPS payment rate for APC 5012. However, we recognize 
that, due to the more extensive packaging that occurs under the OPPS 
for services provided along with clinic visits relative to the more 
limited packaging that occurs under the MPFS for office visits, these 
payment rates are not entirely comparable.
    We then assessed the next 24 major codes most frequently billed on 
the 13X claim form by hospitals. We removed HCPCS code 36591 
(Collection of blood specimen from a completely implantable venous 
access device) because, under current MPFS policies, the code is used 
only to pay separately under the MPFS when no other service is on the 
claim. We also removed HCPCS code G0009 (Administration of Pneumococcal 
Vaccine) because there is no payment for this code under the MPFS. For 
the remaining 22 major codes most frequently billed, we estimated the 
amount that would have been paid to the physician in the office setting 
under the MPFS for practice expenses not associated with the 
professional component of the service. As indicated in Table X.B.1. 
below, this amount reflects (1) the difference between the MPFS 
nonfacility payment rate and the MPFS facility rate, (2) the technical 
component, or (3) in instances where payment would have been made only 
to the facility or only to the

[[Page 79724]]

physician, the full nonfacility rate. This estimate ranged from 0.0 
percent to 137.8 percent of the OPPS payment rate for a code. Overall, 
the average (weighted by claim line volume times rate) of the 
nonfacility payment rate estimate for the MPFS compared to the estimate 
for the OPPS for the 22 remaining major codes is 45 percent.

        Table X.B.1--Comparison of CY 2016 OPPS Payment Rate to CY 2016 MPFS Payment Rate for Top Hospital Codes Billed Using the ``PO'' Modifier
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 CY 2016
                                                                                             Applicable MPFS   Col (5) as a
          HCPCS Code                 Code Description         Total Claim    CY 2016 OPPS       Technical       Percent of           MPFS Estimate
                                                                 Lines       Payment Rate    Payment Amount      OPPS (%)
                                                                                                Estimate
(1)                             (2).......................             (3)             (4)               (5)             (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
96372.........................  Injection beneath the skin         338,444          $42.31            $25.42            60.1  Single rate paid
                                 or into muscle for                                                                            exclusively to either
                                 therapy, diagnosis, or                                                                        practitioner or facility:
                                 prevention.                                                                                   Full nonfacility rate.
71020.........................  X-ray of chest, 2 views,           333,203           60.80             16.83            27.7  Technical component: Full
                                 front and side.                                                                               nonfacility rate.
93005.........................  Routine electrocardiogram          318,099           55.94              8.59            15.4  Technical component: Full
                                 (EKG) with tracing using                                                                      nonfacility rate.
                                 at least 12 leads.
96413.........................  Infusion of chemotherapy           254,704          280.27            136.41            48.7  Single rate paid
                                 into a vein up to 1 hour.                                                                     exclusively to either
                                                                                                                               practitioner or facility:
                                                                                                                               Full nonfacility rate.
93798.........................  Physician services for             203,926          103.92             11.10            10.7  Nonfacility rate--Facility
                                 outpatient heart                                                                              rate.
                                 rehabilitation with
                                 continuous EKG monitoring
                                 per session.
96375.........................  Injection of different             189,140           42.31             22.56            53.3  Single rate paid
                                 drug or substance into a                                                                      exclusively to either
                                 vein for therapy,                                                                             practitioner or facility:
                                 diagnosis, or prevention.                                                                     Full nonfacility rate.
93306.........................  Ultrasound examination of          179,840          416.80            165.77            39.8  Technical component: Full
                                 heart including color-                                                                        nonfacility rate.
                                 depicted blood flow rate,
                                 direction, and valve
                                 function.
77080.........................  Bone density measurement           155,513          100.69             31.15            30.9  Technical component: Full
                                 using dedicated X-ray                                                                         nonfacility rate.
                                 machine.
77412.........................  Radiation treatment                137,241          194.35            267.86           137.8  Technical component (Full
                                 delivery.                                                                                     nonfacility rate) based
                                                                                                                               on weighted averages for
                                                                                                                               the following MPFS codes:
                                                                                                                               G6011; G6012; G6013; and
                                                                                                                               G6014.
90853.........................  Group psychotherapy.......         123,282           69.65              0.36             0.5  Nonfacility rate--Facility
                                                                                                                               rate.
96365.........................  Infusion into a vein for           122,641          173.18             69.82            40.3  Nonfacility rate--Facility
                                 therapy, prevention, or                                                                       rate.
                                 diagnosis up to 1 hour.
20610.........................  Aspiration and/or                  106,769          223.76             13.96             6.2  Nonfacility rate--Facility
                                 injection of large joint                                                                      rate.
                                 or joint capsule.
11042.........................  Removal of skin and tissue          99,134          225.55             54.78            24.3  Nonfacility rate--Facility
                                 first 20 sq cm or less.                                                                       rate.
96367.........................  Infusion into a vein for            98,930           42.31             30.79            72.8  Single rate paid
                                 therapy prevention or                                                                         exclusively to either
                                 diagnosis additional                                                                          practitioner or facility:
                                 sequential infusion up to                                                                     Full nonfacility rate.
                                 1 hour.
93017.........................  Exercise or drug-induced            96,312          220.35             39.74            18.0  Technical component: Full
                                 heart and blood vessel                                                                        nonfacility rate.
                                 stress test with EKG
                                 tracing and monitoring.
77386.........................  Radiation therapy delivery          81,925          505.51            347.30            68.7  Technical component:
                                                                                                                               Nonfacility rate for CPT
                                                                                                                               code G6015 (analogous
                                                                                                                               code used under the
                                                                                                                               MPFS).

[[Page 79725]]

 
78452.........................  Nuclear medicine study of           79,242        1,108.46            412.82            37.2  Technical component: Full
                                 vessels of heart using                                                                        nonfacility rate.
                                 drugs or exercise.
                                multiple studies..........
74177.........................  CT scan of abdomen and              76,393          347.72            220.20            63.3  Technical component: Full
                                 pelvis with contrast.                                                                         nonfacility rate.
71260.........................  CT scan chest with                  75,052          236.86            167.21            70.6  Technical component: Full
                                 contrast.                                                                                     nonfacility rate.
71250.........................  CT scan chest.............          74,570          112.49            129.61           115.2  Technical component: Full
                                                                                                                               nonfacility rate.
73030.........................  X-ray of shoulder, minimum          71,330           60.80             19.33            31.8  Technical component: Full
                                 of 2 views.                                                                                   nonfacility rate.
90834.........................  Psychotherapy, 45 minutes           70,524          125.04              0.36             0.3  Nonfacility rate--Facility
                                 with patient and/or                                                                           rate.
                                 family member.
Weighted Average (claim line volume*rate) of the MPFS payment compared to OPPS payment for the 22 major codes:                45.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As noted with the clinic visits, we recognize that there are 
limitations to our data analysis including that OPPS payment rates 
include the costs of packaged items or services billed with the 
separately payable code, and therefore the comparison to rates under 
the MPFS will not be a one-to-one comparison. Also, we include only a 
limited number of services, and additional services may have different 
patterns than the services described here. After considering the 
payment differentials for major codes billed by off-campus departments 
of hospitals with the ``PO'' modifier and based on the data limitations 
of our analysis, we are adopting, with some exceptions noted below, a 
set of MPFS payment rates that are based on a 50-percent reduction to 
the OPPS payment rates (inclusive of packaging) for nonexcepted items 
and services furnished in nonexcepted off-campus PBDs in this interim 
final rule with comment period. Generally speaking, we arrived at 50 
percent by examining the 45-percent rate noted above, the ASC payment 
rate--which is roughly 55 percent of the OPPS payment rate on average--
and the payment rate for the large number of OPPS and MPFS evaluation 
and management services, as described above. We recognize the 
equivalent MPFS nonfacility rate may be higher or lower than the 
percentage reduction we are applying to the OPPS payment rates on a 
code specific basis. However, we believe that, on the whole, this 
percentage reduction will not underestimate the overall relativity 
between the OPPS and the MPFS based on the limited data currently 
available. We are concerned, however, that this percentage reduction 
might be too small. For example, if we were able at this time to 
sufficiently estimate the effect of the packaging differences between 
the OPPS and MPFS, we suspect that the equivalent portion of MPFS 
payments for evaluation and management codes, and for MPFS services on 
average, would likely be less than 50 percent for the same services. We 
consider this percentage reduction for CY 2017 to be a transitional 
policy until such time that we have more precise data to better 
identify and value nonexcepted items and services furnished by 
nonexcepted off-campus PBDs and billed by hospitals.
    There are several significant exceptions to this standard 
adjustment. For example, for services that are currently paid under the 
OPPS based on payment rates from other Medicare fee schedules 
(including the MPFS) on an institutional claim, we will not adjust the 
current payment rates. These are the items and services assigned status 
indicator ``A'' in Addendum B to the CY 2017 OPPS/ASC final rule with 
comment period (which is available via the Internet on the CMS Web 
site) that will continue to be reported on an institutional claim and 
paid under the MPFS, the CLFS, or the Ambulance Fee Schedule without a 
payment reduction. Similarly, drugs and biologicals that are separately 
payable under the OPPS (identified by status indicator ``G'' or ``K'' 
in Addendum B to the CY 2017 OPPS/ASC final rule with comment period) 
will be paid in accordance with section 1847A of the Act (that is, 
typically ASP + 6 percent), consistent with payment rules in the 
physician office setting. Drugs and biologicals that are 
unconditionally packaged under the OPPS and are not separately payable 
(that is, those drugs and biologicals assigned status indicator of 
``N'' in Addendum B to the CY 2017 OPPS/ASC final rule with comment 
period) will be bundled into the MPFS payment and will not be 
separately paid to hospitals billing for nonexcepted items and 
services. The full range of exceptions and adjustments to the otherwise 
applicable OPPS payment rate that are being adopted in the new MPFS 
site-of-service payment rates in this interim final rule with comment 
period are displayed in Table X.B.2. below.
    All nonexcepted items and services billed by a hospital on an 
institutional claim with modifier ``PN'' (Nonexcepted service provided 
at an off-campus, outpatient, provider-based department of a hospital) 
will be paid under the MPFS at the rate established in this interim 
final rule with comment period. Specifically, nonexcepted off-campus 
PBDs must report modifier ``PN'' on each UB-04 claim line to indicate a 
nonexcepted item or service, but should otherwise continue to bill as 
they currently do. There are no billing changes for excepted items and 
services provided at an off-campus PBDs because these items and 
services remain covered outpatient department services that are paid 
under the OPPS.

[[Page 79726]]

b. MPFS Relativity Adjuster
    If we were to use the payment mechanisms described in this interim 
final rule with comment period over several years, we would anticipate 
using Medicare claims data to compare the services paid in this 
nonexcepted off-campus PBD setting to a similar set of services 
otherwise paid under the MPFS in other sites of service (office or 
freestanding center, among others) in order to develop a MPFS 
relativity adjuster that incorporates the specific mix of services 
furnished in nonexcepted off-campus PBDs. However, given the lack of 
data regarding the mix of services currently being furnished in 
nonexcepted off-campus PBDs, we examined the data that were available 
to us to estimate a first year MPFS relativity adjuster that we believe 
best approximates the appropriate measure of relativity without 
underestimating it. In other words, we conducted several analyses in 
order to develop a MPFS relativity adjuster that we believe would, in 
the aggregate, approximate the payment under MPFS rates that would 
otherwise be applicable without underestimating it, were the necessary 
alternative coding and billing mechanisms under the MPFS present. In 
this interim final rule with comment period, we discuss two analyses 
that were considered in determination of the MPFS relativity adjuster 
for CY 2017. First, we examined the payment differential between the 
OPPS and the ASC payment system. Under the ASC payment system, covered 
surgical procedures furnished in an ASC are paid approximately 55 
percent of the amount paid to hospital outpatient departments for 
performing the same services. Second, we considered the CY 2016 claims 
reported with the ``PO'' modifier (used to report services at off-
campus PBDs under the OPPS). We compared overall payment under the OPPS 
and the MPFS for clinic visits from a list of the most frequently 
billed HCPCS codes reported with the ``PO'' modifier and determined the 
weighted average payment differential for these services. Using the ASC 
differential and the ``PO'' modifier as points of reference, and taking 
into account our desire not to underestimate the relativity adjuster 
for CY 2017, we determined the initial year (CY 2017) MPFS-relativity 
adjuster to be 50 percent. We intend to continue to study this issue 
and welcome comments regarding potential future refinements as we gain 
more experience with these new site-of-service MPFS rates.
c. Geographic Adjustments
    For 2017, we are establishing class-specific geographic practice 
cost indices (GPCIs) under the MPFS exclusively used to adjust these 
site-specific, technical component rates for nonexcepted items and 
services furnished in nonexcepted off-campus PBDs. These class-specific 
GPCIs are parallel to the geographic adjustments made under the OPPS 
based on the hospital wage index. We believe it is appropriate to adopt 
the hospital wage index areas for purposes of geographic adjustment 
because nonexcepted off-campus PBDs are still considered to be part of 
a hospital and the MPFS payments to these entities will be limited to 
the subset of PFS services furnished by hospitals. We also believe it 
is appropriate, as an initial matter for CY 2017, to adopt the actual 
wage index values for these hospitals in addition to the wage index 
areas. The MPFS GPCIs that would otherwise currently apply are not 
based on the hospital wage index areas. Pending further study of this 
issue for future years, for CY 2017, we are using the authority under 
section 1848 (e)(1)(B) of the Act to establish a new set of GPCIs for 
these site-specific, technical component rates that are based both on 
the hospital wage index areas and the hospital wage index value 
themselves.
d. Coding Consistency
    For most services, the same HCPCS codes are used to describe 
services paid under both the MPFS and the OPPS. There are two notable 
exceptions that describe high-volume services. The first of these are 
evaluation and management services, which are reported under the MPFS 
using the 5 levels of CPT codes describing new or established patient 
visits (for a total of 10 codes). However, since CY 2014, these visits 
have been reported under the OPPS using the single HCPCS code G0463 
(Hospital Outpatient Clinic Visit) (78 FR 75042). We are establishing 
the MPFS payment rate for HCPCS code G0463 based on the OPPS payment 
rate reduced by the 50 percent MPFS relativity adjuster. Second, 
several radiation treatment delivery and imaging guidance services also 
are reported using different codes under the MPFS and the OPPS. CMS 
established HCPCS Level II ``G'' codes to describe radiation treatment 
delivery services when furnished in the physician office setting (79 FR 
67666 through 67667). However, these HCPCS ``G'' codes are not 
recognized under the OPPS; rather, CPT codes are used to describe these 
services when furnished in the HOPD. Both sets of codes were 
implemented for CY 2015 and were maintained for CY 2016. Under the 
MPFS, there is a particular statutory provision under section 
1848(c)(2)(K) of the Act that requires maintenance of the CY 2016 
coding and payment inputs for these services for CY 2017 and CY 2018. 
Accordingly, the finalized CY 2017 MPFS rates for these services were 
calculated based on the maintenance of the CY 2016 coding payment 
inputs. On that basis, we are establishing payment amounts for 
nonexcepted items and services consistent with the payments that would 
be made to other facilities under the MPFS. That is, an off-campus PBDs 
submitting claims for nonexcepted items and services will bill the 
HCPCS ``G'' codes established under the MPFS to describe radiation 
treatment delivery procedures. However, the off-campus PBD must append 
modifier ``PN'' to each applicable claim line for nonexcepted items and 
services. The payment amount for these services will be set to reflect 
the technical component rate for the code under the MPFS.
4. OPPS Payment Adjustments
    In this interim final rule with comment period, we are adopting the 
packaging payment rates and multiple procedure payment reduction (MPPR) 
percentage that apply under the OPPS to establish the MPFS payment 
rates for nonexcepted items and services furnished by nonexcepted off-
campus PBDs and billed by hospitals. That is, the claims processing 
logic that is used for payments under the OPPS for comprehensive APCs 
(C-APCs), conditionally and unconditionally packaged items and 
services, and major procedures will be incorporated into the newly 
established MPFS rates. We believe it is necessary to incorporate these 
OPPS payment policies for C-APCs, packaged items and services, and the 
MPPR in order to effectuate a mechanism for payment for nonexcepted 
items and services furnished by off-campus PBDs by January 1, 2017. We 
also believe that this is necessary in order to maintain the integrity 
of the MPFS relativity adjuster because the adjuster intends to 
incorporate the differences in these rules under the OPPS and the MPFS 
rates that would otherwise apply. Hospitals will continue to bill on an 
institutional claim form that will pass through the Outpatient Code 
Editor and into the OPPS PRICER for calculation of payment. This 
approach will yield data based on reported charges for nonexcepted 
items and services furnished by nonexcepted off-campus PBDs, which can 
be used to refine MPFS payment rates for these services

[[Page 79727]]

in future years should we ultimately determine to continue this policy 
in future years.
    There are several OPPS payment adjustments that we are not adopting 
in this interim final rule with comment period, including, but not 
limited to, outlier payments, the rural sole community hospital (SCH) 
adjustment, the cancer hospital adjustments, transitional outpatient 
payments, the hospital outpatient quality reporting payment adjustment, 
and the inpatient hospital deductible cap to the cost-sharing liability 
for a single hospital outpatient service. We believe these payment 
adjustments are expressly authorized for, and should be limited to, 
hospitals that are paid under the OPPS for covered OPD services in 
accordance with section 1833(t) of the Act.
5. Partial Hospitalization Services
    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. In the CY 2017 OPPS/ASC proposed rule (81 FR 
45681), in the discussion of the proposed implementation of section 603 
of Public Law 114-74, we noted that because CMHCs also furnish PHP 
services and are ineligible to be provider-based to a hospital, a 
nonexcepted off-campus PBD would be eligible for PHP payment if the 
entity enrolls and bills as a CMHC for payment under the OPPS. We 
further noted that a hospital may choose to enroll a nonexcepted off-
campus PBD as a CMHC, provided it meets all Medicare requirements and 
conditions of participation (81 FR 45690).
    Commenters expressed concern that without a clear payment mechanism 
for PHP services furnished by nonexcepted off-campus PBDs, access to 
partial hospitalization services would be limited, and pointed out the 
critical role PHPs play in the continuum of mental health care. Many 
commenters believed that Congress did not intend for partial 
hospitalization services to no longer be paid for by Medicare when such 
services are furnished by nonexcepted off-campus PBDs. Several 
commenters disagreed with the notion of enrolling as a CMHC in order to 
receive payment for PHP services. These commenters stated that 
hospital-based PHPs and CMHCs are inherently different in structure, 
operation, and payment, and noted that the conditions of participation 
for hospital departments and CMHCs are different. Several commenters 
requested that CMS find a mechanism to pay hospital-based PHPs in 
nonexcepted off-campus PBDs. Because we share the commenters' concerns, 
we are adopting payment for nonexcepted items and services furnished by 
PHP under the MPFS. When billed in accordance with this interim final 
rule with comment period, these items and services will be paid at the 
CMHC per diem rate for APC 5853, for providing 3 or more partial 
hospitalization services per day.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45681), we noted that 
when a beneficiary receives outpatient services in an off-campus 
department of a hospital, the total Medicare payment for those services 
is generally higher than when those same services are provided in a 
physician's office. Similarly, when partial hospitalization services 
are provided in a hospital-based PHP, Medicare pays more than when 
those same services are provided by a CMHC. Our rationale for adopting 
the CMHC per diem rate for APC 5853 as the MPFS payment amount for 
nonexcepted PBDs providing PHP services is because CMHCs are 
freestanding entities that are not part of a hospital, but they provide 
the same PHP services as hospital-based PHPs. This is similar to the 
differences between freestanding entities paid under the MPFS that 
furnish other services also provided by hospital-based entities. 
Similar to other entities currently paid for their technical component 
services under the MPFS, we believe CMHCs would typically have lower 
cost structures than hospital-based PHPs, largely due to lower overhead 
costs and other indirect costs such as administration, personnel, and 
security. We believe that paying for nonexcepted hospital-based partial 
hospitalization services at the lower CMHC per diem rate aligns with 
section 603 of Public Law 114-74, while also preserving access to PHP 
services. In addition, nonexcepted off-campus PBDs will not be required 
to enroll as CMHC in order to bill and be paid for providing partial 
hospitalization services. However, a nonexcepted off-campus PBD that 
wishes to provide PHP services may still enroll as a CMHC if it chooses 
to do so and meets the relevant requirements. Finally, we recognize 
that because hospital-based PHPs are providing partial hospitalization 
services in the hospital outpatient setting, they can offer benefits 
that CMHCs do not have, such as an easier patient transition to and 
from inpatient care, and easier sharing of health information between 
the PHP and the inpatient staff.
6. Supervision Rules
    The supervision rules that apply for hospitals will continue to 
apply for off-campus PBDs that furnish nonexcepted items and services. 
The amendments made by section 603 of Public Law 114-74 did not change 
the status of these PBDs, only the status of and payment mechanism for 
the services they furnish. These supervision requirements are defined 
in 42 CFR 410.27.
7. Beneficiary Cost-Sharing
    Under the MPFS, the beneficiary copayment is generally 20 percent 
of the fee schedule amount, unless it is waived in accordance with the 
statute. All cost-sharing rules that apply under the MPFS in accordance 
with section 1848(g) of the Act and section 1866(a)(2)(A) of the Act 
will continue to apply for all nonexcepted items and services furnished 
by off-campus PBDs, regardless of the cost-sharing obligation under the 
OPPS.
8. CY 2018, CY 2019, and Future Years
    In this interim final rule with comment period, we are finalizing 
MPFS payment amounts for a new site of service--nonexcepted off-campus 
PBDs--for CY 2017. We are seeking public comments on the new payment 
mechanisms and rates detailed in this interim final rule with comment 
period and, based on these comments, will make adjustments as necessary 
to the payment mechanisms and rates through rulemaking that could be 
effective in CY 2017. Unless we significantly modify the policies set 
forth in this interim final rule with comment period in response to 
public comments, we anticipate continuing to use this same method to 
determine MPFS payment amounts for nonexcepted items and services 
furnished by nonexcepted off-campus PBDs for CY 2018 in order to allow 
for the operational changes necessary to design and implement a long-
term payment approach for nonexcepted off-campus PBDs under the MPFS.
    As we note elsewhere in this interim final rule with comment period 
and in section X.A. of the CY 2017 OPPS/ASC final rule with comment 
period, we believe the amendments made to the statute by section 603 of 
Public Law 114-74 intended to eliminate the Medicare payment incentive 
for hospitals to purchase physician offices, convert them to off-campus 
PBDs, and bill under the OPPS for services furnished there. Therefore, 
we believe the payment policy under this provision

[[Page 79728]]

should ultimately equalize payment rates between nonexcepted off-campus 
PBDs and physician offices to the greatest extent possible, while 
allowing nonexcepted off-campus PBDs to bill in a straight-forward way 
for services furnished.
    We intend, for CY 2019 and beyond, to adopt an approach similar to 
the approach that we initially proposed for CY 2017. Under this 
approach, we would pay nonexcepted off-campus PBDs for their 
nonexcepted items and services at a MPFS-based rate that would reflect 
the relative resources involved in furnishing the services. We 
anticipate that payment amounts under this approach would approximate 
the amount Medicare would pay under the MPFS to cover facility overhead 
costs if the same services were furnished in a physician's office. For 
most services, this MPFS-based rate would equal the nonfacility payment 
rate under the MPFS minus the facility payment rate under the MPFS for 
the service in question. For other services for which we do not provide 
separate payment under the MPFS, if payment is made under OPPS, this 
MPFS-based rate would equal the MPFS nonfacility rate. For still other 
services, the technical component rate under the MPFS would serve as 
the MPFS-based rate. We recognize that certain services are billable 
under OPPS but not under MPFS; for such services, we would consider the 
relative resources involved in furnishing them, and we envision a rate 
similar to the rate that we pay ASCs for similar services. We note that 
the key advantage to this payment approach is that payment amounts 
would be nearly equal whether the service is furnished in a nonexcepted 
off-campus PBD or a physician office. This would address the 
differences in payment between the two sites of service that now create 
an incentive for hospitals to purchase and convert physician offices to 
off-campus PBDs in order to bill under the OPPS. However, to implement 
such a change, we would need to undertake substantial systems changes 
in order to both calculate and pay at these MPFS-based rates, and we 
would need to undertake such systems changes before we could require 
nonexcepted off-campus PBDs to bill using either the professional or 
facility claims forms for CY 2019 and beyond. We are seeking public 
comment on this intended payment approach, which we believe would best 
accomplish the goal of the section 603 provisions set out for us under 
the statute as amended by section 603 of Public Law 114-74.
    Alternatively, we are seeking public comment on the possibility of 
continuing to make payment using a methodology similar to that 
described under this interim final rule with comment period. Under such 
a methodology, we would pay nonexcepted off-campus PBDs under the MPFS 
at a percentage of standard OPPS rates that we believe reflects the 
relative resources involved in furnishing the services; we note that 
this percentage could be lower or higher than the percentage adopted in 
this interim final rule with comment period, and we would utilize 
billing data to the extent they are available, initially from CY 2017 
and CY 2018, to determine the appropriate percentage adjustment, and 
then update the percentage adjustment annually based on the most 
recently available data, for future years. While in the aggregate we 
would seek to equalize payment rates between physician offices and 
nonexcepted off-campus PBDs to the extent appropriate, the rates would 
not be equal on a procedure-by-procedure basis. Therefore, for certain 
specialties, service lines, and nonexcepted off-campus PBD types, total 
Medicare payments for the same services might be either higher or lower 
when furnished in a nonexcepted off-campus PBD rather than in a 
physician office. We are concerned that such specialty-specific 
patterns in payment differentials could result in continued incentives 
for hospitals to buy certain types of physician offices and convert 
them to nonexcepted off-campus PBDs. In other words, we are concerned 
that continuing this type of payment approach indefinitely could create 
incentives to undertake exactly the behavior we believe Congress 
intended to avoid. However, continuing a policy similar to the one we 
are adopting in this interim final rule with comment period would allow 
hospitals to continue billing through a facility claim form and would 
allow for continuation of the packaging rules and cost report-based 
relative payment rate determinations under OPPS, which we believe are 
preferable to using the current valuation methdologies under the MPFS 
for nonexcepted items and services furnished by nonexcepted off-campus 
PBDs. In the future, we also will need to determine how rates 
established for nonexcepted off-campus PBDs will interact with the MPFS 
ratesetting methodology, rules, and statutory requirements because 
these rates would continue to be rates under the MPFS.
    We recognize that nonexcepted off-campus PBDs would benefit from 
knowing our preliminary thoughts regarding a long-term payment approach 
for CY 2018 and beyond, so that they can conduct long-term planning and 
begin considering possible operational or organizational changes in 
response. We are seeking public comment on both the policies 
established in this interim final rule with comment period and the 
intended and alternative approaches described above that may be used in 
future rulemaking.
9. Waiver of Proposed Rulemaking
    Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), 
the agency is required to publish a notice of the proposed rule in the 
Federal Register before the provisions of a rule take effect. 
Similarly, section 1871(b)(1) of the Act requires the Secretary to 
provide for notice of the proposed rule in the Federal Register and 
provide a period of not less than 60 days for public comment. Section 
553(b)(B) of the APA provides for exceptions from the notice and 
comment requirements; in cases in which these exceptions apply, section 
1871(b)(2)(C) of the Act provides for exceptions from the notice and 
60-day comment period requirements of the Act as well. Section 
553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an 
agency to dispense with normal rulemaking requirements for good cause 
if the agency makes a finding that the notice and comment process is 
impracticable, unnecessary, or contrary to the public interest.
    We find that there is good cause to waive the notice and comment 
requirements under sections 553(b)(B) of the APA and section 
1871(b)(2)(C). Section 603 of Public Law 114-74, enacted on November 2, 
2015, amended section 1833(t) of the Act. In general, section 603 of 
Public Law 114-74 provides that certain items and services furnished in 
certain off-campus PBDs will not be considered covered OPD services for 
which payment may be made under the OPPS and instead provides that 
those items and services shall be paid ``under the applicable payment 
system'' beginning January 1, 2017. Because the amendments to section 
1833(t) of the Act at paragraphs (1)(B)(v) and (21) are effective for 
items and services that would have otherwise been paid through the OPPS 
beginning January 1, 2017, we proposed to implement these amendments in 
the CY 2017 OPPS/ASC proposed rule.
    We received a significant number of public comments raising 
concerns with our proposals in the CY 2017 OPPS/ASC proposed rule. 
Specifically, commenters raised concerns with our proposing the 
``applicable payment system'' to be the MPFS, proposing to make no 
payment to the hospital, and

[[Page 79729]]

proposing to make payment only to the physician or practitioner under 
the MPFS for the services they furnish. We thank the many commenters 
and acknowledge their valued input throughout the proposed rule 
process. After consideration of the public comments we received on 
these proposals included in the CY 2017 OPPS/ASC proposed rule, we have 
determined that establishing the MPFS as the applicable payment system 
for nonexcepted items and services furnished by nonexcepted off-campus 
PBDs without simultaneously implementing billing mechanisms to enable 
hospitals to bill and be paid under the MPFS may result in a number of 
negative consequences, such as implications under the physician self-
referral and anti-kickback statutes and existing ``incident to'' 
regulations, thereby possibly leading to an inability for either the 
physician or the hospital to bill for certain nonexcepted items and 
services, and potentially, in effect, failing to fully implement the 
statutory language providing for payment for nonexcepted items and 
services under the applicable payment system. In addition, the public 
comments raised concerns that if we chose to finalize the payment 
proposal without modification, those final policies could result in 
possible access to care issues for Medicare beneficiaries in CY 2017. 
Commenters suggested that many nonexcepted off-campus PBDs would have 
chosen to cease operations rather than attempting to navigate the 
issues and resolve concerns raised in public comments, and that some of 
these may have been in otherwise underserved areas. After considering 
the gravity of concerns raised in public comments on our proposed 
policy on billing and payment for nonexcepted items and services, we 
conclude that it is not feasible to finalize the policy we proposed for 
CY 2017, and for which we provided detailed notice and an opportunity 
to comment in the CY 2017 OPPS/ASC proposed rule. At the same time, the 
amendments made by section 603 of Public Law 114-74 require that 
payment shall be made for these nonexcepted items and services under 
the applicable payment system other than the OPPS beginning January 1, 
2017. As such, because of the potential implications of finalizing some 
of our proposed policies related to payment for nonexcepted items and 
services furnished by nonexcepted off-campus PBDs on hospitals, 
physicians, and beneficiaries, and the statutory requirement that 
payment shall be made for these items and services under the applicable 
payment system other than OPPS beginning January 1, 2017, we find that 
it would be impracticable and contrary to the public interest to 
undergo notice and comment procedures before finalizing, on an interim 
basis subject to public comment, a payment policy for these items and 
services for CY 2017. Therefore, we find good cause to waive the notice 
of proposed rulemaking as provided under section 1871(b)(2)(C) of the 
Act and section 553(b)(B) of the APA and to issue this final rule on an 
interim basis subject to public comment. We are providing a 60-day 
public comment period as specified in the DATES section of this 
document.
10. Collection of Information Requirements
    This document does not impose information collection requirements; 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).
11. 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 preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.
12. Regulatory Impact Statement
    We estimate that the implementation of section 603 of Public Law 
114-74 in this interim final rule with comment period will reduce 
Medicare Part B expenditures by roughly $50 million in CY 2017. While 
this is a significantly lower impact than the $330 million reduction 
estimated for the CY 2017 OPPS proposed rule, this lower impact is 
primarily the result of changes in technical assumptions regarding the 
services affected by this provision, and not a result of the change in 
payment policy. For this interim final rule with comment period, we 
analyzed OPPS claims data through the first 6 months of CY 2016 that 
were coded with the ``PO'' modifier to indicate that the service was 
performed off-campus. Based on this analysis, we have significantly 
reduced the volume of services that we expect to be affected by this 
provision. Additionally, the proposed rule estimate included an impact 
in CY 2017 for lower Medicare Advantage payments due to lower fee-for-
service expenditures that result from this provision. For this interim 
final rule with comment period, we have removed the associated Medicare 
Advantage impact for CY 2017, as the 2017 Medicare Advantage payment 
rates were set well before this provision will be implemented. For 
comparison purposes, if we had finalized the proposed rule policy using 
these revised assumptions, we would now estimate that the provision 
would reduce Medicare Part B expenditures by $70 million in CY 2017.

C. 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 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.

[[Page 79730]]

    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 the CY 2017 OPPS/ASC proposed rule (81 FR 45691), we proposed 
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 were included in Addendum B to the proposed rule (which is 
available via the Internet on the CMS Web site). We proposed that, 
beginning January 1, 2017, hospitals would be required to use this 
modifier on claims for imaging services that are X-rays taken using 
film.
    Comment: Several commenters requested that the proposal for the new 
modifier be revised to include language that required registered 
radiologic technologists to perform all radiography procedures billed 
within the Medicare system.
    Response: We proposed to adopted the new modifier to implement the 
statutory 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. The 
statute does not address, nor did we propose to change, the type of 
professional that is eligible to perform radiography procedures. 
Accordingly, we believe this comment is outside the scope of the 
proposed rule.
    Comment: Commenters questioned whether facilities such as CAHs and 
hospitals in the State of Maryland are required to use the modifier to 
identify imaging services that are X-rays taken using film.
    Response: In accordance with section1833(t)(16)(F)(i) of the Act, 
the payment under the OPPS for imaging services that are X-rays taken 
using film 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. The reduction in payment is 
not applicable to hospitals that do not bill for payments for services 
under the OPPS. Therefore the modifier is not required to be used by 
hospitals that do not receive payments under the OPPS, such as CAHs or 
hospitals exempted from payment under the OPPS in accordance with 
section 1814(b)(3) of the Act.
    Comment: One commenter requested that certain types of X-ray 
services, including radiographic-fluoroscopic (R&F) services that 
combine both radioscopy and radiography in a single examination, 
vascular imaging services which use radioscopy and do not use CR or 
film technologies, and mammography imaging services which largely 
involve the use of digital technology, be considered exempt from 
payment reductions because these services are not typically performed 
using traditional X-ray systems.
    Response: Section 1833(t)(16)(F)(i) of the Act specifically 
identifies imaging services that are X-rays and states that payment 
under the OPPS for imaging services that are X-rays taken using film 
shall be reduced by 20 percent in CY 2017. Therefore, the use of the 
proposed modifier is required for all imaging services that are X-rays 
receiving payment under the OPPS if those X-rays are taken using film. 
The statute does not provide exemptions to this policy for any imaging 
services that are X-rays. Therefore, we are not adopting any exemptions 
in this final rule with comment period.
    Comment: One commenter noted that the text of the legislation did 
not specify which CPT codes will be affected by the proposed policy and 
that without this information the scope of the policy is ambiguous.
    Response: Section 1833(t)(16)(F)(i) of the Act references imaging 
services that are X-rays taken using film. The use of the proposed 
modifier and subsequent reduction in payment under the OPPS is 
applicable to all imaging services that are X-rays taken using film as 
opposed to other methods. Each of the imaging services that are X-rays, 
along with all other codes payable under the OPPS, are included in 
Addendum B to this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing the use of new modifier, FX, for use on claims for imaging 
services that are X-rays taken using film that are furnished during CY 
2017 and subsequent years. The use of this modifier will result in a 
20-percent payment reduction for an imaging service that is an X-ray 
service taken using film (including the X-ray component of a packaged 
service), 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). We note that when payment for an X-ray service taken using film 
is packaged into the payment for another item or service under the 
OPPS, no separate payment for the X-ray service taken using film is 
made. Accordingly, the payment reduction in this instance would be 0 
percent (that is, 20 percent of $0).

D. 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 
OPPS/ASC proposed rule (81 FR 45691), we discussed that in the CY 2017 
MPFS proposed rule, we proposed some minor changes to certain CCM 
scope-of-service elements. We proposed 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 a week basis, as is 
currently required. We refer readers to the CY 2017 MPFS final rule 
with comment period for a detailed discussion of the proposed changes 
to the scope of service elements for CCM, the public comments received, 
and the finalized policies.
    Comment: Commenters supported CMS' proposed changes to certain CCM 
scope-of-service elements under the OPPS. One commenter, in support of 
the proposal, suggested limiting billing for CCM under the OPPS to only 
those providers who use systems that do not limit information exchange.
    Response: We thank commenters for their support. In response to the 
commenter's suggestion to limit billing for CCM under the OPPS to 
providers who use systems that do not limit information exchange, we 
note that we did not propose such a limitation on billing. Therefore, 
we are not accepting this suggestion but may consider it in future 
years' rulemaking.
    After consideration of the public comments we received, we are 
finalizing our CY 2017 proposal, without modification, for CY 2017, to 
apply the changes to certain scope-of-service elements finalized in the 
CY 2017 MPFS final rule with comment period to CCM services furnished 
to hospital outpatients under the OPPS.

[[Page 79731]]

E. 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. In the CY 2017 OPPS/ASC 
proposed rule (81 FR 45691), we noted that the CY 2017 MPFS proposed 
rule included proposed requirements and processes for the second 
component of the Medicare AUC program, which is the specification of 
qualified clinical decision support mechanisms (CDSMs) under the 
program. The CDSM is the electronic tool through which the ordering 
practitioner consults AUC. It also proposed specific clinical priority 
areas and exceptions to the AUC consultation and reporting 
requirements. We refer readers to the CY 2017 MPFS final rule with 
comment period for further information, including a summarization of 
any public comments received and the finalized policies for CY 2017.

XI. CY 2017 OPPS Payment Status and Comment Indicators

A. 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 applying 
for CY 2017 is displayed in Addendum D1 to this final rule with comment 
period, which is available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The CY 2017 payment status indicator assignments for APCs 
and HCPCS codes are shown in Addendum A and Addendum B, respectively, 
to this final rule with comment period, which are available on the CMS 
Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45692), we proposed 
revising the current definition of status indicator ``E'' by creating 
two status indicators, ``E1'' and ``E2,'' to replace status indicator 
``E.'' We proposed that 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.
    Comment: Several commenters supported the proposal to differentiate 
between Medicare noncovered services (status indicator ``E1'') and 
services that have not been assigned a payment rate due to lack of 
pricing information and claims data (status indicator ``E2''). The 
commenters also recommended that CMS not assign the noncovered I/OCE 
edit to status indicator ``E2'' services because noncoverage is not the 
reason for nonpayment of these services.
    Response: We appreciate the commenters' support for the proposal. 
In response to the commenters' recommendation regarding the I/OCE edit, 
we are assigning edit 13 to status indicator ``E2'' items and services. 
This edit will result in a line item rejection. A line item rejection 
is when a line has reached a final disposition with no payment for a 
reason other than medical necessity under section 1862(a)(1) of the 
Act.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to use new status 
indicators ``E1'' and ``E2'' to differentiate between Medicare 
noncovered services and services that have not been assigned a payment 
rate due to lack of pricing information and claims data.

B. CY 2017 Comment Indicator Definitions

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45692), we proposed to 
use four comment indicators for the CY 2017 OPPS. Three of these 
comment indicators, ``CH'', ``NI,'' and ``NP,'' are in effect for CY 
2016 and we proposed to continue their use in CY 2017. In the proposed 
rule, we also proposed 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 stated in the proposed rule 
that we believe that this new comment indicator ``NC'' would help 
hospitals easily identify new HCPCS codes that would 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.
    We did not receive any public comments regarding the proposed CY 
2017 OPPS comment indicators. Therefore, we are adopting, as final, our 
proposal to continue to use for CY 2017 comment indicators ``CH'', 
``NI,'' and ``NP'' that are in effect for CY 2016, and to create new 
comment indicator ``NC'' that will be used in the final rule to flag 
the HCPCS codes that were assigned to comment indicator ``NP'' in the 
proposed rule. The definitions of the

[[Page 79732]]

OPPS comment indicators for CY 2017 are listed in Addendum D2 to this 
final rule with comment period, which is available on the CMS Web site 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for 
the ASC Payment System
    For a detailed discussion of the legislative history and statutory 
authority related to payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74378 through 74379), the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68434 through 68467), 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 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. 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

[[Page 79733]]

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 
final rule with comment period.
    We have separated our discussion below based on when the codes are 
released and whether we proposed to solicit public comments in the CY 
2017 OPPS/ASC proposed rule (and respond to those comments in this CY 
2017 OPPS/ASC final rule with comment period) or whether we are 
soliciting public comments in this 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 are responding to public comments and finalizing the 
treatment of these codes under the ASC payment system in this CY 2017 
OPPS/ASC final rule with comment period.
    In Table 43 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.

                           Table 43--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
  ASC Quarterly  update CR       Type of code           Effective date         Comments sought   When finalized
----------------------------------------------------------------------------------------------------------------
April l, 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     January 1, 2017............  CY 2017 OPPS/ASC  CY 2017 OPPS/ASC
                               III 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 final rule with comment
  period for further discussion of this issue.

2. Treatment of New and Revised Level II HCPCS Codes and Category III 
CPT Codes Implemented in April 2016 and July 2016 for Which We 
Solicited Public Comments in the CY 2017 OPPS/ASC 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 19 (incorrectly 
referenced in the proposed rule as 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 of the 
proposed rule listed 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 of 
the proposed rule listed 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 the 
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 were listed in Table 25 
of the proposed rule, along with their proposed payment indicators. The 
proposed payment rates for these new Category III CPT codes can be 
found in Addendum AA to the proposed rule (which is available via the 
Internet on the CMS Web site).
    In the CY 2017 OPPS/ASC proposed rule, we invited 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

[[Page 79734]]

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 of the proposed rule. We also 
proposed to finalize their payment indicators and their payment rates 
in this CY 2017 OPPS/ASC final rule with comment period.
    We did not receive any public comments regarding the proposed ASC 
payment indicators and payment rates. Therefore, we are adopting as 
final the CY 2017 proposed ASC payment indicators and payment rates for 
the ASC covered surgical procedures and covered ancillary services 
described by the new Level II HCPCS codes implemented in April 2016 and 
July 2016 through the quarterly update CRs as shown below in Tables 44, 
45, and 46, respectively. We note that, for the CY 2017 update, the 
HCPCS Workgroup replaced the temporary drug HCPCS C-codes that were 
listed in Table 23, 24, and 25 of the proposed rule with permanent 
HCPCS J-codes effective January 1, 2017. Therefore, we are assigning 
the replacement HCPCS J-codes to the same payment indicators as their 
predecessor HCPCS C-codes, as shown in Tables 44, 45, and 46 below. The 
final CY 2017 ASC payment rates for these codes, where applicable, can 
be found in ASC Addendum AA and BB of this OPPS/ASC final rule with 
comment period.

 Table 44--Final CY 2017 Payment Indicators for the New Level II HCPCS Codes for Covered Surgical Procedures or
                             Covered Ancillary Services Implemented on April 1, 2016
----------------------------------------------------------------------------------------------------------------
                                                                      CY 2017  Long           Final CY  2017
          CY 2016  HCPCS Code             CY 2017  HCPCS Code          descriptor           payment  indicator
----------------------------------------------------------------------------------------------------------------
C9137.................................  J7207                   Injection, Factor VIII    K2
                                                                 (antihemophilic factor,
                                                                 recombinant) PEGylated,
                                                                 1 I.U.
C9138.................................  J7209                   Injection, Factor VIII    K2
                                                                 (antihemophilic factor,
                                                                 recombinant) (Nuwiq), 1
                                                                 I.U.
C9461.................................  A9515                   Choline C 11,             K2
                                                                 diagnostic, per study
                                                                 dose.
C9470.................................  J1942                   Injection, aripiprazole   K2
                                                                 lauroxil, 1 mg.
C9471.................................  J7322                   Hyaluronan or             K2
                                                                 derivative, Hymovis,
                                                                 for intra-articular
                                                                 injection, 1 mg.
C9472.................................  J9325                   Injection, talimogene     K2
                                                                 laherparepvec, 1
                                                                 million plaque forming
                                                                 units (PFU).
C9473.................................  J2182                   Injection, mepolizumab,   K2
                                                                 1 mg.
C9474.................................  J9205                   Injection, irinotecan     K2
                                                                 liposome, 1 mg.
C9475.................................  J9295                   Injection, necitumumab,   K2
                                                                 1 mg.
J7503.................................  J7503                   Tacrolimus, extended      K2
                                                                 release, (Envarsus XR),
                                                                 oral, 0.25 mg.
----------------------------------------------------------------------------------------------------------------


   Table 45--Final CY 2017 Payment Indicators for the New Level II HCPCS Codes for Covered Ancillary Services
                                            Implemented in July 2016
----------------------------------------------------------------------------------------------------------------
                                                                      CY 2017  Long           Final CY  2017
          CY 2016  HCPCS Code             CY 2017  HCPCS Code          descriptor           payment  indicator
----------------------------------------------------------------------------------------------------------------
C9476.................................  J9145                   Injection, daratumumab,   K2
                                                                 10 mg.
C9477.................................  J9176                   Injection, elotuzumab, 1  K2
                                                                 mg.
C9478.................................  J2840                   Injection, sebelipase     K2
                                                                 alfa, 1 mg.
C9479.................................  C9479                   Instillation,             K2
                                                                 ciprofloxacin otic
                                                                 suspension, 6 mg.
C9480.................................  J9352                   Injection, trabectedin,   K2
                                                                 0.1 mg.
Q9981.................................  J8670                   Rolapitant, oral, 1 mg..  K2
Q5102.................................  Q5102                   Injection, infliximab,    K2
                                                                 biosimilar, 10 mg.
Q9982 *...............................  Q9982                   Flutemetamol F18,         K2
                                                                 diagnostic, per study
                                                                 dose, up to 5
                                                                 millicuries.
Q9983 **..............................  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 46--Final CY 2017 Payment Indicators for the New Category III CPT Codes for Covered Surgical Procedures or
                               Covered Ancillary Services Implemented in July 2016
----------------------------------------------------------------------------------------------------------------
                                                                      CY 2017  Long           Final CY  2017
          CY 2016  HCPCS Code             CY 2017  HCPCS Code          descriptor           payment  indicator
----------------------------------------------------------------------------------------------------------------
0437T.................................  0437T                   Implantation of non-      N1
                                                                 biologic or synthetic
                                                                 implant (e.g.,
                                                                 polypropylene) for
                                                                 fascial reinforcement
                                                                 of the abdominal wall
                                                                 (List separately in
                                                                 addition to primary
                                                                 procedure).
0438T *...............................  0438T                   Transperineal placement   G2
                                                                 of biodegradable
                                                                 material, peri-
                                                                 prostatic (via needle),
                                                                 single or multiple,
                                                                 includes image guidance.
0439T.................................  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.................................  0440T                   Ablation, percutaneous,   G2
                                                                 cryoablation, includes
                                                                 imaging guidance; upper
                                                                 extremity distal/
                                                                 peripheral nerve.

[[Page 79735]]

 
0441T.................................  0441T                   Ablation, percutaneous,   G2
                                                                 cryoablation, includes
                                                                 imaging guidance; lower
                                                                 extremity distal/
                                                                 peripheral nerve.
0442T.................................  0442T                   Ablation, percutaneous,   G2
                                                                 cryoablation, includes
                                                                 imaging guidance; nerve
                                                                 plexus or other truncal
                                                                 nerve (e.g., brachial
                                                                 plexus, pudendal nerve).
0443T.................................  0443T                   Real time spectral        G2
                                                                 analysis of prostate
                                                                 tissue by fluorescence
                                                                 spectroscopy.
0444T.................................  0444T                   Initial placement of a    N1
                                                                 drug-eluting ocular
                                                                 insert under one or
                                                                 more eyelids, including
                                                                 fitting, training, and
                                                                 insertion, unilateral
                                                                 or bilateral.
0445T.................................  0445T                   Subsequent placement of   N1
                                                                 a 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 
Responding to Comments in This CY 2017 Final Rule With Comment Period
    For new and revised CPT codes effective January 1 that were 
received in time to be included in the CY 2017 OPPS/ASC proposed rule, 
we proposed APC and status indicator assignments (81 FR 45695). We are 
responding to comments and finalizing the APC and status indicator 
assignments in this OPPS/ASC final rule with comment period. For those 
new/revised CPT codes that were received too late for inclusion in the 
OPPS/ASC proposed rule, we indicated that 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 final rule with 
comment period (which are available via the Internet on the CMS Web 
site). The new and revised CY 2017 Category I and III CPT codes that 
were not received in time for inclusion in the proposed rule 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 
included the 5-digit placeholder codes and their long descriptors for 
the new and revised CY 2017 CPT codes in Addendum O to the proposed 
rule (which is available via the Internet on the CMS Web site) so that 
the public could have time to adequately comment on our proposed 
payment indicator assignments. The 5-digit placeholder codes were 
included in Addendum O, specifically under the column labeled ``CY 2017 
OPPS/ASC Proposed Rule 5-Digit Placeholder Code,'' to the proposed 
rule. We indicated that the final CPT code numbers would be included in 
the CY 2017 OPPS/ASC final rule with comment period. We also noted that 
not every code listed in Addendum O was subject to comment. For the 
new/revised Category I and III CPT codes, we requested comments on only 
those codes that are assigned to comment indicator ``NP.''
    Comment: One commenter objected to the proposed assignment of the 
procedure described by HCPCS code 05X1T (Suprachoroidal injection of a 
pharmacologic agent (does not include supply of medication)) to payment 
indicator ``G2.'' The commenter believed that the procedure is similar 
in procedural complexity, resource utilization, and clinical 
application to the procedure described by CPT code 67028 (Intravitreal 
injection of a pharmacologic agent (separate procedure)), which is 
assigned to payment indicator ``P3.''
    Response: We agree with the commenter that the procedure described 
by HCPCS code 05X1T (which is finalized as CPT code 0465T in this final 
rule with comment period) is similar to the procedure described by CPT 
code 67028. Therefore, we are modifying our proposal to assign CPT code 
0465T to payment indicator ``P3'' for CY 2017.
    After consideration of the public comments we received, we are 
finalizing, with one modification, the proposed CY 2017 ASC payment 
indicator assignments for new and revised CPT codes, effective January 
1, 2017. We are modifying our proposal and are assigning CPT code 0465T 
to payment indicator ``P3.'' These final CPT codes with short 
descriptors only and their final payment indicators are listed in 
Addendum AA and Addendum BB to this final rule with comment period 
(which is available via the Internet on the CMS Web site). We also list 
these CPT codes with long descriptors in Addendum O to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site).
4. Process for New and Revised Level II HCPCS Codes That Will Be 
Effective October 1, 2016 and January 1, 2017 for Which We Are 
Soliciting Public Comments in This 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

[[Page 79736]]

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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45696), for CY 2017, 
we proposed 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 this 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 are inviting public comments in this CY 
2017 OPPS/ASC final rule with comment period on the interim status 
indicator and APC assignments, and payment rates for these codes that 
will be finalized in the CY 2018 OPPS/ASC final rule with comment 
period.

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

1. Covered Surgical Procedures
a. 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) Changes for CY 2017 to Covered Surgical Procedures Designated 
as Office-Based in developing the CY 2017 OPPS/ASC 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 that 
the services are of a level of complexity consistent with other 
procedures performed routinely in physicians' offices. The CPT code 
that we proposed to permanently designate as office-based for CY 2017 
was listed in Table 26 of the proposed rule (81 FR 45697).
    We invited public comment on this proposal.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal, without modification, to designate the 
procedures described by CPT code 0377T as permanently office-based for 
CY 2017, as set forth in Table 47 below.

Table 47--ASC Covered Surgical Procedure Newly Designated as Permanently
                        Office-Based for CY 2017
------------------------------------------------------------------------
                                                             Final  CY
                          CY 2017 Long       CY 2016  ASC    2017  ASC
  CY 2017  CPT Code        descriptor          payment        payment
                                              indicator     indicator *
------------------------------------------------------------------------
0377T...............  Anoscopy with         G2             R2
                       directed submucosal
                       injection of
                       bulking agent for
                       fecal incontinence
                       Esophagoscopy,
                       flexible,
                       transnasal;
                       diagnostic,
                       including
                       collection of
                       specimen(s) by
                       brushing or
                       washing, when
                       performed (separate
                       procedure).
------------------------------------------------------------------------
*Final payment indicators are based on a comparison of the 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 final rule with comment period.

    We also reviewed CY 2015 volume and utilization data and other 
information for eight procedures designated as temporary office-based 
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

[[Page 79737]]

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)), which is being replaced by CPT code G0429 (Dermal 
filler injection(s) for the treatment of facial lipodystrophy syndrome 
(lds) (e.g., as a result of highly active antiretroviral therapy)) in 
this final rule with comment period. Consequently, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45697), we proposed to maintain the temporary 
office-based designations for these eight codes for CY 2017. We listed 
all of these codes for which we proposed to maintain the temporary 
office-based designations for CY 2017 in Table 27 of the proposed rule. 
The procedures for which the proposed office-based designations for CY 
2017 are temporary also were indicated by asterisks in Addendum AA to 
the proposed rule (which is available via the Internet on the CMS Web 
site).
    We invited public comment on this proposal.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal, without modification, to designate the 
eight procedures listed in Table 48 below as temporary office-based for 
CY 2017.

Table 48--CY 2017 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporary Office-Based in
                               the CY 2016 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
                                                                     CY 2016 ASC  payment    Final CY 2017 ASC
          CY 2017 CPT Code               CY 2017 Long descriptor          indicator*        payment  indicator**
----------------------------------------------------------------------------------------------------------------
0299T...............................  Extracorporeal shock wave     R2*                    R2**
                                       for integumentary wound
                                       healing, high energy,
                                       including topical
                                       application and dressing
                                       care; initial wound.
0402T...............................  Collagen cross-linking of     R2*                    R2**
                                       cornea (including removal
                                       of the corneal epithelium
                                       and intraoperative
                                       pachymetry when performed).
10030...............................  Image-guided fluid            P2*                    P2**
                                       collection drainage by
                                       catheter (e.g., abscess,
                                       hematoma, seroma,
                                       lymphocele, cyst), soft
                                       tissue (e.g., extremity
                                       abdominal wall, neck),
                                       percutaneous.
64461...............................  Paravertebral block (PVB)     P3*                    P3**
                                       (paraspinous block),
                                       thoracic; single injection
                                       site (includes imaging
                                       guidance, when performed).
64463...............................  Continuous infusion by        P3*                    P3**
                                       catheter (includes imaging
                                       guidance, when performed).
65785...............................  Implantation of intrastromal  R2*                    P2**
                                       corneal ring segments.
67229...............................  Treatment of extensive or     R2*                    R2**
                                       progressive retinopathy,
                                       one or more sessions;
                                       preterm infant (less than
                                       37 weeks gestation at
                                       birth), performed from
                                       birth up to 1 year of age
                                       (e.g., retinopathy of
                                       prematurity),
                                       photocoagulation or
                                       cryotherapy.
G0429***............................  Dermal injection              R2*                    R2**
                                       procedure(s) for facial
                                       lipodystrophy syndrome
                                       (LDS) and provision of
                                       Radiesse or Sculptra dermal
                                       filler, including all items
                                       and supplies.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Final payment indicators are based on a comparison of the final rates according to the ASC standard
  ratesetting methodology and the MPFS final rates. 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 final rule
  with comment period.
*** HCPCS code G0429 replaces HCPCS code C9800, effective January 1, 2017.

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45698), for CY 2017, 
we proposed to designate certain new CY 2017 codes for ASC covered 
surgical procedures as temporary office-based, as displayed in Table 28 
of the proposed rule. After reviewing the clinical characteristics, 
utilization, and volume of related procedure 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 proposed to make the office-based designations temporary 
rather than permanent and we will reevaluate the procedures when data 
become available. The procedures for which the proposed office-based 
designations for CY 2017 are temporary also were indicated by asterisks 
in Addendum AA to the proposed rule (which is available via the 
Internet on the CMS Web site).
    We invited public comments on these proposals.
    We did not receive any public comments on our proposal. Therefore, 
for CY 2017, we are finalizing our proposal, without modification, to 
designate the two new CY 2017 codes for ASC surgical procedures listed 
in Table 49 as temporary office-based.

[[Page 79738]]



Table 49--Cy 2017 Payment Indicators for New CY 2017 CPT Codes for ASC Covered Surgical Procedures Designated as
                                             Temporary Office-Based
----------------------------------------------------------------------------------------------------------------
                                       CY 2017 OPPS/
  CY 2017 OPPS/ASC proposed rule 5-   ASC final rule     CY 2017 Long descriptor      Final CY 2017 ASC payment
     digit CMS placeholder code          CPT code                                            indicator**
----------------------------------------------------------------------------------------------------------------
369X1...............................           36901  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...............................           36473  Endovenous ablation therapy   P2*
                                                       of incompetent vein,
                                                       extremity, inclusive of all
                                                       imaging guidance and
                                                       monitoring, percutaneous,
                                                       mechanochemical; first vein
                                                       treated.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Final payment indicators are based on a comparison of the final rates according to the ASC standard
  ratesetting methodology and the MPFS final rates. 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 final rule
  with comment period.

b. ASC Covered Surgical Procedures Designated as Device-Intensive--
Finalized Policy for CY 2016 and Final 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) 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 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

[[Page 79739]]

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 that 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 that 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 that a HCPCS code-level device offset would 
remove an inappropriate device-intensive status for procedures without 
a significant device cost, but which are granted such status because of 
the APC assignment.
    Therefore, in the CY 2017 OPPS/ASC proposed rule (81 FR 45698 
through 45699), for CY 2017, we proposed 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 proposed to revise the regulations at 42 CFR 
416.171(b)(2) to redefine device-intensive procedures in accordance 
with this proposal.
    Comment: The majority of commenters supported CMS' proposal to 
revise the device-intensive procedure designation methodology such that 
an individual HCPCS code with a device offset greater than 40 percent, 
regardless of the APC assignment, would be designated as a device-
intensive procedure. Among the commenters who supported the proposal, a 
few requested that CMS lower the ASC device offset threshold to 30 
percent to qualify a larger number of ASC procedures as device-
intensive.
    Response: We appreciate the commenters' support. However, we do not 
believe that lowering the device offset percentage from 40 percent to 
30 percent in the ASC setting only is appropriate. As discussed in the 
CY 2015 OPPS/ASC final rule with comment period (79 FR 66924), the 
intent of the device-intensive policy is to align significant device 
cost percentage in the OPPS with the device-intensive procedures in the 
ASC payment system. That is, we should not pay more for a device when 
it is implanted in an ASC than if the same device were implanted in an 
HOPD. Lowering the ASC device-intensive procedure offset to 30 percent 
would create a disparity in the number of procedures designated device-
intensive in the ASC setting, when compared to the HOPD setting. A 
lower device offset percentage in the ASC setting would result in more 
device-intensive procedures, when compared to the HOPD setting and, 
therefore, would result in a financial incentive to perform certain 
device-intensive procedures in the ASC setting rather than the HOPD 
setting. Therefore, for CY 2017, we believe it is not appropriate to 
lower the ASC device-intensive offset percentage to 30 percent when the 
OPPS device-intensive offset percentage is 40 percent. We refer readers 
to section IV.B. of this final rule with comment period for background 
on the OPPS device-intensive procedure policy.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2017, to 
designate all procedures that involve the implantation of a device and 
that have an individual HCPCS code-level device offset of greater than 
40 percent, regardless of the APC assignment, as device-intensive. In 
addition, we are revising the regulations under 42 CFR 416.171(b)(2) to 
reflect this finalized policy.
    In addition, for new HCPCS codes describing procedures involving 
the implantation of medical devices that do not yet have associated 
claims data, we proposed to designate these procedures as device-
intensive 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 involve the implantation of 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 involving the implantation of a medical device, the device-
intensive designation 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 complete listing of ASC device-intensive 
procedures was included in Addendum AA to the proposed rule (which is 
available via the Internet on the CMS Web site).
    Comment: Several commenters supported CMS' proposal to apply a 
default device offset of at least 41 percent to new implant procedures, 
with the possibility for a higher device offset if supported by device 
cost. Some commenters asked that CMS specify how additional information 
can be submitted to CMS, including the deadline for submission and the 
type of information that can be submitted, for consideration of a 
higher device offset percentage for a new implant procedure.
    Response: We appreciate the commenters' support. Additional 
information for CMS consideration of an offset percentage higher than 
the default of 41 percent for new HCPCS codes describing procedures 
involving the implantation (or in some cases the insertion) of a 
medical device that do not yet have associated claims data, such as 
pricing data or invoices from a device manufacturer, may be directed to 
CMS staff in the Division of Outpatient

[[Page 79740]]

Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244-1850, or electronically at 
[email protected]. Additional information can be submitted prior to 
the issuance of an OPPS/ASC proposed rule or as a public comment in 
response to the proposed rule. Device offset percentages for a given 
year will be established in each year's OPPS/ASC final rule.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2017 to designate 
as device-intensive all procedures described by new HCPCS codes 
involving the implantation of a medical device that do not yet have 
associated claims data with a default device offset set at 41 percent, 
until claims data are available to establish the HCPCS code-level 
device offset for the procedure. For CY 2017, we also are finalizing 
our proposal, without modification, to temporarily assign a higher 
offset percentage if warranted by additional information. The complete 
listing of ASC device-intensive procedures for CY 2017 is included in 
Addendum AA to this final rule with comment period (which is available 
via the Internet on the CMS Web site).
(3) Changes to List of ASC Covered Surgical Procedures Designated as 
Device-Intensive for CY 2017
    For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45699), 
we proposed to revise our methodology for designating ASC covered 
surgical procedures as device-intensive. Specifically, for CY 2017, we 
proposed to update the ASC list of covered surgical procedures that are 
eligible for payment according to our device-intensive procedure 
payment methodology, consistent with our proposed 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 the proposed rule.
    The ASC covered surgical procedures that we proposed to designate 
as device-intensive and would be subject to the device-intensive 
procedure payment methodology for CY 2017 were included in Addendum AA 
to the 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 of whether the full credit/partial 
credit (FB/FC) device adjustment policy would apply also were included 
in Addendum AA to the proposed rule.
    We invited public comments on the proposed list of ASC device-
intensive procedures.
    Comment: One commenter requested that CMS review the proposed 
device offset percentage for CPT code 43284 (proposed as CPT code 
432X1) (Laparoscopy, surgical, esophageal sphincter augmentation 
procedure, placement of sphincter augmentation device (i.e., magnetic 
band), including cruroplasty when performed). CPT code 43284 is the 
replacement code for predecessor HCPCS codes C9737 (Laparoscopy, 
surgical, esophageal sphincter augmentation with device (e.g., magnetic 
band)) and 0392T (laparoscopy, surgical, esophageal sphincter 
augmentation procedure, placement of sphincter augmentation device 
(e.g., magnetic band)). Therefore, the commenter believed that CY 2015 
claims data for HCPCS codes C9737 and 0392T should be used to determine 
the device offset percentage for CPT code 43284. However, the commenter 
suggested that CMS used CY 2015 claims data for HCPCS code 0392T only 
when determining the device offset percentage for CPT code 43284.
    Response: We agree with the commenter. Accordingly, for this CY 
2017 OPPS/ASC final rule with comment period, we used CY 2015 claims 
data for HCPCS codes C9737 and 0392T to determine the device offset 
percentage for CPT code 43284.
    Comment: One commenter supported CMS' proposed designation of the 
procedure described by HCPCS code C9739 (cystourethroscopy with 
insertion of transprostatic implant; 1 to 3 implants) as device-
intensive based on the proposed methodology change to device-intensive 
designations.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
designating the ASC covered surgical procedures displayed in Addendum 
AA as device-intensive and subject to the device-intensive procedure 
payment methodology for CY 2017. The CPT code, the CPT code short 
descriptor, the final CY 2017 ASC payment indicator, the final CY 2017 
HCPCS code device offset percentage, and an indication of whether the 
full credit/partial credit (FB/FC) device adjustment policy will apply, 
are included in the ASC policy file labeled ``CY 2017 ASC Procedures to 
which the No Cost/Full Credit and Partial Credit Device Adjustment 
Policy Applies,'' which is available via the Internet on the CMS Web 
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Policy-Files.html.
c. 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 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

[[Page 79741]]

CY 2014 to continue to reduce ASC payments by 100 percent or 50 percent 
of the device offset amount when an ASC furnishes a device without cost 
or with full or partial credit, respectively.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45699 through 456700) 
we proposed 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 proposed 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 invited public comments on our proposals to adjust ASC payments 
for no cost/full credit and partial credit devices.
    We did not receive any public comment on these proposals. 
Therefore, we are finalizing these proposals without modification. 
Specifically, we will apply the HCPCS FB/FC modifier policy to all 
device-intensive procedures in CY 2017. The device-intensive procedures 
for CY 2017 are listed in the ASC policy file labeled ``CY 2017 ASC 
Procedures to which the No Cost/Full Credit and Partial Credit Device 
Adjustment Policy Applies'' (referred to as ``ASC device adjustment 
file'' below), which is available via the Internet on the CMS Web site 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Policy-Files.html. For CY 2017, we will reduce the 
payment for the procedures listed in the ASC device adjustment file by 
the full device offset amount if a device is furnished without cost or 
with full credit. ASCs must append the HCPCS modifier ``FB'' to the 
HCPCS code for a surgical procedure listed in the ASC device adjustment 
file previously mentioned when the device is furnished without cost or 
with full credit. In addition, for CY 2017, we will reduce the payment 
for the procedures listed in the ASC device adjustment file by one-half 
of the device offset amount if a device is provided with partial 
credit, if the credit to the ASC is 50 percent or more (but less than 
100 percent) of the device cost. The ASC must append the HCPCS ``FC'' 
modifier to the HCPCS code for a surgical procedure listed in the ASC 
device adjustment file when the facility receives a partial credit of 
50 percent or more (but less than 100 percent) of the cost of a device.
d. 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, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45700 through 45701), we proposed 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 proposed to include them on the list of ASC covered 
surgical procedures for CY 2017.
    The eight procedures that we proposed to add to the ASC list of 
covered surgical procedures, including their HCPCS code long 
descriptors and proposed CY 2017 payment indicators, were displayed in 
Table 29 of the proposed rule.
    Comment: Several commenters supported the proposal to add the eight 
codes that were displayed in Table 29 of the proposed rule to the list 
of ASC covered surgical procedures for CY 2017.
    Response: We appreciate the commenters' support.
    Comment: Commenters noted that CPT code 22851 (Application of 
intervertebral biomechanical device(s) (e.g., synthetic cage(s), 
methlmethacrylate) to vertebral defect or interspace (List separately 
in addition to code for primary procedure)), which was proposed to be 
added to the list of ASC covered surgical procedures (81 FR 45701) was 
deleted by the AMA Editorial Panel in April 2016. These commenters 
indicated that this code was replaced with the following three new CPT 
codes, effective January 1, 2017: 22853 (Insertion of interbody 
biomechanical device(s) (e.g., synthetic cage, mesh) with integral 
anterior instrumentation for device anchoring (e.g., screws, flanges), 
when performed, to intervertebral disc space in conjunction with 
interbody arthrodesis, each interspace (List separately in addition to 
code for primary procedure); 22854 (Insertion of intervertebral 
biomechanical device(s) (e.g., synthetic cage, mesh) with integral 
anterior instrumentation for device anchoring (e.g., screws, flanges), 
when performed,

[[Page 79742]]

to vertebral corpectomy(ies) (vertebral body resection, partial or 
complete) defect, in conjunction with interbody arthrodesis, each 
contiguous defect (List separately in addition to code for primary 
procedure); and 22859 (Insertion of intervertebral biomechanical 
device(s) (e.g., synthetic cage, mesh, methylmethacrylate) to 
intervertebral disc space or vertebral body defect without interbody 
arthrodesis, each contiguous defect (List separately in addition to 
code for primary procedure)). The commenters requested that the 
replacement codes for CPT code 22851 be included on the list of ASC 
covered surgical procedures.
    Response: The commenters are correct. CPT code 22851 was deleted 
effective April 13, 2016, and replaced with CPT codes 22853, 22854, and 
22859, effective January 1, 2017. CPT code 22851 was included on the 
list of codes proposed to be added to the ASC covered surgical 
procedures list in error. Instead of CPT code 22851, which will be 
deleted on December 31, 2016, we intended to propose to add CPT codes 
22853, 22854, and 22859 to the list of ASC covered surgical procedures. 
We have included these codes with a payment indicator of ``N1'' in 
Table 51 below as well as Addendum AA to this final rule with comment 
period (which is available via the Internet on the CMS Web site). We 
also have removed these codes from Addendum EE to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site) for CY 2017.
    Comment: Some commenters requested that CMS establish separate 
payment for the instrumentation codes, CPT codes 22552, 22840, 22842, 
and 22845 that were proposed to be added to the list of ASC covered 
surgical procedures. Commenters also requested separate payment for CPT 
code 22851, which will be replaced with CPT codes 22853, 22854, and 
22859, effective January 1, 2017.
    Response: Each of these codes are add-on services to procedures and 
describe variations of (including additional instrumentation used with) 
the base code procedure. These codes are assigned to status indicator 
``N'' under the OPPS. This status indicator is used to identify items 
and services packaged into APC payment rates. As noted in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70495), we update the 
ASC payment rates and 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. 
Therefore, these services are assigned payment indicator ``N1'' under 
the ASC payment system, which identifies a packaged service where no 
separate payment is made.
    Comment: Some commenters requested that CMS include several 
additional codes that were not proposed in the CY 2017 OPPS/ASC 
proposed rule on the list of ASC covered surgical procedures for CY 
2017. These codes are shown in Table 50 below. One commenter also 
requested that CMS revise existing ASC regulations to allow unlisted 
codes to be payable in the ASC setting.

Table 50--Procedures Requested by Commenters for Addition to the CY 2017
                 List of ASC Covered Surgical Procedures
------------------------------------------------------------------------
      CY 2017  CPT/HCPCS  Code                 Short descriptor
------------------------------------------------------------------------
00142..............................  Anesth lens surgery.
00170..............................  Anesth procedure on mouth.
00810..............................  Anesth low intestine scope.
0232T..............................  Njx platelet plasma.
17999..............................  Skin tissue procedure.
19307..............................  Mast mod rad.
20930..............................  Sp bone algrft morsel add-on.
21470..............................  Treat lower jaw fracture.
22558 *............................  Lumbar spine fusion.
22585..............................  Additional spinal fusion.
22600 *............................  Neck spine fusion.
22630 *............................  Lumbar spine fusion.
22632 *............................  Spine fusion extra segment.
22633 *............................  Lumbar spine fusion combined.
22634 *............................  Spine fusion extra segment.
22830 *............................  Exploration of spinal fusion.
22846 *............................  Insert spine fixation device.
22849 *............................  Reinsert spinal fixation.
22850 *............................  Remove spine fixation device.
22852 *............................  Remove spine fixation device.
22856..............................  Cerv artific diskectomy.
22858..............................  Second level cer diskectomy.
22864 *............................  Remove cerv artif disc.
22899..............................  Spine surgery procedure.
23470..............................  Reconstruct shoulder joint.
23472 *............................  Reconstruct shoulder joint.
27130 *............................  Total hip arthroplasty.
27132 *............................  Total hip arthroplasty.
27176 *............................  Treat slipped epiphysis.
27412..............................  Autochondrocyte implant knee.
27447 *............................  Total knee arthroplasty.
27457 *............................  Realignment of knee.
27477..............................  Surgery to stop leg growth.
27485..............................  Surgery to stop leg growth.
27486 *............................  Revise/replace knee joint.
27487 *............................  Revise/replace knee joint.
27535 *............................  Treat knee fracture.
27540 *............................  Treat knee fracture.
27702 *............................  Reconstruct ankle joint.
28805..............................  Amputation thru metatarsal.
28899..............................  Foot/toes surgery procedure.
29799..............................  Casting/strapping procedure.
29867..............................  Allgrft implnt knee w/scope.
29868..............................  Meniscal trnspl knee w/scpe.
29999..............................  Arthroscopy of joint.
31599..............................  Larynx surgery procedure.
32551..............................  Insertion of chest tube.
33244..............................  Remove elctrd transvenously.
37191..............................  Ins endovas vena cava filtr.
37193..............................  Rem endovas vena cava filter.
37244..............................  Vasc embolize/occlude bleed.
37799..............................  Vascular surgery procedure.
38207..............................  Cryopreserve stem cells.
38214..............................  Volume deplete of harvest.
38999..............................  Blood/lymph system procedure.
41899..............................  Dental surgery procedure.
43280..............................  Laparoscopy fundoplasty.
43281..............................  Lap paraesophag hern repair.
43499..............................  Esophagus surgery procedure.
43775 *............................  Lap sleeve gastrectomy.
43999..............................  Stomach surgery procedure.
44180..............................  Lap enterolysis.
44705..............................  Prepare fecal microbiota.
44799..............................  Unlisted px small intestine.
44950..............................  Appendectomy.
44970..............................  Laparoscopy appendectomy.
46999..............................  Anus surgery procedure.
47379..............................  Laparoscope procedure liver.
47600 *............................  Removal of gallbladder.
49329..............................  Laparo proc abdm/per/oment.
49659..............................  Laparo proc hernia repair.
49999..............................  Abdomen surgery procedure.
53899..............................  Urology surgery procedure.
54411..............................  Remov/replc penis pros comp.
54417..............................  Remv/replc penis pros compl.
55899..............................  Genital surgery procedure.
57282..............................  Colpopexy extraperitoneal.
57283..............................  Colpopexy intraperitoneal.
57425..............................  Laparoscopy surg colpopexy.
58300..............................  Insert intrauterine device.
60252..............................  Removal of thyroid.
60260..............................  Repeat thyroid surgery.
61782..............................  Scan proc cranial extra.
63035..............................  Spinal disk surgery add-on.
63048..............................  Remove spinal lamina add-on.
63057..............................  Decompress spine cord add-on.
63081 *............................  Remove vert body dcmprn crvl.
64999..............................  Nervous system surgery.
67904..............................  Repair eyelid defect.
90870..............................  Electroconvulsive therapy.
91110..............................  Gi tract capsule endoscopy.
C9600..............................  Perc drug-el cor stent sing.
C9601..............................  Perc drug-el cor stent bran.
C9602..............................  Perc d-e cor stent ather s.
C9604..............................  Perc d-e cor revasc t cabg s.
C9605..............................  Perc d-e cor revasc t cabg b.
C9606..............................  Perc d-e cor revasc w ami s.
C9607..............................  Perc d-e cor revasc chro sin.
G0455..............................  Fecal microbiota prep instil.
L8699..............................  Prosthetic implant nos
------------------------------------------------------------------------
* CPT codes on the OPPS inpatient list for CY 2017.

    Response: We reviewed all of the codes that the commenters 
requested for addition to the ASC list of covered surgical procedures. 
Of the 102 codes requested for addition to the ASC list, we did not 
consider procedures that are reported by CPT codes that are on the 
inpatient only list (identified with an asterisk in Table 50 above). 
The 27 codes that are on the inpatient list for CY 2017 are not 
eligible for addition to the ASC list of covered surgical procedures 
(72 FR 42476 through 42486; 42 CFR 416.166).
    We do not believe that the remaining 75 procedures described by 
codes listed in Table 50 should be added to the list for CY 2017 
because they do not meet our criteria for inclusion on the list. Under 
Sec. Sec.  416.2 and 416.166 of our regulations, subject to certain 
exclusions, covered surgical procedures

[[Page 79743]]

in an ASC are surgical procedures that are separately paid under the 
OPPS, that would not be expected to pose a significant risk to safety 
when performed in an ASC, and would not be expected to require active 
medical monitoring and care of the beneficiary at midnight following 
the procedure. The criteria used under the revised ASC payment system 
to identify procedures that would be expected to pose a significant 
safety risk when performed in an ASC include, but are not limited to, 
those procedures that: (1) Generally result in extensive blood loss; 
(2) require major or prolonged invasion of body cavities; (3) directly 
involve major blood vessels; (4) are generally emergent or life 
threatening in nature; (5) commonly require systemic thrombolytic 
therapy; (6) are designated as requiring inpatient care under 42 CFR 
419.22(n); (7) can only be reported using a CPT unlisted surgical 
procedure code; or (8) are otherwise excluded under 42 CFR 411.15 (42 
CFR 416.166). Procedures that do not meet the criteria set forth in 
Sec.  416.166 would not be added to the list of ASC covered surgical 
procedures. We note that we have evaluated many of these procedures in 
previous years (79 FR 66918 through 66921; 78 FR 75067 through 75070) 
and did not add the procedures to the ASC list because of similar 
concerns regarding beneficiary safety. The commenters provided no 
specific information regarding the safety of these procedures in the 
ASC setting.
    In response to the request to allow other unlisted codes to be 
payable in the ASC setting, we note that we have addressed this comment 
several times in prior rulemaking. We refer readers to the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70489) for the most 
recent response. Our longstanding ASC policy under Sec.  416.166 is 
that procedures described by all unlisted codes are noncovered in the 
ASC because we are unable to determine (due to the nondescript nature 
of unlisted procedure codes) if a procedure that would be reported with 
an unlisted code would not be expected to pose a significant risk to 
beneficiary safety when performed in an ASC, and would not be expected 
to require active medical monitoring and care of the beneficiary at 
midnight following the procedure. We continue to believe that it would 
not be appropriate to provide ASC payment for procedures described by 
unlisted CPT codes in the surgical range, even if payment may be 
provided under the OPPS. Therefore, we are not adding procedures 
described by unlisted CPT codes to the list of ASC covered surgical 
procedures for CY 2017.
    After consideration of the public comments we received, we are 
finalizing our proposal with respect to seven of the eight CPT codes 
that we proposed to add to the list of ASC covered surgical procedures 
for CY 2017. We are not adding CPT code 22851 to the list of ASC 
covered surgical procedures for CY 2017. Instead, in response to public 
comments, we are adding three additional procedures described by CPT 
codes 22853, 22854, and 22859 to the list of ASC covered surgical 
procedures for CY 2017 in this final rule with comment period. In 
addition, as discussed below, in response to public comments, we 
removed CPT code 22585 (Arthrodesis, anterior interbody, including disc 
space preparation, discectomy, osteophytectomy, and decompression of 
spinal cord and/or nerve roots; each additional interspace (List 
separately in addition to code for primary procedure)) from the OPPS 
inpatient list for CY 2017. CPT code 22585 is also an add-on code to 
procedures that are currently performed in the ASC and describes a 
variation of (including additional instrumentation used with) the base 
code procedure. Therefore, we are including the procedure described by 
CPT code 22585 on the list of ASC covered surgical procedures for CY 
2017 as well. Table 51 below displays the 11 procedures that we are 
adding to the ASC list of covered surgical procedures, including their 
CPT code long descriptors and final CY 2017 payment indicators.

                 Table 51--Additions to the List of ASC Covered Surgical Procedures for CY 2017
----------------------------------------------------------------------------------------------------------------
                                                                                        CY 2017  ASC  payment
      CY 2017  CPT code                      CY 2017 long descriptor                          indicator
----------------------------------------------------------------------------------------------------------------
20936.......................  Autograft for spine surgery only (includes            N1
                               harvesting the graft); local (e.g., ribs, spinous
                               process, or laminar fragments) obtained from the
                               same incision (List separately in addition to code
                               for primary procedure).
20937.......................  Autograft for spine surgery only (includes            N1
                               harvesting the graft); morselized (through separate
                               skin or fascial incision) (List separately in
                               addition to code for primary procedure).
20938.......................  Autograft for spine surgery only (includes            N1
                               harvesting the graft); structural, biocortical or
                               tricortical (through separate skin fascial
                               incision).
22552.......................  Arthrodesis, anterior interbody, including disc       N1
                               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 instrumentation (e.g.,        N1
                               Harrington rod technique, pedicle fixation across 1
                               interspace, atlantoaxial transarticular screw
                               fixation, sublaminar wiring at C1, facet screw
                               fixation).
22842.......................  Posterior non-segmental instrumentation (e.g.,        N1
                               Harrington rod technique, pedicle fixation across 1
                               interspace, atlantoaxial transarticular screw
                               fixation, sublaminar wiring at C1, facet screw
                               fixation).
22845.......................  Anterior instrumentation; 2 to 3 vertebral segments.  N1
22853 *.....................  Insertion of interbody biomechanical device(s)        N1
                               (e.g., synthetic cage, mesh) with integral anterior
                               instrumentation for device anchoring (e.g., screws,
                               flanges), when performed, to intervertebral disc
                               space in conjunction with interbody arthrodesis,
                               each interspace (List separately in addition to
                               code for primary procedure).
22854 *.....................  Insertion of intervertebral biomechanical device(s)   N1
                               (e.g., synthetic cage, mesh) with integral anterior
                               instrumentation for device anchoring (e.g., screws,
                               flanges), when performed, to vertebral
                               corpectomy(ies) (vertebral body resection, partial
                               or complete) defect, in conjunction with interbody
                               arthrodesis, each contiguous defect (List
                               separately in addition to code for primary
                               procedure).
22859*......................  Insertion of intervertebral biomechanical device(s)   N1
                               (e.g., synthetic cage, mesh, methylmethacrylate) to
                               intervertebral disc space or vertebral body defect
                               without interbody arthrodesis, each contiguous
                               defect (List separately in addition to code for
                               primary procedure).
----------------------------------------------------------------------------------------------------------------
* Effective January 1 2017, CPT codes 22853, 22854, and 22859 replaced CPT code 22851, which was deleted April
  13, 2016 by the AMA Editorial Panel.


[[Page 79744]]

    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 only list for possible inclusion on the ASC list of covered 
surgical procedures. We proposed to remove the following six procedures 
described by CPT codes from the OPPS inpatient list for CY 2017: CPT 
codes 22840, 22842, 22845, 22858, 31584, and 31587. The long 
descriptors for each of these six CPT procedure codes were included in 
the proposed rule (81 FR 45678). We evaluated each of the six 
procedures we proposed to remove for the OPPS inpatient list for CY 
2017 according to the criteria for exclusion from the list of ASC 
covered surgical procedures. After reviewing these procedures, we also 
proposed to add the procedures described by CPT codes 22840, 22842, and 
22845 listed in Table 29 of the proposed rule to the list of ASC 
covered surgical procedures for CY 2017 (81 FR 45700 through 45701). We 
proposed to add these three procedures to the list of ASC covered 
surgical procedures (as well as proposed to remove them from the OPPS 
inpatient list) for CY 2017 because these procedures are described by 
add-on codes for 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 three procedures that we proposed to remove 
from the OPPS inpatient list, we believe that procedures described by 
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) should 
continue to be excluded from the list of ASC covered surgical 
procedures. We invited public comments on the continued exclusion of 
these procedures from the list of ASC covered surgical procedures.
    In response to public comments (as discussed in section IX.B. of 
this final rule with comment period), we also are removing CPT code 
22585 from the OPPS inpatient list for CY 2017 (discussed in section 
IX.B. of this final rule with comment period). CPT code 22585 is also 
an add-on code to procedures that are currently performed in the ASC 
and describes a variation of (including additional instrumentation used 
with) the base code procedure. We also expect that the procedure 
described by CPT code 22585 can be safely performed in an ASC without 
the need for an overnight stay. Therefore, we are including the 
procedure described by CPT code 22585 on the list of ASC covered 
surgical procedures for CY 2017 as well.
    Comment: Commenters supported the proposal to add the procedures 
described by CPT codes 22840, 22842, and 22845 to the list of ASC 
covered surgical procedures. Commenters also requested that CMS add the 
procedure described by CPT code 22858 to the list of ASC covered 
surgical procedures.
    Response: We appreciate the commenters' support. As discussed 
earlier, we continue to believe that the procedure described by CPT 
code 22858 does not meet our criteria for inclusion on the list of ASC 
covered surgical procedures because this procedure would generally be 
expected to require at least an overnight stay.
    After consideration of the public comments we received, we are 
finalizing the proposal to add the procedures described by CPT codes 
22585, 22840, 22842, and 22845, which are being removed from the OPPS 
inpatient list for CY 2017, to the list of ASC covered surgical 
procedures for CY 2017. We also are including the procudure described 
by CPT code 22585 on the list of ASC covered surgical procedures for CY 
2017.
2. Covered Ancillary Services
    Consistent with the established ASC payment system policy, in the 
CY 2017 OPPS/ASC proposed rule (81 FR 45701), we proposed to update the 
ASC list of covered ancillary services to reflect the 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 2016 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 proposed that these 
services also would be packaged under the ASC payment system for CY 
2017. We proposed to continue this reconciliation of packaged status 
for subsequent calendar years. Comment indicator ``CH,'' discussed in 
section XII.F. of the proposed rule, was used in Addendum BB to the 
proposed rule (which is available via the Internet on the CMS Web site) 
to indicate covered ancillary services for which we proposed a change 
in the ASC payment indicator to reflect a proposed change in the OPPS 
treatment of the service for CY 2017.
    All ASC covered ancillary services and their proposed payment 
indicators for CY 2017 were included in Addendum BB to the proposed 
rule. We invited public comments on this proposal.
    We did not receive any public comments on these proposals. 
Therefore, we are finalizing, without modification, our proposal to 
update the ASC list of covered ancillary services to reflect the 
payment status for the services under the OPPS. All CY 2017 ASC covered 
ancillary services and their final payment indicators are included in 
Addendum BB to this final rule with comment period (which is available 
via the Internet on the CMS Web site).

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

1. ASC Payment for Covered Surgical Procedures
a. Background
    Our ASC payment policies for covered surgical procedures under the 
revised ASC payment system are fully described in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66828 through 66831). Under our 
established policy for the revised ASC payment system, 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

[[Page 79745]]

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 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. Update to ASC Covered Surgical Procedure Payment Rates for CY 2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45702), we proposed 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 the proposed rule. Because the 
proposed OPPS relative payment weights were based on geometric mean 
costs for CY 2017 and subsequent years, the ASC system would use 
geometric means to determine proposed relative payment weights under 
the ASC standard methodology. We proposed to continue to use the amount 
calculated under the ASC standard ratesetting methodology for 
procedures assigned payment indicators ``A2'' and ``G2.''
    We proposed that payment rates for office-based procedures (payment 
indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive procedures 
(payment indicator ``J8'') be calculated according to our established 
policies and, for device-intensive procedures, using our proposed 
modified definition of device-intensive procedures, as discussed in 
section XI.C.1.b. of the proposed rule. Therefore, we proposed to 
update the payment amount for the service portion of the device-
intensive procedures using the ASC standard ratesetting methodology and 
the payment amount for the device portion based on the proposed CY 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 proposed 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 invited public comments on these proposals.
    Comment: Several commenters disagreed with the proposed CY 2017 ASC 
payment rates for the surgical procedures described by the following 
CPT codes:
     CPT code 29882 (Arthroscopy, knee, surgical; with meniscus 
repair (medial OR lateral);
     CPT code 29883 (Arthroscopy, knee, surgical; with meniscus 
repair (medial and lateral));
     CPT code 28293 (Correction, hallux valgus (bunion), with 
or without sesamoidectomy; resection of joint with implant);
     CPT code 43239 (Esophagogastroduodenoscopy, flexible, 
transoral; with biopsy, single or multiple);
     CPT code 45378 (Colonoscopy, flexible; diagnostic, 
including collection of specimen(s) by brushing or washing, when 
performed (separate procedure));
     CPT code 66982 (Extracapsular cataract extraction removal 
with insertion of intraocular lens prosthesis (one stage procedure), 
manual or mechanical technique (e.g., irrigation and aspiration or 
phacoemulsification), complex, requiring devices or techniques not 
generally used in routine cataract surgery (e.g., iris expansion 
device, suture support for intraocular lens, or primary posterior 
capsulorrhexis) or performed on patients in the amblyogenic 
developmental stage); and
     CPT code 66984 (Extracapsular cataract removal with 
insertion of intraocular lens prosthesis (one stage procedure), manual 
or mechanical technique (e.g., irrigation and aspiration or 
phacoemulsification)).
    Commenters believed that the proposed CY 2017 payment rates for 
these procedures are inadequate and would not cover overhead costs or 
other standard supplies utilized during surgery. Commenters requested 
that CMS reconsider the data and methodology used to determine ASC 
payment rates.
    Response: As discussed earlier, the ASC payment is dependent upon 
the APC assignment for the procedure. Based on our analysis of the 
latest hospital outpatient and ASC claims data used for this final rule 
with comment period, we updated ASC payment rates

[[Page 79746]]

for CY 2017 using the established rate calculation methodologies under 
Sec.  416.171 and using our finalized modified definition of device-
intensive procedures, as discussed in section XII.C.1.b. of this final 
rule with comment period. We do not make additional payment adjustments 
to specific procedures.
    After consideration of the public comments we received, we are 
finalizing our proposed policies, without modification, to calculate 
the CY 2017 payment rates for ASC covered surgical procedures according 
to our established methodologies using the modified definition of 
device-intensive procedures. For those covered surgical procedures 
where the payment rate is the lower of the final rates under the ASC 
standard ratesetting methodology and the MPFS final rates, the final 
payment indicators and rates set forth in this final rule with comment 
period are based on a comparison using the MPFS rates effective January 
1, 2017. For a discussion of the MPFS rates, we refer readers to the CY 
2017 MPFS final rule with comment period.
2. Payment for Covered Ancillary Services
a. Background
    Our final payment policies under the revised ASC payment system for 
covered ancillary services vary according to the particular type of 
service and its payment policy under the OPPS. Our overall policy 
provides separate ASC payment for certain ancillary items and services 
integrally related to the provision of ASC covered surgical procedures 
that are paid separately under the OPPS and provides packaged ASC 
payment for other ancillary items and services that are packaged or 
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'') 
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 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 final rule with comment period). Thus, our final policy generally 
aligns ASC payment bundles with those under the OPPS (72 FR 42495). In 
all cases, in order for those ancillary services also to be paid, 
ancillary items and services must be provided integral to the 
performance of ASC covered surgical procedures for which the ASC bills 
Medicare.
    Our ASC payment policies provide separate payment for drugs and 
biologicals that are separately paid under the OPPS at the OPPS rates. 
We generally pay for separately payable radiology services at the lower 
of the MPFS nonfacility PE RVU-based (or technical component) amount or 
the rate calculated according to the ASC standard ratesetting 
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators 
for all nuclear medicine procedures (defined as CPT codes in the range 
of 78000 through 78999) that are designated as radiology services that 
are paid separately when provided integral to a surgical procedure on 
the ASC list are set to ``Z2'' so that payment is made based on the ASC 
standard ratesetting methodology rather than the MPFS nonfacility PE 
RVU amount, regardless of which is lower.
    Similarly, we also finalized our policy to set the payment 
indicator to ``Z2'' for radiology services that use contrast agents so 
that payment for these procedures will be based on the OPPS relative 
payment weight 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

[[Page 79747]]

indicator ``Z3,'' and revised the definition of payment indicator 
``Z3'' to include reference to diagnostic services.
b. Payment for Covered Ancillary Services for CY 2017
    For CY 2017 and subsequent years, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45702 through 45704), we proposed to update the ASC payment 
rates and to make changes to ASC payment indicators as necessary to 
maintain consistency between the OPPS and ASC payment system regarding 
the packaged or separately payable status of services and the proposed 
CY 2017 OPPS and ASC payment rates and subsequent year payment rates. 
We also proposed 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 
proposed 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 proposed that payment for 
a radiology service would be packaged into the payment for the ASC 
covered surgical procedure if the radiology service is packaged or 
conditionally packaged under the OPPS. The payment indicators in 
Addendum BB to the proposed rule (which is available via the Internet 
on the CMS Web site) indicated whether the proposed payment rates for 
radiology services are based on the MPFS nonfacility PE RVU-based 
amount or the ASC standard ratesetting methodology; or whether payment 
for a radiology service is packaged into the payment for the covered 
surgical procedure (payment indicator ``N1''). Radiology services that 
we proposed to pay based on the ASC standard ratesetting methodology 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 proposed to continue this modification to the 
payment methodology for CY 2017 and subsequent years and, therefore, 
proposed 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 indicators for radiology services 
that use contrast agents are assigned 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 proposed to continue this 
modification to the payment methodology for CY 2017 and subsequent 
years and, therefore, proposed 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 proposed to continue 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 for CY 2017. We also proposed 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 proposed 
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 proposed 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 proposed 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 and subsequent years, we proposed 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 were listed in Addendum BB to 
the proposed rule (which is available via the Internet on the CMS Web 
site).
    We did not receive public comments on our proposals regarding 
payment for covered ancillary services and, therefore, are finalizing 
these policies as proposed for CY 2017 and subsequent years. For those 
covered ancillary services where the payment rate is the lower of the 
final rates under the ASC standard ratesetting methodology and the MPFS 
final rates, the final payment indicators and rates set forth in this 
final rule with comment period are

[[Page 79748]]

based on a comparison using the MPFS rates effective January 1, 2017. 
For a discussion of the MPFS rates, we refer readers to the CY 2017 
MPFS final rule with comment period.

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
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 did not propose to revise the payment adjustment amount for CY 2017. 
The final ASC payment adjustment amount for NTIOLS in CY 2017 is $50.
4. Announcement of CY 2018 Deadline for Submitting Requests for CMS 
Review of Applications for a New Class of NTIOLs
    In accordance with Sec.  416.185(a) of our regulations, CMS 
announces that in order to be considered for payment effective 
beginning in CY 2018, requests for review of applications for a new 
class of new technology IOLs must be received at CMS by 5:00 p.m. EST, 
on March 01, 2017. Send requests to ASC/NTIOL, Division of Outpatient 
Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244-1850. To be considered, 
requests for NTIOL reviews must include the information requested on 
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.

F. ASC Payment and Comment Indicators

1. Background
    In addition to the payment indicators that we introduced in the 
August 2, 2007 final rule, we created final comment indicators for the 
ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy 
relevant characteristics of HCPCS codes that may receive packaged or 
separate payment in ASCs, such as whether they were on the ASC list of 
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment 
methodology; and their classification as separately payable ancillary 
services, including radiology services, brachytherapy sources, OPPS 
pass-through devices, corneal tissue acquisition services, drugs or 
biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators used in Addenda AA and BB to the proposed 
rules and final rules with comment period serve to identify, for the 
revised ASC payment system, the status of a specific HCPCS code and its 
payment indicator with respect to the timeframe when comments will be 
accepted. The comment indicator ``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 this CY 2017 OPPS/ASC final 
rule with comment period, we 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 (80 FR 70497).
    The ``CH'' comment indicator is used in Addenda AA and BB to the 
proposed rule (which are available via the Internet on the CMS Web 
site) to indicate that the payment indicator assignment has changed for 
an active HCPCS code in the current year and 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. ASC Payment and Comment Indicators
    For CY 2017 and subsequent years, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45705), we proposed 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

[[Page 79749]]

II HCPCS codes. Therefore, we proposed 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 the 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 the 
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 stated that we would respond to public comments on ASC payment 
and comment indicators and finalize their ASC assignment in this CY 
2017 OPPS/ASC final rule with comment period. We referred readers to 
Addenda DD1 and DD2 to the proposed rule (which are available via the 
Internet on the CMS Web site) for the complete list of ASC payment and 
comment indicators proposed for the CY 2017 update.
    We did not receive any public comments on the ASC payment and 
comment indicators and therefore are finalizing their use as proposed 
without modification.

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

1. Background
    In the August 2, 2007 final rule (72 FR 42493), we established our 
policy to base ASC relative payment weights and payment rates under the 
revised ASC payment system on APC groups and the OPPS relative payment 
weights. Consistent with that policy and the requirement at section 
1833(i)(2)(D)(ii) of the Act that the revised payment system be 
implemented so that it would be budget neutral, the initial ASC 
conversion factor (CY 2008) was calculated so that estimated total 
Medicare payments under the revised ASC payment system in the first 
year would be budget neutral to estimated total Medicare payments under 
the prior (CY 2007) ASC payment system (the ASC conversion factor is 
multiplied by the relative payment weights calculated for many ASC 
services in order to establish payment rates). That is, application of 
the ASC conversion factor was designed to result in aggregate Medicare 
expenditures under the revised ASC payment system in CY 2008 being 
equal to aggregate Medicare expenditures that would have occurred in CY 
2008 in the absence of the revised system, taking into consideration 
the cap on ASC payments in CY 2007 as required under section 
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the 
system budget neutral in subsequent calendar years (72 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 final rule with comment period), and certain 
diagnostic tests within the medicine range that are covered ancillary 
services, the established policy is to set the payment rate at the 
lower of the MPFS unadjusted nonfacility PE RVU-based amount or the 
amount calculated using the ASC standard ratesetting methodology. 
Further, as discussed in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66841 through 66843), we also adopted alternative 
ratesetting methodologies for specific types of services (for example, 
device-intensive procedures).
    As discussed in the August 2, 2007 final rule (72 FR 42517 through 
42518) and as codified at Sec.  416.172(c) of the regulations, the 
revised ASC payment system accounts for geographic wage variation when 
calculating individual ASC payments by applying the pre-floor and pre-
reclassified IPPS hospital wage indexes to the labor-related share, 
which is 50 percent of the ASC payment amount based on a GAO report of 
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted 
for geographic wage variation in labor cost when calculating individual 
ASC payments by applying the pre-floor and pre-reclassified hospital 
wage index values that CMS calculates for payment under the IPPS, using 
updated Core Based Statistical Areas (CBSAs) issued by OMB in June 
2003.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to hospitals. We believe that using the most recently 
available pre-floor and pre-reclassified IPPS hospital wage indexes 
results in the most appropriate adjustment to the labor portion of ASC 
costs. We continue to believe that the unadjusted hospital wage 
indexes, which are updated yearly and are used by many other Medicare 
payment systems, appropriately account for geographic variation in 
labor costs for ASCs. Therefore, the wage index for an ASC is the pre-
floor and pre-reclassified hospital wage index under the IPPS of the 
CBSA that maps to the CBSA where the ASC is located.
    On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which 
provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010 in the Federal Register (75 FR 37246 through 37252) and 2010 
Census Bureau data. (A copy of this bulletin may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 
49963), we implemented the use of the CBSA delineations issued by OMB 
in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY 
2015. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66937), we finalized a 1-year transition policy that

[[Page 79750]]

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 note that in the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 56913), we finalized this proposal.) 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, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45706), we proposed to implement these 
revisions to the OMB statistical area delineations, effective January 
1, 2017, beginning with the CY 2017 ASC wage indexes. We invited public 
comments on these proposals.
    For CY 2017, the 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 
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.)
    Comment: Several commenters made the same recommendation that was 
made in the CY 2010 (74 FR 60625), CY 2011 (75 FR 72059), CY 2012 (76 
FR 74446), CY 2013 (77 FR 68463), CY 2014 (78 FR 75086), and CY 2015 
(79 FR 66937) rulemakings--that is, that CMS adopt for the ASC payment 
system the same wage index values used for hospital payment under the 
OPPS.
    Response: We have responded to this comment in the prior OPPS/ASC 
rules mentioned above, and believe our prior rationale for using 
unadjusted wage indexes is still sound. We continue to believe that the 
unadjusted hospital wage indexes, which are updated yearly and are used 
by almost all Medicare payment systems, appropriately account for 
geographic variance in labor costs for ASCs. We refer readers to our 
response to this comment in the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 72059). We discuss our budget neutrality 
adjustment for changes to the wage indices below in section XII.G.2.b. 
of this final rule with comment period.
2. 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 ASC relative payment weights for each update year to make 
them budget neutral (72 FR 42533). Consistent with our established 
policy, in the CY 2017 OPPS/ASC proposed rule (81 FR 45706 through 
45707), we proposed 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 proposed 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 proposed to use the 
ratio of CY 2016 to CY 2017 total payments (the weight scalar) to scale 
the ASC relative payment weights for CY 2017. The proposed CY 2017 ASC 
scalar was 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

[[Page 79751]]

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 the proposed rule, we had 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 the proposed rule, is posted on the CMS Web site at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45707), 
we proposed 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 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

[[Page 79752]]

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 the 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 was 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 was 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).
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45708), for CY 2017, 
we proposed to reduce the CPI-U update of 1.7 percent by the MFP 
adjustment of 0.5 percentage point, resulting in an MFP-adjusted CPI-U 
update factor of 1.2 percent for ASCs meeting the quality reporting 
requirements. Therefore, we proposed to apply a 1.2 percent MFP-
adjusted CPI-U update factor to the CY 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 proposed 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 adjustment. Therefore, we proposed to apply a -0.8 
percent MFP-adjusted CPI-U update factor to the CY 2016 ASC conversion 
factor for ASCs not meeting the quality reporting requirements. We also 
proposed that if more recent data are subsequently available (for 
example, a more recent estimate of the CY 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 proposed 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 resulted 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 proposed 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 -0.8 percent discussed 
above, which resulted in a proposed CY 2017 ASC conversion factor of 
$43.801.
    We invited public comments on these proposals.
    Comment: Several commenters suggested that CMS replace the CPI-U as 
the update mechanism for ASC payments with the hospital market basket. 
The commenters stated that the CPI-U measures inflation in a basket of 
consumer goods atypical of what ASCs purchase. In addition, the 
commenters stated that the Affordable Care Act requires CMS to reduce 
the update by a measure of productivity gains, which inappropriately 
subjects ASCs to two productivity adjustments: Improvements reflected 
in the price of consumer purchased goods; and the additional 
statutorily required reduction. The commenters believed that the 
hospital market basket would be the most appropriate update for ASCs; 
they indicated that there are various alternatives within the CPI-U 
that CMS could explore that more accurately reflect the economic 
climate in the ASC environment. MedPAC acknowledged that there may be a 
burden associated with requiring ASCs to submit cost reports, but 
recommended that CMS collect some sort of ASC cost data to determine 
whether an existing Medicare index is a good proxy or if there should 
be an ASC-specific market basket.
    Response: As we have stated in response to similar comments in the 
past (for example, 77 FR 68465; 78 FR 75088 through 75089; 79 FR 66939; 
and 80 FR 70501), we continue to believe that, while commenters 
believed that the items included in the CPI-U index may not adequately 
measure inflation for the goods and services provided by ASCs, the 
hospital market basket does not align with the cost structures of ASCs. 
Hospitals provide a much wider range of services, such as room and 
board and emergency services, and the costs associated with providing 
these services are not part of the ASC cost structure. Therefore, at 
this time, we do not believe that it is appropriate to use the hospital 
market basket for the ASC annual update. We recognize that the CPI-U is 
an output price index that accounts for productivity. However, section 
1833(i)(2)(D)(v) of the Act requires the agency to reduce the annual 
update factor by the MFP adjustment. For the reasons stated above, we 
do not believe that the hospital market basket appropriately reflects 
the cost structures of ASCs, and because we do not have cost data on 
ASCs, we are continuing to use the CPI-U which we believe provides a 
reasonable approximation of the price increases facing ASCs. We will 
continue to explore the feasibility of collecting ASC cost data. 
However, based on our past experience, we do not believe that 
collecting such data through surveys would be productive.
    After consideration of the public comments we received, we are 
finalizing our proposal to apply our established methodology for 
determining the final CY 2017 ASC conversion factor. Using more 
complete CY 2015 data for this final rule with comment period than were 
available for the proposed rule, we calculated a wage index budget 
neutrality adjustment of 0.9996. Based on IGI's 2016 third quarter 
forecast, the CPI-U for the 12-month period ending with the midpoint of 
CY 2017 is now projected to be 2.2 percent, while the MFP adjustment 
(as discussed in the CY 2011 MPFS final rule with comment period (75 FR 
73394 through 73396), and revised in the CY 2012 MPFS final rule with 
comment period (76 FR 73300 through 73301) and in the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70500 through 70501)) is 0.3 
percent, resulting in an MFP-adjusted CPI-U update factor of 1.9 
percent for ASCs that meet the quality reporting requirements. The 
final ASC conversion factor of $45.030, for ASCs that meet the quality 
reporting requirements, is the product of the CY 2016 conversion factor 
of $44.190 multiplied by the wage index budget neutrality adjustment of 
0.9996 and the MFP-adjusted CPI-U payment update of

[[Page 79753]]

1.9 percent. For ASCs that do not meet the quality reporting 
requirements, we are reducing the CPI-U update of 2.2 percent by 2.0 
percentage points and then we are applying the 0.3 percentage point MFP 
adjustment, resulting in a -0.1 percent MFP adjusted CPI-U update 
factor. The final ASC conversion factor of $44.330 for ASCs that do not 
meet the quality reporting requirements is the product of the CY 2016 
conversion factor of $44.190 multiplied by the wage index budget 
neutrality adjustment of 0.9996 and the MFP-adjusted CPI-U payment 
update of -0.1 percent.
3. Display of CY 2017 ASC Payment Rates
    Addenda AA and BB to this final rule with comment period (which are 
available via the Internet on the CMS Web site) display the updated ASC 
payment rates for CY 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 final rates under the ASC standard ratesetting methodology and the 
MPFS final rates, the final payment indicators and rates set forth in 
this final rule with comment period are based on a comparison using the 
final MPFS rates that will be effective January 1, 2017. For a 
discussion of the MPFS rates, we refer readers to the CY 2017 MPFS 
final rule with comment period.
    The final 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 final CY 2017 payment rates. Specifically, 
in Addendum AA, a ``Y'' in the column titled ``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 ASC payment indicator for the new code.
    The values displayed in the column titled ``CY 2017 Payment 
Weight'' are the final relative payment weights for each of the listed 
services for CY 2017. The final 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 final CY 2017 payment rate displayed in the ``Final 
CY 2017 Payment Rate'' column, each ASC payment weight in the ``Final 
CY 2017 Payment Weight'' column was multiplied by the CY 2017 
conversion factor of $45.030. The conversion factor includes a budget 
neutrality adjustment for changes in the wage index values and the 
annual update factor as reduced by the productivity adjustment (as 
discussed in section XII.G.2.b. of this final rule with comment 
period).
    In Addendum BB, there are no relative payment weights displayed in 
the ``Final CY 2017 Payment Weight'' column for items and services with 
predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Final CY 2017 Payment'' column displays 
the CY 2017 national unadjusted ASC payment rates for all items and 
services. The 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 October 2016 through December 2016.
    Addendum EE provides the HCPCS codes and short descriptors for 
surgical procedures that we are excluding from payment in ASCs for CY 
2017.

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)

[[Page 79754]]

Quality Incentive Program (QIP), that link payment to performance. In 
implementing the Hospital OQR Program and other quality reporting 
programs, we have focused on measures that have high impact and support 
national priorities for improved quality and efficiency of care for 
Medicare beneficiaries as reflected in the National Quality Strategy 
(NQS) and the CMS Quality Strategy, as well as conditions for which 
wide cost and treatment variations have been reported, despite 
established clinical guidelines. To the extent possible under various 
authorizing statutes, our ultimate goal is to align the clinical 
quality measure requirements of the various quality reporting programs. 
As appropriate, we will consider the adoption of measures with 
electronic specifications to enable the collection of this information 
as part of care delivery. We refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68467 through 68469) for a 
discussion on the principles underlying consideration for future 
measures that we intend to use in implementing this and other quality 
reporting programs.
2. Statutory History of the Hospital OQR Program
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72064 through 72065) for a detailed discussion of the 
statutory history of the Hospital OQR Program.

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality 
Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74458 through 74460) for a detailed discussion of the 
priorities we consider for the Hospital OQR Program quality measure 
selection. In the CY 2017 OPPS/ASC proposed rule (81 FR 45710), we did 
not propose 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. In the CY 2017 OPPS/ASC proposed rule (81 FR 45710), we 
did not propose 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. In the 
CY 2017 OPPS/ASC proposed rule (81 FR 45710), we did not propose 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45710), we did not 
propose 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). In the CY 2017 OPPS/ASC 
proposed rule (81 FR 45710), we did not propose 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 #                             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).

[[Page 79755]]

 
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: 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.
------------------------------------------------------------------------
[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. New Hospital OQR Program Quality Measures for the CY 2020 Payment 
Determinations and Subsequent Years
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45711 through 45720), 
for the CY 2020 payment determination and subsequent years, we proposed 
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.
    We received a few comments that apply across all proposed measures 
and will address those first.
    Comment: Several commenters expressed concern that only one of the 
seven measures proposed by CMS is NQF-endorsed and, therefore, 
questioned whether the measures were accurate and a fair representation 
of hospital performance.
    Response: Section 1833(t)(17)(C)(i) of the Act does not require 
that each measure we adopt for the Hospital OQR Program be endorsed by 
a national consensus building entity, or the NQF specifically. Under 
this provision, the Secretary has further authority to adopt non-NQF-
endorsed measures. While we strive to adopt NQF-endorsed measures when 
possible, we believe the requirement that measures reflect consensus 
among affected parties can be achieved in other ways, including through 
the measure development process, stakeholder input via a Technical 
Expert Panel (TEP), broad acceptance and use of the measure, and public 
comments. As part of that process, we sought and received extensive 
input on these measures from stakeholders and clinical experts.
    We believe that these measures reflect consensus among the affected 
parties, because the MAP, which represents stakeholder groups, reviewed 
and conditionally supported the measures for use in the program. The 
MAP conditionally supported OP-35: Admissions and Emergency Department 
(ED) Visits for Patient Receiving Outpatient Chemotherapy.\7\ In 
addition, the MAP supported the OP-36: Hospital Visits after Hospital 
Outpatient Surgery measure for program use citing the vital importance 
of measures that help facilities reduce unnecessary hospital visits, 
and the measure received NQF endorsement on September 3, 
2015.8 9 Furthermore, the MAP encouraged continued 
development of OP-37a-e: Consumer Assessment of Healthcare Providers 
and Systems Outpatient and Ambulatory Surgery Survey measures, and the 
MAP stated that these are high impact measures that will improve both 
quality and efficiency of care and be meaningful to consumers.\10\
---------------------------------------------------------------------------

    \7\ Spreadsheet of MAP 2016 Final Recommendations available at: 
http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \8\ 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.
    \9\ Spreadsheet of MAP 2016 Final Recommendations. February 1, 
2016. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \10\ 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.
---------------------------------------------------------------------------

    In evaluating and selecting these measures for inclusion in the 
Hospital OQR Program, we considered whether there were other available 
measures that have been endorsed or adopted by the NQF that assess the 
areas in focus for quality measurement and reporting. We were unable to 
identify other NQF-endorsed measures. However, we developed these 
measures using the same rigorous process that we have used to develop 
other publicly reported measures. Lastly, it is our priority to ensure 
we select measures that are appropriate for the Hospital OQR Program 
that further our goals under the National Quality Strategy and CMS 
Quality Strategy.

[[Page 79756]]

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.\11\ Each year, about 
22 percent of cancer patients receive chemotherapy,\12\ with Medicare 
payments for cancer treatment totaling $34.4 billion in 2011, almost 10 
percent of Medicare fee-for-service (FFS) dollars.\13\ With an 
increasing number of cancer patients receiving chemotherapy in a 
hospital outpatient department,\14\ 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.\15\ 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.16 17 18
---------------------------------------------------------------------------

    \11\ American Cancer Society. ``Cancer Facts & Figures 2015.'' 
Available at: http://www.cancer.org/acs/groups/content/@editorial/documents/document/acspc-044552.pdf.
    \12\ 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.
    \13\ 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.
    \14\ 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.
    \15\ 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.
    \16\ 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.
    \17\ 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.
    \18\ 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.\19\ 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.\20\ Appropriate 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.
---------------------------------------------------------------------------

    \19\ 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.
    \20\ 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45711 
through 45714), we proposed 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

[[Page 79757]]

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. For 
all our measures, we routinely monitor the impact of SDS on hospitals' 
results. We will continue to investigate methods to ensure all 
hospitals are treated as fairly as possible within the program.
    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. This trial 
entails 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 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 consider how they apply to our 
quality programs in future rulemaking, as appropriate and feasible. We 
look forward to working with stakeholders in this process.
    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 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

[[Page 79758]]

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.21 22 23 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.
---------------------------------------------------------------------------

    \21\ 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.
    \22\ 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.
    \23\ McKenzie, H., L. Hayes, K. White, K. Cox, J. Fethney, M. 
Boughton, and J. Dunn. ``Chemotherapy Outpatients' Unplanned 
Presentations to Hospital: A Retrospective Study.'' Supportive Care 
in Cancer, Vol. 19, No. 7, 2011, pp. 963-969.
---------------------------------------------------------------------------

(5) Cohort
    The cohort includes Medicare FFS patients ages 18 years and older 
as of the start of the performance period with a diagnosis of any 
cancer (except leukemia) who received at least one hospital outpatient 
chemotherapy treatment at a reporting hospital during the performance 
period. Based on discussions with clinical and technical panel experts, 
the measure excludes cancer patients with a diagnosis of leukemia at 
any time during the performance period due to the high toxicity of 
treatment and recurrence of disease. Therefore, admissions for leukemia 
patients may not reflect poorly managed outpatient care, but rather 
disease progression and relapse. The measure also excludes patients who 
were not enrolled in Medicare FFS Parts A and B in the year before the 
first 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 invited 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.
    Comment: Several commenters supported the adoption of the proposed 
OP-35: Admissions and Emergency Department (ED) Visits for Patients 
Receiving Outpatient Chemotherapy measure in the Hospital OQR Program. 
Some commenters applauded CMS for recognizing cancer care as a priority 
area for outcome measurement, and

[[Page 79759]]

asserted this measure is particularly important as the number of cancer 
patients receiving chemotherapy in hospital outpatient settings is 
increasing. These commenters also agreed that it is imperative to 
include a measure to monitor admissions and ED visits for patients that 
receive outpatient chemotherapy in the Hospital OQR Program. Many 
commenters asserted that including an oncology measure would be an 
important step in holding hospitals accountable for the care they 
provide to chemotherapy patients--particularly because many of the 
reasons these patients are admitted to hospitals or visit the ED are 
for symptoms and side effects that can and should be anticipated and 
treated in nonacute care settings. These commenters asserted that 
reducing hospital admissions and ED visits will improve health outcomes 
and quality of life for chemotherapy patients, and the first step in 
doing so is to begin measuring the prevalence of these incidents. These 
commenters also asserted that 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.
    Response: We thank the commenters for their support.
    Comment: Several commenters did not support the adoption of OP-35 
because the measure is not NQF-endorsed, and asserted that CMS needs to 
obtain NQF approval prior to measure implementation to ensure that the 
measure is accurate, valid, and actionable.
    Response: Section 1833(t)(17)(C)(i) of the Act does not require 
that each measure we adopt for the Hospital OQR Program be endorsed by 
a national consensus building entity, or the NQF specifically. Under 
this provision, the Secretary has further authority to adopt non 
endorsed measures. While we strive to adopt NQF-endorsed measures when 
possible, we believe the requirement that measures reflect consensus 
among affected parties can be achieved in other ways, including through 
the measure development process, through broad acceptance and use of 
the measure, and through public comments. As part of that process, we 
sought and received extensive input on the measure from stakeholders 
and clinical experts at multiple points during development, including 
from the MAP and the NQF.
    Furthermore, in evaluating and selecting OP-35 for inclusion in the 
Hospital OQR Program, we considered whether there were other available 
measures that have been endorsed or adopted by the NQF that assess 
admissions and ED visits following outpatient chemotherapy, an 
important area for quality measurement and reporting. We were unable to 
identify any other NQF-endorsed measures. We developed OP-35 using the 
same rigorous process that we have used to develop other publicly 
reported outcome measures.
    Although this measure is not currently NQF-endorsed, our background 
research and analyses conducted during technical development 
demonstrate that this measure is accurate, valid, and actionable. This 
measure is an important signal of high quality care, measures what it 
intends to measure, and is specified in a way to appropriately 
differentiate data available between cancer hospitals providing high 
and low quality care for these patients. This measure assesses an 
aspect of care with documented unmet patient needs resulting in 
reduction of patient's quality of life and increase in healthcare 
utilization and costs. Several studies 24 25 26 illustrate a 
gap in care for patients receiving chemotherapy in the hospital 
outpatient setting, as hospitals cannot effectively track the condition 
or status of patients after they return home following treatment. In 
addition, the performance rates and information provided to 
stakeholders are actionable and useful for quality improvement efforts 
by highlighting a specific gap in care for cancer patients treated at 
each hospital. The diagnoses measured include commonly cited reasons 
for unplanned hospitalizations and ED visits in this population that 
are considered potentially preventable through appropriately managed 
outpatient care. We have limited the outcome measure to these 
conditions in order to make the performance rate more meaningful and 
actionable to hospitals.
---------------------------------------------------------------------------

    \24\ 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.
    \25\ 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.
    \26\ 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.
---------------------------------------------------------------------------

    Thus, adoption of this measure would provide an opportunity to 
enhance the information available to patients choosing among providers 
who offer chemotherapy in the hospital outpatient setting. There 
currently remains a gap in care that leads to acute, potentially 
preventable hospitalizations among patients receiving chemotherapy. We 
note that, on average, cancer patients receiving chemotherapy have one 
hospital admission and two ED visits per year,\27\ and therefore we 
believe it would be a disservice to patients to delay inclusion of the 
current outcome measure in quality reporting and quality improvement 
initiatives. As stated in the measure description above, 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.
---------------------------------------------------------------------------

    \27\ Klodziej M, Hoverman JR, Garey JS, et al. Benchmarks for 
value in cancer care: An analysis of a large commercial population. 
J Oncol Pract. 2011;7:301-306.
---------------------------------------------------------------------------

    Comment: Several commenters expressed concern that OP-35 is not 
risk adjusted for cancer type, SDS factors, and clinical complexity. 
Some commenters specifically stated that the NQF process of reviewing 
whether to include SDS factors in OP-35's risk-adjustment methodology 
is important to reflect and evaluate the effect of known disparities in 
access and outcomes for cancer patients in underserved areas. Some 
commenters asserted that OP-35 is particularly susceptible to 
performance variation due to SDS and factors outside the control of the 
hospital because chemotherapy patients may come back to an emergency 
department or require an inpatient admission not because of the care 
they received during the outpatient department visit, but because of a 
variety of community factors or their living conditions which may 
hamper the implementation of the post-discharge plan of care. One 
commenter further asserted that without this information, OP-35 lacks 
the necessary information needed to determine whether it is appropriate 
for public reporting.
    Response: We would like to make clear that OP-35 is in fact risk-
adjusted to account for the variation in patient mix and aggressiveness 
of treatment, and does adjust for clinical complexities

[[Page 79760]]

including patient's age, sex, exposure (number of chemotherapy 
treatments during the performance period), cancer type, and certain 
clinical comorbidities. We refer readers to the measure specifications 
as originally made available in the CY 2017 OPPS/ASC proposed rule (81 
FR 45722) at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    Regarding SDS factors, 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. For all our measures, we routinely monitor 
the impact of SDS on hospitals' results. We will continue to 
investigate methods to ensure all hospitals are treated as fairly as 
possible within the program.
    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. This trial entails 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 encouraged to submit 
information such as analyses and interpretations as well as performance 
scores with and without sociodemographic factors in the risk adjustment 
model. Several measures developed by CMS have been brought to NQF since 
the beginning of the trial, including OP-35. CMS, in compliance with 
NQF's guidance, has tested sociodemographic factors in the measures' 
risk models and made recommendations about whether or not to include 
these factors in the proposed measure. We intend to continue engaging 
in the NQF process as we consider the appropriateness of adjusting for 
sociodemographic factors in our outcome measures.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of 
sociodemographic status 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 consider how 
they apply to our quality programs in future rulemaking, as appropriate 
and feasible. We look forward to working with stakeholders in this 
process.
    During development of this measure, we assessed the relationship 
between the measure outcomes and SDS factors in accordance with NQF 
measure development guidelines as part of the 2-year NQF SDS trial 
period, available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=80279. For our analysis, we used 
three variables that are available within or link directly to Medicare 
administrative claims data for evaluation of SDS factors and may 
capture some of the impact of community factors on patient care: Race; 
Medicaid dual-eligible status; and AHRQ socioeconomic status (SES) 
Index score. For more information on the AHRQ SES Index score, we refer 
readers to: http://archive.ahrq.gov/research/findings/final-reports/medicareindicators/medicareindicators3.html.
    The results of our data analysis demonstrate no significant 
associations between hospital measure performance and the three tested 
SDS factors--patient race, patient Medicaid dual-eligible status, and 
patients' neighborhood AHRQ SES Index score. Based on these results, we 
disagree that the measure is not susceptible to performance variation 
due to patient and community SDS or other factors outside the control 
of the hospital, such as a variety of community factors or their living 
conditions, which may hamper the implementation of the post-discharge 
plan of care. At the hospital level, there was no clear relationship 
between median risk-standardized rates and hospitals' case mix by these 
three SDS factors, and the distributions of risk-standardized rates 
suggested that hospitals caring for a greater percentage of low SDS 
patients have similar rates of inpatient admission and ED visits within 
30 days of hospital-based outpatient chemotherapy. Based on these 
findings, our final measure specifications do not risk adjust for any 
of these specific SDS factors. As a result, the measure does not 
currently adjust for SDS factors beyond those that are already 
accounted for as listed above (that is, age, sex, and clinical 
complexity).
    Furthermore, based on these analyses and results, we believe this 
measure, as specified, effectively adjusts for patient-mix and can be 
publicly reported. We refer readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html for the more information 
on our SDS analysis and results.
    Comment: Some commenters expressed concern with the validity and 
reliability of the measure. Some commenters specifically stated that 
the NQF's Cancer Project 2015-2017 Committee failed to endorse the 
measure, citing reliability concerns. Commenters urged CMS to expedite 
additional measure testing, including sensitivity and specificity 
testing.
    Response: As stated by the commenters, the NQF's Cancer Project 
2015-2017 Committee did not endorse the proposed measure due to 
concerns regarding reliability. However, we disagree about the concerns 
with the measure's reliability. We believe that this measure is 
sufficiently reliable to be included in the Hospital OQR Program. We 
conducted several assessments of reliability during development using 
two different approaches given data limitations during testing. We 
first used the test-retest method to calculate reliability from one 
year of data, and then used the Intraclass Correlation Coefficient 
(ICC) and Spearman-Brown prophecy formula to estimate the reliability 
based on what would be expected if the sample size was increased. The 
Spearman-Brown prophecy formula \28\ \29\ is an accepted statistical 
method that estimates the ICC \30\ based on what would be expected if 
the sample size was increased, to estimate the reliability score if CMS 
were to use a full year of data for public reporting rather than the 
six months of data that we used in initial testing.
---------------------------------------------------------------------------

    \28\ Spearman, C. (1910). Correlation calculated from faulty 
data. British Journal of Psychology, 3, 171-195.
    \29\ Brown, W. (1910). Some experimental results in the 
correlation of mental abilities. British Journal of Psychology, 3, 
296-322.
    \30\ Landis J, Koch G, The measurement of observer agreement for 
categorical data. Biometrics 1977;33:159-174.
---------------------------------------------------------------------------

    Measure reliability was first calculated using a split sample of 
one year of data for the test-retest method.\31\ We randomly split the 
patient cohort at each hospital into two equal halves, calculated the 
measure using each half, and then calculated the agreement between 
these two (the ``test'' and the ``retest''). Following this test-retest 
methodology, we calculated the Pearson correlation between the 
performance rate estimates in each half-year sample to assess 
reliability. We found the risk-standardized admission rate (RSAR) to 
have a reliability of 0.41 (95 percent

[[Page 79761]]

confidence interval (CI): 0.37-0.45) and the risk-standardized ED visit 
rate (RSEDR) to have a reliability of 0.27 (95 percent CI: 0.22-0.33) 
which, according to Cohen's classification, represent moderate and 
borderline weak-to-moderate reliability, respectively. The 95 percent 
CI gives us a reasonable estimate of the true reliability range.
---------------------------------------------------------------------------

    \31\ Rousson V, Gasser T, Seifert B. Assessing intrarater, 
interrater and test-retest reliability of continuous measurements. 
Statistics in Medicine. 2002;21:3431-3446.
---------------------------------------------------------------------------

    However, our reliability estimate was arguably limited by use of 
only a half year of split data. We expected our reliability to be 
higher if we increased the amount of data we used. Therefore, after 
submitting the measure to NQF for endorsement review, we conducted 
additional calculations of the reliability testing score, this time 
using the ICC and the Spearman-Brown prophecy formula. The Spearman-
Brown prophecy formula is an accepted statistical method that estimates 
the ICC based on what would be expected if the sample size was 
increased. It therefore provides us with an estimate of what the 
reliability score would be if CMS were to use a full year of data for 
public reporting rather than the six months of data that we used. Using 
the Spearman-Brown prophecy formula, we estimated that our measure will 
have an ICC of 0.63 (95 percent CI: 0.58-0.68) for RSAR and 0.47 
percent (95 percent CI: 0.40-0.53) for RSEDR using a full year of data.
    The NQF considers ICC values ranging from 0.41 to 0.60 as 
``moderate'' reliability, and 0.61 to 0.80 as ``strong'' 
reliability.\32\ Our calculated ICC values of 0.63 for RSAR and 0.47 
for RSEDR are interpreted as ``strong'' and ``moderate'' reliability, 
respectively. Therefore, we believe the measure is sufficiently 
reliable.
---------------------------------------------------------------------------

    \32\ National Quality Forum. Guidance for Measure Testing and 
Evaluating Scientific Acceptability of Measure Properties. (2011).
---------------------------------------------------------------------------

    We also disagree with the concerns regarding the validity of the 
measure. We interpret the commenter's concern about validity to be 
about the degree to which the measure is measuring what it is intended 
to measure (that is, construct validity). Measure testing results 
demonstrated the measure's validity both at the conceptual level and 
empirically. Conceptual (or face) validity was demonstrated based on 
feedback from a TEP, a Cancer Workgroup that included representatives 
from each of the 11 PPS-exempt cancer hospitals, public comments, and 
NQF MAP review process. During each phase of measure development, these 
groups provided input to ensure that the measure specification had face 
validity (that is, identified outcomes both important to the patient 
and related to the quality of chemotherapy administration). In 
addition, empirical analyses found that the most common reasons for 
admission (for example, pneumonia, pain, and anemia) and ED visits (for 
example, pain, fever, and dehydration) aligned with the diagnoses 
included in the measure specification. Additional details of our 
validity testing are provided within the materials submitted to NQF 
available at: http://www.qualityforum.org/ProjectMeasures.aspx?projectID=80703. In summary, this measure is an 
important signal of high quality outpatient cancer care, measures what 
it intends to measure by focusing on a patient-important aspect of 
care--avoiding potentially unnecessary ED visits and hospital 
admissions, and is specified in a way to appropriately differentiate 
between cancer hospitals providing high and low quality care for these 
patients.
    We will consider additional measure testing, such as additional 
sensitivity and specify analyses, during the annual reevaluation of the 
measure.
    Comment: One commenter encouraged CMS to release, as part of the 
rulemaking process, the full measure specifications for every measure 
proposed, as it asserted having full specifications is critical to 
providers for public reporting. This commenter further expressed that 
hospitals not having full specifications may interpret the measures in 
different ways. In addition, the commenter asserted that the multiple 
interpretations of the measure specifications in reporting means the 
data reported is not comparable, and, therefore, consumers cannot make 
fully informed decisions based on valid and reliable data.
    Response: Like this commenter, we also place great importance on 
transparency and clarity in measure specifications. Measure 
specifications for proposed measures are publicly available and 
provided in the proposed rules. For OP-35 in particular, measure 
specifications can be accessed from the CY 2017 OPPS/ASC proposed rule 
(81 FR 45713) and on the CMS Web site (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html).
    Comment: Some commenters questioned the appropriateness of the 
measure outcome, expressing concerns with the relationship between 
chemotherapy and the outcome. One commenter expressed concern that OP-
35 is poorly calibrated for the intended outcome because the listed 
causes for admissions and ED visits for cancer patients are not 
exclusive sequelae of outpatient chemotherapy, which may undermine the 
sensitivity and specificity of this measure. Some commenters expressed 
concern that, because the causes for admissions and ED visits are not 
solely the consequence of outpatient chemotherapy, they were uncertain 
which behavior the measure will evaluate in reality and how the results 
will be interpreted to infer quality. One commenter disagreed with the 
assumption that limiting hospital visits to those that occur within 30 
days of chemotherapy ensures that the admission is due to the 
management of side effects and ongoing care. This commenter expressed 
that a variety of clinical scenarios could occur during the 30 days 
after chemotherapy and lead to a hospital visit for one of the 10 
specified diagnoses, with some being the result of ongoing cancer care 
and some being the result of other issues. In addition, some commenters 
expressed that some causes listed in the measure numerator are not 
actual diagnoses because some are symptoms (nausea and pain) without a 
defined cause and others are based on laboratory results (anemia).
    Response: Given the increase in outpatient hospital-based 
chemotherapy, understanding and minimizing related unplanned admissions 
and ED visits is a high priority. The 10 conditions that constitute the 
unplanned reasons for admission or ED visit are commonly cited reasons 
for hospital visits among patients receiving chemotherapy in the 
hospital outpatient setting. These 10 conditions do include symptom 
diagnoses, diagnoses that require lab values, and diagnoses related to 
infections. Hospital visits for these 10 conditions may be due to 
conditions related to the cancer itself or to side effects of 
chemotherapy, both of which affect patients' quality of care and 
quality of life. Admissions and ED visits for these conditions are 
potentially preventable through appropriately managed outpatient care 
and increased communication with the patient and are a potential signal 
of poor quality care and poor care coordination.
    We recognize that by limiting the measure to these 10 potentially 
preventable outcome conditions, the measure will not identify 
admissions and ED visits from other less common potentially preventable 
outcome conditions, potentially limiting the sensitivity of the 
measure. On the other hand, we recognize that not all admissions and ED 
visits for these conditions over the 30-day time frame will be 
preventable and some may be

[[Page 79762]]

due to other factors beyond the cancer and the chemotherapy treatment, 
such that the highest-performing hospital is unlikely to have a rate of 
0, potentially limiting the specificity of the measure. Nevertheless, 
to strike the best possible balance between measure sensitivity and 
specificity, we limited the measure to these 10 conditions over a 30-
day time period for identifying admissions and ED visits after hospital 
outpatient chemotherapy treatment. Existing literature suggests the 
vast majority of adverse events occur within that time frame, as were 
observed during testing.\33\ \34\ \35\ The measure does not evaluate 
compliance with certain care processes, procedures, or behaviors, but 
rather evaluates overall management of patients' symptoms and 
complications from chemotherapy, a reflection of outpatient care 
quality for these patients. The results can be inferred to illustrate 
potential gaps in the care of these patients and promote individual 
hospitals to reflect internally on how to improve the care they 
provide, especially for hospitals with outlying performance compared to 
their peers. While the goal is not to reach zero admissions and ED 
visits, the premise is that reporting this information will promote an 
improvement in patient care over time for two reasons. First, 
transparency achieved by publicly reporting this measure will raise 
hospital and patient awareness of unplanned hospital visits following 
chemotherapy. Second, this reporting will incentivize OPDs to 
incorporate quality improvement activities into their chemotherapy care 
planning in order to improve care coordination and reduce the number of 
these visits. We also believe that making OPDs aware of their 
performance, as well as the performance that might be expected given 
the OPD's case-mix is helpful in supporting efforts to improve 
outcomes. The measure is intended to improve symptom management and 
care coordination for cancer patients who are undergoing chemotherapy.
---------------------------------------------------------------------------

    \33\ 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.
    \34\ 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.
    \35\ 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.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concern that the measure's 30-
day timeframe is misaligned with the presentation of conditions such as 
febrile neutropenia, a common cause of hospitalization among patients 
receiving chemotherapy, and further argued that the 30-day time window 
would not specifically address febrile neutropenia, since this 
condition does not correlate with any normal cycle of neutropenic nadir 
and recovery. One commenter believed that patients do not visit an ED 
for febrile neutropenia, but rather for fever and related symptoms of 
infection, and therefore, the cause of the visit might or might not be 
a complication of chemotherapy. Some commenters supported the 
development of a measure that addresses infection risk in cancer 
patients, specifically the risk of febrile neutropenia as a surrogate 
for infection in patients undergoing myelosuppressive chemotherapy. 
These commenters recommended CMS consider adopting NQF #2930 ``Febrile 
Neutropenia Risk Assessment Prior to Chemotherapy'' in the Hospital OQR 
Program.
    Response: As stated above, we limited the time period for 
identifying the outcomes of admissions and ED visits, which are not 
limited only to complications of chemotherapy, to 30 days after 
hospital outpatient chemotherapy treatment, as existing literature 
suggests the vast majority of adverse events occur within that time 
frame,\36\ \37\ \38\ and we observed this during measure development 
testing. In addition, the TEP supported this time period because: (1) 
It helps link patients' experiences to the facilities that provided 
their recent treatment while accounting for variations in duration 
between outpatient treatments; (2) it 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) clinically, 30 days after each outpatient 
chemotherapy treatment is a reasonable time frame to observe related 
side effects.
---------------------------------------------------------------------------

    \36\ 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.
    \37\ 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.
    \38\ 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.
---------------------------------------------------------------------------

    During measure development, our TEP recommended expanding the 
original list of conditions that constitute the unplanned reasons for 
admission or ED visit, which included neutropenic fever, to include 
both neutropenia and fever separately to avoid missing any diagnoses of 
neutropenic fever since diagnosis of neutropenia requires lab results, 
and a single code for neutropenic fever does not exist in ICD-9 or ICD-
10. We agreed that it was reasonable to expand the outcome to include 
fever and neutropenia to capture all potentially qualifying diagnoses. 
Neutropenic fever (and therefore fever and neutropenia as separate 
conditions) can occur at any time in the 30 days post-chemotherapy, but 
it is more likely to occur later on within the 30-day window, rather 
than directly after chemotherapy infusion.\39\ Specifically, 
neutropenia often occurs between 7 and 12 days after chemotherapy, but 
much depends based on individual patient characteristics and the type 
of chemotherapy.\40\ While the time course for when neutropenic fever 
is expected to occur after chemotherapy may not perfectly align with 
the current 30-day ascertainment period, we determined that a 
standardized approach, utilizing the same 30-day outcome timeframe for 
all of the 10 outcome conditions, would ease measure calculation, 
usability, and interpretation.
---------------------------------------------------------------------------

    \39\ http://www.cdc.gov/cancer/preventinfections/pdf/neutropenia.pdf; http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2752227/.
    \40\ http://www.cdc.gov/cancer/preventinfections/pdf/neutropenia.pdf.
---------------------------------------------------------------------------

    We thank the commenter for the suggestion to develop a measure that 
addresses infection risk in cancer patients, and specifically to 
include NQF #2930 ``Febrile Neutropenia Risk Assessment Prior to 
Chemotherapy'' in the Hospital OQR Program. We will consider these 
suggestions in the future.
    Comment: One commenter recommended that CMS clearly define which 
chemotherapies should be included in OP-35 because there are various 
treatment options such as IV cytotoxic drugs, oral molecularly targeted 
agents, and biological therapy. The commenter recommended CMS specify 
whether it is exclusively examining Medicare Part A and B claims data 
from existing administrative reporting practices or if this measure

[[Page 79763]]

requires any additional reporting from providers.
    Response: This measure focuses on patients receiving infusion-based 
chemotherapy administered in a hospital outpatient department based on 
claims identified using Medicare Part A and B files such as ICD-9 
procedure codes V58.11 (Encounter for antineoplastic chemotherapy) and 
99.25 (Injection or infusion of cancer chemotherapeutic substance). We 
refer readers to the measure specifications, as we did in the CY 2017 
OPPS/ASC proposed rule (81 FR 45722), with the code sets defining 
chemotherapy, available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. Because this is a claims-based measure, it 
does not require any additional reporting from providers. Using claims 
data allows for consistent identification of chemotherapy 
administration in hospital OPDs and aligns with the NQF voluntary 
consensus standards \41\ and CMS standards for claims-based models for 
publicly reported measures.\42\
---------------------------------------------------------------------------

    \41\ National Quality Forum. National voluntary consensus 
standards for patient outcomes, first report for phases 1 and 2: a 
consensus report. http://www.qualityforum.org/projects/Patient_Outcome_Measures_Phases1-;2.aspx. Accessed August 19, 2010.
    \42\ Centers for Medicare & Medicaid Services (CMS). CMS 
Measures Management System. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MeasuresManagementSystemBlueprint.html. Accessed January 2016.
---------------------------------------------------------------------------

    Comment: One commenter requested that CMS exclude all planned 
inpatient admissions from the outcome to ensure that hospitals are held 
accountable only for those admissions that are unplanned. The commenter 
asserted that this modification would ensure alignment with readmission 
measures in the inpatient setting, which exclude planned readmissions. 
Another commenter recommended that CMS adjust OP-35 for those ED visits 
and hospitalizations which may be necessary, to avoid creating patient 
safety or value issues. This commenter asserted that a measure looking 
at the medical history of admitted patients to see whether they had 
received appropriate prophylactic measures to prevent toxicity and to 
assess the appropriateness of hospitalization or ED visits would be 
more meaningful than a simple count of ED visits and hospitalizations.
    Response: We do not agree that it is necessary to exclude all 
planned inpatient admissions from the outcome to ensure that hospitals 
are held accountable only for those admissions that are unplanned, 
because the outcome is defined by 10 specific reasons for the ED visit 
or admission, none of which are ``elective'' reasons for admissions and 
therefore, all can be considered unplanned. OP-35 is an outcome measure 
reporting the risk-adjusted rate of potentially preventable admissions 
and ED visits for cancer patients receiving outpatient chemotherapy. 
The measure does not assess the clinical processes that are part of the 
pathway to providing high-quality care for patients receiving 
outpatient chemotherapy (for example, whether the patient had access to 
primary care or whether the patient was prescribed appropriate pain 
medications); the measure assesses the outcomes based on the care 
provided. We recognize the value of process measures to support the 
outcome measure and reinforce certain aspects of high quality 
outpatient care, and we may consider process measures focused on the 
clinical care of cancer patients in future development. Furthermore, we 
use a specific set of codes to identify admissions and ED visits for 10 
potentially preventable symptoms--anemia, dehydration, diarrhea, 
emesis, fever, nausea, neutropenia, pain, pneumonia, or sepsis--none of 
which are ``elective'' admissions and therefore, can be considered 
unplanned.
    We do not agree that this measure needs to adjust for ED visits and 
admissions that may be necessary. As stated above, we do not view these 
outcomes as planned outcomes. We also do not think that measuring these 
potentially avoidable outcomes will result in hospitals making the 
clinical decisions that are not in the best interest of patient or put 
the patient care at risk. As stated previously, the goal is not to 
reach zero admissions and ED visits; the purpose is to identify those 
hospitals whose performance is worse than average, identifying areas 
for improvement. We will take into consideration for future rulemaking 
commenter's suggestion to adopt measures that evaluate the medical 
history of admitted patients to see whether they had received 
appropriate prophylactic measures to prevent toxicity and to assess the 
appropriateness of hospitalization or ED visits.
    Comment: Some commenters requested CMS consider additional 
denominator exclusions for the OP-35 measure. Two commenters expressed 
concerns about the measure's inclusion of patients with hematologic 
malignancies other than leukemia, such as lymphoma and multiple myeloma 
in the measure cohort. The commenters suggested that these patients are 
at an increased risk for many of these complications, compared to 
patients with solid tumors, and as a result, alternative measurement 
approaches may be more appropriate for these patients. Some commenters 
stated that OP-35 should exclude patients receiving chemotherapy for a 
condition/disease other than cancer, but who have a diagnosis of cancer 
as a result of having a history of cancer. These commenters urged CMS 
to ensure that the measure does not inappropriately include patients 
who are receiving chemotherapy and do not have a current cancer 
diagnosis, as such patients would be a clinically different population 
than patients with a current cancer diagnosis who are receiving 
chemotherapy. Commenters also expressed concerns that patients should 
only be included in the measure for a particular hospital if they have 
received at least two outpatient chemotherapy visits at that hospital 
to ensure that hospitals are only held accountable for patients for 
whom they are the primary provider of services.
    Response: We specified the measure to be as inclusive as possible; 
we excluded, based on clinical input and rationale, only those patient 
groups for which hospital visits were not typically a quality signal or 
for which risk adjustment would not be adequate. For example, the 
measure excludes patients with leukemia because, given the high 
toxicity of treatment and recurrence of disease, admissions among this 
population do not reflect poorly managed outpatient care. Patients with 
leukemia have a high expected admission rate due to frequent relapse, 
which is not the type of admission the measure intends to capture. 
Feedback from early public input during measure development suggested 
that the exclusion of all patients with a hematologic malignancy would 
be too broad. Based on this feedback, we analyzed data which showed 
that patients with lymphoma and multiple myeloma experienced similar 
rates of ED visits and admissions for these potentially preventable 
hospitalizations when compared with patients with other cancer types. 
Therefore, we disagree that patients with hematologic malignancies 
other than leukemia, such as lymphoma and multiple myeloma, have an 
increased risk for many of these complications, compared to patients 
with solid tumors. For more information on our analysis we refer 
readers to: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-

[[Page 79764]]

Instruments/HospitalQualityInits/Measure-Methodology.html. Therefore, 
we excluded patients with leukemia, but not other hematologic 
malignancies. However, as part of continued measure evaluation, we will 
consider reviewing rates stratified by cancer type to track the impact 
and inform future measure revisions.
    Comment: Some commenters stated that OP-35 should exclude patients 
receiving chemotherapy for a condition/disease other than cancer, but 
who have a diagnosis of cancer as a result of having a history of 
cancer. These commenters urged CMS to ensure that the measure does not 
inappropriately include patients who are receiving chemotherapy and do 
not have a current cancer diagnosis, as such patients would be a 
clinically different population than patients with a current cancer 
diagnosis who are receiving chemotherapy.
    Response: This measure is intended to assess the care provided to 
cancer patients receiving chemotherapy in the OPD. To be included in 
the cohort, a patient must have a diagnosis of cancer on a Medicare FFS 
claim during the performance period; we do not include codes for 
``history of cancer'' in our code set to define cancer diagnosis. We 
refer readers to the measure specifications for more details about the 
cohort: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. 
By limiting the cohort to those with a diagnosis of cancer on a 
Medicare FFS claim, the measure would only include patients currently 
receiving chemotherapy as part of active cancer care management, and 
therefore, exclude patients who are receiving chemotherapy but without 
a current cancer diagnosis, likely a very small number of patients. 
However, we will continue to monitor the cohort for any future 
necessary measure updates.
    Comment: Commenters expressed concerns that patients should only be 
included in the measure for a particular hospital if they have received 
at least two outpatient chemotherapy visits at that hospital to ensure 
that hospitals are only held accountable for patients for whom they are 
the primary provider of services.
    Response: We disagree. Excluding patients who only receive one 
chemotherapy treatment at a facility during the performance period may 
unnecessarily exclude qualifying patients. Furthermore, we believe that 
if an OPD provides even a single chemotherapy treatment to the cancer 
patient, that OPD is still expected to provide appropriate care 
planning, treatment, and follow-up over the subsequent 30 days. In 
addition, our data show that nearly 95 percent of the patients who 
receive chemotherapy treatment in an OPD receive treatment at the same 
facility throughout the course of treatment.
    After consideration of the public comments we received, we are 
finalizing the adoption of the OP-35: Admissions and Emergency 
Department (ED) Visits for Patients Receiving Outpatient Chemotherapy 
measure for the CY 2020 payment determination and subsequent years as 
proposed.
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.\43\ Same-day surgery offers significant patient benefits as 
compared with inpatient surgery, including shorter waiting times, 
avoidance of hospitalizations, and rapid return home.\44\ Furthermore, 
same-day surgery costs significantly less than an equivalent inpatient 
surgery, and therefore, presents a significant cost saving opportunity 
to the health system.\45\ 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.46 47 48 49 50 51 52 53 Furthermore, hospital visit 
rates vary among hospitals,\54\ 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.\55\ 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.
---------------------------------------------------------------------------

    \43\ Cullen KA, Hall MJ, Golosinskiy A. Ambulatory surgery in 
the United States, 2006. National health statistics reports. Jan 28 
2009(11):1-25.
    \44\ 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.
    \45\ 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.
    \46\ Ibid.
    \47\ 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.
    \48\ 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.
    \49\ 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.
    \50\ 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.
    \51\ 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.
    \52\ 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.
    \53\ 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.
    \54\ 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.
    \55\ 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 
45714 through 45716), we proposed to include OP-36: Hospital Visits 
after Hospital Outpatient Surgery in the Hospital OQR Program

[[Page 79765]]

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 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.\56\ In 
addition, the MAP supported the measure for program use citing the 
vital importance of measures that help facilities reduce unnecessary 
hospital visits.\57\ 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.\58\
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    \56\ 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.
    \57\ Spreadsheet of MAP 2016 Final Recommendations. February 1, 
2016. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \58\ Ibid.
---------------------------------------------------------------------------

    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.\59\ As 
stated above, this measure also was endorsed by the NQF.
---------------------------------------------------------------------------

    \59\ 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. For 
all our measures, we routinely monitor the impact of SDS on hospitals' 
results. We will continue to investigate methods to ensure all 
hospitals are treated as fairly as possible within the program.
    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. This trial entails 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 consider how they apply to our 
quality programs in future rulemaking, as appropriate and feasible. We 
look forward to working with stakeholders in this process.
(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

[[Page 79766]]

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 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 (we refer 
readers to Addendum AA to this final rule with comment period, which is 
available via the Internet 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).\60\ 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),\61\ to account for organ-specific 
differences in risk and complications, which are not adequately 
captured by the Work RVU alone.
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    \60\ 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.
    \61\ HCUP Clinical Classifications Software for Services and 
Procedures. Healthcare Cost and Utilization Project (HCUP). 2008. 
Agency for Healthcare Research and Quality, Rockville, MD. Available 
at: https://www.hcup-us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp.
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    We invited 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.
    Comment: One commenter supported the proposed adoption of the OP-
36: Adoption of Hospital Visits After Hospital Outpatient Surgery 
measure because it provides the opportunity for providers to improve 
their quality of care and lower the rate of preventable adverse events 
that occur after outpatient surgery.
    Response: We thank the commenter for its support.
    Comment: Many commenters recommended that OP-36 be reviewed by the 
NQF's SDS trial to determine whether there is a conceptual and 
empirical relationship between the measure's outcomes and SDS factors 
before it is publicly reported. Furthermore, commenters believed that 
OP-36 should be reviewed to determine if additional SDS risk adjustment 
are necessary. Some commenters were concerned that the measure may be 
heavily influenced by factors outside of the hospital's direct control. 
Many commenters specifically expressed concern that hospitals that 
serve a significant volume of patients in lower socioeconomic areas 
which may lack adequate infrastructure for appropriate follow-up care 
may be unfairly penalized as a result of this measure. Without the use 
of appropriate risk adjustment for this measure, many commenters 
asserted the clinical outcomes could be less reliable due to SDS 
confounding variables. In addition, many commenters expressed concern 
that patients with low SDS may have fewer options for managing their 
care and therefore may require additional hospital visits compared to 
patients with more resources. One commenter expressed concern that 
patient populations who do not have family or home care aides or ready 
access to pharmacies for medications may be more likely to return to 
the ED compared to patients with these benefits.
    Response: We understand the important role that factors outside of 
the hospitals' direct control, for example socioeconomic and 
sociodemographic status, play in the care of patients. Patients with 
low SDS may have fewer options for managing their care and therefore, 
may require additional hospital visits compared to patients with more 
resources. In addition, patient populations that do not have family or 
home care aides, or ready access to pharmacies for medications, may be 
more likely to return to the ED compared to patients with these 
benefits, as commenter mentions. We routinely monitor the impact of 
sociodemographic status on hospitals' results. However, we do not 
believe that hospitals would necessarily be unfairly penalized as a 
result of this measure for reasons discussed below.
    As stated previously, the Office of the Assistant Secretary for 
Planning and Evaluation (ASPE) is conducting research to examine the 
impact of sociodemographic status 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 
consider how they apply to our quality programs in future rulemaking, 
as appropriate and feasible. We look forward to working with 
stakeholders in this process.

[[Page 79767]]

    We also note that 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. This trial entails 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 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. We intend to 
continue engaging in the NQF process as we consider the appropriateness 
of adjusting for sociodemographic factors in our outpatient quality 
reporting program measures.
    This NQF trial period went into effect April 15, 2015,\62\ meaning 
that projects with measure submission deadlines beforehand fell under 
NQF's previous policy on SDS adjustment,\63\ while projects with 
measure submission deadlines after that date are subject to the NQF 
trial. Because the 2015 NQF Surgery Project's measure submission 
deadline was January 14, 2015, both the developer and the Surgery 
Standing Committee conformed to the pre-trial policy regarding 
inclusion of SDS factors in the risk-adjustment approach.\64\ Thus, OP-
36 was not part of NQF's SDS trial. At this time, we do not plan to 
resubmit the measure to be part of the SDS trial because the measure 
was already reviewed and endorsed by the NQF. We will further evaluate 
the role of SDS when the measure is under comprehensive reevaluation.
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    \62\ National Quality Forum. Socioeconomic Status (SES) Trial 
period. Available at: http://www.qualityforum.org/ProjectDescription.aspx?projectID=80124.
    \63\ Under the previous policy, only clinical factors could be 
included in a measure's risk adjustment model.
    \64\ Email from Andrew Lyzenga at NQF, June 15, 2015.
---------------------------------------------------------------------------

    Consistent with the pre-trial NQF SDS guidance, we evaluated the 
potential effects of risk adjusting for two SDS indicators--Medicaid-
dual eligibility and race. These variables are available in the CMS 
claims data and use of Medicaid eligibility status as a proxy for SDS 
is consistent with prior research as well as NQF recommendations.\65\ 
Our results show that adjusting for these two factors at the patient 
level does little to change the measure scores. Unadjusted and adjusted 
OPD risk-standardized hospital visit (RSHV) ratios are highly 
correlated--Pearson correlation of 0.990 and 0.998 for adjustment for 
Medicaid-dual eligibility and race, respectively.\66\ This suggests 
that including a patient-level risk adjuster for SDS will result in 
minimal difference in measure results after accounting for other 
factors already adjusted for in the model, such as age, comorbidities, 
and the complexity of the surgery. Thus, we are finalizing the measure 
as currently specified because the inclusion of SDS-related variables 
in the risk-adjustment model did not substantially affect measure 
results.
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    \65\ National Quality Forum. Patient Outcome Measures Phases 1 
and 2. Available at: http://www.qualityforum.org/projects/Patient_Outcome_Measures_Phases1-2.aspx.
    \66\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation. 2016 Measure Updates and 
Specifications Report: Hospital Visits after Hospital Outpatient 
Surgery Measure. June 2016. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf.
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    In addition, 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.
    In addition, we examined the distribution of measure scores by 
quartiles of both the percentage of dual-eligible patients and the 
percentage of African American patients in order to explore whether 
there might be differences in OPD RSHV ratios by the proportion of such 
patients treated at the facility. A ratio of less than one indicates 
the OPD's patients were estimated as having fewer post-surgical visits 
than expected compared to OPDs with similar surgical procedures and 
patients, and a ratio of greater than one indicates the OPD's patients 
were estimated as having more visits than expected. We do not expect 
the rate of hospital visits to be zero. Overall, our results showed a 
range of measure scores across quartiles of dual-eligible patients and 
of African American patients. The median RSHV ratio for all quartiles 
was <1 (indicating better than expected performance), demonstrating 
that, even among facilities with the highest proportion of dual-
eligible and African American patients, many OPDs can and do perform 
well on the measure. Furthermore, even though the distribution of 
measure scores was shifted slightly higher in facilities with the 
highest proportion of such patients, the distributions for all 
quartiles are largely overlapping. Together, these two points suggest 
that hospitals that serve a significant volume of patients in lower 
socioeconomic areas that lack adequate infrastructure for appropriate 
follow-up care would not be unfairly penalized as a result of this 
measure. From these analyses, it is not clear what is causing the 
observed differences across hospitals with the highest and lowest 
proportions of dual-eligible and African American patients. One 
potential cause could be differences related to quality, and, as 
discussed above, we are particularly concerned about masking quality 
differences through SDS adjustments. Given these findings, we did not 
adjust the measure for SDS at this time. We believe that doing so will 
not appreciably change the measure scores and might contribute to 
masking disparities in care. However, as noted above, we will continue 
to assess the appropriateness of including SDS factors in risk 
adjustment to assess the reliability of the measure.
    Reducing adverse outcomes is the joint responsibility of hospitals 
and other clinicians. Measuring hospital visits will create incentives 
to invest in interventions to improve outpatient care and improved 
transitions to post-procedure care. We recognize that the facility's 
performance might be affected by factors outside of the facility. 
However, all facilities have the opportunity to reduce the rate of 
hospital visits following surgeries. Because of the measure's intent to 
illuminate variation in quality of care across OPDs for same-day 
surgeries, inform patient choice, and drive quality improvement, we do 
not believe we should delay public reporting pending further analysis 
of the empirical relationship between the measure's outcomes and SDS 
factors.
    Comment: A few commenters expressed concerns that this measure does 
not provide clear signals of quality or will create disincentives for 
seeking care in the ED when appropriate. Two commenters asserted that 
the measure combines admissions, observation stays and ED visits; each 
reflecting widely different approaches to patient-centered care and 
that it may not be reasonable to combine these types of hospital 
visits. Another commenter urged CMS to remove the ED visits and 
observation stays from the measure to focus only on inpatient 
admissions. One commenter asserted that the ``expected number of post-
surgical hospital visits'' calculation will not provide sufficient 
assurance, particularly given issues related to risk-adjustment, that 
the current structure of the measure will avoid creating a disincentive 
for seeking appropriate

[[Page 79768]]

care in the emergency department. The commenter further asserted it 
will be methodologically difficult to come up with that expected number 
of visits, and further expressed that applying a measure such as this 
for patient-initiated services is a misstep in policy. One commenter 
advised CMS to monitor the use of the measure.
    Response: We believe that patients with emergent medical needs will 
continue to seek care in an ED as needed. Providers should not have an 
incentive to discourage patients from seeking appropriate care for a 
medical problem that they feel needs to be addressed immediately since 
the goal of the measure is not to reach zero ED visits and the measure 
is risk adjusted so facilities with generally higher-risk patients will 
not be disadvantaged in the measure. In addition, it is not expected 
that patients undergoing same-day surgery would need to be placed in 
observation status after the procedure. We have designed the measure to 
capture all unplanned hospital visits that may be a signal of poor 
quality of care, and thereby encourage hospitals to minimize risk and 
the need for follow-up hospital services.
    We disagree that combining admissions, observation stays and ED 
visits reflects widely different approaches to patient-centered care 
and that we should remove the ED visits and observation stays from the 
measure to focus only on inpatient admissions. We included ED visits 
and observation stays for a variety of reasons. First, hospital visits 
are a broad outcome that captures the full range of potentially serious 
adverse events related to preparing for, undergoing, and recovering 
from the surgery. Second, hospital visits are easily identifiable and 
measurable from claims data. Third, this broad outcome is consistent 
with a patient-centered view of care that prompts providers to fully 
account for and minimize to the fullest extent all acute complications, 
such as uncontrolled pain or urinary retention, not just those narrowly 
related to procedural technique. Finally, hospital visits are costly; 
reducing hospital visits following outpatient surgery may lead to 
substantial healthcare savings. As one commenter suggested, we will 
continue to reevaluate the measure and monitor its use.
    One commenter asserted that it will be methodologically difficult 
to come up with the expected number of visits and will result in a 
misstep in policy. However, the measure's risk model is informed by the 
literature and expert review, and is designed to capture patient risk, 
not risk that might be related to quality. Our approaches to risk 
adjustment and calculating both predicted and expected values using 
hierarchical generalized linear modeling are tailored to, and 
appropriate for, a publicly reported outcome measure as articulated in 
published scientific guidelines.67 68 69 In addition, these 
analytic methods have been widely used in other risk-adjusted outcome 
measures developed by CMS for quality measurement and public 
reporting.\70\ As a result, we believe that the ``expected number of 
post-surgical hospital visits'' calculation is sound and will provide 
sufficient assurance and will not be a misstep in policy.
---------------------------------------------------------------------------

    \67\ Krumholz HM, Brindis RG, Brush JE, et al. Standards for 
Statistical Models Used for Public Reporting of Health Outcomes: An 
American Heart Association Scientific Statement From the Quality of 
Care and Outcomes Research Interdisciplinary Writing Group: 
Cosponsored by the Council on Epidemiology and Prevention and the 
Stroke Council Endorsed by the American College of Cardiology 
Foundation. Circulation. 2006; 113 (3): 456-462.
    \68\ Normand S-LT, Shahian DM. Statistical and Clinical Aspects 
of Hospital Outcomes Profiling. Stat Sci. 2007; 22 (2): 206-226.
    \69\ Centers for Medicare & Medicaid Services. Statistical 
Issues in Assessing Hospital Performance. January 27, 2012. 
Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Statistical-Issues-in-Assessing-Hospital-Performance.pdf.
    \70\ We refer readers to the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66949) for an example of a risk-adjusted 
outcome measure that used the hierarchical generalized linear 
modeling.
---------------------------------------------------------------------------

    Comment: Two commenters asserted that beneficiaries will find 
procedure-specific outcome measures more valuable as beneficiaries 
choose outpatient facilities based on, in part, services and procedures 
offered.
    Response: We disagree that a procedure-specific outcome measure 
would be more valuable. A broad range of surgical procedures are 
performed at OPDs, and the measure as specified provides consumers with 
a full picture of quality at a facility. This measure complements other 
outpatient quality measures already adopted in the Hospital OQR Program 
that focus on specific types of procedures or patients, for example the 
Facility 7-day Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy measure. For more information on that measure, we refer 
readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66948 through 66955). In addition, as part of our standard procedures, 
we will provide facilities with case-level information, including the 
surgery performed as part of confidential preview reporting to provide 
facilities with actionable information for quality improvement. We 
believe that the measure, including the preview report, will encourage 
hospitals to implement systems of care that will ensure quality and 
reduce unplanned hospitals visits in the hospital as whole.
    Comment: One commenter expressed concern that the measure does not 
distinguish if the procedure was provided at the same hospital where 
the patient has the unplanned visit, making hospitals accountable for 
the care provided somewhere else.
    Response: The measure assigns the hospital visit outcome to the 
facility providing the same-day outpatient surgery, not to the facility 
(if different) where the hospital visit took place. We refer readers to 
the measure specifications at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf.
    Comment: Some commenters recommended that CMS hold providers in 
both hospital outpatient and ASC settings accountable by either adding 
outpatient surgeries performed in ASCs to OP-36 or simultaneously 
instituting a similar measure in the ASC setting. Commenters argued 
that holding providers in both settings accountable would negate the 
possibility of inappropriate favoring of one setting over another to 
avoid the negative consequence of an inpatient admission. Two 
commenters argued that the availability of data on complications from 
outpatient hospital surgeries without the corresponding data in ASC 
settings will negatively affect the reputation of hospitals.
    Response: We thank the commenters for their suggestion to hold 
providers in both hospital outpatient and ASC settings accountable. We 
did not and do not intend to add outpatient surgeries performed in ASCs 
to OP-36, because ASCs are a diverse group of facilities that often 
specialize in very specific subspecialties and procedures, while OPDs 
often perform all types of surgeries across many subspecialties. 
Therefore, comparing ASCs to OPDs would not be fair as ASCs 
specializing only in orthopedic procedures, for example, may have 
substantially lower rates due to the nature of the procedures they 
perform, compared to an OPD that performs procedures across all 
subspecialties.
    We agree that holding both hospital outpatient and ASC settings 
accountable would negate the possibility of inappropriate favoring of 
one setting over another to avoid the negative consequence of an 
inpatient admission. We also acknowledge that availability of

[[Page 79769]]

data on complications from outpatient hospital surgeries without the 
corresponding data in ASC settings might negatively affect the 
reputation of outpatient hospitals due to inappropriate favoring of one 
setting over another. To address these concerns, we are currently 
developing two new outcome measures that specifically assess hospital 
visits within 7 days following orthopedic and urology procedures 
performed at ASCs for the ASCQR Program. The measures went through the 
measure development public input period, and results are available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/CallforPublicComment.html. To access the results scroll 
to the bottom of the page and select ARCHIVED Public Comment Files 
between 08-18-2016 and 09-14-2016 [zip]. Once the zip file has 
downloaded open Development-of-Facility-Level-Quality-Measures-of-
Unplanned-Hospital-Visits-after-Selected-Ambulatory-Surgical-Center-
Procedures.zip, and select ``TEP Summary Report for Measures of 
Hospital Visits after Selected ASC Procedures.pdf.'' The measures are 
anticipated to undergo MAP review in December 2016. If/when these two 
new measures are adopted in the ASCQR Program, we believe that they 
will negate the possibility of inappropriate favoring of one setting 
over another.
    Comment: One commenter expressed concerns that OP-36 does not 
appropriately identify planned versus unplanned readmissions. The 
commenter specifically noted that if, during the episode window, a 
planned surgery for a chronic condition resulted in the assignment of 
an additional acute diagnosis, the entire admission would be deemed 
unplanned. The commenter recommended against classifying clinically 
appropriate hospital admissions following outpatient surgery as low 
quality care.
    Response: We disagree and believe that the measure appropriately 
identifies planned versus unplanned admissions following index 
procedures. We developed the algorithm that identifies planned 
readmissions, and applied this algorithm to the measure. We refer 
readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf for more details on this 
algorithm. To summarize, the algorithm uses procedure and principal 
discharge diagnosis codes on each hospital claim to identify admissions 
that are typically planned and may occur after hospital outpatient 
surgery. Generally, a planned admission is defined as a non-acute 
admission for a scheduled procedure (for example, total hip replacement 
or cholecystectomy). In addition, few specific and limited types of 
care are always considered planned (for example, major organ 
transplant, rehabilitation, or maintenance chemotherapy). The measure 
does not count planned hospital visits, or clinically appropriate 
visits, as an outcome because variation in planned admissions does not 
reflect quality differences; therefore, these visits will not signal 
low quality care. On the other hand, admissions for an acute illness or 
for complications of care, as well as all ED and observation stay 
hospital visits, are considered unplanned. We refer readers to the 
technical report for the full planned admission algorithm at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf. We reassess this algorithm 
annually.
    With regard to the commenter's concern that a planned admission 
might result in an acute discharge diagnosis--such as an infection from 
a planned procedure--and result in the hospital visit being counted as 
an outcome, the measure risk-adjusts for a wide variety of patient 
comorbidities, including chronic conditions that might increase the 
risk of a planned or unplanned hospital visit. We refer readers to 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf.
    In addition, we plan to conduct a dry run of this measure in 2017, 
and will assess feedback from hospitals including those related to the 
algorithm and planned admissions. Based on the feedback, we will 
consider adjusting the algorithm as needed for a future iteration of 
the measure.
    Comment: One commenter expressed concerns regarding the proposed 
risk adjustment variables. The commenter stated the convoluted approach 
of adjusting for surgical procedure complexity using RVUs and the 
introduction of a complicated anatomical body system classification 
system make the risk-adjustment methodology unclear and difficult to 
understand. The commenter further expressed that the documentation of 
comorbid conditions on same-day surgery is very limited because of the 
nature of the service, and that it is problematic to depend upon 
extensive documentation in a same day surgery record to determine risk. 
This commenter asserted that surgeons who bring a patient in for a 
specific ambulatory-type procedure typically limit their documentation 
to conditions that are relevant to the specific body system related to 
the surgical procedure. Another commenter recommended CMS develop a 
more robust risk adjustment model with a higher c-statistic.
    Response: We disagree that our approach of adjusting for surgical 
procedure complexity using RVUs and the introduction of a complicated 
anatomical body system classification system make the risk-adjustment 
methodology unclear and difficult to understand. Our approach to 
accounting for procedural complexity is well-documented in literature 
\71\ and aligns with the established approach used for risk adjustment 
in the American College of Surgeons' National Surgical Quality 
Improvement Program (NSQIP).\72\ To summarize, the measure risk adjusts 
for surgical procedural complexity using two variables. First, it 
adjusts for surgical procedural complexity using the Work RVUs of the 
procedure. Work RVUs are assigned to each CPT procedure code and 
approximate surgical procedural complexity by incorporating elements of 
physician time and effort. For patients with multiple concurrent CPT 
procedure codes, we risk adjust for the CPT code with the highest Work 
RVU value. Second, it classifies each surgery into an anatomical body 
system group using the AHRQ Clinical Classification System (CCS).\73\ 
The measure uses the body system variable, in addition to the Work RVU 
of the surgery, to account for organ-specific difference in risk and 
complications which are not adequately captured by the Work RVU alone. 
We also collect all diagnoses from a patient's inpatient, outpatient, 
and physician claims from the year prior to identify comorbidities for 
adjustment (see page 14 of the technical report:

[[Page 79770]]

https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf). Therefore, that any potential 
limitation of the comorbidities listed on the say-day surgery claim 
itself--such as limited to the specific body system related to the 
surgery--will not impact our ability to collect a full comorbidity 
history for each patient.
---------------------------------------------------------------------------

    \71\ Raval MV, Cohen ME, Ingraham AM, et al. Improving American 
College of Surgeons National Surgical Quality Improvement Program 
risk adjustment: Incorporation of a novel procedure risk score. 
Journal of the American College of Surgeons. Dec 2010;211(6):715-
723.
    \72\ Raval MV, Cohen ME, Ingraham AM, et al. Improving American 
College of Surgeons National Surgical Quality Improvement Program 
risk adjustment: Incorporation of a novel procedure risk score. 
Journal of the American College of Surgeons. Dec 2010;211(6):715-
723.
    \73\ Healthcare Cost and Utilization Project. Clinical 
Classifications Software (CCS) for Services and Procedures. Last 
Modified: February 3, 2016. Available at: https://www.hcup-us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp.
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    We disagree that we should develop a more robust risk adjustment 
model with a higher c-statistic. The measure's final model c-statistic 
is 0.71, which already indicates good model discrimination.\74\ 
According to NQF,\75\ the purpose of the c-statistic is to capture 
patient risk, not perfectly predict the outcome. We did not adjust for 
other factors because patient risk, aside from mortality, is not 
associated with the measure outcome.
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    \74\ Hosmer, D.W. and Lemeshow, S. (2000) Multiple Logistic 
Regression, in Applied Logistic Regression, Second Edition, John 
Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/0471722146.ch2.
    \75\ National Quality Forum. What Good Looks Like--Measure 
Submission Examples. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=73367.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concern that OP-36 is a 
duplicative measure because they believe it overlaps with OP-32: 
Colonoscopy Measure: Facility 7-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy. They urged CMS to limit the 
duplication of OP-32 and consider only one of the two measures for 
inclusion in this program.
    Response: OP-36 is not duplicative and does not overlap with OP-32. 
OP-36 does not include the colonoscopy procedures that are included in 
OP-32. OP-32 was adopted in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66948 through 66955) and measures facility 7-day 
risk-standardized hospital visit rate after outpatient colonoscopy. All 
endoscopy procedures (that is, low-risk colonoscopy procedures like 
those included in OP-32) are considered non-surgical procedures based 
on Medicare coding (GSI code 000) \76\ and are not included in the 
outpatient surgery (OP-36) measure cohort.
---------------------------------------------------------------------------

    \76\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/GloballSurgery-ICN907166.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters requested clarification regarding how the 
measure identifies qualifying stays, particularly inpatient admissions, 
immediately following surgery. Two commenters requested clarification 
regarding whether an inpatient admission that is planned for a patient 
with multiple comorbidities who is receiving outpatient surgery would 
be considered ``a hospital visit after an outpatient surgery.'' The 
commenters requested further clarification on how CMS would 
differentiate the patient with multiple comorbidities who is receiving 
outpatient surgery from the patient who has an outpatient surgery and 
then has an immediate complication and is admitted as an inpatient. The 
commenters asserted that, in both cases, the patient's inpatient 
admission began on the same day as the surgery and the timing of the 
admission (prior or after surgery) would not be apparent on the claim 
UB-04 form because the ICD-10-PCS procedure code will be reported for 
the surgery.
    Response: We include admissions directly after surgery in the 
outcome because an admission is unexpected for the procedures included 
in the measure, and our overall goal is to illuminate variation in 
unplanned hospital visits following these same-day outpatient surgeries 
to improve quality.
    The Medicare 3-day payment window policy affects some surgeries 
performed at OPDs. As discussed in the CY 2012 PFS final rule with 
comment period (76 FR 73279 through 73286), the policy deems outpatient 
services (including surgical procedures) provided by a hospital or an 
entity wholly owned or operated by a hospital (such as an OPD) in the 3 
calendar days preceding the date of a beneficiary's inpatient admission 
as related to the admission. For outpatient surgical procedures 
affected, the OPD facility claim (for the technical portion of the 
surgical procedure) is bundled with the inpatient claim and is not 
recorded in the Medicare outpatient facility claims files; the Medicare 
physician claim for professional services furnished is still submitted 
separately.\77\
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    \77\ Centers for Medicare & Medicaid Services. Frequently Asked 
Questions (FAQs) on the 3-day Payment Window for Services Provided 
to Outpatients Who Later Are Admitted as Inpatients. December 2012. 
Available at: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE1232.pdf.
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    To capture outpatient surgeries that resulted in a same-day 
admission to inpatient status, we identify professional claims 
(formerly called carrier claims) for surgeries with an OPD place of 
service code that matches to an inpatient admission within 3 days, and 
lacks a corresponding OPD facility claim. We then attribute the surgery 
identified as affected by this policy to the appropriate OPD using the 
facility provider identification from the inpatient claim. The 
measure's target cohort includes low-risk to moderate-risk surgeries 
that can be safely performed as same-day surgeries and do not typically 
require an overnight stay or an inpatient admission. In the situation 
of a physician who admits the patient preoperatively because the 
patient has multiple comorbidities and his or her anticipated length of 
stay is over 2 midnights, we would expect the place of service on the 
inpatient claim to be coded as inpatient.\78\ We will further assess 
the approach to identifying Medicare 3-day payment window situations 
during the dry run of this measure in 2017.
---------------------------------------------------------------------------

    \78\ CY 2016 OPPS/ASC final rule with comment period (80 FR 
70538 through 70545).
---------------------------------------------------------------------------

    Comment: Two commenters asserted that using physician claims data 
to make determinations on where the surgeries occurred leads to 
inaccurate determinations because it relies on the ``place of service'' 
coding. These commenters stated that the ``place of service'' coding is 
often inaccurate and will allow physicians to receive payment for the 
surgery whether they code it as an inpatient or an outpatient surgery.
    Response: We thank the commenters for their attention to the 
challenges in identifying hospital outpatient-based surgeries using 
place of service coding. Place of service coding is used on 
professional claims to specify the entity where service(s) were 
rendered.\79\ Although we expect physicians to follow coding guidance 
and record the correct place of service according to the guidelines, we 
recognize that the place of service field may contain inaccuracies due 
to data entry errors (unrelated to fraud/abuse). We take the approach 
of first identifying surgeries from Part B professional claims with an 
outpatient place of service code to make sure we identify surgeries 
billed as inpatient under the 3-day payment window policy. This policy 
affects some surgeries (that is, those performed at wholly owned or 
wholly operated entities) performed at OPDs. As discussed in the CY 
2012 MPFS final rule with comment period (76 FR 73279 through 73286), 
the policy deems outpatient services (including surgical procedures) 
provided by a hospital or an entity wholly owned or operated by a 
hospital (such as an OPD) in the 3 calendar days preceding the date of 
a beneficiary's inpatient admission as related to the admission. For 
outpatient surgical procedures affected, the OPD facility claim (for 
the technical portion

[[Page 79771]]

of the surgical procedure) is bundled with the inpatient claim and is 
not recorded in the Medicare hospital outpatient claims; however, the 
Medicare physician claim for professional services furnished is still 
submitted separately.\80\
---------------------------------------------------------------------------

    \79\ CY 2007 PFS proposed rule (71 FR 49062).
    \80\ Centers for Medicare & Medicaid Services. Implementation of 
New Statutory Provision Pertaining to Medicare 3-Day Payment Window-
Outpatient Services Treated ad Inpatient. August 9, 2010. Available 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/JSMTDL-10382-ATTACHMENT.pdf.
---------------------------------------------------------------------------

    The measure first attributes surgeries to an OPD if a claim is 
present in the Medicare Part B claims indicating an outpatient surgical 
procedure. We identify physician claims with outpatient hospital 
department or physician office place of service code in the Part B 
claims file. We then link Part B claims to outpatient facility claims 
to identify the OPD where the surgery took place. Based on prior 
findings by the OIG,\81\ we allow the match of those with an office 
place of service to hospital outpatient claims for situations where a 
physician in a hospital-based practice assigns an office place of 
service. If we find no match for physician claims that indicate an 
outpatient place of service with outpatient facility claims, we then 
look for a match with inpatient claims to identify hospital admissions 
subject to the CMS 3-day payment policy. We identify in the 
professional claims surgeries in the OPD setting with an inpatient 
admission within 3 days and lacking a corresponding OPD facility claim. 
We then attribute the surgery identified as affected by this policy to 
the appropriate OPD using the facility provider identification from the 
inpatient claim.
---------------------------------------------------------------------------

    \81\ OIG, Incorrect Place-Of-Service Claims Resulted in 
Potential Medicare Overpayments Costing Millions (A-01-13-00506), 
issued May 2015 and available at: https://oig.hhs.gov/oas/reports/region1/11300506.pdf.
---------------------------------------------------------------------------

    We intend to further assess the approach to attributing outpatient 
surgeries during the dry run of this measure in 2017 and prior to 
measure implementation.
    After consideration of the public comments we received, we are 
finalizing the adoption of the OP-36: Hospital Visits after Hospital 
Outpatient Surgery measure (NQF #2687) for the CY 2020 payment 
determination and subsequent years as proposed.
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 
HOPDs 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 HOPDs that would allow valid 
comparisons across HOPDs. 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.\82\ 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.
---------------------------------------------------------------------------

    \82\ 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.\83\ 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).
---------------------------------------------------------------------------

    \83\ U.S. Department of Health and Human Services. HHS Strategic 
Plan, Strategic Goal 4: Ensure Efficiency, Transparency, 
Accountability, and Effectiveness of HHS Programs. Feb. 2016. 
Available at: http://www.hhs.gov/about/strategic-plan/strategic-goal-4/index.html.
---------------------------------------------------------------------------

    The OAS CAHPS Survey contains 37 questions that cover topics such 
as access to care, communications, experience at the facility, and 
interactions with facility staff. The survey also contains two global 
rating questions and asks for self-reported health status and basic 
demographic information (race/ethnicity, educational attainment level, 
languages spoken at home, among others). The basic demographic 
information is captured in the OAS CAHPS Survey through standard AHRQ 
questions used to develop case-mix adjustment models for the survey. 
Furthermore, the survey development process followed the principles and 
guidelines outlined by AHRQ and its CAHPS Consortium[supreg]. The OAS 
CAHPS Survey received the registered CAHPS trademark in April 2015. OAS 
CAHPS Survey questions can be found at: https://oascahps.org/Survey-Materials under ``Questionnaire.''
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45716 through 45720), 
we proposed 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 HOPDs. We note that we 
made similar proposals in the ASCQR Program in section XIV.B.4.c. of 
the 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

[[Page 79772]]

     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 proposed were included on the CY 2014 MUC 
list,\84\ and reviewed by the MAP.\85\ 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.\86\ The MAP stated that these are high impact measures that 
will improve both quality and efficiency of care and be meaningful to 
consumers.\87\ 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.\88\ 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.\89\ 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.\90\
---------------------------------------------------------------------------

    \84\ 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.
    \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.
    \87\ Ibid.
    \88\ Ibid.
    \89\ Ibid.
    \90\ 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 \91\ and its CAHPS Consortium \92\ 
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.
---------------------------------------------------------------------------

    \91\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys''. Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \92\ 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 in the Federal Register 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 non-
respondents) on survey responses. In addition, we began voluntary 
national implementation of the OAS CAHPS Survey in January 2016.\93\ 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.
---------------------------------------------------------------------------

    \93\ Outpatient and Ambulatory Surgery CAHPS Survey: ``National 
Implementation.'' Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    In section XIX. of this final rule with comment period, for the 
Hospital VBP Program, we are removing the HCAHPS Pain Management 
dimension (which consists of three questions) in the Patient- and 
Caregiver-Centered Experience of Care/Care Coordination domain. 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 final rule with comment period.
    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 final rule with 
comment period 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 and 
are part of a composite measure focusing on the preparation for 
discharge and recovery. 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?
    [squ] A1: Yes, definitely.
    [squ] A2: Yes, somewhat.
    [squ] A3: No.
    Q: At any time after leaving the facility, did you have pain as a 
result of your procedure? \94\
---------------------------------------------------------------------------

    \94\ 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.
---------------------------------------------------------------------------

    [squ] A1: Yes.
    [squ] A2: No.
    Unlike the HCAHPS pain management questions, which directly address 
the adequacy of the hospital's pain management efforts, 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. 
However, we also

[[Page 79773]]

recognize that questions remain about the ongoing prescription opioid 
epidemic. For these reasons, we proposed 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 welcomed 
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 final rule with comment period 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 proposed 
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 (Questions 1 through 24). The list of approved 
vendors is available at: https://oascahps.org. We also proposed 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 final rule with comment 
period 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 proposed 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 further proposed 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 also proposed 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 proposed 
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) of this 
final rule with comment period 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 final rule with comment period below, we also proposed 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 
at: https://oascahps.org/Survey-Materials.
    Furthermore, we proposed 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 proposed 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 final rule with 
comment period. 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 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


[[Page 79774]]


    Based on the above responses, we would calculate that hospital's 
measure score for public reporting as follows:
[GRAPHIC] [TIFF OMITTED] TR14NO16.000

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 final rule with comment period, 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 proposed 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) of this final rule with comment period 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 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 proposed 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 allows hospitals 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 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

[[Page 79775]]

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 did not propose a format or timing for public 
reporting of OAS CAHPS Survey data in the proposed rule.
    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 invited 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.
    Comment: Several commenters supported inclusion of the OP-37a-e OAS 
CAHPS Survey-based measures in the Hospital OQR Program. One commenter 
agreed with the MAP that these survey measures are ``high impact 
measures that will improve care quality and efficiency of care and be 
meaningful to consumers.'' This commenter also supported CMS' proposal 
to include the same measures for the ASCQR program to facilitate 
alignment between the programs. Another commenter supported the OAS 
CAHPS Survey-based measures because patient-reported outcomes are an 
integral part in understanding how the delivery system is performing 
and also helps to bridge a partnership with patients. One commenter 
agreed with CMS' reasons for proposing to adopt the OAS CAHPS Survey-
based measures in the Hospital OQR Program, and asserted the importance 
of pain management communication, including communication with patients 
about pain-related issues, setting expectations about pain, shared 
decision-making and proper prescription practices. One commenter 
appreciated CMS' attempt to fill an important gap because there are 
currently no standardized surveys available to collect information on 
the patient's overall experience for surgeries or procedures performed 
within a hospital outpatient department. One commenter agreed that the 
OAS CAHPS Survey-based measures are an important quality indicator that 
can ultimately be used in combination with other measures to assist 
patients as they decide where to seek care, and has seen significant 
interest among HOPDs that want to begin collecting data voluntarily.
    Response: We thank the commenters for their support.
    Comment: A few commenters expressed concerns that there is very 
little publicly available information detailing the survey development. 
The commenters requested additional information regarding the OAS CAHPS 
Survey development process, and also requested clarification on whether 
the measures were developed with multi-stakeholder input.
    Response: As discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 
45716 through 45718), background on the survey development process is 
publicly available on the OAS CAHPS Web site: http://oascahps.org/. The 
OAS CAHPS Survey development process followed the principles and 
guidelines outlined by the AHRQ \95\ and its CAHPS Consortium \96\ 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. This process 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; conducting a field test; and conducting a 
test of the various data collection mode effects on survey responses .
---------------------------------------------------------------------------

    \95\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys.'' Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \96\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://cahps.ahrq.gov/about-cahps/cahps-program/index.html.
---------------------------------------------------------------------------

    We published a request for information on January 25, 2013 (78 FR 
5459) 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. In 2013 
and 2014, we conducted six focus groups with patients who had recent 
outpatient surgeries or procedures in an HOPD or ASC. Analysis of the 
focus group feedback \97\ led to development of the final domain 
structure for the survey, and identified the following topic areas for 
assessment under a patient experience of care survey for these 
procedures: (1) Preparations for surgery; (2) check-in process; (3) 
facility environment; (4) staff communication; (5) discharge; (6) 
recovery and outcomes; and (7) overall experience.
---------------------------------------------------------------------------

    \97\ Hospital Outpatient Surgery Department/Ambulatory Surgery 
Center Experience of Care Survey Focus Group Report (Submitted to 
CMS June 2013).
---------------------------------------------------------------------------

    We convened and consulted with two TEPs throughout the development 
and testing of the OAS CAHPS Survey.\98\ In 2013, we established a 10-
member TEP consisting of experts on outpatient surgery, including 
clinicians, providers, patient advocates, and representatives from 
other stakeholder organizations to provide preliminary guidance in the 
establishment of relevant topics and to comment on the draft versions 
for cognitive testing and the field test. Information about the TEP was 
documented in materials supporting an information collection request 
for the voluntary national implementation of the OAS CAHPS Survey 
published in the Federal Register (80 FR 2430 through 2431).\99\ We 
established a second TEP in 2015 to solicit input and guidance related 
to national implementation protocols and the survey mode experiment.
---------------------------------------------------------------------------

    \98\ Information about feedback from the first TEP was 
documented in the Federal Register at 80 FR 2430.
    \99\ Available at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10500.html.
---------------------------------------------------------------------------

    We conducted three rounds of cognitive testing among patients who 
received outpatient surgery at an ASC or hospital outpatient department 
before finalizing the field test version of the OAS CAHPS Survey. With 
each round of testing, we modified the survey to

[[Page 79776]]

reflect the comments from the previous round.
    The survey was tested in both the outpatient and ASC setting in 
2014 (field testing) and 2015 (mode testing) and found to be reliable. 
We refer readers to 80 FR 2430 and the OAS CAHPS Information Collection 
Request Paperwork Reduction Act Package \100\ for more information 
about field and mode testing for these measures. The field test 
collected data through a mixed-mode design, which consisted of a mail 
survey with telephone follow-up of non-respondents. We recruited a 
total of 36 facilities for the field test: 18 hospital outpatient 
departments and 18 ASCs. Approximately 116 patient records were 
selected from each of the 36 facilities, for a total sample of 4,179 
patients. The field test data collection yielded a 46-percent adjusted 
response rate, or 1,863 completed surveys (31 percent computer-assisted 
telephone interviewing, 68 percent mail, and 0.8 percent break-offs). 
Once partial surveys were removed from the analysis set, 1,849 total 
surveys were used in the evaluation. The field test data were evaluated 
and analyzed to identify item-level refinements necessary for the 
survey instrument. The field test psychometric analysis included 
evaluations of individual items and composite item sets. Individual 
items were analyzed to report item-level missing data and item response 
distributions (including ceiling and floor effects), which included 
response variance. Composite item sets were analyzed using factor 
analysis and item response theory (IRT) analysis to assess 
dimensionality, discriminability, dimensional coverage, and subgroup 
response differences. Internal consistency statistics (reliability) and 
correlational checks for composite validity were performed to evaluate 
the final composite item sets. The item-level recommendations for the 
field test were based on the findings from the factor analyses, the 
internal consistency checks, and the IRT analysis. As a result, 10 
questions were recommended for deletion. Reliability of the remaining 
measures was assessed using the Cronbach's alpha coefficient, with an 
estimate range from zero to one. An estimate of zero indicated no 
measurement consistency and one indicates perfect consistency. The 
cutoff criterion for the examination was 0.70, which indicated adequate 
consistency.\101\ The composites analytically derived maintained 
adequate internal consistency even when reduced to Top-Box scoring and 
across the facility types and modes of administration.
---------------------------------------------------------------------------

    \100\ OMB Control Number 0938-1240, ``Consumer Assessment of 
Healthcare providers and Systems Outpatient and Ambulatory Surgery 
(OAS CAHPS) Survey (CMS-10500).'' Available at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201510-0938-003.
    \101\ Aron, A. and Aron, E.N. Statistics for Psychology. (1999) 
2nd ed. New Jersey: Prentice Hall.
---------------------------------------------------------------------------

    In 2015, we conducted a mode experiment for the OAS CAHPS Survey. 
We refer readers to https://oascahps.org/General-Information/Mode-Experiment for more details. The facility sample included hospital 
outpatient departments and ASCs that reflect industry characteristics 
and was sorted to achieve implicit stratification by four facility 
characteristics: Single specialty or multispecialty; facility size 
(large, medium, or small), facility location (urban or rural), and 
facility ownership (public, private, or other). A total of 70 
facilities (38 hospital outpatient departments and 32 ASCs) 
participated in the mode experiment by providing a monthly patient 
information file for patients served during one or more of the three 
sample months (July, August, and September 2015). The patient sample 
consisted of 13,576 patients who had an eligible surgery or procedure 
during a sample month and who met other survey eligibility criteria. 
Data collection for each sample month began approximately 21 days after 
the sample month closed and ended within a 6-week period after the 
survey was initiated. The overall response rate (for all three modes) 
was 39 percent. The response rate for the mail-only mode was 37 
percent, the telephone-only response rate was 34 percent, and the 
mixed-mode response rate was 50 percent.
    We began voluntary national implementation of the OAS CAHPS Survey 
in January 2016 and refer readers to https://oascahps.org/General-Information/National-Implementation for more details. Preliminary data 
from the voluntary reporting period (Quarter 1 data), which included 
24,201 sampled patients from 74 facilities, indicate a response rate of 
33 percent for both telephone and mail modes. Voluntary national 
implementation is ongoing.
    Comment: Several commenters recommended that CMS delay 
implementation of OAS CAHPS measures because the measures are not NQF-
endorsed, and asserted that this will significantly limit hospitals' 
insight into whether the measures portray hospital performance in a 
fair and accurate manner until they are endorsed by the NQF.
    Response: We disagree with commenters' recommendation that we 
should delay implementation of the OAS CAHPS measures in the Hospital 
OQR Program. We refer readers to our discussion above regarding 
measures that are not NQF endorsed. The OAS CAHPS Survey has undergone 
rigorous testing. As discussed in the measure description, the five 
survey-based measures (MUC IDs: X3697; X3698; X3699; X3702; and X3703) 
were included on the CY 2014 MUC list,\102\ and reviewed by the 
MAP.\103\ 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.\104\ The MAP 
stated that these are high impact measures that will improve both 
quality and efficiency of care and be meaningful to consumers.\105\ 
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.\106\ 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.\107\ 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.\108\
---------------------------------------------------------------------------

    \102\ 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.
    \103\ 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.
    \104\ Ibid.
    \105\ Ibid.
    \106\ Ibid.
    \107\ Ibid.
    \108\ Ibid.
---------------------------------------------------------------------------

    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 \109\ and its CAHPS Consortium 
\110\ in developing a patient experience of care survey, such as: 
Reporting on actual patient experiences; standardization across the 
survey instrument; administration protocol; data analysis

[[Page 79777]]

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.
---------------------------------------------------------------------------

    \109\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys''. Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \110\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://cahps.ahrq.gov/about-cahps/cahps-program/index.html.
---------------------------------------------------------------------------

    In addition, as discussed above, we received public input from 
several modes. We published a request for information in the Federal 
Register 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. As stated in more detail above, 
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.\111\
---------------------------------------------------------------------------

    \111\ Outpatient and Ambulatory Surgery CAHPS Survey: ``National 
Implementation.'' Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    Given these consensus-building efforts, we believe the measure 
reflects consensus among affected parties for a standardized instrument 
assessing patients' experience of care in the hospital setting. As 
such, we do not think it is necessary to delay implementation of the 
OAS CAHPS Survey until it achieves NQF endorsement. We believe the 
benefits of measure data for patients and hospitals outweigh waiting 
for NQF endorsement. We also note, however, that we intend to submit 
the OAS CAHPS Survey-based measures to NQF for endorsement under an 
applicable call for measures in the near future.
    We also disagree with commenters' assertion that lack of NQF 
endorsement will limit hospitals' insight into whether the measures 
portray hospital performance in a fair and accurate manner. The survey 
was tested in both the outpatient and ASC setting in 2014 (field 
testing) and 2015 (mode testing) and found to be reliable. We refer 
readers to https://oascahps.org/ for more information about field and 
mode testing for these measures. The OAS CAHPS Survey development 
process followed the principles and guidelines outlined by AHRQ and its 
CAHPS Consortium.\112\ This process included reviewing existing 
literature; reviewing surveys submitted under a public call for 
measures; 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; conducting a field test; and conducting a 
test of the various data collection mode effects on survey responses.
---------------------------------------------------------------------------

    \112\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://ahrq.gov/cahps/index.html.
---------------------------------------------------------------------------

    In 2014, the field test data were evaluated and analyzed to 
identify item-level refinements necessary for the survey instrument. 
The field test psychometric analysis included evaluations of individual 
items and composite item sets. Individual items were analyzed to report 
item-level missing data and item response distributions (including 
ceiling and floor effects), which included response variance. Composite 
item sets were analyzed using factor analysis and item response theory 
(IRT) analysis to assess dimensionality, discriminability, dimensional 
coverage, and subgroup response differences. Internal consistency 
statistics (reliability) and correlational checks for composite 
validity were performed to evaluate the final composite item sets. The 
item-level recommendations for the field test were based on the 
findings from the factor analyses, the internal consistency checks, and 
the IRT analysis. As a result, 10 questions were recommended for 
deletion. Reliability of the remaining measures was assessed using the 
Cronbach's alpha coefficient, with an estimate range from zero to one. 
An estimate of zero indicated no measurement consistency and one 
indicates perfect consistency. The cutoff criterion for the examination 
was 0.70, which indicated adequate consistency.\113\ The composites 
analytically derived maintained adequate internal consistency even when 
reduced to Top-Box scoring and across the facility types and modes of 
administration.
---------------------------------------------------------------------------

    \113\ Aron, A. and Aron, E.N. Statistics for Psychology. (1999) 
2nd ed. New Jersey: Prentice Hall.
---------------------------------------------------------------------------

    Based on the rigorous testing that was undertaken during the 
development process, we believe the OAS CAHPS Survey, and measure 
scores derived therefrom, are both reliable and valid. Therefore, we 
believe it is unnecessary to delay implementation of the OAS CAHPS 
Survey in the hospital outpatient setting.
    Comment: Some commenters recommended CMS to convene stakeholder 
group of providers, consumers, venders, and other relevant parties to 
discuss the CAHPS survey questions holistically to address how these 
surveys should be distributed in the future, prioritize the development 
of these survey tools to a limited subset of provider settings, and 
determine how to manage the issue of overlapping care.
    Response: We refer readers to our response above discussing measure 
development and stakeholder input. To reiterate, we received public 
input for the OAS CAHPS Survey from several modes. As stated above, we 
published a request for information in the Federal Register on January 
25, 2013 (78 FR 5460). Stakeholder input was also obtained through 
communications with two TEPs and the MAP. However, moving forward, we 
will continue to seek stakeholder input on the appropriateness of 
procedures that are appropriate for the hospital setting as well as 
improving the quality of care provided in the hospital outpatient 
setting.
    Comment: Commenters expressed concerns about the significant 
resources needed to collect the survey, and also expressed concerns 
that the CAHPS[supreg] program already includes multiple overlapping 
survey tools. The commenters asserted that the inclusion of another 
survey may lead to confusion among patients about which provider is 
being assessed and create excessive survey administration burden for 
hospitals.
    Response: While we understand commenters' concerns regarding 
resources needed to collect the survey, and survey administration 
burden for hospitals, the OAS CAHPS Survey was developed for use in 
assessing patient experience of care for select outpatient surgical 
procedures. We are dedicated to

[[Page 79778]]

improving the quality of care provided to patients, and believe 
patients are a vital source of information in assessing the quality of 
care provided at a hospital outpatient department. We believe that the 
benefits of this measure, such as giving patients the opportunity to 
compare and assess quality of care in the outpatient setting in a 
standardized and comparable manner, outweigh the burdens. Regarding 
confusion among patients and multiple overlapping survey tools, other 
CAHPS surveys, such as the HCAHPS Survey, are tailored to different 
aspects of care provided by hospitals, such as inpatient care. In 
addition, the survey introduction letter provided to patients includes 
the date and location of the surgery or procedure that the patient 
received at the facility. Furthermore, patients will also be reminded 
of the date and location of the surgery or procedure they received 
during the telephone interviews. For these reasons, we do not believe 
there will be issues associated with overlap or confusion for these 
surveys.
    Comment: One commenter asserted that requiring hospitals to meet 
the proposed target minimum number of surveys (that is, 300 completed 
surveys) would be difficult for smaller facilities and recommended that 
the target minimum number of surveys instead be set at 100 completed 
surveys, in alignment with the requirements from the first year of the 
HCAHPS Survey's use in the inpatient setting. Another commenter 
expressed concerns that comparing an HOPD with a small patient 
population to a sample of a much larger HOPD's population may weaken 
the statistical reliability of the survey results and comparability of 
facilities' scores. This commenter recommended that facilities should 
be measured against comparable facility size and clinical make-up, and 
urged CMS to increase the number of survey-eligible patients a facility 
can have to qualify for the exception.
    Response: We are committed to ensuring high reliability in publicly 
reported OAS CAHPS Survey results. To make abundantly clear our 
policies discussed in the proposed rule, hospital outpatient 
departments will fall into one of three categories based on their past 
and projected total patient volume, will fall into one of three 
scenarios. In order to determine its projected total patient volume, we 
recommend hospitals review their accounts receivable and payable 
records. From these accounting documents, a facility can determine its 
past patient volume and project future patient volume. Acceptable 
methods of sampling survey-eligible patients can be found in Chapter 
IV-Sampling Procedures of the Protocols and Guidelines Manual at 
https://oascahps.org/Survey-Materials.
    The first category includes hospitals that estimate receiving more 
than 300 completed surveys during the 12-month reporting period based 
on its past and projected total patient volume. We note that in the CY 
2017 OPPS/ASC proposed rule (81 FR 45718), we stated that ``hospitals 
will be required to survey a random sample of eligible patients on a 
monthly basis.'' We also note that elsewhere in the proposed rule (81 
FR 45719), we also stated that, ``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.'' We 
recognize that the language is confusing and are clarifying here that 
hospitals that anticipate receiving more than 300 surveys have a 
choice. They are required to either: (1) Randomly sample their eligible 
patient population, or (2) survey their entire OAS CAHPS eligible 
patient population. In other words, random sampling is optional.
    We calculated the number 300 by using the reliability criterion for 
the OAS CAHPS Survey measures, which is 0.8 or higher.\114\ This 
requires facilities with large patient populations to randomly sample a 
sufficient number of patients to yield at least 300 completed surveys 
over each 12-month reporting period. This criterion allows at least 80 
percent power to detect a 10 percent difference for binary survey 
outcome at the 0.05 significance level.\115\ A reliability criterion of 
0.8 is the normal standard for random sample surveys.\116\ The 300 
completed surveys translates into approximately 25 completed surveys 
per month (25 completes x 12 months = 300 completes per year). At this 
time, there are no plans to adjust the threshold of the target minimum 
of 300 completed surveys for the OAS CAHPS Survey for larger facilities 
that have the option to undertake random sampling. To do so could 
decrease the reliability of the OAS CAHPS survey results. Survey data 
will be collected on a monthly basis and uploaded on a quarterly basis. 
As stated in the Protocols and Guideline Manual, survey vendors will 
report the ``total patient volume,'' ``total eligible patients,'' 
``number of patients sampled,'' and the ``number of completed surveys'' 
for each reporting period.\117\ These reported patient data will be 
used to ensure sampling requirements are followed.
---------------------------------------------------------------------------

    \114\ Cohen, Jacob. 1977. Statistical Power Analysis for the 
Behavioral Sciences. New York: Academic Press.
    \115\ Ibid.
    \116\ Ibid.
    \117\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Second, if a hospital does not anticipate receiving 300 completed 
surveys during the 12-month reporting period based on its past and 
projected total patient volume, it must survey all eligible patients 
served during the reporting period. In other words, these smaller 
facilities must undertake a census of all eligible patients served; 
there is no option to randomly sample. Smaller facilities' OAS CAHPS 
survey results are not affected by the reliability issues underlying 
the target minimum policy because conducting a census--surveying all 
eligible patients in a population, as opposed to sampling and 
administering the survey to a portion of that eligible patient 
population--measures the true value of the patient population by 
including all eligible patients at the facility in the survey 
population. However, we will continue to review the data from the 
voluntary implementation to identify and address any issues related to 
the reliability and comparability of OAS CAHPS Survey-based measure 
rates across facilities. Thus the OAS CAHPS results for the larger 
facilities and the smaller facilities both achieve the statistical 
precision of the reliability criterion. For example, if two different 
facilities with large patient volumes in a particular year, both 
randomly sample their eligible patients and receive 300 completed 
surveys, they would both have met the reliability criterion during that 
year. As a second example, if in a particular year, one facility 
estimates it will receive more than 300 completed surveys in that year 
and samples and obtains 300 completed surveys while, during that same 
year, a different facility does not anticipate receiving 300 completed 
surveys and undertakes a census of its entire survey-eligible patients, 
both facilities would achieve the statistical precision of the 
reliability criterion for that year. As a third example, for a facility 
that obtained 300 completed surveys from their 1500 total eligible 
patients served in one year, but experienced a change in patient volume 
during the next year, and surveyed their entire 200 eligible patients 
served the next year, the facility would have met the reliability 
criterion during both years.
    Third, if in the prior year a hospital serves less than 60 survey 
eligible patients, the facility can request an exemption from the OAS 
CAHPS

[[Page 79779]]

Survey administration requirement because these few surveys would not 
provide reliable data and the burden associated with administering the 
survey as well as the resulting public reporting of OAS CAHPS Survey 
results would be disproportionately burdensome. At this time, there are 
no plans to adjust the threshold for the exemption. This request and 
related deadlines will be available on the OAS CAHPS Survey Web site 
(https://oascahps.org) on or before May 15 of the data collection 
calendar year as discussed in the proposed rule (81 FR 45719).
    The facility-level data for both large and small facilities will be 
adjusted to account for patient characteristics that impact response 
tendencies (that is, patient-mix) and ensure fair comparisons across 
all facilities. As discussed in the CY 2017 OPPS/ASC proposed rule (81 
FR 45720), 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. We refer readers to the Protocols and 
Guidelines Manual, available at: https://oascahps.org/Survey-Materials, 
for more information regarding the patient-mix adjustment methodology. 
However, we do not adjust for facility-level characteristics that are 
under control of the facility, for example, specialty or geographic 
location. During the voluntary implementation of the survey, we will 
continue to review the data collected to identify and address any 
issues related to the reliability and comparability of measure rates 
across facilities as appropriate. In addition, we believe the 60 
survey-eligible patient exemption policy appropriately balances the 
benefit of ensuring that patient experience of care data is collected 
and publicly reported for use by patients in making decisions about 
their health care against the burden of requiring facilities to 
administer the OAS CAHPS Survey. For this reason, we do not believe it 
would be appropriate to increase the exemption threshold at this time.
    Comment: Many commenters expressed concerns regarding the length of 
the OAS CAHPS Survey. A number of commenters recommended that CMS 
shorten the OAS CAHPS Survey in order to increase the survey completion 
rates, and further recommended CMS allow each facility to have more 
choice in the questions they include in its survey. One commenter 
expressed concern that the OAS CAHPS Survey's length will limit the 
number of completed surveys a hospital receives because patients will 
be overwhelmed by the number of questions in the survey or otherwise 
unable to complete the survey, and in turn, impact the ability of the 
hospital to use the survey data in quality improvement activities.
    Response: The OAS CAHPS Survey is comparable in length and survey 
response rate to other patient experience of care surveys. For example, 
the HCAHPS Survey is 32 questions long, (http://www.hcahpsonline.org/surveyinstrument.aspx), and the response rate for the HCAHPS Survey has 
generally been 32 to 33 percent, (for example see: https://www.medicare.gov/hospitalcompare/details.html?msrCd=prnt1grp1&ID=220066&stCd=MA&stName=Massachusetts). 
By comparison, the OAS CAHPS Survey is 37 questions long, and the 
survey's 2015 mode experiment showed an overall response rate of 39 
percent.\118\ The mode experiment, a final step in the measurement 
development process, was conducted in 2015 to test the OAS CAHPS Survey 
questions when administered by mail-only, telephone-only, and mixed-
mode (mail with telephone follow-up).
---------------------------------------------------------------------------

    \118\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Mode 
Experiment.'' Available at: https://oascahps.org/General-Information/Mode-Experiment.
---------------------------------------------------------------------------

    In addition, the 24 core questions of the OAS CAHPS Survey are 
either directly actionable (that is, give feedback to hospitals) or 
inform the need for patients to answer subsequent questions that are 
actionable. For example, Question 10, which asks whether a patient 
received anesthesia, establishes whether a patient should respond to 
Question 11 and Question 12, which provide actionable feedback to 
hospitals with the patient about the anesthesia process and possible 
side effects. We also encourage hospitals to consider adding specific 
questions of interest to the OAS CAHPS Survey. As noted in the CY 2017 
OPPS/ASC proposed rule (81 FR 45718), HOPDs may elect to add up to 15 
supplemental questions to the OAS CAHPS Survey. These could be 
questions HOPDs develop specifically for use alongside the OAS CAHPS 
Survey, or questions from an existing survey.
    However, we continue to evaluate the utility of individual 
questions as we collect new data from the survey's national 
implementation and will consider different options for shortening the 
OAS CAHPS Survey without the loss of important data in the future. 
Specifically, we are contemplating removing two demographic questions--
the ``gender'' and ``age'' questions--from the OAS CAHPS Survey in its 
next update if we determine that it is feasible, when collecting 
information on survey-eligible patients from facility records, that 
gender and age information could also be collected via these records.
    Comment: One commenter requested that CMS remove or revise two 
questions on the OAS CAHPS Survey asking whether a doctor or anyone 
from the facility: (1) Gave the patient all the information needed 
about their procedure; and/or (2) gave the patient easy to understand 
instructions about preparing for their procedure. This commenter 
asserted that patient education is solely within the purview of the 
doctor's office, not the facility, and should therefore be removed from 
a survey assessing patients' experience of care at the facility.
    Response: We disagree with the commenter's assertion that patient 
education is solely within the purview of the doctor's office. We 
believe it is the facility's responsibility to ensure that a doctor, 
nurse, or other facility staff member provides the patient with 
information about preparing for their procedure, the procedure itself, 
and what to expect following discharge from the hospital. Furthermore, 
the OAS CAHPS Survey-based measures were reviewed by two 10-member TEPs 
comprised of experts on outpatient surgery, including clinicians, 
providers, patient advocates, and representatives from other 
stakeholder organizations. These TEPs provided guidance in the 
establishment of relevant topics for assessing patient experience of 
care at an outpatient facility, and commented on draft versions of the 
survey for cognitive and field testing. These TEPs agreed with the 
questions as drafted, including those regarding the facility's 
communication with patients. Therefore, we believe it is appropriate to 
include these important communications between the patient and the 
facility about their care in the OAS CAHPS Survey.
    The OAS CAHPS Survey is focused on patients' experience of care 
received for their ambulatory surgery or procedure. A physician/surgeon 
who performs surgeries/procedures at a facility is a member of that 
facility with both rights and responsibilities. We believe it is the 
facility's responsibility to ensure that someone--whether the doctor, 
nurse, or other facility staff member--provide patients with 
information about preparing for their procedure, about the procedure 
itself, as well as what to expect following the procedure/surgery. 
Therefore, we believe it is appropriate to include these

[[Page 79780]]

important communications with patients in the OAS CAHPS Survey.
    Comment: One commenter requested that CMS reconsider its position 
on respondent confidentiality for the OAS CAHPS Survey administration 
to align with the HCAHPS survey, which allows for the release of 
patient-level data for quality improvement purposes, with the 
stipulation that a patient's identity should not be shared with direct 
care staff.
    Response: The administration protocols for OAS CAHPS follow 
protocols for other more recent CAHPS[supreg] Surveys, restricting the 
release of patient-level data if the patient has not consented. For 
example, the Home Health Care CAHPS (HHCAHPS) Survey protocol states: 
``HHCAHPS Survey approved vendors can provide responses linked to a 
sample patient's name and other identifying information only if the 
sample patient gives his or her consent on the `Consent to Share 
Identifying Information' question.'' \119\ For the Hospital IQR 
Program, because hospitals can self-administer the HCAHPS Survey, we do 
not state that patients' responses and identifying information will not 
be shared with the hospital. However, HCAHPS Surveys administered via a 
third-party vendor are not linked to a sample patient's name unless the 
patient gives his or her consent, and we encourage hospitals to 
undertake measures to protect patient confidentiality when self-
administering the survey. We note that facilities may choose to add the 
``Consent to Share'' question \120\ to the OAS CAHPS Survey. This 
question asks whether a patient gives permission for their name to be 
linked to their survey responses. However, we note that each facility 
should consult with its own counsel to ensure compliance with 
applicable privacy and security laws.
---------------------------------------------------------------------------

    \119\ Home Health Care CAHPS Survey: ``Protocols and Guidelines 
Manual.'' Available at: https://homehealthcahps.org/Portals/0/PandGManual.pdf.
    \120\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Survey 
Materials.'' Available at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter recommended that CMS align the OAS CAHPS 
Survey with the HCAHPS Survey by: (1) Adopting the same four-point 
scale used in the HCAHPS Survey for ratings questions (that is, 
``Always; Usually; Sometimes; or Never'' responses); (2) separating 
questions about nurses and doctors treating a patient into two separate 
sets of questions; (3) adopting the same series of questions used in 
the HCAHPS Survey regarding interactions with doctors and nurses; and 
(4) adding the same new medication questions used in the HCAHPS Survey 
to the OAS CAHPS Survey (Question 15: ``During this hospital stay, were 
you given any medicine that you had not taken before?''; Question 16: 
``Before giving you any new medicine, how often did hospital staff tell 
you what the medicine was for?''; Question 17: ``Before giving you any 
new medicine, how often did hospital staff describe possible side 
effects in a way you could understand?'').
    Response: As part of the survey development process, the OAS CAHPS 
Survey was aligned as appropriate with other CAHPS Surveys, including 
the HCAHPS Survey. However, unlike HCAHPS, which assesses patients 
experience in the inpatient setting; the OAS CAHPS Survey assesses 
patient experience of care for outpatient surgical procedures, and 
therefore, takes the outpatient/ambulatory setting into account and 
captures information about the appropriate experiences of care for this 
particular setting.
    We note that the four-point scale response set used for some HCAHPS 
Survey questions, ``Always; Usually; Sometimes; or Never,'' is 
appropriate to use when a question includes the phrase ``how often.'' 
This is appropriate in the inpatient setting, where patients stay in 
the hospital for a longer period of time. The OAS CAHPS Survey 
questions use a single point in time reference for an outpatient 
surgery or procedure because patients spend a significantly shorter 
period of time in the facility. Therefore, we believe the OAS CAHPS 
Survey questions and response options are worded appropriately (that 
is, for the majority of the OAS CAHPS Survey questions, the response 
categories are: ``Yes, definitely;'' ``Yes, somewhat;'' or ``No.'' 
Response categories for other questions are: ``Yes'' or ``No'' for this 
setting of care and treatment situation. The OAS CAHPS Survey 
instrument can be found at: https://oascahps.org/Survey-Materials.
    In the OAS CAHPS Survey, references to the doctors, nurses, and 
other staff at the facility are grouped together for two reasons. 
First, grouping assessment of the health care personnel at a facility 
helps reduce the overall length of the survey so that similar questions 
are not repeated separately for doctors and nurses. Second, the 
questions under section I, II, III and IV (Before Your Procedure, 
Facility and Staff, Communications, and Recovery) include aspects of 
the patient's care that could be addressed by either the doctor or 
someone else at the facility. Combining these professionals under a 
single series of questions allows the patient to report that someone 
provided information and explained the process without having to recall 
the specific individual who gave the information. This is important 
because the OAS CAHPS Survey is intended to assess the patient's 
experience of care at the facility, including, but not separating out, 
all the staff that work at the facility.
    For these reasons, we believe it is appropriate to ask these 
questions in a way that reflects the care provided by doctors, nurses, 
and other facility staff combined. We note that during the OAS CAHPS 
Survey field test conducted in 2014 and the mode experiment conducted 
in 2015, we did not receive any indications that the respondents had 
any difficulty answering these questions as they are currently written. 
The nonresponse, which is an indication of difficulty answering a 
question, was very low for the two questions that combine doctors and 
nurses (Question 7, which is about treating the patient with courtesy 
and respect and Question 8, which is about making sure the patient was 
a comfortable as possible). For the field test, less than 0.5 percent 
of the respondents did not respond to these questions while 99.5 
percent were able to answer these questions. For the mode experiment 
just over 1 percent of the respondents did not respond to the questions 
while nearly 99 percent were able to answer them. These nonresponse 
rates were very similar to the questions that were about clerks and 
receptionists.
    While there are no plans to add questions about new medications to 
the OAS CAHPS Survey at this time, we will take this recommendation 
into consideration during future updates to the survey.
    Comment: One commenter requested clarification from CMS about why 
the OAS CAHPS Survey does not use same administration method as the 
HCAHPS Survey. One commenter recommended that CMS to align the 
outpatient version of patient's experience of care survey with the 
current inpatient version from a content, timeline and administration 
method standpoint, and requested CMS to review these requirements to 
prevent duplication of effort and provide a uniform process for 
patients. One commenter requested that CMS compare the OAS CAHPS Survey 
questions to the HCAHPS survey questions.
    Response: Regarding survey content and questions, the OAS CAHPS 
survey was designed for the outpatient/ASC setting in order to more 
appropriately evaluate patient experience of care there. Therefore, the 
content should not be and is not the same as the HCAHPS survey. We 
refer readers to our discussion above regarding OAS CAHPS

[[Page 79781]]

survey development. Regarding administration method, the only 
difference between the HCAHPS and OAS CAHPS survey administration is 
that for the HCAHPS survey, hospitals are allowed to either self-
administer or contract with a vendor. For the OAS CAHPS survey, on the 
other hand, hospitals must contract with a vendor. There is no option 
to self-administer. However, procedures related to vendors are aligned 
between both surveys. Therefore, we believe that processes streamline 
any duplication of efforts and processes for patients.
    Comment: A few commenters expressed concerns that two existing 
CAHPS surveys, Clinician/Group CAHPS (CG-CAHPS) and the Surgical CAHPS 
(S-CAHPS), already capture the information that is being assessed in 
the OAS CAHPS Survey. One commenter recommended that the Hospital OQR 
Program to use the S-CAHPS survey for measurement of patient experience 
before, during, and after surgery.
    Response: The CG-CAHPS survey \121\ assesses patients' experiences 
with health care providers and staff in doctors' offices, and the focus 
of the S-CAHPS survey \122\ is to obtain a patient's experience of care 
received specifically from a surgeon. Neither of those surveys focus on 
a patient's experience of care received from an HOPD or an ASC 
specifically, like the OAS CAHPS survey was designed to do. We do not 
believe the units of analyses are the same. However, we will take these 
suggestions into consideration for the future.
---------------------------------------------------------------------------

    \121\ Clinician and Group Survey CAHPS. Available at: http://www.pqrscahps.org/.
    \122\ American College of Surgeons. ``S-CAHPS (Consumer 
Assessment of Healthcare Providers and Systems Surgical Care 
Survey).'' Available at: https://www.facs.org/advocacy/quality/cahps.
---------------------------------------------------------------------------

    Comment: Some commenters urged CMS to make testing and revision of 
the Emergency Department Patient Experiences with Care (EDPEC) Survey a 
priority, and asserted that patient experiences in the ED setting 
require unique questions that are not necessarily reflected in the OAS 
CAHPS Survey. Another commenter recommended that CMS finalize the EDPEC 
Survey, and establish expectations for compliance across all hospitals 
first, including publishing results from the pilot, before requiring 
mandatory compliance with the OAS CAHPS. One commenter urged CMS to 
ensure the data collected from the EDPEC and OAS CAHPS Surveys 
accurately reflects the quality of care provided by physicians and 
facilities and accounts for the nuances and differences required when 
providing care in the emergency department.
    Response: The Emergency Department Patient Experiences with Care 
(EDPEC) Survey is a survey tool that is currently under development at 
CMS that assesses patient experiences of care in the emergency 
department. We have made considerable investments in developing and 
testing the EDPEC Survey to measure experiences of patients (18 and 
older) with emergency department care specifically. The survey 
respondents include patients admitted to the hospital following their 
emergency department visit and those visiting the emergency department 
who are discharged to the community. For additional details regarding 
the EDPEC Survey, we refer readers to: https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/CAHPS/ed.html. However, the EDPEC 
Survey cannot be finalized at this time, because it is still under 
development and would need to be reviewed by the MAP prior to CMS 
proposing the survey. We will take commenter's suggestion into 
consideration that the EDPAC accurately reflects the quality of care 
provided by physicians and facilities and accounts for the nuances and 
differences required when providing care in the emergency department.
    In addition, to be abundantly clear, the OAS CAHPS Survey was 
developed to assess the quality of care provided to patients during 
select surgical outpatient procedures only. Therefore, the OAS CAHPS 
Survey should not be administered to ED patients. The EDPEC Survey can 
only be administered in the emergency department setting, and not in 
the hospital outpatient setting or ASC setting. Regarding the 
commenter's concern about the OAS CAHPS Survey accurately reflecting 
the quality of care provided by physicians and facilities, we believe 
the survey accurately does this and we point readers to our discussion 
above detailing the survey development process and TEP input. Regarding 
the comment about establishing expectations for compliance, we refer 
readers to our previous response above regarding the different 
categories of compliance for the OAS CAHPS Survey as well as the 
measure description in the proposed rule. We interpret commenter's 
request for CMS to publish results from the pilot to refer to the 
voluntary national implementation of the OAS CAHPS Survey, and we will 
publish results when available. However, we do not agree that we should 
delay implementation of this measure pending this publication, because 
the valuable information that this measure will provide to patients and 
hospitals outweighs waiting for these results.
    Comment: One commenter requested clarification from CMS regarding 
the inclusion of pain management-related questions in the OAS CAHPS 
Survey. The commenter expressed concern that the pain management 
communication question may negatively influence patient perceptions 
about their overall care and, in turn, result in negative responses 
throughout the survey. Another commenter expressed concern that the OAS 
CAHPS Survey's questions regarding communication about pain management 
may not reflect the true perception patients have of their experience 
relative pain management, and recommended CMS continue to explore ways 
to ensure better measurement of patients' experience with pain 
management.
    Response: The OAS CAHPS Survey pain management communication 
questions focus on the information provided to patients regarding pain 
management following discharge from a hospital outpatient department, 
not the hospital outpatient department's direct control or management 
of patients' pain. The hospital outpatient department is responsible 
for providing the patient with this information if there is a 
possibility that the patient might have pain as a result of the 
procedure. Communication about possible effects during recovery is 
important for patients. As discussed previously, the OAS CAHPS Survey 
underwent a rigorous survey development process, the results of which 
did not indicate any negative impact to overall survey responses 
resulting from the inclusion of these questions regarding pain 
management communication. In addition, we have no reason to believe 
that patients' responses to the pain management communication questions 
would not accurately reflect their experience with the facility. 
Therefore, we do not believe that the pain management communication 
question would negatively influence patient perceptions about their 
overall care, resulting in negative responses throughout the survey. 
However, as noted in the CY 2017 OPPS/ASC proposed rule (81 FR 45718), 
we will continue to evaluate the appropriateness and responsiveness of 
these questions to patient experience of care and public health 
concerns.
    Comment: A number of commenters expressed concern regarding the OAS 
CAHPS Survey pain management communication question, ``Some ways to 
control pain include prescription medicine, over-the-counter pain 
relievers or ice packs. Did your doctor

[[Page 79782]]

or anyone from the facility give you information about what to do if 
you had pain as a result of your procedure?'' One commenter recommended 
that CMS refine this question to be clear the survey is asking whether 
patients received pain management information that could be applied 
once they left the facility, and that the information could include, 
but is not limited to, information about pain management using 
appropriate medications. Another commenter recommended reorganizing the 
pain management methods listed in the first question to run from non-
medication pain management to prescription pain medication treatment. 
Another commenter recommended that CMS expand this question to include 
other methods of pain management, such as physical therapy because the 
commenter believed using a more inclusive list of pain control methods 
would help to further combat the over prescription of opioids for pain 
management.
    Some commenters also expressed concerns regarding the pain 
management communication control question, ``At any time after leaving 
the facility, did you have pain as a result of your procedure?'' 
Specifically, a few commenters requested that CMS revise the pain 
management communication control question to ask whether, at any time 
after leaving the facility, the patient experienced pain as a result of 
their procedure that they felt they could not manage based on the 
information they received from the facility or treating physician.
    Response: We thank the commenters for their recommendations. As 
discussed previously, the OAS CAHPS Survey underwent a rigorous survey 
development process, the results of which indicated that patients 
understand these questions as presented, and that the questions were 
sufficiently developed for use in the survey.\123\ As discussed 
previously, the OAS CAHPS Survey-based measures were reviewed by two 
10-member TEPs comprised of experts on outpatient surgery, including 
clinicians, providers, patient advocates, and representatives from 
other stakeholder organizations. These TEPs provided guidance in the 
establishment of relevant topics for assessing patient experience of 
care at an outpatient facility, and commented on draft versions of the 
survey for cognitive and field testing.
---------------------------------------------------------------------------

    \123\ A description of the field test analysis of the survey 
questions was documented in the Federal Register notice (January 16, 
2015; 80 FR 2430). https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10500.html.
---------------------------------------------------------------------------

    The possible treatments for pain included in the survey reflect 
what is tested and reflected to work, and their order is not intended 
to reflect a preference for any single pain treatment method, only to 
provide examples of types of pain management a facility may discuss 
with a patient prior to discharge. The examples provided in this 
question are also not intended to be an exhaustive list, and we 
acknowledge that there are many methods for addressing pain following a 
procedure performed at a hospital outpatient department, including 
physical therapy. Because this is not an exhaustive list, we do not 
believe it is necessary to exclude, expand, or reorganize these 
questions at this time. However, we will take these suggestions, 
including reorganizing the pain management methods, into consideration 
for future iterations of the survey.
    Comment: Two commenters expressed concerns that the pain management 
communication control question raises an unrealistic expectation 
regarding pain control, and may potentially encourage over prescription 
of opioids. These commenters therefore recommended removing the pain 
management communication control question from the OAS CAHPS Survey.
    Response: We also note that Question 16 ``At any time after leaving 
the facility, did you have pain as a result of your procedure?'' is a 
control question; in other words, an answer of ``yes'' or of ``no'' 
would not affect provider scores on the OAS CAHPS survey questions. The 
scores are based on the previous Question 15, which asked if the doctor 
or anyone from the facility gave the patient information about what to 
do if the patient had pain as a result of the procedure. We will not 
publicly report the data from the control question that asks if the 
patient had pain as a result of the procedure, rather, that question is 
only used to determine if the previous question should be included in 
the score or not. For example, if the patient reported having had pain 
in Question 16, then the response to Question 15 would be included in 
the score that is reported for the hospital.
    For example, the focus of Questions 15 and 16 is to determine 
whether a patient who is expected to experience pain as a result of a 
procedure was given information from the doctor or anyone from the 
facility about what to do about pain. If a patient experiences pain as 
a result of a procedure (Question 16), it is important that the patient 
was provided information as to what to do about the pain (Question 15). 
In these instances the response to Question 15 would be included in the 
score. However, for some procedures conducted in a hospital outpatient 
department (for example colonoscopies), there is little expectation 
that the patient will experience pain. In these instances, a doctor or 
anyone from the facility may not have given a patient information about 
what to do about pain because such information would not be relevant. 
In these latter instances, the response to Question 15 would not be 
included in the score unless the patient response is a top-box (that 
is, ``Yes, definitely'') response.
    We do not believe a question asking whether patients experienced 
pain would have an undue influence on patients' responses to the OAS 
CAHPS Survey or warrant its removal from the OAS CAHPS Survey. As 
stated above, the OAS CAHPS Survey underwent a rigorous survey 
development process, the results of which did not indicate any negative 
impact to overall survey responses resulting from the inclusion of 
these questions regarding pain management communication. In addition, 
we have no reason to believe that patients' responses to the pain 
management communication questions would not accurately reflect their 
experience with the facility. Therefore, we do not believe that the 
pain management communication question would negatively influence 
patient perceptions about their overall care, resulting in negative 
responses throughout the survey.
    Furthermore, as stated in the CY 2017 OPPS/ASC proposed rule at 81 
FR 45717 through 45718, this control question will not affect scores on 
the OAS CAHPS survey. Rather, scores are based on the previous Question 
15, which asks if the doctor or anyone from the facility gave the 
patient information about what to do if the patient had pain as a 
result of the procedure. However, we will review the data from the 
voluntary national implementation and continue to evaluate the 
appropriateness and responsiveness of these questions, particularly for 
any unintended consequences.
    Comment: One commenter requested clarification about whether CMS 
intends to publicly report HOPD scores on the pain management 
communication control question.
    Response: We interpret the comment to refer to Question 16. 
Question 16, ``At any time after leaving the facility, did you have 
pain as a result of your procedure?'' is a control question; in other 
words, an answer of ``yes'' or of ``no'' would not affect provider 
scores

[[Page 79783]]

on the OAS CAHPS Survey questions. The scores are based on the previous 
Question 15, which asked if the doctor or anyone from the facility gave 
the patient information about what to do if the patient had pain as a 
result of the procedure.
    Comment: One commenter recommended that CMS remove the questions on 
the OAS CAHPS Survey asking patients whether they experienced pain, 
nausea, or bleeding following a procedure because the commenter 
believes this information is not useful to facilities in quality 
improvement activities, as these are all risks associated with surgery.
    Response: Question 17 (``Before you left the facility, did your 
doctor or anyone from the facility give you information about what to 
do if you had nausea or vomiting?'') and Question 18 (``At any time 
after leaving the facility, did you have nausea or vomiting as a result 
of either your procedure or the anesthesia?'') are intended to assess 
the information provided to patients regarding what to expect following 
a surgery/procedure. We believe it is the facility's responsibility to 
ensure that the patient is aware of the potential side effect of their 
treatment, and, therefore, believe these questions are indicative of 
quality of care. As above, we note that Question 18 is a control 
question, so an affirmative or negative response would not be included 
in the provider scores on the OAS CAHPS Survey, but rather is used to 
determine if the provider should have given guidance on how to handle 
nausea or vomiting (Question 17). The information will be useful to 
facilities because they will be able to ensure that the information 
that patients need during recovery is adequately addressed by the 
facility staff. These questions are not reporting whether the patients 
experienced pain, nausea, vomiting, bleeding or signs of infection; the 
questions are reporting if the patients were informed what to do if 
they had these outcomes.
    For example, the focus of Questions 17 and 18 is to determine 
whether a patient who might likely experience nausea or vomiting as a 
result of a procedure was given information from the doctor or anyone 
from the facility about what to do to manage these outcomes. If a 
patient experiences these outcomes as a result of a procedure, it is 
important that the patient was provided information on how to manage 
these outcomes. In these instances, the response to Question 17 would 
be included in the score. However, for some procedures conducted in a 
hospital (for example laser surgeries), there is little expectation of 
the patient experiencing nausea or vomiting and in these instances a 
doctor or anyone from the facility may not have given a patient 
information on how to manage these outcomes as such information would 
not be relevant. In these latter instances, the responses to Question 
17 would not be included in the score unless the patient response is a 
top-box (that is, ``Yes, definitely'') response.
    Furthermore, as stated in the CY 2017 OPPS/ASC proposed rule (81 FR 
45717 through 45718), this control question will not affect scores on 
the OAS CAHPS survey. Rather, scores are based on the previous Question 
17, which asks if the doctor or anyone from the facility gave 
information about what to do if the patient had nausea or vomiting. 
However, we will review the data from the voluntary national 
implementation and continue to evaluate the appropriateness and 
responsiveness of these questions, particularly for any unintended 
consequences.
    Comment: One commenter urged CMS to examine the necessity and 
utility of the OAS CAHPS measures and adjust for all factors (for 
example, limited English proficiency, low health literacy) that could 
influence how patients respond to the survey but are beyond the control 
of the hospital and not directly related to hospital performance.
    Response: In order to achieve the goal of fair comparisons across 
all hospitals, the OAS CAHPS Survey-based measures risk-adjust for 
factors that are not directly related to facility performance. The 
measures are risk-adjusted for patient case-mix, which proved to be 
significant predictors: age; education; overall health status; overall 
mental health status; type of surgical procedure; and English 
proficiency. Health literacy is not one of the patient characteristics 
used because assessing a patient's health literacy would add 
significant burden to the survey. The self-reported education is used 
as a surrogate and only requires one additional question. We refer 
readers to http://www.ahrq.gov/professionals/quality-patient-safety/quality-resources/tools/perfmeasguide/perfmeaspt2a.html for more 
details about the risk-adjustment.
    Comment: One commenter recommended the OAS CAHPS Survey be 
administered only to patients receiving surgeries and certain other 
procedures in the HOPD setting.
    Response: We agree with the commenter and refer readers to section 
XIII.B.5.c.(5) of this final rule with comment period (Cohort) in the 
measure description above as well as in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45719). As we stated there, a criterion to be an eligible 
patient is one ``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).'' The OAS CAHPS Survey 
was specifically developed to assess patients' experience of care for 
selected outpatient surgical procedures. The surgeries and procedures 
eligible for the OAS CAHPS Survey measures fall within the Category I 
CPT-4 range Codes for Surgery (for example, CPT codes between 10021-
69990) or one of the following Category II G-codes: G0104; G0105; 
G0121; or G0260. All other CPT codes are considered ineligible for the 
OAS CAHPS Survey-based measures. We refer readers to the OAS CAHPS 
Protocols and Guidelines Manual for more information, which is 
available at: https://oascahps.org/Survey-Materials.
    Comment: One commenter expressed concerns that additional review 
and consideration is needed regarding the CPT codes involving the 
insertion/use of Foley catheters, 51701 and 51702.
    Response: For the OAS CAHPS Survey, the primary criterion for 
determining eligible surgeries and procedures is the CPT code.\124\ OAS 
CAHPS-eligible surgeries and procedures fall within the range Category 
I Codes for Surgery (that is, CPT codes between 10021 and 69990) or one 
of the following Category II G-codes: G0104; G0105; G0121; or G0260. 
Among the 60,000 surgeries and procedures documented in the Codes for 
Surgery range, there are some relatively minor procedures that fall 
within the range that are considered ineligible for OAS CAHPS. The OAS 
CAHPS protocol \125\ documents the ineligible CPT codes that have been 
excluded, but because the codes are maintained by the American Medical 
Association and are subject to periodic updates, the list of exclusions 
must be open for expansion. CMS protocols for the OAS CAHPS Survey 
\126\ allow survey vendors to work with hospital outpatient departments 
to submit for consideration other specific CPT codes to be considered 
for exclusion. As additional exclusions are approved, the survey 
protocols are updated and announced. The two CPT codes in question 
(51701 and 51702) are currently under consideration by CMS for 
exclusion.
---------------------------------------------------------------------------

    \124\ CPT only copyright 2015 American Medical Association. All 
rights reserved.
    \125\ Outpatient and Ambulatory Surgery CAHPS Survey: 
``Protocols and Guidelines Manual.'' Available at: https://oascahps.org/Survey-Materials.
    \126\ https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter recommended that CMS delay public

[[Page 79784]]

reporting of hospital outpatient department measure rates on the OAS 
CAHPS Survey-based measures for at least one year to allow hospitals to 
become familiar with the measures and survey administration.
    Response: As stated in the CY 2017 OPPS/ASC proposed rule (81 FR 
45720), this measure was proposed for the CY 2020 payment determination 
and subsequent years. Therefore, hospitals would not be required to 
submit OAS CAHPS Survey data until CY 2018. We refer readers to section 
XII.D.4. of this final rule with comment period for data submission 
requirements. This gives hospitals an additional year to become 
familiar with both the OAS CAHPS Survey and its administration 
requirements, as well as to contract with a third-party vendor to 
administer the survey. We refer hospitals to the list of CMS-approved 
survey vendors available on the OAS CAHPS Web site (https://oascahps.org/General-Information/Approved-Survey-Vendors) and encourage 
hospitals to compare prices across vendors, as they may vary. We 
believe this additional year is sufficient time for hospitals to become 
familiar with the measures and survey administration before it is a 
requirement of the Hospital OQR Program and before measures data is 
publicly reported. Furthermore, we encourage hospitals to participate 
in the voluntary national implementation of the OAS CAHPS Survey to 
gain experience. More information can be found at: https://oascahps.org/.
    Moreover, as stated in the CY 2017 OPPS/ASC proposed rule (81 FR 
45720), 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 did not propose a format or timing for public reporting of 
OAS CAHPS Survey data in the proposed rule.
    After consideration of the public comments we received, we are 
finalizing the adoption of the OP-37a-e: Outpatient and Ambulatory 
Surgery Consumer Assessment of Healthcare Providers and Systems (OAS 
CAHPS) Survey Measures for the CY 2020 payment determination and 
subsequent years as proposed with a clarification that hospitals that 
anticipate receiving more than 300 surveys are required to either: (1) 
Randomly sample their eligible patient population, or (2) survey their 
entire OAS CAHPS eligible patient population. We note that these 
measures are also being finalized in the ASCQR Program and refer 
readers to section XIV.B.4.c of this final rule with comment period for 
more details.
d. Summary of Previously Adopted and Newly Adopted Hospital OQR Program 
Measures for the CY 2020 Payment Determinations and Subsequent Years
    The table below outlines the finalized Hospital OQR Program measure 
set for the CY 2020 payment determination and subsequent years, and 
includes both previously adopted measures and measures newly adopted in 
this final rule with comment period.

  Previously Finalized and Newly 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: 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.

[[Page 79785]]

 
* 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 finalized for the CY 2020 payment determination and
  subsequent years.

6. Hospital OQR Program Measures and Topics for Future Consideration
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45721 through 45722), 
we sought 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 moving towards the use of outcome measures and away from the 
use of clinical process measures across the Medicare program. We 
invited public comments on possible measure topics for future 
consideration in the Hospital OQR Program. We specifically requested 
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.
    Comment: One commenter requested that, in selecting future measures 
and topics, CMS streamline, align, focus, and collaborate on measures 
that matter most for improving patient care. The commenter also 
expressed its support for CMS' focus on outcome measures.
    Response: We thank the commenter for its suggestion. As discussed 
in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74458 
through 74460), in general, when selecting measures for the Hospital 
OQR Program, we take into account several considerations and goals. 
These include: (a) Expanding the types of measures beyond process of 
care measures to include an increased number of outcome measures, 
efficiency measures, and patients' experience-of-care measures; (b) 
expanding the scope of hospital services to which the measures apply; 
(c) considering the burden on hospitals in collecting chart-abstracted 
data; (d) harmonizing the measures used in the Hospital OQR Program 
with other CMS quality programs to align incentives and promote 
coordinated efforts to improve quality; (e) seeking to use measures 
based on alternative sources of data that do not require chart 
abstraction or that utilize data already being reported by many 
hospitals, such as data that hospitals report to clinical data 
registries, or all-payer claims data bases; and (f) weighing the 
relevance and utility of the measures compared to the burden on 
hospitals in submitting data under the Hospital OQR Program. We also 
stated that we assign priority to quality measures that assess 
performance on: (a) Conditions that result in the greatest mortality 
and morbidity in the Medicare population; (b) conditions that are high 
volume and high cost for the Medicare program; and (c) conditions for 
which wide cost and treatment variations have been reported, despite 
established clinical guidelines (76 FR 74458 through 74459). To the 
extent possible, we seek to streamline reporting, align with other 
hospital quality reporting and performance programs, and focus on 
measures that have high impact and support national priorities as 
reflected in the NQS and the CMS Quality Strategy. We thank the 
commenter for its support of our move toward adopting more outcome-
based measures in the future.
    Comment: Several commenters recommended increasing the number of 
immunization measures, specifically, adult immunization measures, in 
the program, including: (1) A pneumococcal immunization measure, such 
as NQF #0043; (2) an influenza immunization measure, such as NQF #0041; 
(3) an HPV vaccination catch-up measure for females ages 19-26 years 
and for males 19-21 years; (4) a measure for Tdap/pertussis-containing 
vaccine for ages 19+ years; (5) a measure for Zoster vaccination for 
ages 60-64 years; and (6) a measure for Zoster vaccination for ages 65+ 
years. Commenters noted that several of these measures are already 
required by the PQRS Program. One commenter recommended that CMS 
address all Advisory Committee on Immunization Practices (ACIP)-
recommended vaccines for adults. Other commenters also strongly 
supported maintaining the Influenza Vaccination Coverage among 
Healthcare Personnel measure in the Hospital OQR Program.
    Response: We acknowledge commenters' suggestions that we should 
include additional immunization performance measures in the Hospital 
OQR Program to help ensure vaccines are routinely offered and 
administered to patients in the hospital outpatient setting. We also 
refer readers to the CY 2016 PFS final rule with comment period (80 FR 
71216 through 71259) for measures currently included in the PQRS 
Program. We will take these suggestions into consideration for future 
rulemaking. We thank commenters for supporting the continued inclusion 
of OP-27: Influenza Vaccination Coverage among Healthcare Personnel.
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 invited public comments on future implementation of eCQMs as 
well

[[Page 79786]]

as specific future eCQMs for the Hospital OQR Program.
    Comment: Some commenters supported CMS' goal to incorporate 
electronic clinical quality measures (eCQMs) in the Hospital OQR 
Program in the future. One commenter asserted that eCQMs will help 
quantify healthcare processes and outcomes that are associated with the 
ability to provide high quality health care, and the development of 
eCQMs increases clinical data availability and improves measure quality 
and outcomes. One commenter agreed with the development of outpatient 
eCQMs because it would better align the outpatient and inpatient 
hospital quality reporting programs; this commenter asserted that the 
outpatient areas lag behind inpatient areas in the implementation of 
electronic health records. Another commenter encouraged CMS to make the 
transition to eCQM reporting a high priority to align with the Hospital 
IQR Program and The Joint Commission's ORYX[supreg] Reporting Program.
    Response: We thank the commenters for their support of 
incorporating eCQMs in the Hospital OQR Program in the future. We are 
evaluating eCQM implementation in the Hospital IQR Program, as well as 
other Medicare payment programs, and will take lessons learned in that 
program into consideration when crafting policy for the Hospital OQR 
Program. Furthermore, we consider the alignment with the Hospital IQR 
Program and the Joint Commission's ORYX[supreg] Reporting Program a 
high priority for our transition to eCQM reporting in the Hospital OQR 
Program, and we will take this recommendation into consideration. For 
additional information regarding the Joint Commission's ORYX[supreg] 
Reporting Program, we refer readers to: https://www.jointcommission.org/facts_about_oryx_for_hospitals/. We also 
acknowledge the commenter's concerns that outpatient areas lag behind 
inpatient areas in the implementation of electronic health records, and 
we will consider this issue as we develop eCQMs for the Hospital OQR 
Program.
    Comment: One commenter recommended a gradual start with one 
measure, and recommended the Hospital OQR Program start with the ED-3 
measure (Median Time from ED Arrival to ED Departure for Discharge ED 
Patients). The commenter expressed concerns that CMS did not take 
advantage of eCQM ED-3 measure to begin accepting Quality Reporting 
Document Architecture (QRDA-1) files for CY 2017. The commenter 
strongly recommended CMS show continued support for ED-3 and add it to 
the list of future eCQM requirements.
    Response: We acknowledge the commenter's concern regarding 
gradually including eCQMs in the Hospital OQR Program, beginning with 
the inclusion of the ED-3: Median Time from ED Arrival to ED Departure 
for Discharge ED Patients measure. In the CY 2011 OPPS/ASC final rule 
with comment period (75 FR 72074), we finalized OP-18: Median Time from 
ED Arrival to ED Departure for Discharged ED Patients (NQF #0496), the 
only measure in our current measure set which is currently specified as 
an eCQM; it is e-specified as ED-3. The e-specification for this 
measure is available at: http://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/2014_eCQM_Specs_for_EH.zip 
in the folder entitled: EH_CMS32v2_NQF0496_ED3_MedianTime. The ED-e 
measure could not be proposed or adopted previously due to the 
statutory limitations of the Hospital OQR Program. This e-measure would 
be required to undergo the prerulemaking process in accordance with 
section 1890A of the Act. This e-measure is currently on the 2016 MUC 
List, and we are considering it for future use in the program, because 
we believe it is important to encourage providers to submit this 
measure electronically.
    Comment: A few commenters did not support CMS' goal to incorporate 
eCQMs in the Hospital OQR Program. One commenter asserted that 
requiring eCQM reporting in the quality programs would create a 
duplicative penalty for hospitals unable to meet Meaningful Use 
requirements. This commenter further argued there has not been 
sufficient development of eCQMs for the Hospital OQR Program. Another 
commenter expressed concerns that providers will not have sufficient 
time and information systems and technology resources to be fully 
prepared for reporting eCQMs. This commenter requested more flexibility 
from CMS, and requested decreasing required measures until the 
specifications have been tested and validated. This commenter also 
requested that data from eCQMs not be published in Hospital Compare 
until benchmarks for each measure are available.
    Response: We disagree that any future requirements for electronic 
reporting in the Hospital OQR Program would duplicate penalties. 
Incorporating eCQMs is part of an effort to align various programs, 
including the Hospital IQR Program and Medicare and Medicaid EHR 
Incentive Programs, in order to reduce overall burden. Furthermore, we 
believe that it is appropriate to consider incorporating eCQMs because 
measures available now and those being developed for the future are 
increasingly based on electronic standards (80 FR 49696). In addition, 
as described in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57156), we 
have observed the successes of hospitals meeting the meaningful use 
requirements and our data show that 95 percent of hospitals already 
attest to successful eCQM reporting under the EHR Incentive Program.
    We acknowledge the commenter's concerns that providers will not 
have sufficient time and information systems and technology resources 
to be fully prepared for reporting eCQMs. We anticipate that as EHR 
technology evolves and more health IT infrastructure is operational, in 
cooperation with the efforts of the ONC Health IT Certification 
Program, data elements and information systems requirements will become 
more standardized. Reliable, accurate data and electronic reporting are 
all important priorities to us. We believe that, with the advancement 
of technology and the use of electronic measures, even more precise, 
accurate, and reliable data will be captured for analysis. We also 
acknowledge commenters' concerns and recommendations regarding the use 
of eCQMs in the Hospital OQR Program, such as decreasing required 
measures until the specifications have been tested and validated and 
delaying public reporting on Hospital Compare until benchmarks for each 
measure are available. In addition, we understand the commenter's 
concerns that there has not been sufficient development of eCQMs for 
the Hospital OQR Program. We aim to ease the transition to reporting of 
electronic clinical quality measures, but any policies regarding the 
specific timelines and requirements related to data submission would be 
proposed in future rulemaking. We will consider these comments and work 
with stakeholders to address their concerns evaluating any eCQMs we 
propose to adopt in future rulemaking.
    Comment: One commenter recommended that, for anesthesia measures, 
eCQMs should communicate across the continuum of patient care, and 
disparate information systems should interface between offices, 
clinics, hospitals, and pharmacy platforms to communicate across the 
patient's experience to increase patient safety, improve outcomes and 
decrease cost of care. This commenter recommended that these anesthesia

[[Page 79787]]

measures should include standardized taxonomy and fields and require 
providers to use these measures across various platforms to optimize 
communication of care and interoperability. This commenter also 
asserted that free text fields are more complex and require dedicated 
staff to abstract charts for quality reporting instead of electronic 
capture from the EHR of specific data fields. This commenter therefore 
recommended CMS make data available to all interested parties to 
identify trends and opportunities for improvement as data is reported.
    Response: We appreciate the commenter's recommendations regarding 
the inclusion of e-specified anesthesia-related measures in the 
Hospital OQR Program. Furthermore, we acknowledge concerns about 
disparate information systems and conflicting data elements resulting 
in issues of comparability, completeness, and accuracy of eCQM data as 
well as concerns that e-specified anesthesia measures should include 
standardized taxonomy and fields, and require providers to use these 
measures across various platforms to optimize communication of care and 
interoperability. In the future, if we consider adopting e-specified 
measures related to patients undergoing anesthesia, we will be mindful 
of these concerns. Furthermore, regarding making data available to all 
interested parties to identify trends and opportunities for improvement 
as data is reported, we will consider the feasibility of this within 
the constraints of the HIPAA Privacy and Security Rules and other data 
privacy laws.
    Comment: One commenter recommended the following existing Hospital 
OQR Program measures be slated for future eCQM development: OP-1: 
Median Time to Fibrinolysis; OP-2: Fibrinolytic Therapy Received Within 
30 Minutes of ED Arrival; OP-3: Median Time to Transfer to Another 
Facility for Acute Coronary Intervention; OP-5: Median Time to ECG; OP-
20: Door to Diagnostic Evaluation by a Qualified Medical Professional; 
and OP-21: Median Time to Pain Management for Long Bone Fracture.
    Response: We will share these suggested existing Hospital OQR 
Program measures with the measure developers for consideration as 
future eCQMs and will take these comments under consideration as we 
develop future eCQM policy for the Hospital OQR Program.
    Comment: One commenter requested that, when referencing providers 
within eCQMs, CMS use provider-neutral language consistent with the 
language used by CMS that supports inter-professional team care 
delivery and outcomes.
    Response: We interpret provider-neutral language as language that 
includes eligible professionals. As defined under section 1861(r) of 
the Act and finalized in the EHR Incentive Programs Stage 1 final rule 
(75 FR 44442), an eligible professional is a doctor of medicine or 
osteopathy; a doctor of dental surgery or dental medicine; a doctor of 
podiatric medicine; a doctor of optometry; or a chiropractor), nurse 
practitioners, physician assistants, and other health care 
practitioners as health care providers. We strive to use language that 
eliminates bias and minimizes assumptions in their writing. In 
addition, hospital measures are not generally reported on the 
individual-level (for example, by each physician); instead they are 
reported by CCN (for example, hospital-wide) in order to encourage 
coordinated care delivery.
    Comment: One commenter expressed concerns that the size and scope 
of CMS testing and validation for eCQMs may be too narrow for an 
accurate review.
    Response: We thank the commenter for sharing its suggestions and 
concerns regarding the testing and validation for eCQMs for the future 
measure concept. As we have not yet developed policy for Hospital OQR 
Program eCQM validation, we believe the commenter is referring to the 
Hospital IQR Program Validation Pilot for eCQMs that was finalized in 
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50269 through 50273). We 
refer readers to FY 2015 IPPS/LTCH PPS final rule (79 FR 50269 through 
50273) for our discussions of size and scope of Hospital IQR Program 
eCQM Validation Pilot. Additional details about the Hospital IQR 
Program 2015 eCQM Validation Pilot are available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1140537256076. We also refer readers to the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 57173 through 57181), for a summary of results from the pilot 
test and our most recent eCQM validation policies in the Hospital IQR 
Program. We will consider these comments as we develop eCQM policy 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.\127\ 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.\128\ 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 Services Administration, have joined the effort. 
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.\129\ 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.\130\ 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.\131\ 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

[[Page 79788]]

overlapping opioid and benzodiazepine prescriptions across all 
settings.132 133 134
---------------------------------------------------------------------------

    \127\ 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.
    \128\ 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.
    \129\ 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.
    \130\ 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.
    \131\ 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.
    \132\ 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.
    \133\ 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/.
    \134\ 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 
\135\ recommends that providers avoid concurrently prescribing opioids 
and benzodiazepines because rates of fatal overdose are 10 times higher 
in patients who are co-dispensed opioid analgesics and benzodiazepines 
than opioids alone \136\ and concurrent use of benzodiazepines with 
opioids was prevalent in 31 percent to 51 percent of fatal 
overdoses.\137\ ED visit rates involving both opioid analgesics and 
benzodiazepines increased from 11.0 in 2004 to 34.2 per 100,000 
population in 2011.\138\ Opioid overdose events resulting in ED use can 
cost the United States approximately $800 million per year.\139\
---------------------------------------------------------------------------

    \135\ 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.
    \136\ Dasgupta, N., et al. ``Cohort Study of the Impact of High-
dose Opioid Analgesics on Overdose Mortality,'' Pain Medicine, Wiley 
Periodicals, Inc., 2015.
    \137\ 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.
    \138\ 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.
    \139\ 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 requested 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.
    Comment: Several commenters supported the future eCQM ``Safe Use of 
Opioids-Concurrent Prescribing'' measure concept currently under 
development for the Hospital OQR Program. One commenter specifically 
supported the development of measures to help address the opioid 
epidemic. Another commenter supported the future measure concept 
because the large number of people receiving health care who take 
multiple medications, and the resulting complexity of managing those 
medications, makes medication reconciliation an important safety 
process. This commenter further asserted that effective medication 
reconciliation programs require a complete understanding of what the 
patient was prescribed and what medications the patient is actually 
taking, and is particularly important when prescribing opioids.
    Response: We thank commenters for their support of the development 
of a future measure addressing safe use of opioids and concurrent 
prescribing. We note that the measure is still under development. 
However, we will consider these recommendations in our ongoing measure 
development activities.
    Comment: Several commenters disagreed with the scope and intention 
of the future opioid measure concept and asserted that measures that 
simply assess the proportion of adults with a prescription are 
inadequate because they do not consider if opioid prescriptions are 
appropriate. One commenter asserted that clinicians should be able to 
use their clinical judgment and should not be punished if the 
clinicians sincerely believed that prescribing both classes of 
medication together is more beneficial than prescribing only one class 
of medication alone.
    Response: We thank the commenters for sharing their suggestions and 
concerns about the scope and intention of the future opioid measure. We 
understand commenters' concerns about measures that assess the 
proportion of adults with a prescription are inadequate, and will 
consider this issue while we develop this future measure. During 
initial development of this measure, experts were interviewed and 
recognized that there will be clinically necessary instances where a 
patient with an active opioid or benzodiazepine may require a short-
term prescription for a second medication. However, the 2016 CDC 
Guideline for Prescribing Opioids for Chronic Pain \140\ recommends 
that providers avoid concurrently prescribing opioids and 
benzodiazepines because rates of fatal overdose are 10 times higher in 
patients who are co-dispensed opioid analgesics and benzodiazepines 
than opioids alone \141\ and concurrent use of benzodiazepines with 
opioids was prevalent in 31 percent to 51 percent of fatal 
overdoses.\142\ We do not expect sites to have numerators of zero, but 
we do intend the measure to alert providers to the risks of concurrent 
opioid or opioid and benzodiazepine therapy. We will continue to engage 
with stakeholders, including clinicians, as we develop this future 
measure. We note that the measure is still under development, and we 
will consider these recommendations in our ongoing measure development 
and testing activities.
---------------------------------------------------------------------------

    \140\ 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.
    \141\ Dasgupta, N., et al. ``Cohort Study of the Impact of High-
dose Opioid Analgesics on Overdose Mortality,'' Pain Medicine, Wiley 
Periodicals, Inc., 2015.
    \142\ 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.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concerns that the measure 
concept may introduce unintended consequences such as under-treatment 
and placing undue accountability on acute settings for long-term pain 
management; patients on small doses of a benzodiazepine for a chronic 
problem (anxiety, insomnia) might not be able to be given opioids if 
they have an acute injury or fracture; and creating withdrawal in a 
patient who has been on long standing opioids with

[[Page 79789]]

concurrent benzodiazepines. One commenter urged CMS to exercise caution 
when implementing measures that have the potential to inadvertently 
discourage providers from prescribing opioids to those patients who 
need them.
    Response: We thank the commenters for sharing their suggestions and 
concerns about the potential of the future measure concept to introduce 
unintended consequences for patients using benzodiazepines. We also 
acknowledge commenters' concerns that the future measure concept may 
place undue accountability on facilities providing acute care for 
patients receiving long-term treatment for chronic pain, and we will 
take this issue into consideration as we develop the measure. We also 
believe it is important to understand and monitor the potential for 
unintended consequences, and we will take these issues into 
consideration to inform our ongoing measure development efforts.
    Comment: One commenter recommended that CMS consider physician 
burden and time in developing this measure. This commenter further 
expressed concerns that emergency physicians do not always have access 
to the list of a patient's medications. Another commenter expressed 
concern that ED providers deliver episodic care and do not have control 
over the medications that their patients have been prescribed prior to 
arrival to the ED, and therefore performance on this measure is largely 
outside of the control of ED providers.
    Response: We thank the commenters for sharing their concerns 
regarding ED physician burden and time, and concerns that performance 
on the measure may be largely outside the control of providers. The 
measure is not intended to hold facilities accountable for undocumented 
opioid or benzodiazepine prescriptions; if a patient's opioid or 
benzodiazepine medications are not recorded in the EHR because they 
could not be reconciled by the provider during the healthcare 
encounter, that patient will not be captured by the measure. While it 
may be difficult to gather a complete record of all medications from 
each patient during a healthcare encounter, we believe it is best 
practice to make reasonable efforts to determine what medications a 
patient is taking at the beginning of an encounter and document that in 
the clinical record. This approach aligns with The Joint Commission's 
National Patient Safety Goals which includes medication reconciliation 
as an important component of improving the safe use of 
medications.\143\ We understand the importance of not developing and 
implementing measures that are overly burdensome regarding providers' 
time and burden, and we are committed to working with stakeholders, 
including providers, in developing this future measure. Although ED 
providers may face challenges that are unique to acute pain management, 
it is not reasonable to exclude them from this measure, due to the high 
rates of opioid prescriptions from ED settings. A study that analyzed 
data on ED discharges from the 2006 through 2010 National Hospital 
Ambulatory Medical Care Survey found that opioids were prescribed for 
18.7 percent of all ED discharges, representing 21.7 million 
prescriptions per year.\144\ Rates of opioids prescriptions in the 
outpatient settings may be high, but opioid prescription rates from the 
ED setting are also significant. Furthermore, discharge planning with 
the patient's primary care provider is a routine expectation for care 
coordination. We will consider these recommendations to inform our 
ongoing measure development and testing efforts.
---------------------------------------------------------------------------

    \143\ Joint Commission's National Patient Safety Goals. https://www.jointcommission.org/assets/1/6/2016_NPSG_HAP.pdf.
    \144\ Kea, B., Fu, R., Lowe, R., et al. (2016). Interpreting the 
National Hospital Ambulatory Medical Care Survey: United States 
Emergency Department Opioid Prescribing, 2006-2010. American 
Emergency Medicine. Wiley Periodicals, Inc. Retrieved [March 2016] 
from http://onlinelibrary.wiley.com/doi/10.1111/acem.12862/abstract.
---------------------------------------------------------------------------

    Comment: Some commenters recommended that CMS explore the 
development and use of appropriate use criteria for opioid prescribing, 
and also recommended CMS explore measures of overuse; for example, the 
percentage of patients with more than a certain number of prescription 
fills over a time period.
    Response: We appreciate the commenters' recommendations to explore 
appropriate use criteria for opioid prescribing, and we also will take 
into consideration the recommendation to explore measures of overuse in 
the Hospital OQR Program. We will consider these recommendations when 
developing a future measure addressing safe use of opioids and 
concurrent prescribing.
    Comment: One commenter recommended that hospitals be held 
accountable for instances in which they initiate new combination opioid 
therapy or opioid-benzodiazepine therapy, and recommended that the 
measure not penalize hospitals for continuing home combination therapy. 
The commenter recommended that CMS establish a medication management 
plan, with pain management or primary care signing on, before sending a 
patient on combination therapy home.
    Response: As we move through the development of this measure 
concept, we will consider the commenter's recommendations on holding 
hospitals accountable when they initiate new combination therapy, and 
not penalizing hospitals for continuing home combination therapy, which 
means treatment in which a patient is given two or more drugs (or other 
therapeutic agents) for a single disease. In addition, the 
recommendation to institute a medication management plan may help to 
inform our ongoing measure development.
    Comment: One commenter requested clarification on how hypnotics 
will be viewed for purposes of this measure.
    Response: We thank the commenter for requesting this clarification. 
Hypnotic drug products are a class of drugs used to induce and/or 
maintain sleep.\145\ At this time, we are not including any non-
benzodiazepine hypnotics in the scope of the measure. We are still 
developing this measure, and we will consider this comment to inform 
our ongoing measure development efforts.
---------------------------------------------------------------------------

    \145\ U.S. Food and Drug Administration. (2015). Sleep Disorder 
(Sedative-Hypnotic) Drug Information. Retrieved October 6, 2016, 
from http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm101557.htm.
---------------------------------------------------------------------------

    Comment: Some commenters recommended that CMS exclude several 
groups from the measure, including hospice patients, cancer patients, 
and patients with sickle cell disease. One commenter recommended that 
the measure concept be limited to large quantities of medications 
because this would provide the option for emergency physicians to 
continue a patient's opioid, or opioid/benzodiazepine regimen, for a 5-
day period. This commenter also encouraged CMS to consider alternative 
strategies that are more practical for the ED, such as better 
counseling on the risks and benefits of these medications, as well as 
investment in the development and promotion of clinical practice 
guidelines that focus on pain management and prescribing.
    Response: We appreciate the commenters' recommendations on 
excluding certain populations from the measure, limiting the measure to 
cases involving large quantities of medications, and considering 
alternative strategies that are may be practical for the ED. We will 
take the commenters' recommendations into

[[Page 79790]]

consideration in our measure development and testing efforts.
    Comment: One commenter recommended removal of the following 
medication value sets: Benzodiazepines RXNORM Value Set and Schedule II 
and Schedule III Opioids RXNORM Value Set. This commenter expressed 
concerns regarding the feasibility of capturing the concept of 
``medications that are active and do not end.'' The commenter also 
recommended that the measure solely address concurrent discharge 
medications.
    Response: We interpret the concept of ``medications that are active 
and do not end'' as to refer to medications active on arrival or active 
home medications, which continue to remain on the patient's medications 
list at discharge if they were not discontinued by the provider, and 
that the commenter is concerned about how they would be captured in an 
eCQM value set. We interpret eCQM value sets as lists of specific 
values (terms and their codes) used to describe clinical and 
administrative concepts in the quality measures. They provide groupings 
of unique values along with a standard description or definition from 
one or more standard vocabularies used to describe the same clinical 
concept (for example, diabetes, clinical visit, demographics) within 
the quality measures. For more information about eCQM value sets, we 
refer readers to: https://ecqi.healthit.gov/ecqm-tools/tool-library/value-set-authority-center-vsac.
    We will consider the most appropriate eCQM value sets for the 
measure specifications during feasibility testing. The measure concept 
is currently specified to address concurrent medication prescribing at 
discharge. We will consider these recommendations in our ongoing 
measure development efforts, and we thank the commenter for its 
suggestions.
    Comment: One commenter recommended that a denominator exclusion is 
needed for ``Medical Reason'' for concurrent discharge medications; and 
to ensure accurate timeframes of data, the measurement period must be 
defined in the logic or within the Quality Data Model (QDM) variables.
    Response: We thank the commenter for sharing its recommendation 
regarding excluding ``Medical Reason'' for concurrent discharge 
medications from the denominator and defining a measurement period in 
logic or QDM variables. As currently developed, the measurement period 
is defined as one year. We will take the commenter's recommendations 
into consideration in our measure development and testing efforts.
    Comment: Some commenters expressed concern that the future measure 
concept is reliant on Prescription Drug Monitoring Programs (PDMP), and 
until coordinated PDMPs are in place, the measure should not be a part 
of a quality and patient safety initiative for emergency physician 
scoring. One commenter expressed concerns that the future measure 
concept is a poor measure for the ED given the ongoing lack of 
universal access to reliable PDMP data, the time it would take for ED 
physicians to gather this data, the potential for unintended 
consequences, and the relatively low number of opioid prescriptions 
linked to the ED setting. One commenter requested clarification on 
whether providers will be required to confirm opioid or benzodiazepine 
therapy through prescription monitoring programs, and how would this 
work for hospitals servicing patients from other States. Another 
commenter asserted that there needs to be a drug monitoring 
infrastructure that exchanges data with EHRs, dispensing pharmacies, 
and other relevant sources and compiles the data into one mechanism 
before CMS develops the concurrent prescribing of opioids measure. This 
commenter further asserted that implementing the future measure concept 
without taking in consideration the drug monitoring infrastructure 
would be premature, potentially confusing, and burdensome for 
facilities, and result in an inappropriate application of 
accountability.
    Response: We interpret the commenters' use of the term PDMP to 
refer to a statewide electronic database, which collects designated 
data on substances dispensed in the State. We refer readers to http://www.pdmpassist.org/ for information about PDMPs. We thank the 
commenters for sharing their concerns about the availability of PDMP 
data and that a drug monitoring infrastructure should be in place 
before we implement the proposed measure concept. The measure, as 
currently specified, uses data from the hospital EHR. We recognize that 
data on active prescriptions may not always be available, but the 
measure does not include undocumented prescriptions. This measure is 
intended to influence current prescribing practices to avoid concurrent 
prescriptions, but is not prescriptive of how hospitals approach this 
goal. The commenters' suggested practices of using PDMPs and 
interdisciplinary care teams are means to reach that goal. In addition, 
studies have shown that there are high rates of opioid prescriptions 
from ED settings. A study that analyzed data on ED discharges from the 
2006 through 2010 National Hospital Ambulatory Medical Care Survey 
found that opioids were prescribed for 18.7 percent of all ED 
discharges, representing 21.7 million prescriptions per year.\146\ 
Rates of opioids prescriptions in the outpatient settings may be high, 
but opioid prescription rates from the ED setting are also significant. 
We will consider these concerns to inform our ongoing measure 
development efforts.
---------------------------------------------------------------------------

    \146\ Kea, B., Fu, R., Lowe, R., et al. (2016). Interpreting the 
National Hospital Ambulatory Medical Care Survey: United States 
Emergency Department Opioid Prescribing, 2006-2010. American 
Emergency Medicine. Wiley Periodicals, Inc. Retrieved [October 2016] 
from http://onlinelibrary.wiley.com/doi/10.1111/acem.12862/abstract.
---------------------------------------------------------------------------

    Comment: One commenter urged CMS to leave the measure posted for 
stakeholder input for a substantial length of time (for example, more 
than 90 days) to allow stakeholders to conduct the necessary 
information-gathering. This commenter also recommended CMS engage with 
pharmacists in the future measure concept's development and 
implementation.
    Response: We thank the commenter for its view and suggestion. We 
will continue to engage with stakeholders, including pharmacists, as we 
develop the future measure. We note that because this measure is still 
in development, additional public input opportunities exist prior to 
measure proposal in rulemaking, such as during MAP review and the NQF 
process. We also will consider allowing stakeholders more time to 
provide input into the development of the future measure concept.
    Lastly, we invite all commenters to continue to actively engage in 
the measures development process for the Hospital OQR Program and other 
CMS quality reporting programs and encourage them to monitor the CMS 
Web site for future public input opportunities.
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 79791]]

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). In the CY 
2017 OPPS/ASC proposed rule (81 FR 45722), we did not propose 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45722), 
we formalized our current public display practices regarding timing of 
public display and the preview period, as discussed in more detail 
below. We also proposed 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 the proposed rule, therefore, we proposed 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 proposed that hospitals will 
generally have approximately 30 days to preview their data, also 
consistent with current practice. Lastly, moving forward, we proposed 
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 invited public comments on our public display proposals as 
discussed above.
    Comment: Some commenters supported CMS' proposal to formalize the 
current public display and reporting practices. One commenter expressed 
support of CMS' efforts to ensure consumers have adequate information 
with which to make informed health care decisions. This commenter 
further expressed that formalizing the current public display and 
reporting practices will not only help consumers make decisions about 
where to get their care, but will also encourage hospitals to ensure 
high quality of care. Another commenter applauded CMS' move toward a 
more transparent process for quality reporting. This commenter further 
asserted that making the publication of healthcare data more 
transparent will better educate both patients and providers, and lead 
to significant changes and improvement in the delivery system.
    Response: We thank the commenters for their support.
    Comment: One commenter did not support CMS' proposal to formalize 
current public display and reporting practices, and recommended CMS 
revise the preview timeframe from 30 to a minimum of 60 days to allow 
providers sufficient time to ensure information submitted is accurate.
    Response: We believe 30 days is sufficient time for hospitals to 
preview their data in advance of the information being made public. We 
also note that the 30-day preview period practice is consistent with 
the preview period timeframe for publicly reporting program data with 
the Hospital IQR Program (77 FR 53505), the Hospital Readmissions 
Reduction Program (76 FR 51672 through 51673), the Hospital-Acquired 
Condition Reduction Program (78 FR 50727 through 50728), the PPS-Exempt 
Cancer Hospital Quality Reporting Program (77 FR 53562 through 53563), 
and the Inpatient Psychiatric Facility Quality Reporting Program (77 FR 
53653 through 77 FR 53654). We also note that the ASCQR Program is 
finalizing a similar proposal in section XIV.B.7. of this final rule 
with comment period. We believe that this alignment across CMS quality 
programs will reduce burden on facilities (78 FR 50898). Furthermore, 
the complexity of measures and required calculations involve a 
significant amount of programming resources. Implementing a longer 
preview period would affect our ability to publish Hospital OQR Program 
data in a timely manner and result in substantial delays between 
hospital performance and the public reporting of measure data.
    While we understand that a 60-day preview period would allow 
hospitals more time to review their Hospital OQR Program data prior to 
its publication, we believe 30 days provides an appropriate balance 
between sufficient time to review data and timely publication, 
providing patients with the most up to date information for use in 
making decisions about their care. Implementing a longer preview period 
would affect our ability to publish Hospital OQR Program data in a 
timely manner and likely result in longer delays between hospital 
performance and the public reporting of measure data because the 
complexity of these measures and the required calculations will involve 
a significant amount of programming resources.
    After consideration of the public comments we received, we are 
finalizing, as proposed starting with the CY 2018 payment 
determination, our proposals to: (1) 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; (2) provide hospitals 
with approximately 30 days to preview their data; and (3) announce the 
timeframes for the preview period on a CMS Web site and/or on our 
applicable listservs.

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). In the CY 2017 OPPS/ASC proposed rule (81 FR 45722), we did 
not propose any changes to these requirements.

[[Page 79792]]

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). In the CY 2017 OPPS/ASC 
proposed rule (81 FR 45722), we did not propose 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.

            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
------------------------------------------------------------------------

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45722 through 45723), 
we did not propose 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: Median Time to Pain Management for Long Bone 
Fracture (NQF #0662); and
     OP-23: 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45723), we did not 
propose 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. In the CY 2017 OPPS/ASC 
proposed rule (81 FR 45723), we did not propose any changes to these 
policies for the CY 2019 payment determination.
    However, in sections XIII.B.5.a. and b. of this final rule with 
comment period, we are adopting 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 also apply to these 
measures.
    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).
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45723), we did not 
propose any changes to our claims-based measures submission policies 
for the CY 2020 payment determination and subsequent years.
4. Data Submission Requirements for the 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 final rule with comment 
period, we are adopting 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 proposed requirements 
related to survey administration and vendors. We note that we are 
adopting similar policies in

[[Page 79793]]

the ASCQR Program in section XIV.D.5. of this final rule with comment 
period.
a. Survey Requirements
    The survey has three administration methods: Mail-only; telephone-
only; and mixed mode (mail with telephone follow-up of nonrespondents). 
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 proposed 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 proposed 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 
proposed 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 final rule 
with comment period, 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 
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 proposed 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 proposed 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 invited 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.
    Comment: Many commenters recommended that CMS include an electronic 
method of administration, such as portal messages and/or email, for the 
OAS CAHPS Survey because electronic methods of survey administration 
would be more cost-effective for hospitals and more convenient for 
patients than administration via phone or standard mail. One commenter 
noted that electronic survey administration has allowed many hospitals 
to achieve significant cost savings in the administration of patient 
surveys, and asserted electronic administration may increase patient 
response rates. Some commenters expressed concerns that CMS has not 
explored and tested alternative data collection methods that may 
significantly decrease providers' cost in administering the survey and 
enhance patient participation. The commenters expressed concerns that 
CMS has not tested the OAS CAHPS

[[Page 79794]]

Survey in an online format as an alternative mode of administration of 
the survey.
    Response: While email and Web-based survey administration modes are 
not available at this time, we are actively investigating these modes 
as possible new options for the future. This ongoing investigation 
includes, among other things, determining whether hospitals receive 
reliable email addresses from patients, whether there is adequate 
access to the Internet across all types of patients, and whether 
implementing a Web-based survey administration method would introduce 
bias into the survey administration process. However, we note that a 
previous study \147\ investigating the suitability of speech-enabled 
interactive voice response (SE-IVR) and Web modes for publicly reported 
surveys of patients' experience of hospital care found lower response 
rates for mixed-mode administrations including a Web-based option than 
for mail-only and SE-IVR administrations. Portal messaging, like 
systems that are sometimes used to address patient questions, would 
require a Web portal that patients can access. If this were housed at 
the facility, patient confidentiality could potentially be an issue. 
Furthermore, as currently specified, the OAS CAHPS Survey requires that 
the survey be administered by an approved survey vendor. This is 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. Removing vendors, neutral third parties, could raise 
issues of objectivity and bias. However, as stated above, we are 
actively investigating new modes of conducting this survey as possible 
options for the future. We believe that the data collected by this 
measure is so significant and important that collecting data and 
publicly reporting it sooner rather than later outweighs waiting for a 
Web-based survey administration method to be developed, tested, and 
implemented nationwide.
---------------------------------------------------------------------------

    \147\ Elliot, MN, Brown JA, Lehrman WG, Beckett MK, 
Hambarsoomian K, Giordano LA, Goldstein EH. A randomized experiment 
investigating the suitability of speech-enabled IVR and Web modes 
for publicly reported surveys of patients' experience of hospital 
care. Med Care Res Rev, 2013 April;70(2): 165-84.
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing our proposals for the data submission requirements for the 
five OAS CAHPS Survey measures we are finalizing for the CY 2020 
payment determination and subsequent years as proposed.
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: 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 #0659) (via 
CMS' QualityNet Web site);
     OP-31: Cataracts: Improvement in Patient's Visual Function 
within 90 Days Following Cataract Surgery (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 (specifically, the 
Influenza Vaccination Coverage Among Healthcare Personnel measure (NQF 
#0431)) submitted via the CDC NHSN Web site.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45724 through 45725), 
we did not propose 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45725), we did not 
propose 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).
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45725), we did not 
propose any changes to our validation requirements.

[[Page 79795]]

8. 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45725), we proposed 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 final rule (81 FR 57181 through 81 FR 
57182; 81 FR 57230 through 57231), we finalized 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 
XIV.D.6. of this final rule with comment period, we also are also 
finalizing a deadline of 90 days following an event causing hardship 
for the ASCQR Program.
    We invited 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.
    Comment: Commenters supported CMS' proposal to change the 
extraordinary circumstances extension request deadline from 45 days to 
90 days following an event causing hardship. The commenters asserted 
that extending the deadline for filing from 45 to 90 days will allow 
facilities to respond to the event and ensure patient safety before 
submitting the request for an extension or exemption.
    Response: We thank the commenters for their support.
    After consideration of the public comments received, we are 
finalizing our proposal to extend the submission deadline for requests 
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 proposed.
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 the CY 2017 OPPS/ASC proposed rule (81 FR 45725), we clarified 
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.
    We did not receive any public comments on our clarification to our 
reconsideration and appeals procedures. In summary, for the CY 2017 
payment determination and subsequent years, we clarify that 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.

E. 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 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

[[Page 79796]]

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 the 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 final rule with 
comment period.
2. Reporting Ratio Application and Associated Adjustment Policy for CY 
2017
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45726 through 45727), 
we proposed to continue our established policy of applying the 
reduction of the OPD fee schedule increase factor through the use of a 
reporting ratio for those hospitals that fail to meet the Hospital OQR 
Program requirements for the full CY 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 proposed to continue to 
apply the reporting ratio to all services calculated using the OPPS 
conversion factor. For the CY 2017 OPPS, we proposed 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 proposed to continue to exclude 
services paid under New Technology APCs. We proposed to continue to 
apply the reporting ratio to the national unadjusted payment rates and 
the minimum unadjusted and national unadjusted copayment rates of all 
applicable services for those hospitals that fail to meet the Hospital 
OQR Program reporting requirements. We also proposed to continue to 
apply all other applicable standard adjustments to the OPPS national 
unadjusted payment rates for hospitals that fail to meet the 
requirements of the Hospital OQR Program. Similarly, we proposed to 
continue to calculate OPPS outlier eligibility and outlier payment 
based on the reduced payment rates for those hospitals that fail to 
meet the reporting requirements.
    We invited public comments on these proposals. We did not receive 
any public comments on these proposals. In this final rule with comment 
period, we are clarifying that the reporting ratio does not apply to 
codes with status indicator ``Q4'' because services and procedures 
coded with status indicator ``Q4'' are either packaged or paid through 
the Clinical Laboratory Fee Schedule and are never paid through the 
OPPS. Otherwise, we are finalizing application of the reporting ratio 
as proposed. For the CY 2017 OPPS, the final reporting ratio is 0.980, 
calculated by dividing the final reduced conversion factor of $75.001 
by the final full conversion factor of $73.501.

[[Page 79797]]

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

A. Background

1. Overview
    We refer readers to section XIII.A.1. of this final rule with 
comment period for 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. In 
the CY 2017 OPPS/ASC proposed rule (81 FR 45727), we did not propose 
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). In the CY 2017 OPPS/ASC 
proposed rule (81 FR 45727), we did not propose 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. In the CY 2017 OPPS/ASC proposed rule (81 FR 45727), we did 
not propose 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 
data submission tool for the CY 2015 payment determination and 
subsequent years, and one process of care, preventive service measure 
submitted via an online data submission 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 data submission 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..........................    [dagger]0265  All-Cause Hospital
                                                  Transfer/Admission.
ASC-5..........................   [dagger] 0264  Prophylactic
                                                  Intravenous (IV)
                                                  Antibiotic Timing.
ASC-6..........................             N/A  Safe Surgery Checklist
                                                  Use.
ASC-7..........................             N/A  ASC Facility Volume
                                                  Data on Selected ASC
                                                  Surgical Procedures.*
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 2475754.
** 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 79798]]

4. 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 the CY 2017 OPPS/ASC 
proposed rule (81 FR 45728 through 45734), we proposed to adopt a total 
of seven measures for the CY 2020 payment determination and subsequent 
years: Two measures collected via a CMS online data submission 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 an 
online data submission 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; \148\ 
surgical site infections; \149\ impaired coagulation; \150\ and 
colligation of drug effects; \151\ 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.\152\ 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.\153\ This measure provides the opportunity for ASCs to 
improve quality of care and lower the rates of anesthesia-related 
complications in the ASC setting.
---------------------------------------------------------------------------

    \148\ 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.
    \149\ 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.
    \150\ 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.
    \151\ Kurz A. Physiology of thermoregulation. Best Pract Res 
Clin Anaesthesiol.2008;22(4):627-644.
    \152\ Mahoney CB, Odom J. Maintaining intraoperative 
normothermia: A meta-analysis of outcomes with costs. AANA Journal. 
1999;67(2): 155-164.
    \153\ 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 proposed 
to adopt the ASC-13: Normothermia Outcome measure, which is based on 
aggregate measure data collected by the ASC and submitted via a CMS 
online data submission tool (QualityNet), in the ASCQR Program for the 
CY 2020 payment determination and subsequent years. We expect the 
measure will 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.'' 
\154\ 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.\155\ 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.\156\
---------------------------------------------------------------------------

    \154\ 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.
    \155\ 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.
    \156\ 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,\157\ 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

[[Page 79799]]

perioperative normothermia can signify 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.
---------------------------------------------------------------------------

    \157\ 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 online data 
submission tool (that is, QualityNet).
    We proposed that the data collection period for the proposed ASC-13 
measure would be the calendar year 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 
proposed 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 final rule with comment 
period 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 invited 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.
    Comment: Many commenters supported adoption of the proposed ASC-13 
measure because impairment of thermoregulatory control due to 
anesthesia may result in perioperative hypothermia, which has been 
associated with numerous adverse outcomes, and commenters believe this 
measure would promote improvement in patient care outcomes. Some 
commenters supported adoption of the proposed ASC-13 measure because 
the commenters believe this measure will promote improvement in patient 
care over time, and incentivize ASCs to engage in more quality 
improvement activities through public reporting of measure performance 
data.
    Response: We thank commenters for their support.
    Comment: A number of commenters did not support adoption of the 
proposed ASC-13 measure because they believe there is a lack of 
evidence of a performance gap in this area for ASCs.
    Response: While we acknowledge there is currently a lack of 
evidence regarding a performance gap in normothermia outcomes, we 
believe the serious adverse outcomes associated with perioperative 
hypothermia, coupled with the frequency of procedures using anesthesia 
being performed in ASCs, warrant proactive monitoring of normothermia 
outcomes in the ASC setting. In addition, we note that some evidence 
suggests variability in normothermia maintenance in other clinical 
settings.\158\ We also believe the resulting publicly reported data on 
normothermia outcomes will help inform patient decision-making, and 
incentivize ASCs to engage in quality improvement efforts.
---------------------------------------------------------------------------

    \158\ 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.
---------------------------------------------------------------------------

    Comment: A few commenters did not support adoption of the proposed 
ASC-13 measure because the measure is chart-abstracted and because the 
measure is not NQF-endorsed.
    Response: In selecting measures for the ASCQR Program, we weigh the 
relevance and utility of measures against the potential burden to ASCs 
resulting from the measure's adoption. While we understand the 
commenters' concerns regarding the burden of chart-abstracting 
measures, we believe the benefits of including it in the ASCQR Program 
and publicly reporting normothermia outcome data for use in patient 
decision-making and incentivizing ASCs to engage in quality improvement 
efforts to reduce rates of perioperative hypothermia outweigh the 
burden associated with collecting aggregate data on patients treated at 
an ASC.
    In addition, as we discuss above, section 1833(t)(17)(C)(i) of the 
Act does not require that each measure we adopt for the ASCQR Program 
be endorsed by a national consensus building entity, or 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. While 
we strive to adopt NQF-endorsed measures when possible, we believe the 
requirement that measures reflect consensus among affected parties can 
be achieved in other ways, including through the measure development 
process, through broad acceptance and use of the measure, and through 
public comments. As noted in the CY 2017 OPPS/ASC proposed rule (81 FR 
45728), ASC-13 is maintained by

[[Page 79800]]

the ASC Quality Collaboration, an entity recognized within the 
community as an expert in measure development for the ASC setting. In 
addition, this measure is already publicly reported as part of the ASC 
Quality Collaboration's quarterly Quality Report. Furthermore, the MAP, 
which represents stakeholder groups, reviewed and conditionally 
supported the measure for use in the ASCQR Program. Therefore, we 
believe the measure reflects consensus among affected parties.
    Comment: One commenter asserted that, because the proposed ASC-13 
measure only tracks post-operative temperature and not perioperative 
temperature, it is an inappropriate or imprecise quality measure, and 
therefore, should not be included in the ASCQR Program measure set.
    Response: We disagree with the commenter's assertion that only 
tracking patient temperature immediately following anesthesia end time 
results in an imprecise or inappropriate quality measure. The field 
testing conducted for the ASC-13 measure found that, under its current 
specifications, the measure is able to distinguish levels of 
performance across facilities, thereby demonstrating its precision as a 
quality measure. We therefore believe the measure as currently 
specified is appropriate for use in the ASCQR Program, because we 
believe it will incentivize ASCs to engage in quality improvement 
efforts around patients' return to normothermia. One of the central 
goals of the ASCQR Program is to drive improvement in the quality of 
care provide in the ASC setting, and we, therefore, believe the 
measure's focus on return to normothermia within 15 minutes of arrival 
in the PACU is appropriate for assessing ASC performance on this 
measure. However, we will continue to assess the appropriateness and 
precision of this measure as currently specified as a driver of quality 
improvement.
    Comment: One commenter noted that a similar measure was previously 
used for inpatient surgical procedures and subsequently retired based 
on sustained improvement in normothermia following general anesthesia. 
The commenter recommended that the ASCQR Program take a similar 
approach by adopting the proposed ASC-13 measure and then retiring the 
measure once there is validation of sustained normothermia compliance.
    Response: We thank the commenter for its recommendation and note 
that the ASCQR Program has previously adopted policies regarding the 
retention and removal of quality measures (76 FR 74494 and 74504; 77 FR 
68494 through 68495; 78 FR 75122; 79 FR 66967 through 66969). One of 
these criteria is an assessment of whether a measure is ``topped out,'' 
or when measure performance is so high and unvarying that meaningful 
distinctions and improvements in performance can no longer be made (79 
FR 66968). As we noted in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70527), the benefits of removing a measure from the ASCQR 
Program will be assessed on a case-by-case basis. We will evaluate all 
measures adopted for the ASCQR Program against these criteria as a 
whole in determining whether to suspend or remove a previously adopted 
measure from the ASCQR Program measure set.
    Comment: One commenter urged CMS to ensure that the proposed ASC-13 
measure population exclude procedures where propofol is administered 
because propofol is not general anesthesia. The commenter further 
recommended that CMS exclude non-surgical procedures, such as 
endoscopy, from this measure.
    Response: Depending on the dose administered, propofol may in fact 
be used for moderate sedation, monitored anesthesia care, and the 
induction/maintenance of general anesthesia. The ASC-13 measure only 
includes procedures performed under general or neuraxial anesthesia of 
60 minutes or more in duration and, as a result, only procedures in 
which propofol is used as a general anesthetic for 60 minutes or more 
would be included in this measure. We refer readers to the measure 
methodology where this is discussed, http://www.ascquality.org/qualitymeasures.cfm, under ``ASC Quality Collaboration Measures 
Implementation Guide.'' While these instances may be rare, we believe 
it is appropriate to include procedures where propofol is used as a 
general anesthetic in this measure, because those procedures are 
subject to the same patient outcome concerns regarding maintenance of 
normothermia as procedures performed using other anesthetics. We also 
note that the majority of endoscopy procedures do not involve general 
anesthesia, and would, therefore, be excluded from the measure. 
However, nonsurgical procedures performed under general or neuraxial 
anesthesia of 60 minutes or more in duration would be included in the 
measure. Again, while these procedures may be rare, we believe it is 
important to capture patient outcome data for these procedures in order 
to incentivize quality improvement among ASCs in normothermia 
maintenance.
    Comment: One commenter noted that the 2015 Surgical Standing 
Committee convened by NQF approved a change in the definition of 
normothermia from 36 degrees Celsius/96.8 degrees Fahrenheit to 35.5 
degrees Celsius/95.9 degrees Fahrenheit, and that NQF endorsed this 
changed definition in September 2015. The commenter also expressed 
concern that adopting the Normothermia Outcome measure in the ASCQR 
Program using a less current definition of ``normothermia'' may result 
in misalignment in quality measurement across federal healthcare 
quality programs. The commenter therefore recommended CMS adopt the 
proposed Normothermia Outcome measure with one modification, to use the 
more current definition of ``normothermia.''
    Response: We thank the commenter for its recommendation. We believe 
the commenter is referring to the 2014 Surgery Project at NQF, which 
released its final report in December of 2015. This report is available 
at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81394. We interpret the 
commenter's reference to a ``change in the definition of normothermia'' 
to refer to a different, recently endorsed measure, NQF #2681: 
Perioperative Temperature Management, which uses a temperature 
threshold of 35.5 degrees Celsius/95.9 degrees Fahrenheit, as opposed 
to the 36 degrees Celsius/96.8 degree Fahrenheit threshold used in the 
ASC-13 measure. We believe using the higher temperature threshold for 
normothermia is still clinically appropriate. This higher temperature 
threshold has been used as the definition of normothermia in a number 
of journal articles and best practices reviews,\159\ and is maintained 
in the American Society of PeriAnesthesia Nurses' Clinical Guideline 
for the Prevention of Unplanned Perioperative Hypothermia.\160\ 
Furthermore, we believe maintaining a higher temperature threshold for 
normothermia under the ASC-13 measure will provide greater incentive 
for ASCs to engage in quality improvement in this area by encouraging 
facilities to engage in more proactive perioperative temperature 
maintenance in order to shorten patients' time for return to 
normothermia. In addition, the MAP agreed that this measure ``is highly 
impactful and meaningful to patients.''

[[Page 79801]]

Therefore, we believe finalizing the measure along with the measure's 
definition of normothermia as proposed is appropriate. However, we 
appreciate commenters' concerns that this measure may have an unclear 
performance gap and that this measure's lower bound for normothermia 
does not match the lower bound for normothermia in NQF #2681, a measure 
we recently finalized for inclusion in the quality category of the 
Merit-based Incentive Payment System. We will engage the measure 
steward in harmonization efforts. We will discuss our continued 
evaluation of this measure in a future year's rulemaking.
---------------------------------------------------------------------------

    \159\ Kurz, A. Thermal care in the perioperative period. Best 
Pract Res Clin Anesthesiol. 2008;22:39-62.
    \160\ Hoover VD et al. ASPAN's evidence-based clinical practice 
guideline for the promotion of perioperative normothermia: Second 
edition. J Perianesth Nurs. 2010 Dec; 25(6):346-365.
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing our proposal to adopt the ASC-13: Normothermia Outcome 
measure for the ASCQR Program for the CY 2020 payment determination and 
subsequent years as proposed. We will discuss our continued evaluation 
of this measure in a future year's rulemaking.
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.\161\ Each year, 
approximately 1.5 million patients undergo cataract surgery to improve 
their vision.\162\ While unplanned anterior vitrectomy rates are 
relatively low, complications from this procedure may result in poor 
visual outcomes and other complications, including retinal 
detachment.\163\ Cataract surgery is the most common surgery performed 
in ASCs; therefore, this measure is of interest to the ASC 
Program.\164\
---------------------------------------------------------------------------

    \161\ National Eye Institute. ``Cataracts.'' Cataracts. National 
Institutes of Health, n.d. Available at: https://www.nei.nih.gov/eyedata/cataract#1.
    \162\ ``Measure Application Partnership Hospital Workgroup'', 
National Quality Forum. Dec. 2014, Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \163\ 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.
    \164\ ``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 proposed 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.\165\
---------------------------------------------------------------------------

    \165\ 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 proposed was included on a publicly available 
document entitled ``List of Measures under Consideration for December 
1, 2014.'' \166\ 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.\167\ The MAP agreed 
that this measure is highly impactful and meaningful to patients.\168\ 
It stated that according to the National Eye Institute report in 2002, 
more than half of U.S. residents over 65 years have a cataract.\169\ 
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.\170\ Unplanned anterior vitrectomy is a 
recognized adverse intraoperative event during cataract surgery 
occurring in two to four percent of all cases,\171\ with some research 
showing that rates of unplanned anterior vitrectomy are higher among 
less experienced surgeons.\172\ 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.\173\ The MAP agreed that this is an outcome measure that fills 
the workgroup identified priority gap of procedure complications.\174\
---------------------------------------------------------------------------

    \166\ 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.
    \167\ 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.
    \168\ Ibid.
    \169\ Ibid.
    \170\ Ibid.
    \171\ 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.
    \172\ Tan JHY and Karawatowski. Phacoemulsification cataract 
surgery and unplanned anterior vitrectomy--is it bad news? Eye. 2002 
March;16:117-120.
    \173\ 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.
    \174\ Ibid.
---------------------------------------------------------------------------

    The proposed ASC-14 measure is not NQF-endorsed. However, this 
measure is maintained by the ASC Quality Collaboration,\175\ 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.
---------------------------------------------------------------------------

    \175\ ASC Quality Collaboration. ``ASC Quality Collaboration.'' 
Available at: http://www.ascquality.org/.

---------------------------------------------------------------------------

[[Page 79802]]

(3) Data Sources
    This measure is based on aggregate measure data collected via 
chart-abstraction by the ASC and submitted via a CMS online data 
submission tool (that is, QualityNet).
    We proposed that the data collection period for the proposed ASC-14 
measure would be the calendar year 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 
proposed 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 final rule with comment 
period 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 invited 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.
    Comment: Many commenters supported adoption of the proposed ASC-14 
measure because cataract surgery is frequently performed in the ASC 
setting, and adoption of this measure will promote improvement in 
patient care over time and incentivize ASCs to engage in more quality 
improvement activities through public reporting of measure performance 
data. Some commenters asserted this measure has significant potential 
to reduce the rate of unplanned vitrectomies by encouraging ASCs to 
arrange mentoring relationships between newer and more senior doctors 
practicing at the ASC in order to engage in knowledge-sharing and, in 
turn, improve performance. Commenters also noted there is little burden 
associated with reporting on the measure, because the patient is still 
in the ASC when the complication occurs and the patient's ASC record 
will include the relevant information that will be reported.
    Response: We thank the commenters for their support.
    Comment: Some commenters did not support adoption of the proposed 
ASC-14 measure because the commenters believe chart-abstracted measures 
are too burdensome for ASCs and the measure is not NQF-endorsed. One 
commenter recommended that CMS focus on higher priority measures that 
impact a greater number of ASC patients.
    Response: In selecting measures for the ASCQR Program, we weigh the 
relevance and utility of measures against the potential burden to ASCs 
resulting from the measure's adoption. 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. While we understand the commenters' concerns 
regarding the burden of chart-abstracting measures, we believe the 
benefits of including the measure in the ASCQR Program and publicly 
reporting unplanned anterior vitrectomy data for use in patient 
decision-making and incentivizing ASCs to engage in quality improvement 
efforts to reduce rates of unplanned anterior vitrectomy outweigh the 
burden associated with collecting aggregate data on patients treated at 
an ASC.
    In addition, as we discuss above, section 1833(t)(17)(C)(i) of the 
Act does not require that each measure we adopt for the ASCQR Program 
be endorsed by a national consensus building entity, or 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. While 
we strive to adopt NQF-endorsed measures when possible, we believe the 
requirement that measures reflect consensus among affected parties can 
be achieved in other ways, including through the measure development 
process, through broad acceptance and use of the measure, and through 
public comments. As noted in the CY 2017 OPPS/ASC proposed rule (81 FR 
45730), ASC-14 is maintained by the ASC Quality Collaboration, an 
entity recognized within the community as an expert in measure 
development for the ASC setting. In addition, this measure is already 
publicly reported as part of the ASC Quality Collaboration's quarterly 
Quality Report. Furthermore, the MAP, which represents stakeholder 
groups, reviewed and conditionally supported the measure for use in the 
ASCQR Program. We therefore believe the measure reflects consensus 
among affected parties.
    We further believe this measure addresses a high-priority concern 
affecting a large number of ASC patients. As noted previously, 
cataracts are a leading cause of blindness in the United States. As 
stated at in the proposed rule (81 FR 45729), each year, approximately 
1.5 million patients undergo cataract surgery to improve their vision, 
and cataract surgery is the most common surgery performed in ASCs. In 
addition, as stated in the proposed rule (81 FR 45729), 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. While rates of unplanned anterior vitrectomy 
are relatively low, we believe that the severity of the complications 
associated with this unplanned procedure, combined with the frequency 
of cataract surgery in the ASC setting, highlights the importance of 
tracking and preventing these outcomes for patients treated in the ASC 
setting.
    Comment: One commenter recommended CMS revise the CPT coding for 
this procedure to distinguish between planned and unplanned anterior 
vitrectomies rather than adopting a chart-abstracted measure on this 
issue.
    Response: We appreciate the commenter's recommendation to collect 
unplanned anterior vitrectomy data through a set of modified CPT codes, 
but believe collecting this measure data through chart abstraction will 
enable us to provide patients with this data more quickly and without 
undertaking the time-intensive and resource-intensive process of 
modifying and implementing modified CPT codes.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt the ASC-14: Unplanned Anterior 
Vitrectomy measure for the ASCQR

[[Page 79803]]

Program for the CY 2020 payment determination and subsequent years as 
proposed.
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.\176\ 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.
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    \176\ CMS National Quality Strategy 2016. Available at: https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
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(2) Overview of Measures
    The OAS CAHPS Survey was developed as part of HHS' Transparency 
Initiative to measure patient experiences with ASC care.\177\ 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 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 Home Health QRP (80 FR 68709 through 
68710), and the Hospice QRP (80 FR 47141 through 47207).
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    \177\ 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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    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 proposed 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 made 
similar proposals in the Hospital OQR Program in section XIII.B.5.c. of 
the 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 proposed were included on the CY 2014 MUC 
list,\178\ and reviewed by the MAP.\179\ 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.\180\ The MAP stated that these are high impact measures that 
will improve both quality and efficiency of care and be meaningful to 
consumers.\181\ 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.\182\ 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.\183\ 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.\184\
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    \178\ 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.
    \179\ 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.
    \180\ Ibid.
    \181\ Ibid.
    \182\ Ibid.
    \183\ Ibid.
    \184\ Ibid.
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    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 \185\ and its CAHPS[supreg] Consortium 
\186\ in developing a patient experience of care survey, such as: 
Reporting on actual patient experiences; standardization across the

[[Page 79804]]

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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    \185\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys.'' Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \186\ 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 in the Federal Register 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.\187\
---------------------------------------------------------------------------

    \187\ Outpatient and Ambulatory Surgery CAHPS Survey. ``National 
Implementation'' Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    In addition, while the proposed OAS CAHPS Survey-based measures are 
not currently NQF-endorsed, they will be submitted to the NQF for 
endorsement under an applicable call for measures in the near future.
    In section XIX. of the proposed rule (81 FR 45755 through 45757), 
for the Hospital VBP Program, we proposed to remove the three Pain 
Management dimension questions of the HCAHPS Survey from the total 
Hospital VBP Program performance score. 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 final rule with comment period.
    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 and are part of a composite measure focusing on the 
preparation for discharge and recovery. 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?
    [square] A1: Yes, definitely.
    [square] A2: Yes, somewhat.
    [square] A3: No.
    Q: At any time after leaving the facility, did you have pain as a 
result of your procedure? \188\
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    \188\ 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.
---------------------------------------------------------------------------

    [square] A1: Yes.
    [square] 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. For these reasons, we proposed 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 welcomed 
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 final rule with comment period 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 proposed 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 (Questions 1 
through 24). The list of approved vendors is available at: https://oascahps.org.
    We also proposed 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 final rule 
with comment period 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, we refer readers to: http://www.hhs.gov/civil-rights.
    We proposed 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 further proposed 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

[[Page 79805]]

Manual (https://oascahps.org/Survey-Materials). We also proposed 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 
proposed 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 final rule with 
comment period 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 final rule with 
comment period, below, we also proposed 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 proposed 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 final rule with comment period, 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 proposed to adopt three composite OAS CAHPS 
Survey-based measures (ASC-15a, ASC-15b, and ASC-15c) and two global 
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 final rule with 
comment period. Therefore, ASCs' scores on the OAS CAHPS Survey-based 
measures, discussed below, will not affect whether they are subject to 
the 2.0 percentage point payment reduction for ASCs that fail to meet 
the reporting requirements of the ASCQR Program. These measure 
calculations will be used for public reporting purposes only.
(A) Composite Survey-Based Measures
    ASC rates on each composite OAS CAHPS Survey-based measure would be 
calculated by determining the proportion of ``top-box'' responses (that 
is, ``Yes'' or ``Yes Definitely'') for each question within the 
composite and averaging these proportions over all questions in the 
composite measure. For example, to assess ASC performance on the 
composite measure ASC-15a: OAS CAHPS--About Facilities and Staff, we 
would calculate the proportion of top-box responses for each of the 
measure's six questions, add those proportions together, and divide by 
the number of questions in the composite measure (that is, six).
    As a specific example, we take an ASC that had 50 surveys completed 
and received the following proportions of ``top-box'' responses through 
sample calculations:

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

    Based on the above responses, we would calculate that facility's 
measure score for public reporting as follows:
[GRAPHIC] [TIFF OMITTED] TR14NO16.001

    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 final rule with comment period. 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 proposed to adopt two global OAS CAHPS Survey measures. 
ASC-15d asks the patient to rate the care provided by the ASC on a 
scale of 0 to 10, and ASC-15e asks about the patient's willingness to 
recommend the ASC 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 final rule with comment 
period, 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;

[[Page 79806]]

     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 Protocols 
and Guidelines Manual (https://oascahps.org/Survey-Materials) (referred 
to in the proposed rule as the ``OAS CAHPS Survey Manual administration 
manual''); 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 proposed 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 proposed 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 allows ASCs 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 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 
applicable payment determination year (42 CFR 416.305(c)). For example, 
an ASC as identified by National Provider Identifier (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, 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 final rule with comment period, 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 
did not propose a format or timing for public reporting of OAS CAHPS 
Survey data in the proposed rule.
    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 invited 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.
    Comment: Many commenters supported adoption of the proposed ASC-
15a-e survey-based measures based on an understanding that these 
measures capture patient experience of care data, apply to ASCs 
broadly, and are also proposed for adoption in the ASCQR Program. Some 
commenters noted adopting these measures will establish a baseline for 
standardized collection of patient experience of care data, and allow 
for meaningful comparisons across ASCs on patient experience of care. 
Commenters also noted that the ASC-15a-e survey-based measures are 
important quality indicators that can be used in combination with other 
measures to assist patients in deciding where to seek care. One 
commenter expressed specific support for the inclusion of risk-
adjustment factors in the OAS CAHPS Survey-based measures.
    Response: We thank the commenters for their support.
    Comment: One commenter requested additional information regarding 
the OAS CAHPS Survey development process.
    Response: As discussed in the CY 2017 OPPS/ASC proposed rule (for 
example, 81 FR 45730 through 45732), background on the OAS CAHPS 
Survey, including the survey development process, is publicly available 
on the

[[Page 79807]]

OAS CAHPS Web site: http://oascahps.org/. The OAS CAHPS Survey 
development process followed the principles and guidelines outlined by 
the AHRQ \189\ and its CAHPS Consortium \190\ 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. This process included reviewing existing 
literature; reviewing surveys submitted under a public call for 
measures; 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; conducting a field test; and conducting a 
test of the various data collection mode effects on survey responses.
---------------------------------------------------------------------------

    \189\ Agency for Healthcare Research and Quality. ``Principles 
Underlying CAHPS Surveys.'' Available at: https://cahps.ahrq.gov/about-cahps/principles/index.html.
    \190\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://cahps.ahrq.gov/about-cahps/cahps-program/index.html.
---------------------------------------------------------------------------

    We published a request for information on January 25, 2013 (78 FR 
5459) 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. In 2013 
and 2014, we conducted six focus groups with patients who had recent 
outpatient surgeries or procedures in a hospital outpatient department 
or ASC. Analysis of the focus group feedback \191\ led to development 
of the final domain structure for the survey, and identified the 
following topic areas for assessment under a patient experience of care 
survey for these procedures: (1) Preparations for surgery; (2) check-in 
process; (3) facility environment; (4) staff communication; (5) 
discharge; (6) recovery and outcomes; and (7) overall experience.
---------------------------------------------------------------------------

    \191\ Hospital Outpatient Surgery Department/Ambulatory Surgery 
Center Experience of Care Survey Focus Group Report (Submitted to 
CMS June 2013).
---------------------------------------------------------------------------

    We convened and consulted with two TEPs throughout the development 
and testing of the OAS CAHPS Survey.\192\ In 2013, we established a 10-
member TEP consisting of experts on outpatient surgery, including 
clinicians, providers, patient advocates, and representatives from 
other stakeholder organizations to provide preliminary guidance in the 
establishment of relevant topics and to comment on the draft versions 
for cognitive testing and the field test. Information about the TEP was 
documented in materials supporting an information collection request 
for the voluntary national implementation of the OAS CAHPS Survey 
published in the Federal Register (80 FR 2430 through 2431).\193\ We 
established a second TEP in 2015 to solicit input and guidance related 
to national implementation protocols and the survey mode experiment.
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    \192\ Information about feedback from the first TEP was 
documented in the Federal Register at 80 FR 2430 (See Section A.1 of 
the Supporting Statement).
    \193\ Available at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10500.html.
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    We conducted three rounds of cognitive testing among patients who 
received outpatient surgery at an ASC or hospital outpatient department 
before finalizing the field test version of the OAS CAHPS Survey. With 
each round of testing, we modified the survey to reflect the comments 
from the previous round.
    The survey was tested in both the outpatient and ASC setting in 
2014 (field testing) and 2015 (mode testing) and found to be reliable. 
We refer readers to 80 FR 2430 and the OAS CAHPS Information Collection 
Request Paperwork Reduction Act Package \194\ for more information 
about field and mode testing for these measures. The field test 
collected data through a mixed-mode design, which consisted of a mail 
survey with telephone follow-up of non-respondents. We recruited a 
total of 36 facilities for the field test: 18 Hospital outpatient 
departments and 18 ASCs. Approximately 116 patient records were 
selected from each of the 36 facilities, for a total sample of 4,179 
patients. The field test data collection yielded a 46 percent adjusted 
response rate, or 1,863 completed surveys (31 percent computer-assisted 
telephone interviewing, 68 percent mail, and 0.8 percent break-offs). 
Once partial surveys were removed from the analysis set, 1,849 total 
surveys were used in the evaluation. The field test data were evaluated 
and analyzed to identify item-level refinements necessary for the 
survey instrument. The field test psychometric analysis included 
evaluations of individual items and composite item sets. Individual 
items were analyzed to report item-level missing data and item response 
distributions (including ceiling and floor effects), which included 
response variance. Composite item sets were analyzed using factor 
analysis and item response theory (IRT) analysis to assess 
dimensionality, discriminability, dimensional coverage, and subgroup 
response differences. Internal consistency statistics (reliability) and 
correlational checks for composite validity were performed to evaluate 
the final composite item sets. The item-level recommendations for the 
field test were based on the findings from the factor analyses, the 
internal consistency checks, and the IRT analysis. As a result, 10 
questions were recommended for deletion. Reliability of the remaining 
measures was assessed using the Cronbach's alpha coefficient, with an 
estimate range from zero to one. An estimate of zero indicated no 
measurement consistency and one indicates perfect consistency. The 
cutoff criterion for the examination was 0.70, which indicated adequate 
consistency.\195\ The composites analytically derived maintained 
adequate internal consistency even when reduced to Top-Box scoring and 
across the facility types and modes of administration.
---------------------------------------------------------------------------

    \194\ OMB Control Number 0938-1240, ``Consumer Assessment of 
Healthcare providers and Systems Outpatient and Ambulatory Surgery 
(OAS CAHPS) Survey (CMS-10500).'' Available at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201510-0938-003.
    \195\ Aron, A. and Aron, E.N. Statistics for Psychology. (1999) 
2nd ed. New Jersey: Prentice Hall.
---------------------------------------------------------------------------

    In 2015, we conducted a mode experiment for the OAS CAHPS Survey. 
We refer readers to https://oascahps.org/General-Information/Mode-Experiment for more details. The facility sample included hospital 
outpatient departments and ASCs that reflect industry characteristics 
and was sorted to achieve implicit stratification by four facility 
characteristics: Single specialty or multispecialty; facility size 
(large, medium, or small), facility location (urban or rural), and 
facility ownership (public, private, or other). A total of 70 
facilities (38 hospital outpatient departments and 32 ASCs) 
participated in the mode experiment by providing a monthly patient 
information file for patients served during one or more of the three 
sample months (July, August, and September 2015). The patient sample 
consisted of 13,576 patients who had an eligible surgery or procedure 
during a sample month and who met other survey eligibility criteria.

[[Page 79808]]

Data collection for each sample month began approximately 21 days after 
the sample month closed and ended within a 6-week period after the 
survey was initiated. The overall response rate (for all three modes) 
was 39 percent. The response rate for the mail-only mode was 37 
percent, the telephone-only response rate was 34 percent, and the 
mixed-mode response rate was 50 percent.
    We began voluntary national implementation of the OAS CAHPS Survey 
in January 2016 and refer readers to https://oascahps.org/General-Information/National-Implementation for more details. Preliminary data 
from the voluntary reporting period (Quarter 1 data), which included 
24,201 sampled patients from 74 facilities, indicate a response rate of 
33 percent for both telephone and mail modes. Voluntary national 
implementation is ongoing.
    Comment: Some commenters did not support adoption of the proposed 
ASC-15a-e survey-based measures because these measures have not been 
endorsed by a consensus-based measurement evaluation body. The 
commenters asserted that moving forward with the non-endorsed measures 
could result in publication of unreliable measure scores, and urged CMS 
to delay implementation of these measures until NQF endorsement is 
received. One commenter recommended CMS implement the OAS CAHPS Survey 
in the Hospital OQR Program first to demonstrate its reliability before 
requiring ASCs to implement the survey.
    Response: We note that section 1833(t)(17)(C)(i) of the Act does 
not require that each measure we adopt for the ASCQR Program be 
endorsed by a national consensus building entity, or 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. While 
we strive to adopt NQF-endorsed measures when possible, we believe the 
requirement that measures reflect consensus among affected parties can 
be achieved in other ways, including through the measure development 
process, through broad acceptance and use of the measure, and through 
public comments. As discussed in the measure description above, the MAP 
has reviewed the measure.
    In addition, we received public input from several modes. We 
published a request for information in the Federal Register 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. As stated in more detail above, 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. Given these consensus-building efforts, we 
believe the measure reflects consensus among affected parties for a 
standardized instrument assessing patients' experience of care in the 
ASC setting. As such, we do not think it is necessary to delay 
implementation of the OAS CAHPS Survey until it achieves NQF 
endorsement. We also believe it is unnecessary to delay implementation 
of the OAS CAHPS Survey in the ASC setting until its reliability is 
demonstrated in the hospital outpatient department setting, because the 
survey was tested in both settings in 2014 (field testing) and 2015 
(mode testing) and found to be reliable, as discussed above and again 
below. We also note, however, that we intend to submit the OAS CAHPS 
Survey-based measures to NQF for endorsement under an applicable call 
for measures in the near future.
    We also disagree with the commenters' assertion that moving forward 
with a non-endorsed measure could result in publication of unreliable 
measure scores. The survey was tested in both the outpatient and ASC 
setting in 2014 (field testing) and 2015 (mode testing) and found to be 
reliable. We refer readers to https://oascahps.org/ for more 
information about field and mode testing for these measures. The OAS 
CAHPS Survey development process followed the principles and guidelines 
outlined by AHRQ and its CAHPS Consortium.\196\ This process included 
reviewing existing literature; reviewing surveys submitted under a 
public call for measures; 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; conducting a field test; and 
conducting a test of the various data collection mode effects on survey 
responses.
---------------------------------------------------------------------------

    \196\ Agency for Healthcare Research and Quality. ``The CAHPS 
Program.'' Available at: https://ahrq.gov/cahps/index.html.
---------------------------------------------------------------------------

    In 2014, the field test data were evaluated and analyzed to 
identify item-level refinements necessary for the survey instrument. 
The field test psychometric analysis included evaluations of individual 
items and composite item sets. Individual items were analyzed to report 
item-level missing data and item response distributions (including 
ceiling and floor effects), which included response variance. Composite 
item sets were analyzed using factor analysis and item response theory 
(IRT) analysis to assess dimensionality, discriminability, dimensional 
coverage, and subgroup response differences. Internal consistency 
statistics (reliability) and correlational checks for composite 
validity were performed to evaluate the final composite item sets. The 
item-level recommendations for the field test were based on the 
findings from the factor analyses, the internal consistency checks, and 
the IRT analysis. As a result, 10 questions were recommended for 
deletion. Reliability of the remaining measures was assessed using the 
Cronbach's alpha coefficient, with an estimate range from zero to one. 
An estimate of zero indicated no measurement consistency and one 
indicates perfect consistency. The cutoff criterion for the examination 
was 0.70, which indicated adequate consistency.\197\ The composites 
analytically derived maintained adequate internal consistency even when 
reduced to Top-Box scoring and across the facility types and modes of 
administration.
---------------------------------------------------------------------------

    \197\ Aron, A. and Aron, E.N. Statistics for Psychology. (1999) 
2nd ed. New Jersey: Prentice Hall.
---------------------------------------------------------------------------

    Based on the rigorous testing that was undertaken during the 
development process, we believe the OAS CAHPS Survey, and measure 
scores derived therefrom, are both reliable and valid. Therefore, we 
believe it is unnecessary to delay implementation of the OAS CAHPS 
Survey in the ASC setting.
    Comment: Many commenters asserted that requiring ASCs to meet the 
proposed target minimum number of surveys (that is, 300 completed 
surveys) would be difficult for participating ASCs because they are 
small businesses and implementing a high target minimum will require 
ASCs to ramp up quickly to administer the OAS CAHPS Survey. Other 
commenters stated that past experience with facility-specific surveys 
indicates ASCs will experience

[[Page 79809]]

low completion rates on the OAS CAHPS Survey. The commenters therefore 
recommended CMS consider lowering this target minimum or, in the 
alternative, consider implementing scaled target minimums based on 
facility size. A number of commenters recommended that the target 
minimum instead be set at 100 completed surveys, in alignment with the 
requirements from the first year of the HCAHPS Survey's use in the 
inpatient setting. One commenter recommended CMS assess ASCs' 
performance based on the number of surveys sent to patients. A number 
of commenters recommended that CMS increase the threshold for an 
exception to administering the OAS CAHPS Survey based on a small 
patient population from 60 survey-eligible patients to 100 survey 
eligible-patients in the year preceding the performance period.
    Other commenters recommended that CMS remove the proposed 60 
survey-eligible patient threshold from the OAS CAHPS Survey proposals. 
The commenters noted an ASC is exempt from the requirements of the 
ASCQR Program if it submits fewer than 240 Medicare primary and 
secondary claims per year, and requested CMS clarify the circumstances 
under which this proposal would exclude an ASC eligible to participate 
in the ASCQR Program from the requirement to administer the OAS CAHPS 
Survey.
    Two commenters asserted that comparing an ASC with a small patient 
population to a sample of a much larger ASC's population may weaken the 
statistical reliability of the survey results and comparability of 
facilities' scores.
    Response: We are committed to ensuring high reliability in publicly 
reported OAS CAHPS Survey results. To make abundantly clear our 
policies discussed in the proposed rule, ASCs will fall into one of 
three categories based on their past and projected total patient 
volume. In order to determine its projected total patient volume, we 
recommend ASCs review their accounts receivable and payable records. 
From these accounting documents, a facility can determine its past 
patient volume and project future patient volume. Acceptable methods of 
sampling survey-eligible patients can be found in Chapter IV-Sampling 
Procedures of the Protocols and Guidelines Manual at https://oascahps.org/Survey-Materials.
    The first category includes ASCs that estimate receiving more than 
300 completed surveys during the 12-month reporting period based on its 
past and projected total patient volume. We note that in the proposed 
rule (81 FR 45732), we stated that ``ASCs will be required to survey a 
random sample of eligible patients on a monthly basis.'' We also note 
that elsewhere in the proposed rule (81 FR 45733), we also stated that, 
``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.'' We recognize that the language 
is confusing and are clarifying here that ASCs that anticipate 
receiving more than 300 surveys have a choice. They are required to 
either: (1) randomly sample their eligible patient population, or (2) 
survey their entire OAS CAHPS eligible patient population. In other 
words, random sampling is optional.
    We calculated the number 300 by using the reliability criterion for 
the OAS CAHPS Survey measures, which is 0.8 or higher.\198\ This which 
requires facilities with large patient populations to randomly sample a 
sufficient number of patients to yield at least 300 completed surveys 
over each 12-month reporting period. This criterion allows at least 80 
percent power to detect a 10 percent difference for binary survey 
outcome at the 0.05 significance level.\199\ A reliability criterion of 
0.8 is the normal standard for random sample surveys.\200\ The 300 
completed surveys translates into approximately 25 completed surveys 
per month (25 completes x 12 months = 300 completes per year). At this 
time, there are no plans to adjust the threshold of the target minimum 
of 300 completed surveys for the OAS CAHPS Survey for larger facilities 
that have the option to undertake random sampling. To do so could 
decrease the reliability of the OAS CAHPS survey results. Survey data 
will be collected on a monthly basis and uploaded on a quarterly basis. 
Survey vendors will report the ``total patient volume,'' ``total 
eligible patients,'' ``number of patients sampled,'' and the ``number 
of completed surveys'' for each reporting period.\201\ These reported 
patient data will be used to ensure sampling requirements are followed.
---------------------------------------------------------------------------

    \198\ Cohen, Jacob. 1977. Statistical Power Analysis for the 
Behavioral Sciences. New York: Academic Press.
    \199\ Ibid.
    \200\ Ibid.
    \201\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Second, if an ASC does not anticipate receiving 300 completed 
surveys during the 12-month reporting period based on its past and 
projected total patient volume, it must survey all eligible patients 
served during the reporting period. In other words, these smaller 
facilities must undertake a census of all eligible patients served; 
there is no option to randomly sample. Smaller facilities' OAS CAHPS 
survey results are not affected by the reliability issues underlying 
the target minimum policy because conducting a census--surveying all 
eligible patients in a population, as opposed to sampling and 
administering the survey to a portion of that eligible patient 
population--measures the true value of the patient population by 
including all eligible patients at the facility in the survey 
population. However, we will continue to review the data from the 
voluntary implementation to identify and address any issues related to 
the reliability and comparability of OAS CAHPS Survey-based measure 
rates across facilities. Thus, the OAS CAHPS results for the larger 
facilities and the smaller facilities both achieve the statistical 
precision of the reliability criterion. For example, if two different 
facilities with large patient volumes in a particular year both 
randomly sample their eligible patients and receive 300 completed 
surveys, they would both have met the reliability criterion during that 
year. If in a particular year one facility estimates it will receive 
more than 300 completed surveys in that year and samples and obtains 
300 completed surveys while, during that same year, a different 
facility does not anticipate receiving 300 completed surveys and 
undertakes a census of its entire survey-eligible patients, both 
facilities would achieve the statistical precision of the reliability 
criterion for that year. As a third example, for a facility that 
obtained 300 completed surveys from their 1500 total eligible patients 
served in one year, but experienced a change in patient volume during 
the next year and surveyed their entire 200 total eligible patients 
served the next year, the facility would have met the reliability 
criterion during both years.
    Third, if in the prior year an ASC serves less than 60 survey 
eligible patients, the facility can request an exemption from the OAS 
CAHPS Survey administration requirement because these few surveys would 
not provide reliable data and the burden associated with administering 
the survey as well as the resulting public reporting of OAS CAHPS 
Survey results would be disproportionately burdensome. At this time, 
there are no plans to adjust the threshold for the exemption. This 
request and related deadlines will be available on the OAS CAHPS Survey 
Web site (https://oascahps.org) on or before May 15 of the

[[Page 79810]]

data collection calendar year as discussed in the proposed rule (81 FR 
45733).
    However, we agree with the commenters that the proposed 60 survey-
eligible patient threshold is unlikely to exclude ASCs that would 
otherwise be eligible for the ASCQR Program from the OAS CAHPS Survey 
administration requirements. As noted by commenters, ASCs with fewer 
than 240 Medicare claims (Medicare primary and secondary payer) per 
year during an 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 applicable payment determination year 
(42 CFR 416.305(c)). Therefore, it is unlikely that an ASC would 
qualify for an exemption from the OAS CAHPS Survey without also being 
exempted from the ASCQR Program. However, this would also likely be the 
case if we adopted a 100 survey-eligible patient threshold. We 
currently lack data regarding the interaction between the ASCQR 
Program's programmatic threshold and the OAS CAHPS Survey's survey-
eligible patient threshold. Because it may be possible for an ASC to 
treat enough patients to be eligible for the ASCQR Program but not 
treat 60 survey-eligible patients, we believe it is appropriate to 
maintain the OAS CAHPS Survey administration threshold at this time. To 
be clear, an ASC that would not need to report data for any measures in 
the ASCQR Program if it has less than 240 Medicare claims (Medicare 
primary and secondary payer) in the year prior to the data collection 
year for the applicable payment determination, would also not be 
required to submit a participation exemption request form or administer 
the OAS CAHPS Survey for the same time period.
    The facility-level data for both large and small facilities will be 
adjusted to account for patient characteristics that impact response 
tendencies (that is, patient-mix) and ensure fair comparisons across 
all facilities. As discussed in the CY 2017 OPPS/ASC proposed rule (81 
FR 45720), 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. We refer readers to the Protocols and 
Guidelines Manual, available at: https://oascahps.org/Survey-Materials 
for information regarding the patient-mix adjustment methodology. 
However, we do not adjust for facility-level characteristics that are 
under control of the facility, for example, specialty or geographic 
location. During the voluntary implementation of the survey, we will 
continue to review the data collected to identify and address any 
issues related to the reliability and comparability of measure rates 
across facilities as appropriate. In addition, we believe the proposed 
60 survey-eligible patient exemption policy appropriately balances the 
benefit of ensuring that patient experience of care data is collected 
and publicly reported for use by patients in making decisions about 
their health care against the burden of requiring facilities to 
administer the OAS CAHPS Survey. For this reason, we do not believe it 
would be appropriate to increase the exemption threshold at this time.
    Comment: A number of commenters did not support adoption of the 
proposed OAS CAHPS Survey-based measures due to the administrative and 
financial burdens associated with implementing the OAS CAHPS Survey. 
The commenters asserted that ASCs, as small businesses, cannot afford 
the staff needed to gather the required measure data, and that 
diverting available resources to address these reporting requirements 
may result in diminishing quality of care for ASCs' patients or cause 
ASCs to withdraw from the ASCQR Program. One commenter noted that ASCs 
are already paid at lower rates than hospital outpatient departments 
for the same procedures and this requirement would further reduce ASCs' 
resources available for quality improvement activities. Commenters 
asserted that most ASCs will treat more than 60 but fewer than 300 
survey-eligible patients in a given year, and as a result, smaller ASCs 
will incur significant costs to administer the survey and receive far 
fewer completed surveys than the target minimum.
    Response: In selecting measures for the ASCQR Program, we weigh the 
relevance and utility of measures against the potential burden to ASCs 
resulting from the measure's adoption. We refer readers to the CY 2013 
OPPS/ASC final rule with comment period for a discussion of our 
considerations in the selection of ASCQR Program quality measures (77 
FR 68493 through 68494). While we understand the commenters' concerns 
regarding the administrative and financial burdens associated with 
implementing the OAS CAHPS Survey and OAS CAHPS Survey-based measures 
in the ASCQR Program, we believe the benefits of capturing patient 
experience of care data in the ASC setting outweigh the administrative 
burden associated with administering the survey. We are dedicated to 
improving the quality of care provided to patients, and believe 
patients are a vital source of information in assessing the quality of 
care provided at an ASC.
    Furthermore, collection of the patient's perspectives of care data 
is similar for other CAHPS surveys, such as the Home Health Care CAHPS 
(HHCAHPS) Survey,\202\ In-Center Hemodialysis CAHPS (ICH CAHPS),\203\ 
and Hospice CAHPS.\204\ ASCs would follow the same model where 
providers contract with approved survey vendors for the data collection 
and implementation of the survey. We post the list of the approved OAS 
CAHPS vendors on https://oascahps.org, and we encourage ASCs to contact 
vendors for cost and service information pertaining to OAS CAHPS as 
there may be differences among vendors. In addition, as discussed in 
the proposed rule (81 FR 45737), 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 the Protocols and 
Guidelines Manual for the OAS CAHPS Survey (https://oascahps.org/Survey-Materials) for materials for each mode of survey administration. 
While ASCs/vendors 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, ASCs/vendors may 
conduct the OAS CAHPS survey in one or more of the survey modes of 
telephone only, mail only, or mail with telephone follow-up. We note 
that generally, the mail only mode is the most economical choice.
---------------------------------------------------------------------------

    \202\ Home Health Care CAHPS Survey: ``Protocol and Guidelines 
Manual.'' Available for download at: https://homehealthcahps.org/Portals/0/PandGManual.pdf.
    \203\ In-Center Hemodialysis CAHPS Survey: ``Protocol and 
Guidelines Manual.'' Available for download at: https://ichcahps.org/Portals/0/ICH_SurveyAdminManual.pdf.
    \204\ Hospice CAHPS Survey: ``Quality Assurance Guidelines.'' 
Available for download at: http://www.hospicecahpssurvey.org/en/quality-assurance-guidelines/.
---------------------------------------------------------------------------

    Comment: Some commenters noted that many ASCs already have a 
different survey in place to assess patient satisfaction and quality of 
care, and stated their belief that adding another survey requiring the 
ASC to contract with a third party vendor would not improve the quality 
control measures already in place at the ASC. One commenter requested 
clarification as to whether ASCs may continue to administer their own 
facility-specific patient experience of care surveys using the same 
tools and administration

[[Page 79811]]

methods they use now if the ASC-15a-e survey-based measures are 
finalized.
    Response: 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.\205\
---------------------------------------------------------------------------

    \205\ CMS National Quality Strategy 2016. Available at: https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
---------------------------------------------------------------------------

    Through inclusion in the ASCQR Program and public reporting of 
survey results, both ASCs and patients will be able to learn. ASCs can 
assess their own quality and see how their quality compares to other 
ASCs, and patients can compare measures and make informed decisions 
about their healthcare. We believe this provides additional incentives 
for ASCs to engage in quality improvement activities.
    While an ASC may continue to administer its own facility-specific 
patient experience of care survey, that survey administration would not 
satisfy the requirements of the ASC-15a-e survey-based measures. In 
order to meet the survey administration requirements for these 
measures, the ASC must administer the OAS CAHPS Survey in accordance 
with the requirements listed in the OAS CAHPS Survey Protocols and 
Guidelines Manual.\206\
---------------------------------------------------------------------------

    \206\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    We encourage ASCs to consider adding specific questions of interest 
to the OAS CAHPS Survey instead, rather than administering a second, 
standalone, survey to patients. As noted in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45732), ASCs may elect to add up to 15 
supplemental questions to the OAS CAHPS Survey. These could be 
questions ASCs develop specifically for use alongside the OAS CAHPS 
Survey, or questions from an existing survey. All supplemental 
questions must be placed after the core OAS CAHPS Survey questions 
(Questions 1 through 24).
    Comment: Another commenter suggested that CMS delay public 
reporting of ASC measure rates for at least one year to allow ASCs to 
become familiar with the measures and survey administration.
    Response: As stated in the CY 2017 OPPS/ASC proposed rule (81 FR 
45728), this measure was proposed for the CY 2020 payment determination 
and subsequent years. Therefore, ASCs would not be required to submit 
OAS CAHPS Survey results until CY 2018. This gives ASCs an additional 
year to become familiar with both the OAS CAHPS Survey and its 
administration requirements, as well as contract with a third-party 
vendor to administer the survey. We refer ASCs to the list of CMS-
approved survey vendors available on the OAS CAHPS Web site (https://oascahps.org/General-Information/Approved-Survey-Vendors) and encourage 
ASCs to compare prices across vendors, as they may vary. We believe 
this additional year is sufficient time for ASCs to become familiar 
with the measures and survey administration before it is a requirement 
of the ASCQR Program and is publicly reported. Furthermore, we 
encourage ASCs to participate in the voluntary national implementation 
of the OAS CAHPS Survey to gain experience. More information can be 
found at: https://oascahps.org.
    Moreover, as stated in the proposed rule (81 FR 45734), 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 did not 
propose a format or timing for public reporting of OAS CAHPS Survey 
data in the proposed rule.
    Comment: One commenter recommended that CMS instead provide ASCs 
with a sample survey document to use in their practices, which ASCs 
could enter into a CMS database for review. The commenter believed such 
an alternative would provide CMS with patient experience of care data 
without imposing undue burdens on ASCs, and give ASCs greater control 
over the data submission process.
    Response: At present, there is no standardized survey available to 
collect information on the patient's overall experience for surgeries 
or procedures performed within an ASC. Implementing the OAS CAHPS 
Survey in the ASCQR Program will enable patients to compare patient 
experience of care data across multiple ASCs as part of their 
healthcare decision-making. In addition, we believe implementing the 
OAS CAHPS Survey in the ASCQR Program will incentivize ASCs to factor 
patient experience of care into their quality improvement efforts more 
proactively. Implementing a shorter ``sample survey'' would not enable 
the same apples-to-apples comparison as a fully tested survey, and we 
believe allowing ASCs to administer the survey by any means chosen 
rather than according to the OAS CAHPS Protocol and Guidelines Manual 
\207\ could affect the reliability of a facility's scores. As currently 
specified, the OAS CAHPS Survey requires that the survey be 
administered by an approved survey vendor. This is to ensure that 
patients respond to the survey in a way that reflects their actual 
experiences with ASC care, and is not influenced by the ASC. Removing 
vendors, neutral third parties, could raise issues of objectivity and 
bias.
---------------------------------------------------------------------------

    \207\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter did not support adoption of the proposed 
ASC-15a-e survey-based measures because the commenter believes the OAS 
CAHPS Survey assesses only patient satisfaction with their care, not 
the quality of care provided, and is therefore inappropriate for use in 
the ASCQR Program.
    Response: We disagree with the commenter's assertion that the OAS 
CAHPS Survey does not assess the quality of care provided at a 
facility. Studies show a relationship between the clinical quality of 
care provided at a facility and patients' experience of 
care.208 209 The OAS CAHPS Survey is specifically designed 
to measure patient experience of care in the hospital outpatient and 
ambulatory surgical center settings, and we believe patient experience 
of care is an important indicator of the quality of care provided at a 
facility. As noted above, patients are the best source for certain 
information about the quality of care.
---------------------------------------------------------------------------

    \208\ Isaac, T., Zaslavsky, A.M., Cleary, P.D., and Landon, B.E. 
The Relationship Between Patients' Perception of Care and Measures 
of Hospital Quality and Safety. Health Services Research. 
2010;45:1024-1040.
    \209\ Anhang, P. et al. Examining the Role of Patient Experience 
Surveys in Measuring Health Care Quality. Med Care Res Rev. 
2014;71(5):552-554.
---------------------------------------------------------------------------

    Comment: One commenter requested additional information regarding 
the definition of ``completed surveys'' for the OAS CAHPS Survey.
    Response: We refer readers to Exhibit 9.1 ``Steps for Determining 
Whether a

[[Page 79812]]

Questionnaire Meets Completeness Criteria'' on in the Protocol and 
Guidelines manual, available at: https://oascahps.org/Survey-Materials.
[GRAPHIC] [TIFF OMITTED] TR14NO16.002

    A survey administered under the OAS CAHPS Survey Protocols and 
Guidelines is considered to be ``complete'' if the patient answered at 
least half of the questions applicable to all patients.\210\ There are 
a total of 22 questions that are applicable to all patients--Questions 
1 through 10 and Questions 13 through 24. A survey is considered 
complete when at least 11 of these questions are answered by the 
patient.
---------------------------------------------------------------------------

    \210\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter expressed concerns about using the survey 
results in payment determinations, particularly in instances where a 
facility has a low response rate. A few commenters stated that patient 
response is out of the control of the facility, and asserted that 
facilities should not be penalized for patients' decision not to 
complete the survey.
    Response: We agree with commenters that patient response is largely 
out of the control of the facility. However, we clarify we did not 
propose to penalize ASCs for patients' decision not to complete the 
survey. Payment implications under the ASCQR Program are tied to the 
successful and timely reporting of required quality measure data. An 
ASC will not receive a payment reduction based on performance under the 
ASC-15a-e measures if the ASC administers the survey according to the 
OAS CAHPS Survey Protocol and Guidelines Manual \211\ and submits that 
data to CMS by the data submission deadline, regardless of the number 
of completed surveys the facility receives. Results will be used for 
public reporting only.
---------------------------------------------------------------------------

    \211\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter noted that the patient population for ASCs 
is different than that of hospitals, and there is little data available 
about this population's willingness to complete CAHPS surveys.
    Response: We acknowledge the commenter's concern regarding the 
current lack of data on ASC patient response rates to patient 
experience of care surveys. As noted previously (81 FR 45730), before 
development of the OAS CAHPS Survey, there was no standardized survey 
available to collect information on the patient's overall experience 
for surgeries or procedures performed within an ASC. However, the field 
and mode testing of the OAS CAHPS Survey, as discussed in the above 
responses, indicates that ASCs will receive a reasonable response rate. 
For the mode experiment in 2015, which included 13,576 patients from 70 
facilities (38 hospital outpatient departments and 32 ASCs), the 
overall response rate across all modes tested was 39 percent. The 
response rate for ASCs was slightly higher (39.6 percent) than the 
response rates for the hospital outpatient departments (38.6 percent) 
for the mode experiment. The response rate for the mail-only mode was 
37 percent; the telephone-only response rate was 34 percent; and the 
mixed-mode response rate was 50 percent. For the field test in 2014, 
which was mixed-mode only and included 4, 179 patients from 36 
facilities (18 hospital outpatient departments and 18 ASCs), the 
response rate was 46 percent. The overall response rate for the 18 
participating ASCs was slightly higher (47 percent) than the response 
rate for the hospital outpatient departments.\212\ Therefore, we 
believe ASCs will receive a reasonable response rate under the OAS 
CAHPS Survey.
---------------------------------------------------------------------------

    \212\ https://oascahps.org/General-Information/Mode-Experiment.
---------------------------------------------------------------------------

    Comment: One commenter expressed concern that the survey 
administration period for the OAS CAHPS Survey extends too far beyond 
the time after a patient's procedure.
    Response: Both the field test (2014) and the mode experiment (2015) 
were conducted using monthly survey administration. The monthly 
sampling ensures that patient records are evenly distributed throughout 
the year without possible seasonal bias. As stated in the proposed rule 
(81 FR 45738), to meet the OAS CAHPS Survey requirements for the ASCQR 
Program, we proposed 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

[[Page 79813]]

quarterly deadlines established for each data collection period. While 
we require that the OAS CAHPS Survey be collected on a monthly basis, 
we are clarifying here that facilities can sample and implement the 
survey more frequently than monthly as long as the reporting of data is 
provided based on a monthly sampling plan. Information on sampling more 
frequently than monthly can be found in the OAS CAHPS Protocols and 
Guidelines Manual which is available at: https://oascahps.org/Survey-Materials. Under the OAS CAHPS Protocols and Guidelines Manual,\213\ 
ASCs may choose to have their vendors select the sample and implement 
the survey more frequently as long as the monthly targets are met and 
the patient sample is distributed throughout the month. Therefore, if 
ASCs are concerned with the timeframe, they may survey more frequently.
---------------------------------------------------------------------------

    \213\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: One commenter recommended that CMS align the OAS CAHPS 
Survey with the HCAHPS Survey by: (1) Adopting the same four-point 
scale used in the HCAHPS Survey for ratings questions (that is, 
``Always; Usually; Sometimes; or Never'' responses); and (2) adopting 
the same new medication questions used in the HCAHPS Survey to the OAS 
CAHPS Survey (Question 15: ``During this hospital stay, were you given 
any medicine that you had not taken before?''; Question 16: ``Before 
giving you any new medicine, how often did hospital staff tell you what 
the medicine was for?''; Question 17: ``Before giving you any new 
medicine, how often did hospital staff describe possible side effects 
in a way you could understand?'').
    Response: As part of the survey development process, the OAS CAHPS 
Survey was aligned as appropriate with other CAHPS Surveys, including 
the HCAHPS Survey. However, the OAS CAHPS Survey assesses patient 
experience of care for outpatient surgical procedures, and therefore, 
takes the outpatient/ambulatory setting into account and captures 
information about the appropriate experiences of care for this 
particular setting.
    We note that the four-point scale response set used for some HCAHPS 
Survey questions, ``Always; Usually; Sometimes; or Never,'' is 
appropriate to use when a question includes the phrase ``how often.'' 
This is appropriate in the inpatient setting, where patients stay in 
the hospital for a longer period of time. The OAS CAHPS Survey 
questions use a single point in time reference for an outpatient 
surgery or procedure because patients spend a significantly shorter 
period of time in the facility. Therefore, we believe the OAS CAHPS 
Survey questions and response options are worded appropriately (that 
is, for the majority of the OAS CAHPS Survey questions, the response 
categories are: ``Yes, definitely,'' ``Yes, somewhat,'' or ``No.'' 
Response categories for other questions are: ``Yes'' or ``No'' for this 
setting of care and treatment situation.
    While there are no plans to add questions about new medications to 
the OAS CAHPS Survey at this time, we will take this recommendation 
into consideration during future updates to the survey.
    Comment: One commenter expressed concern that the OAS CAHPS Survey 
groups patients' assessment of care provided by doctors and nurses 
together because the commenter believes this will provide less 
meaningful information to providers and patients. The commenter 
recommended that CMS develop separate questions regarding nurses' care, 
focusing on the nursing staff's effect on the patient's surgical 
experience and discharge instructions to better measure the role of 
nurses in patient experience of care.
    Response: In the OAS CAHPS Survey, references to the doctors, 
nurses, and other staff at the facility are grouped together for two 
reasons. First, grouping assessment of the healthcare personnel at a 
facility helps reduce the overall length of the survey so that similar 
questions are not repeated separately for doctors and nurses. Second, 
the questions listed under sections I, II, III, and IV (Before Your 
Procedure; Facility and Staff; Communications; and Recovery) include 
aspects of the patient's care that could be addressed by either the 
doctor or another healthcare professional at the facility. Combining 
these professionals under a single series of questions allows the 
patient to report that someone provided information and explained the 
process without having to recall the specific individual who gave the 
information. This is important because the OAS CAHPS Survey is intended 
to assess the patient's experience of care at the facility, including, 
but not separating out, all the staff that work at the facility. For 
these reasons, we believe it is appropriate to ask these questions in a 
way that reflects the care provided by doctors, nurses, and other 
facility staff combined. We note that during the OAS CAHPS Survey field 
test conducted in 2014 and the mode experiment conducted in 2015, we 
did not receive any indications that the respondents had any difficulty 
answering these questions as they are currently written. The 
nonresponse, which is an indication of difficulty answering a question, 
was very low for the two questions that combine doctors and nurses 
(Question 7, which is about treating the patient with courtesy and 
respect and Question 8, which is about making sure the patient was a 
comfortable as possible). For the field test, less than 0.5 percent of 
the respondents did not respond to these questions while 99.5 percent 
were able to answer these questions. For the mode experiment just over 
1 percent of the respondents did not respond to the questions while 
nearly 99 percent were able to answer them. These nonresponse rates 
were very similar to the questions that were about clerks and 
receptionists.
    Comment: One commenter expressed concern that CMS did not propose 
to include the Consumer Assessment of Healthcare Providers and Systems 
Surgical Care Survey (S-CAHPS) in the ASCQR Program alongside the OAS 
CAHPS Survey. The commenter stated the S-CAHPS Survey, developed by 
AHRQ in collaboration with a broad array of surgical groups, addresses 
critical gaps in the assessment of surgical care such as informed 
consent, shared decision-making, anesthesia care, post-operative 
instructions, and access, all of which are issues consumers find to be 
very important in seeking surgical care. The commenter therefore 
recommended CMS include the S-CAHPS Survey in the ASCQR Program in 
addition to the OAS CAHPS Survey. Another commenter recommended CMS 
adopt the S-CAHPS Survey for the ASCQR Program instead of the OAS CAHPS 
Survey because the S-CAHPS Survey is NQF-endorsed for the measurement 
of patient experience of care before, during, and after surgery.
    Response: The focus of S-CAHPS is to obtain a patient's experience 
of care received from a surgeon,\214\ whereas the focus of OAS CAHPS is 
to obtain data on a patient's experience of care received from a 
facility, specifically from an ambulatory surgery center or an ASC. 
Therefore, the units of analyses are not the same. We also refer 
readers to our discussions above regarding non-NQF endorsed measures. 
Furthermore, in order for a measure to be proposed for adoption into 
the ASCQR Program, it must first be put on the MUC list and reviewed by 
the MAP. The S-CAHPS

[[Page 79814]]

Survey has not been submitted to the MAP for consideration as a measure 
for the ASCQR Program, and therefore, cannot be proposed or adopted for 
the program at this time. However, we will take these recommendations 
into consideration for the future.
---------------------------------------------------------------------------

    \214\ American College of Surgeons. ``S-CAHPS (Consumer 
Assessment of Healthcare Providers and Systems Surgical Care 
Survey).'' Available at: https://www.facs.org/advocacy/quality/cahps.
---------------------------------------------------------------------------

    Comment: Two commenters requested that CMS reconsider its position 
on respondent confidentiality for the OAS CAHPS Survey administration 
to align with the HCAHPS survey, which allows for the release of 
patient-level data for quality improvement purposes, with the 
stipulation that a patient's identity should not be shared with direct 
care staff. One commenter stated that very few patients return to an 
ASC for another surgical procedure within three months of the index 
surgery, and that ASC patients should therefore not be considered to 
have an ``ongoing relationship'' with the ASC where they received care. 
Another commenter noted that maintaining this confidentiality would 
pose challenges to identification and formal investigation of potential 
grievances and limit facilities' ability to map specific ratings to 
other patient-level encounter variables for quality improvement 
initiatives. Commenter asserted that ASCs must be able to work 
confidentially with the OAS CAHPS Survey results in order to study the 
patient experience and drive quality improvement efforts.
    Response: The administration protocols for OAS CAHPS follow 
protocols for other more recent CAHPS[supreg] Surveys, restricting the 
release of patient-level data if the patient has not consented. For 
example, the Home Health Care CAHPS (HHCAHPS) Survey protocol states: 
``HHCAHPS Survey approved vendors can provide responses linked to a 
sample patient's name and other identifying information only if the 
sample patient gives his or her consent on the `Consent to Share 
Identifying Information' question.'' \215\ For the Hospital IQR 
Program, because hospitals can self-administer the HCAHPS Survey, we do 
not state that patients' responses and identifying information will not 
be shared with the hospital. However, HCAHPS Surveys administered via a 
third-party vendor are not linked to a sample patient's name unless the 
patient gives his or her consent, and we encourage hospitals to 
undertake measures to protect patient confidentiality when self-
administering the survey. We note that facilities may choose to add the 
``Consent to Share'' question \216\ to the OAS CAHPS Survey. This 
question asks whether a patient gives permission for their name to be 
linked to their survey responses. However, we note that each facility 
should consult with its own counsel to ensure compliance with 
applicable privacy and security laws.
---------------------------------------------------------------------------

    \215\ Home Health Care CAHPS Survey: ``Protocols and Guidelines 
Manual.'' Available at: https://homehealthcahps.org/Portals/0/PandGManual.pdf.
    \216\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Survey 
Materials.'' Available at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Comment: Two commenters expressed concern that if the OAS CAHPS 
Survey results are reported at the CCN level, the results will be more 
difficult for patients to use in selecting a facility for their care, 
and of less value to individual facilities for performance improvement 
purposes. The commenters recommended that CMS collect and report ASC-
15a-e measure data at the NPI level, as is done for other ASCQR Program 
measures.
    Response: Survey results are collected and reported at the CCN 
level because the OAS CAHPS Survey was tested at the CCN level. 
However, we thank the commenters for their recommendation to report OAS 
CAHPS Survey-based measure data at the NPI level for patient ease and 
individual facility performance improvement purposes. We will consider 
the feasibility of requiring ASCs to collect and report OAS CAHPS 
Survey data at the NPI level in future rulemaking.
    Comment: Many commenters expressed concerns regarding the length of 
the OAS CAHPS Survey. A number of commenters asserted that the OAS 
CAHPS Survey's length impairs ASCs' ability to add their own questions 
to the survey because the resulting survey would be too long to receive 
a reasonable response rate. The commenters also expressed concern that 
the OAS CAHPS Survey's length will limit the number of completed 
surveys an ASC receives because patients will be overwhelmed by the 
number of questions in the survey or otherwise unable to complete the 
survey, and in turn impact the ability of the ASC to use the survey 
data in quality improvement activities.
    These commenters recommended CMS shorten the OAS CAHPS Survey in 
order to increase survey completion rates, and further recommended CMS 
allow each facility to have more choice in the questions they include 
in their survey. A number of commenters specifically recommended that 
CMS shorten the required patient experience items to allow ASCs to add 
their own questions and collect targeted information to enhance patient 
experience at their own facilities. Numerous commenters also 
recommended that CMS shorten the ``About You'' section of the OAS CAHPS 
Survey to include only those items either required by law or collected 
for use in patient-mix adjustment.
    Response: The OAS CAHPS Survey is comparable in length and survey 
response rate to other patient experience of care surveys. For example, 
the HCAHPS Survey is 32 questions long,\217\ and the response rate for 
the HCAHPS Survey has generally been 32 to 33 percent.\218\ By 
comparison, the OAS CAHPS Survey is 37 questions long, and the survey's 
2015 mode experiment showed an overall response rate of 39 
percent.\219\ The mode experiment was conducted to test the OAS CAHPS 
Survey questions when administered by mail-only, telephone-only, and 
mixed-mode (mail with telephone follow-up).
---------------------------------------------------------------------------

    \217\ http://www.hcahpsonline.org/surveyinstrument.aspx.
    \218\ For example, see: https://www.medicare.gov/hospitalcompare/details.html?msrCd=prnt1grp1&ID=220066&stCd=MA&stName=Massachusetts.
    \219\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Mode 
Experiment.'' Available at: https://oascahps.org/General-Information/Mode-Experiment.
---------------------------------------------------------------------------

    With regard to the concern that response rates would be negatively 
affected by any supplemental questions, we found that the response 
rates for the field test in 2014 were good for ASCs (47 percent for the 
mixed-mode) and that earlier version of the survey included 12 
additional questions that have since been removed from the OAS CAHPS 
Survey.
    While we appreciate commenters' recommendation that facilities be 
allowed to choose which questions to administer, the survey instrument 
was developed in order to provide a more complete picture of patients' 
experience of care in the ASC setting. We believe allowing facilities 
to administer a selection of the survey items to patients would impair 
the assessment of a facility's quality of care, and would also inhibit 
the comparison of performance across facilities and the reliability of 
a facility's scores. As currently specified, the OAS CAHPS Survey 
requires that the survey be administered by an approved survey vendor. 
As previously discussed, this is to ensure that patients respond to the 
survey in a way that reflects their actual experiences with ASC care, 
and is not influenced by the ASC. Removing vendors, neutral third 
parties, could raise issues of objectivity and bias. In addition, the 
24 core questions of the OAS CAHPS Survey are either directly 
actionable (that is, give feedback to hospitals) or inform the need for 
patients to answer subsequent

[[Page 79815]]

questions that are actionable. For example, Question 10, which asks 
whether a patient received anesthesia, establishes whether a patient 
should respond to Questions 11 and 12, which provide actionable 
feedback to ASCs regarding their communication with the patient about 
the anesthesia process and possible side effects. We also encourage 
ASCs to consider adding specific questions of interest to the OAS CAHPS 
Survey. As noted in the CY 2017 OPPS/ASC proposed rule (81 FR 45732), 
ASCs may elect to add up to 15 supplemental questions to the OAS CAHPS 
Survey. These could be questions ASCs develop specifically for use 
alongside the OAS CAHPS Survey, or questions from an existing survey.
    However, we also acknowledge commenters' concerns about the length 
of the OAS CAHPS Survey and their recommendations to shorten sections 
of the survey, such as the ``About You'' section. We continue to 
evaluate the utility of individual questions as we collect new data 
from the survey's voluntary national implementation, and will consider 
different options for shortening the OAS CAHPS Survey without the loss 
of important data in the future. Specifically, we are contemplating 
removing two demographic questions--the ``gender'' and ``age'' 
questions--from the OAS CAHPS Survey in its next update, if we 
determine that it is feasible, when collecting information on survey-
eligible patients from facility records, that gender and age 
information could also be collected via these records.
    Comment: One commenter requested that CMS remove or revise two 
questions on the OAS CAHPS Survey asking whether a doctor or anyone 
from the facility: (1) Gave the patient all the information needed 
about their procedure; and/or (2) gave the patient easy to understand 
instructions about preparing for their procedure. The commenter 
asserted that patient education is solely within the purview of the 
doctor's office, not the facility, and should therefore be removed from 
a survey assessing patients' experience of care at the facility.
    Response: We disagree with the commenter's assertion that patient 
education is solely within the purview of the doctor's office. We 
believe it is the facility's responsibility to ensure that a doctor, 
nurse, or other facility staff member provides the patient with 
information about preparing for their procedure, the procedure itself, 
and what to expect following discharge from the ASC. The OAS CAHPS 
Survey-based measures were reviewed by two 10-member TEPs comprised of 
experts on outpatient surgery, including clinicians, providers, patient 
advocates, and representatives from other stakeholder organizations. 
These TEPs provided guidance in the establishment of relevant topics 
for assessing patient experience of care at an outpatient facility, and 
commented on draft versions of the survey for cognitive and field 
testing. These TEPs agreed with the questions as drafted, including 
those regarding the facility's communication with patients. Therefore, 
we believe it is appropriate to include these important communications 
between the patient and the facility about their care in the OAS CAHPS 
Survey.
    The OAS CAHPS Survey is focused on patients' experience of care 
received for their ambulatory surgery or procedure. A physician/surgeon 
who performs surgeries/procedures at a facility is a member of that 
facility with both rights and responsibilities. We believe it is the 
facility's responsibility to ensure that someone--whether the doctor, 
nurse, or other facility staff member--provide patients with 
information about preparing for their procedure, about the procedure 
itself, as well as what to expect following the procedure/surgery. 
Therefore, we believe it is appropriate to include these important 
communications with patients in the OAS CAHPS Survey.
    Comment: One commenter requested clarification from CMS regarding 
the inclusion of pain management-related questions in the OAS CAHPS 
Survey. The commenter expressed concern that the pain management 
communication questions may negatively influence patient perceptions 
about their overall care and, in turn, result in negative responses 
throughout the survey. Another commenter expressed concern that the OAS 
CAHPS Survey's questions regarding communication about pain management 
may not reflect the true perception patients have of their experience 
relative to pain management, and recommended CMS continue to explore 
ways to ensure better measurement of patients' experience with pain 
management.
    Response: The OAS CAHPS Survey pain management communication 
questions focus on the information provided to patients regarding pain 
management following discharge from an ASC, not the ASC's direct 
control or management of patients' pain. The ASC is responsible for 
providing the patient with this information if there is a possibility 
that the patient might have pain as a result of the procedure. 
Communication about possible effects during recovery is an important 
factor for patients. As discussed previously, the OAS CAHPS Survey 
underwent a rigorous survey development process, the results of which 
did not indicate any negative impact to overall survey responses 
resulting from the inclusion of these questions regarding pain 
management communication. In addition, we have no reason to believe 
that patients' responses to the pain management communication questions 
would not accurately reflect their experience with the facility. 
Therefore, we do not believe that the pain management communication 
question would negatively influence patient perceptions about their 
overall care, resulting in negative responses throughout the survey. 
However, as noted in the CY 2017 OPPS/ASC proposed rule (81 FR 45732), 
we will continue to evaluate the appropriateness and responsiveness of 
these questions to patient experience of care and public health 
concerns.
    Comment: A number of commenters expressed concern regarding the OAS 
CAHPS Survey pain management communication question, ``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?'' One commenter recommended that CMS refine this 
question to be clear the survey is asking whether patients received 
pain management information that could be applied once they left the 
facility, and that the information could include, but is not limited 
to, information about pain management using appropriate medications. 
Another commenter recommended reorganizing the pain management methods 
listed in the first question to run from non-medication pain management 
to prescription pain medication treatment. One commenter recommended 
that CMS expand this question to include other methods of pain 
management, such as physical therapy, because the commenter believed 
using a more inclusive list of pain control methods would help to 
further combat the over prescription of opioids for pain management.
    Some commenters also expressed concerns regarding the pain 
management communication control question, ``At any time after leaving 
the facility, did you have pain as a result of your procedure?'' 
Specifically, a few commenters requested that CMS revise the pain 
management communication control question to ask whether, at any time 
after leaving the facility, the patient experienced pain as a result of 
their procedure that they felt they could

[[Page 79816]]

not manage based on the information they received from the facility or 
treating physician.
    Response: We thank the commenters for their recommendations. As 
discussed previously, the OAS CAHPS Survey underwent a rigorous survey 
development process, the results of which indicated that patients 
understand these questions as presented, and that the questions 
sufficiently developed for use in the survey.\220\ As discussed 
previously, the OAS CAHPS Survey-based measures were reviewed by two 
10-member TEPs comprised of experts on outpatient surgery, including 
clinicians, providers, patient advocates, and representatives from 
other stakeholder organizations. These TEPs provided guidance in the 
establishment of relevant topics for assessing patient experience of 
care at an ASC, and commented on draft versions of the survey for 
cognitive and field testing. The possible treatments for pain included 
in the survey reflect what is tested and reflected to work, and their 
order is not intended to reflect a preference for any single pain 
treatment method, only to provide examples of types of pain management 
a facility may discuss with a patient prior to discharge. The examples 
provided in this question are also not intended to be an exhaustive 
list, and we acknowledge that there are many methods for addressing 
pain following a procedure performed at an ASC, including physical 
therapy. Because this is not an exhaustive list, we do not believe it 
is necessary to exclude, expand, or reorganize these questions at this 
time. However, we will take these suggestions, including reorganizing 
the pain management methods, into consideration for future iterations 
of the survey.
---------------------------------------------------------------------------

    \220\ A description of the field test analysis of the survey 
questions was documented in the Federal Register notice on January 
16, 2015 (80 FR 2430 through 2431). Available at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10500.html.
---------------------------------------------------------------------------

    Comment: Two commenters expressed concerns that the pain management 
communication control question raises an unrealistic expectation 
regarding pain control, and may potentially encourage over prescription 
of opioids. These commenters therefore recommended removing the pain 
management communication control question from the OAS CAHPS Survey.
    Response: We also note that Question 16 ``At any time after leaving 
the facility, did you have pain as a result of your procedure?'' is a 
control question; in other words, an answer of ``yes'' or of ``no'' 
would not affect provider scores on the OAS CAHPS survey questions. The 
scores are based on the previous Question 15, which asked if the doctor 
or anyone from the facility gave the patient information about what to 
do if the patient had pain as a result of the procedure. We will not 
publicly report the data from the control question that asks if the 
patient had pain as a result of the procedure, rather, that question is 
only used to determine if the previous question should be included in 
the score or not. For example, if the patient reported having had pain 
in Question 16, then the response to Question 15 would be included in 
the score that is reported for the ASC.
    For example, the focus of Questions 15 and 16 is to determine 
whether a patient who is expected to experience pain as a result of a 
procedure was given information from the doctor or anyone from the 
facility about what to do about pain. If a patient experiences pain as 
a result of a procedure (Question 16), it is important that the patient 
was provided information as to what to do about the pain (Question 15). 
In these instances, the response to Question 15 would be included in 
the score. However, for some procedures conducted in an ASC (for 
example colonoscopies), there is little expectation of the patient 
experiencing pain. In these instances, a doctor or anyone from the 
facility may not have given a patient information about what to do 
about pain as such information would not be relevant. In these latter 
instances, the response to Question 15 would not be included in the 
score unless the patient response is a top-box (that is, ``Yes, 
definitely'') response.
    We do not believe a question asking whether patients experienced 
pain would have an undue influence on patients' responses to the OAS 
CAHPS Survey or warrant its removal from the OAS CAHPS Survey. As 
stated above, the OAS CAHPS Survey underwent a rigorous survey 
development process, the results of which did not indicate any negative 
impact to overall survey responses resulting from the inclusion of 
these questions regarding pain management communication. In addition, 
we have no reason to believe that patients' responses to the pain 
management communication questions would not accurately reflect their 
experience with the facility. Therefore, we do not believe that the 
pain management communication question would negatively influence 
patient perceptions about their overall care, resulting in negative 
responses throughout the survey.
    Furthermore, as stated in the proposed rule (81 FR 45732), this 
control question will not affect scores on the OAS CAHPS survey. 
Rather, scores are based on the previous Question 15, which asks if the 
doctor or anyone from the facility gave the patient information about 
what to do if the patient had pain as a result of the procedure. 
However, we will review the data from the voluntary national 
implementation and continue to evaluate the appropriateness and 
responsiveness of these questions, particularly for any unintended 
consequences.
    Comment: One commenter requested clarification about whether CMS 
intends to publicly report ASC scores on the pain management 
communication control question.
    Response: We interpret the comment to refer to Question 16, ``At 
any time after leaving the facility, did you have pain as a result of 
your procedure?'' As stated above, this question is a control question, 
meaning that an answer of ``yes'' or ``no'' would not affect scores on 
the OAS CAHPS survey questions. Rather, scores are based on the 
previous Question 15, which asks if the doctor or anyone from the 
facility gave the patient information about what to do if the patient 
had pain as a result of the procedure.
    Comment: One commenter recommended that CMS remove the questions on 
the OAS CAHPS Survey asking patients whether they experienced pain, 
nausea, or bleeding following a procedure, because the commenter 
believes this information is not useful to facilities in quality 
improvement activities, as these are all risks associated with surgery.
    Response: Question 17 (``Before you left the facility, did your 
doctor or anyone from the facility give you information about what to 
do if you had nausea or vomiting?'') and Question 18 (``At any time 
after leaving the facility, did you have nausea or vomiting as a result 
of either your procedure or the anesthesia?'') are intended to assess 
the information provided to patients regarding what to expect following 
a surgery/procedure. We believe it is the facility's responsibility to 
ensure that the patient is aware of the potential side effect of their 
treatment, and, therefore, believe these questions are indicative of 
quality of care. As above, we note that Question 18 is a control 
question, so an affirmative or negative response would not be included 
in the provider scores on the OAS CAHPS Survey, but rather is used to 
determine if the provider should have given guidance on how to handle 
nausea or vomiting (Question

[[Page 79817]]

17). The information will be useful to facilities because they will be 
able to ensure that the information that patients need during recovery 
is adequately addressed by the facility staff. These questions are not 
reporting whether the patients experienced pain, nausea, vomiting, 
bleeding or signs of infection; the questions are reporting if the 
patients were informed what to do if they had these outcomes.
    For example, the focus of questions 17 and 18 is to determine 
whether a patient who might likely experience nausea or vomiting as a 
result of a procedure was given information from the doctor or anyone 
from the facility about what to do to manage these outcomes. If a 
patient experiences these outcomes as a result of a procedure, it is 
important that the patient was provided information on how to manage 
these outcomes. In these instances, the response to Question 17 would 
be included in the score. However, for some procedures conducted in an 
ASC (for example laser surgeries), there is little expectation of the 
patient experiencing nausea or vomiting and in these instances a doctor 
or anyone from the facility may not have given a patient information on 
how to manage these outcomes as such information would not be relevant. 
In these latter instances the responses to Question 17 would not be 
included in the score unless the patient response is a top-box (that 
is, ``Yes, definitely'') response.
    Furthermore, as stated in the proposed rule (81 FR 45732), this 
control question will not affect scores on the OAS CAHPS survey. 
Rather, scores are based on the previous Question 17, which asks if the 
doctor or anyone from the facility gave information about what to do if 
the patient had nausea or vomiting. However, we will review the data 
from the voluntary national implementation and continue to evaluate the 
appropriateness and responsiveness of these questions, particularly for 
any unintended consequences.
    Comment: One commenter recommended that CMS include an item in the 
OAS CAHPS Survey assessing whether patients felt they were provided 
sufficient and timely access to medical innovation and technology 
during their care in the ASC setting.
    Response: We thank the commenter for its recommendation as well as 
similar concerns from other commenters and will take this 
recommendation into consideration while balancing the survey's length 
during the next OAS CAHPS Survey update.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt the ASC-15a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures for the ASCQR Program for the 
CY 2020 payment determination and subsequent years as proposed with a 
clarification that ASCs that anticipate receiving more than 300 surveys 
are required to either: (1) randomly sample their eligible patient 
population, or (2) survey their entire OAS CAHPS eligible patient 
population. We note that these measures are also being finalized in the 
Hospital OQR Program and refer readers to section XIII.B.5.c. of this 
final rule with comment period for more details.
    Including the proposals we are finalizing, the measure set for the 
ASCQR Program CY 2020 payment determination and subsequent years is 
listed below.

 ASCQR Program Measure Set Previously Finalized and Newly Finalized for
         the CY 2020 Payment Determination and Subsequent Years
------------------------------------------------------------------------
             ASC #                    NQF #            Measure name
------------------------------------------------------------------------
ASC-1..........................            0263  Patient Burn.
ASC-2..........................            0266  Patient Fall.
ASC-3..........................            0267  Wrong Site, Wrong Side,
                                                  Wrong Patient, Wrong
                                                  Procedure, Wrong
                                                  Implant.
ASC-4..........................   [dagger] 0265  All-Cause Hospital
                                                  Transfer/Admission.
ASC-5..........................   [dagger] 0264  Prophylactic
                                                  Intravenous (IV)
                                                  Antibiotic Timing.
ASC-6..........................             N/A  Safe Surgery Checklist
                                                  Use.
ASC-7..........................             N/A  ASC Facility Volume
                                                  Data on Selected ASC
                                                  Surgical Procedures.*
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 finalized for the CY 2020 payment determination and
  subsequent years.

5. ASCQR Program Measure 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

[[Page 79818]]

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 the CY 2017 OPPS/ASC proposed rule (81 FR 45735), we invited 
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.\221\ 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.\222\ Prevention requires careful attention to solutions, 
medications, and ophthalmic devices and to cleaning and sterilization 
of surgical equipment because of the numerous potential 
etiologies.\223\ Despite a recent focus on prevention, cases of TASS 
continue to occur, sometimes in clusters.\224\ 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.
---------------------------------------------------------------------------

    \221\ 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.
    \222\ 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.
    \223\ 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.
    \224\ 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 \225\ 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.\226\ A summary of the MAP 
recommendations can be found at: http://www.qualityforum.org/Projects/i-m/MAP/2016_Final_Recommendations.aspx.
---------------------------------------------------------------------------

    \225\ Available at: http://www.qualityforum.org/2015_Measures_Under_Consideration.aspx, under ``2015 Measures Under 
Consideration List (PDF).''
    \226\ Available at: 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://www.ascquality.org/qualitymeasures.cfm, under ``Implementation 
Guide.''
    We invited public comments on the possible inclusion of this 
measure in the ASCQR Program measure set in the future.
    Comment: A number of commenters agreed that TASS is a serious 
complication of anterior segment eye surgery, and that the high volume 
of eye procedures performed in the United States each year highlights 
the importance of measures that can support best practices in 
instrument sterilization and reprocessing. The commenters also noted 
that incidences of TASS are attributable to the ASC, prevention is 
actionable by the facility, and published guidelines regarding cleaning 
and sterilizing of surgical instruments to help improve quality and 
prevent TASS are available. The commenters also stated that measuring 
the incidence of TASS may aid in better tracking and understanding the 
prevalence of TASS.
    Response: We thank the commenters for their comments and insights 
regarding future inclusion of the TASS measure in the ASCQR Program. We 
will take these comments into consideration if we propose to adopt the 
TASS measure for the ASCQR Program in the future.
    Comment: A few commenters did not support future adoption of the 
TASS measure because the occurrence of TASS is not necessarily 
attributable to the ASC, and as a result ASCs may lack the ability to 
reduce cases of TASS. Some commenters recommended that CMS wait until 
the NQF has reviewed and endorsed the TASS measure before adopting this 
measure for the ASCQR Program.
    Response: We thank the commenters for sharing their concerns 
regarding future inclusion of the TASS measure in the ASCQR Program. As 
stated above, we believe that ASCs could reduce cases of TASS by 
prevention, which requires careful attention to solutions, medications, 
and ophthalmic devices and to cleaning and sterilization of surgical 
equipment because of the numerous potential etiologies.\227\ With 
millions of anterior segment surgeries being performed in the United 
States each year, we believe that measurement and public reporting have 
the potential to serve as an additional tool to drive further 
preventive efforts. However, we will take these comments into 
consideration if we propose to adopt the TASS measure for the ASCQR 
Program in the future.
---------------------------------------------------------------------------

    \227\ 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.
---------------------------------------------------------------------------

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

[[Page 79819]]

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. In the CY 2017 OPPS/ASC proposed rule (81 
FR 45735), we did not propose 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 final rule with comment period, we are formalizing our 
current public display practices regarding timing of public display and 
the preview period, as discussed in more detail below and finalizing 
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 the CY 2017 OPPS/ASC 
proposed rule (81 FR 45735 through 45736), therefore, we proposed 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 proposed that 
ASCs will generally have approximately 30 days to preview their data, 
also consistent with current practice.
    Lastly, moving forward, we proposed 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 invited public comments on our proposals regarding the timing of 
public display and the preview period as discussed above.
    Comment: A number of commenters supported CMS' proposal to give 
ASCs 30 days to preview their quality data before it is publicly 
reported on Hospital Compare because commenters agree doing so will 
increase data transparency and better educate patients and providers 
regarding ASC's performance under the ASCQR Program. The commenters 
encouraged CMS to publicly display ASCQR Program data as soon as 
possible, because doing so will help consumers make more informed 
decisions about their care and encourage facilities to ensure high 
quality of care.
    Response: We thank the commenters for their support.
    Comment: One commenter urged CMS to align preview period policies 
across its inpatient and outpatient quality reporting programs in order 
to reduce confusion and frustration of providers participating in more 
than one quality reporting program.
    Response: By adopting a 30-day preview period, the ASCQR Program 
will align the duration of its preview period for publicly reporting 
program data with the Hospital IQR Program (77 FR 53505), the Hospital 
Readmissions Reduction Program (76 FR 51672 through 51673), the 
Hospital-Acquired Condition Reduction Program (78 FR 50727 through 
50728), the PPS-Exempt Cancer Hospital Quality Reporting Program (77 FR 
53562 through 53563), and the Inpatient Psychiatric Facility Quality 
Reporting Program (77 FR 53654). We also note that we are finalizing a 
similar proposal under the Hospital OQR Program and refer readers to 
section XIII.C.8. of this final rule with comment period for more 
details.
    Comment: One commenter urged CMS to finalize a preview period that 
is reliably and consistently 30 days in length because ASCs need 
predictability in the preview period in order to appropriately plan 
staffing and ensure the data are accessed quickly and distributed to 
the appropriate parties for review in a timely fashion. Another 
commenter recommended that CMS establish a set timeline for the release 
of preview reports and consistent preview periods, because doing so 
will ensure greater quality in data reporting and reduce unnecessary 
costs for facilities in reviewing program data.
    Response: We agree with the commenters, and believe adopting a 
consistent preview period will benefit ASCs' planning and review of 
ASCQR Program measure data. We also understand commenters' concern that 
allowing variability in the duration of the preview period may impact 
ASCs' ability to plan and prepare for the preview period. While we 
currently intend to provide a consistent 30-day preview period for 
ASCQR Program data year-after-year, we believe that retaining some 
flexibility in this timeline is important in order to ensure that 
measure data are available for public reporting in a timely fashion. 
While there may be some variability in the specific dates of a preview 
period due to data processing and report development issues, we 
currently publish notifications regarding the availability of preview 
reports for facilities' review before publication of ASCQR Program 
measure data through the QualityNet Web site (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier1&cid=1138115987249) and direct communication to ASCs. We intend to continue 
providing ASCs with this advance notice of the preview period because 
we believe doing so provides ASCs with sufficient time to identify and 
procure resources needed to ensure timely and accurate review of their 
ASCQR Program data.
    Comment: One commenter suggested that CMS allow a preview period of 
60 days for ASCs, rather than the proposed 30-day preview period, 
because ASCs are generally small providers without dedicated quality 
measurement personnel on staff. The commenter stated that a 60-day 
preview period would allow a more appropriate amount

[[Page 79820]]

of time for ASCs to retrieve reports and review their data before its 
publication.
    Response: While we understand that a 60-day preview period would 
allow ASCs more time to review their ASCQR Program data prior to its 
publication, we believe 30 days provides balance between sufficient 
time for ASCs to review their data and timely publication. Implementing 
a longer preview period would affect our ability to publish ASCQR 
Program data in a timely manner, and likely result in longer delays 
between ASC performance and public reporting of measure data. We 
believe that implementing a 30-day preview period, in conjunction with 
the revised May 15 data submission deadline for data submitted via a 
CMS online data submission tool (discussed in more detail below), will 
enable us to publicly report ASCs' performance data significantly 
faster, providing patients with the most up-to-date information for use 
in making decisions about their care. Furthermore, 30 days aligns the 
ASCQR Program with other CMS quality reporting programs as discussed 
above.
    Comment: One commenter requested that CMS provide additional 
information on the length of time it takes to appeal a 
misclassification and how CMS intends to address misclassifications 
within the 30-day preview period.
    Response: We interpret the commenter's reference to 
``misclassifications'' to mean errors in an ASC's ASCQR Program data. 
With regards to errors spotted during the preview period, ASCs are 
directed to contact CMS if there are inaccuracies with regards to 
measure calculations. ASCs are responsible for ensuring that the 
underlying measure data are accurate, however, because the preview 
period is not an opportunity to make corrections to the underlying 
data.
    While the preview period does not serve as a corrections period, 
ASCs can edit any measure data submitted via an online data submission 
tool up until the data submission deadline for that measure (80 FR 
70533). In addition, although we understand that ASCs cannot currently 
change QDCs on claims once submitted, or edit measure quality data 
submitted via an online data submission tool after the submission 
deadline was passed, we believe it is the responsibility of each ASC to 
ensure that its data, as reported to CMS, are accurate (80 FR 70533).
    After consideration of the public comments we received, we are 
finalizing our proposals regarding the timing of public display and the 
preview period for the ASCQR Program as proposed.

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). In the CY 2017 OPPS/ASC proposed rule (81 FR 45736), 
we did not propose any changes to these policies.
2. Requirements Regarding Participation Status
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75133 through 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. In the CY 
2017 OPPS/ASC proposed rule (81 FR 45736), we did not propose 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). In the CY 2017 OPPS/ASC proposed rule (81 FR 
45736), we did not propose 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). In the 
CY 2017 OPPS/ASC proposed rule (81 FR 45736), we did not propose any 
changes to these policies.
3. Requirements for Data Submitted Via an Online Data Submission Tool
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45736 through 45737), 
we proposed changes to requirements for data submitted via a CMS online 
data submission tool (QualityNet.org). In the CY 2017 OPPS/ASC proposed 
rule (81 FR 45736), we did not propose 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). In the CY 2017

[[Page 79821]]

OPPS/ASC proposed rule (81 FR 45736), we did not propose 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 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 the CY 2017 OPPS/ASC proposed rule (81 FR 
45737), we proposed 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 online data submission tool in the ASCQR Program 
for the CY 2019 payment determination and subsequent years. We also 
proposed 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 online data 
submission 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 online data 
submission tool. Furthermore, the proposed submission deadlines for 
measures submitted via a CMS online data submission tool would align 
the above-listed measures with the submission deadline for ASC-8, 
resulting in a single deadline for all data submitted via an online 
data submission tool by ASCs (via CMS and non-CMS online data 
submission 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 online data submission tool outweigh previously stated 
stakeholder concerns with this deadline.
    Therefore, we proposed 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 policy 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).\228\
---------------------------------------------------------------------------

    \228\ 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 
2019 payment determination and subsequent years.
---------------------------------------------------------------------------

    In addition, this policy would apply to the following measures for 
the CY 2020 payment determination and subsequent years that we 
finalized above:
     ASC-13: Normothermia Outcome, and
     ASC-14: Unplanned Anterior Vitrectomy.
    Lastly, we also proposed 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 invited 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.
    Comment: Some commenters supported CMS' proposal to move the 
reporting deadlines for data submitted via a CMS online data submission 
tool to May 15 because doing so would make ASC quality data available 
to the public as soon as possible each year and would therefore help 
stakeholders compare quality among facilities.
    Response: We thank the commenters for their support.
    Comment: Some commenters did not support the proposal to adopt a 
May 15 deadline for all data submitted via a CMS online data submission 
tool for the CY 2019 payment determination and subsequent years, 
because the commenters believe shortening the data submission time 
period for these measures will increase ASCs' burden and lead to 
confusion for ASCs. These commenters further asserted that changing the 
longstanding data submission deadline for measure data submitted during 
CY 2017 in this rulemaking may lead to ASCs inadvertently missing the 
earlier deadline and thereby forfeiting their full payment update. 
Commenters recommended that CMS retain the current data submission 
deadlines for data submitted via a CMS online data submission tool or, 
in the alternative, align the data submission deadline for measures 
submitted via a CMS online data submission tool on August 15.
    Response: While we acknowledge that ASCs may undergo a period of 
adjustment while changing their reporting processes to meet the May 15 
data submission deadline, we believe that aligning the data submission 
deadlines for measure data submitted via a CMS online data submission 
tool

[[Page 79822]]

will ultimately streamline and reduce administrative burden on ASCs by 
reducing the total number of data submission deadlines under the ASCQR 
Program. Furthermore, one of the primary goals of the ASCQR Program is 
to publicly report ASC performance data, and moving the data submission 
deadline for all data submitted via a CMS online data submission tool 
to May 15 will enable us to publicly report ASCs' performance data by 
December of the same year. We believe this modified public reporting 
timeline will provide patients with the most up-to-date information for 
use in making decisions about their care. Therefore, we believe that 
any associated burden will be outweighed by the importance of making 
the public aware of performance data as timely as possible.
    We also understand commenters' concerns that shortening the data 
submission time period for these measures may lead to some confusion 
for ASCs, but note that this policy affects data submitted for CY 2019 
payment determinations, which will be reported during CY 2018. To be 
clear, this policy will not affect data collected during CY 2016 data 
collection period and reported during CY 2017 for CY 2018 payment 
determinations. Therefore, ASCs have an additional year under the 
current August 15 data submission deadline before the updated May 15 
deadline will go into effect. As stated in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45737), 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. We believe 
this delay will provide ASCs with sufficient time to become familiar 
with the updated deadline and adjust their data reporting processes 
accordingly.
    Comment: One commenter noted that technical difficulties have 
delayed ASC reporting in the past, and this commenter was concerned 
that similar issues could arise each time new measures are incorporated 
into ASC reporting.
    Response: We acknowledge that we have delayed reporting deadlines 
for the ASCQR Program in the past due to technical issues.\229\ 
However, we have since resolved those concerns, and do not anticipate 
any further technical issues as a result of expanding the ASCQR Program 
measure set.
---------------------------------------------------------------------------

    \229\ ``2013-16-ASC: ASC Web-Based Measures Deadline Extended to 
August 23.'' Published July 18, 2013. Available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036. (Delay due to obtaining access to the QualityNet Secure 
Portal and going through security requirements. Deadline extended by 
seven days). ``2015-39-ASC: Important Update--Submission Deadline 
Extended for Reporting Data Online into QualityNet and NHSN.'' 
Published July 31, 2015. Available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228774593984. (Delay because program is in initial implementation 
years).
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing our proposals to change the submission deadline to May 15 in 
the year prior to the affected payment determination year for all data 
submitted via a CMS online data submission tool in the ASCQR Program 
for the CY 2019 payment determination and subsequent years as proposed. 
We are also finalizing corresponding changes to the regulation at 42 
CFR 416.310(c)(1)(ii) to replace the date ``August 15'' with the date 
``May 15'' as proposed.
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). In the CY 2017 OPPS/ASC proposed 
rule (81 FR 45737), we did not propose any changes to these 
requirements.
5. Data Submission Requirements for 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 final rule with comment 
period, above, we are adopting 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 of the CY 2017 OPPS/
ASC proposed rule (81 FR 45737 through 45738), we proposed requirements 
related to survey administration and vendors. We note that we are 
adopting similar policies in the Hospital OQR Program in section 
XIII.B.5.c. of this final rule with comment period.
a. Survey Requirements
    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 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 proposed 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 proposed 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 
proposed 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 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 this 
final rule with comment period, above. These submission deadlines will 
be posted on the OAS CAHPS Survey Web site (https://oascahps.org). Late 
submissions will not be accepted.
    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. Therefore, we 
encourage ASCs to be fully appraised of the methods and actions of 
their survey vendors--especially the vendors' full compliance

[[Page 79823]]

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 proposed 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 proposed 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 invited 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.
    Comment: One commenter expressed concern that under the proposed 
ASC-15a-e survey-based measures, an ASC could meet its obligations 
under the measure by contracting with a CMS-approved, third-party 
vendor to administer the survey but still receive a reduction in their 
reimbursements if that vendor does not administer the survey properly 
or submit the required data to CMS by the data submission deadline.
    Response: We acknowledge that it is possible an ASC could fail to 
meet the requirements under the ASC-15a-e survey-based measures if its 
vendor fails to administer the survey properly or submit the required 
data to CMS by the data submission deadline. However, we continue to 
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. We encourage all ASCs to be fully 
apprised of the methods and actions of their survey vendors--especially 
the vendors' full compliance with the OAS CAHPS Survey Administration 
protocols--and to carefully inspect all data warehouse reports in a 
timely manner. After the survey vendor submits the data to the OAS 
CAHPS Data Center, we strongly recommend that hospitals promptly review 
their two OAS CAHPS feedback reports and submit corrections under the 
process outlined in the OAS CAHPS Protocol and Guidelines Manual.\230\ 
These reports enable a hospital to ensure that its survey vendor has 
submitted the data on time, the data has been accepted into the OAS 
CAHPS Data Center, and the data accepted into the OAS CAHPS Data Center 
are complete and accurate.
---------------------------------------------------------------------------

    \230\ Outpatient and Ambulatory Surgery CAHPS Survey: ``Protocol 
and Guidelines Manual.'' Available for download at: https://oascahps.org/Survey-Materials.
---------------------------------------------------------------------------

    Finally, we note that submission of complete, accurate, and timely 
data is the responsibility of the ASC. ASCs should check-in regularly 
with survey vendors to ensure that vendors are properly submitting 
timely survey data.
    Comment: Many commenters recommended that CMS include an electronic 
method of administration, such as portal messages and/or email, for the 
OAS CAHPS Survey because electronic methods of survey administration 
would be more cost effective for ASCs and more convenient for patients 
than administration via phone or standard mail. One commenter noted 
electronic survey administration has allowed many ASCs to achieve 
significant cost savings in the administration of patient surveys, and 
asserted electronic administration may increase patient response rates. 
Another commenter noted that recent releases by the U.S. Census Bureau 
and the National Telecommunications & Information Administration of the 
U.S. Department of Commerce show that the use of information technology 
is already prevalent and expanding rapidly amongst all Americans 
regardless of age, sex, educational attainment, household income, and 
employment status. One commenter noted that many survey vendors already 
offer electronic survey options to their customers.
    One commenter expressed concern that the proposed OAS CAHPS Survey 
administration methods may result in biased reporting because older 
patients are more likely to respond to mail-based or telephone-based 
surveys than younger patients. The commenter also noted electronic 
survey administration can reduce facility costs with the reduction of 
paper use and postage requirements, while also decreasing the time to 
receiving feedback from patients following their treatment at an ASC. 
The commenter therefore recommended CMS include electronic 
administration methods, portal messages and/or email as a method of 
administration for the OAS CAHPS Survey.

[[Page 79824]]

    Response: While email and Web-based survey administration modes are 
not available at this time, we are actively investigating these modes 
as possible new options for the future. This ongoing investigation 
includes, among other things, determining whether ASCs receive reliable 
email addresses from patients, whether there is adequate access to the 
Internet across all types of patients, and whether implementing a Web-
based survey administration method would introduce bias into the survey 
administration process. However, we note that a previous study 
investigating the suitability of speech-enabled interactive voice 
response (SE-IVR) and Web modes for publicly reported surveys of 
patients' experience of hospital care found lower response rates for 
mixed-mode administrations including a Web-based option than for mail-
only and SE-IVR administration modes.\231\ Portal messaging, like 
systems that are sometimes used to address patient questions, would 
require a Web portal that patients can access. If this were housed at 
the facility, patient confidentiality could potentially be an issue. 
Furthermore, as currently specified, the OAS CAHPS Survey requires that 
the survey be administered by an approved survey vendor. This is 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. Removing vendors, neutral third parties, could raise 
issues of objectivity and bias. However, as stated above, we are 
actively investigating new modes of conducting this survey as possible 
options for the future. We believe that the data collected by this 
measure is so significant and important that collecting data and 
publicly reporting it sooner rather than later outweighs waiting for a 
Web-based survey administration method to be developed, tested, and 
implemented nationwide.
---------------------------------------------------------------------------

    \231\ Elliott MN, Brown JA, Lehrman WG, Beckett MK, 
Hambarsoomian K, Giordano LA, Goldstein EH. A Randomized Experiment 
Investigating the Suitability of Speech-Enabled IVR and Web Modes 
for Publicly Reported Surveys of Patients' Experience of Hospital 
Care. Med Res Rev. 2013 April;70(2):165-184.
---------------------------------------------------------------------------

    Comment: A few commenters expressed concerns regarding the proposed 
survey administration requirements. One commenter stated that requiring 
survey vendors make multiple calls to patients regarding the OAS CAHPS 
Survey may be excessively intrusive to patients, particularly when 
coupled with a mailed survey. Another commenter asserted that requiring 
multiple mailings would add considerable expense to survey costs 
incurred by ASCs in administering the OAS CAHPS Survey. One commenter 
expressed concern that the OAS CAHPS Survey administration requirement 
that ASCs, via their CMS-approved vendor, contact a patient multiple 
times would be very burdensome for ASCs with a diminishing return. 
These commenters recommended that CMS remove the requirement that ASCs 
attempt to contact a patient multiple times from the survey 
administration requirements in order to minimize the burden imposed on 
ASCs.
    Response: As stated in the proposed rule (81 FR 45737), we proposed 
that ASCs, via their CMS-approved vendors, 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. We are finalizing this proposal in section XIV.C.5.a. of this 
final rule with comment period, above. This is also reflected in the 
OAS CAHPS Survey Protocols and Guidelines. Under the telephone-only and 
mixed mode survey administration requirements, the vendor does not 
leave a message for the patient when calling to administer the survey. 
Further, under the mixed mode with telephone follow-up survey 
administration, only one follow-up telephone call is made. We believe 
these administration requirements impose minimal survey response 
burdens on patients or burdens on ASCs.
    The use of a second mailing to improve response rates and reduce 
survey error comes from survey methodological literature,\232\ and is 
the standard for CAHPS Survey implementation.\233\ Data from the OAS 
CAHPS Survey Mode Experiment in 2015 showed that in a sample size of 
3,510 patients, including both mail-only and mixed-mode survey 
administration, the response rate to the first mailing was 
approximately 25 percent. By contrast, the final response rate for the 
mail-only sample after the second mailing was 37 percent. We believe 
this 12-percent increase highlights the importance of requiring a 
second mailing in improving survey response rates. In addition to 
lowering response rates, which can lead to potential bias in the data, 
we believe implementing a single mailing survey administration option 
would require increases in the initial sample size for survey 
administration in order to achieve 300 completed surveys. Thus, we 
believe the cost savings from not requiring a second mailing would be 
reduced due to the need for an increased sample size for the initial 
mailing for reliability.
---------------------------------------------------------------------------

    \232\ Dillman, D. A. 1978. Mail and Telephone Surveys: The Total 
Design Method. New York: Wiley & Sons.
    \233\ ``Outpatient and Ambulatory Surgery.'' Available at: 
https://oascahps.org.
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing our proposals for the data submission requirements for the 
five OAS CAHPS Survey-based measures for the CY 2020 payment 
determination and subsequent years, as proposed. We also are 
finalizing, as proposed, to codify these OAS CAHPS Survey 
administration requirements for ASCs and survey vendors under the ASCQR 
Program at 42 CFR 416.310(e).
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.\234\ 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).
---------------------------------------------------------------------------

    \234\ 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.
---------------------------------------------------------------------------

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45738 through 45739), 
we proposed one modification to the ASCQR Program's extraordinary 
circumstances extensions or exemptions policy for the CY 2019 payment 
determination and subsequent years. Specifically, we proposed 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

[[Page 79825]]

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 final rule (81 FR 57181 through 57182; 81 FR 
57231), we finalized 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 final rule with 
comment period, we are also finalizing a similar deadline of 90 days 
following an event causing hardship for the Hospital OQR Program.
    In addition, we proposed to make a corresponding change to the 
regulation text at 42 CFR 416.310(d)(1). Specifically, we proposed to 
state that ASCs may request an extension or exemption within 90 days of 
the date that the extraordinary circumstance occurred.
    We invited 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.
    Comment: Commenters supported CMS' proposal to extend the deadline 
for submission of an ECE request from within 45 days of the 
extraordinary event to within 90 days of the extraordinary event 
because this proposal would give ASCs more time to determine whether it 
is appropriate to submit a request and would align the ASCQR Program 
with many of CMS' other quality reporting and value-based purchasing 
programs.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal to extend the time to submit a request form to 
within 90 days of the date that the extraordinary circumstance occurred 
for the CY 2019 payment determination and subsequent years as proposed. 
We also are finalizing, as proposed, a corresponding change to the 
regulation text at 42 CFR 416.310(d)(1).
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. In the CY 2017 OPPS/ASC proposed rule (81 FR 
45736), we did not propose 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 final rule with comment period.
    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 the 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.

[[Page 79826]]

    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 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45739 through 45740), 
we did not propose 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.\235\ The 1984 National Organ and Transplantation Act 
(NOTA)\236\ created the OPTN and Organ Procurement Organizations 
(OPOs), among 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.\237\ 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.\238\
---------------------------------------------------------------------------

    \235\ Hamilton, T.E. 2009, ``Accountability in Health Care--
Transplant Community Offers Leadership,'' American Journal of 
Transplantation, Vol. 9, pp. 1287-1293.
    \236\ National Organ Transplant Act (NOTA; Pub. L. 98-507), 
codified at 42 U.S.C. 274, ``Organ procurement and transplantation 
network.''
    \237\ 42 U.S.C. 274a, ``Scientific registry.''
    \238\ Available at: http://srtr.org/who.aspx.
---------------------------------------------------------------------------

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

[[Page 79827]]

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.\239\
---------------------------------------------------------------------------

    \239\ Dickinson, D.M., Arrington, C.J., et al., 2008, ``SRTR 
program-specific reports on outcomes: A guide for the new reader,'' 
American Journal of Transplantation, Vol. 8 (4 PART 2), pp. 1012-
1026.
---------------------------------------------------------------------------

    On March 30, 2007, we issued a final rule that set 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 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 once 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 
CMS' enforcement of the outcomes standard.\240\ 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 has 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 
final rule with comment period, we discuss finalization of a proposal 
to make additional revisions to Sec.  488.61(h)(2) to clarify 
provisions relating to a signed SIA remaining in force.)
---------------------------------------------------------------------------

    \240\ 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, resulting 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 in section XVI. of this final rule 
with comment period. 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, despite the risk 
adjustment model accounting for differences in both donor organ quality 
and recipient health. 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

[[Page 79828]]

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.''\241\ 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 programs, in priority order. As the authors of a 
later study concluded, ``This initially led to an extraordinary 
increase in the volume of unwanted offers to many centers.''\242\
---------------------------------------------------------------------------

    \241\ 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.
    \242\ 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, and 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. For instance, with 
the ECD kidneys, characteristics that historically defined an ECD 
kidney include age of donor at or greater than 60 years, or kidneys 
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 kidney use. 
ECD kidney 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 kidney that might be appropriate 
to use compared with one that involves too much risk. Therefore, ECD 
kidney use may have been a particularly sensitive indicator of risk 
aversion. We note that, in 2014, the OPTN replaced the ECD kidney 
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 
kidney acceptance, but may have limited effect on undue risk aversion.

B. Revisions to Performance Thresholds

    For the reasons described above, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45742 through 45743), we proposed 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 the proposed rule, we 
followed 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 1 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 1 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

[[Page 79829]]

to use more of the increasing number of viable organs.
    For consistency and to avoid unneeded complexity, we proposed 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 proposed 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 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 final rule with comment 
period).
    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 flagging criteria, both before and after 
adoption of the new Bayesian methodology, have 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 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 invited public comment on this issue. Specifically, we invited 
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.
    Comment: Many commenters supported CMS' proposal to raise the 
threshold for observed/expected events (1-year patient deaths and graft 
failures) from 1.5 to 1.85 for all organ types. One commenter believed 
that changing the threshold to 1.85 would appropriately balance the 
need for outcome requirements standards in the transplant CoPs, while 
ensuring that the thresholds do not hinder beneficiary access to 
available organs. Other commenters stated that the proposed change 
would encourage greater access to transplantation for higher-risk 
patients who could still benefit from a transplant, thereby improving 
health outcomes and quality of life and decreasing costs. One commenter 
stated that the change would help to make solid organs available to 
patients who need them by not penalizing hospitals that perform higher-
risk transplant procedures. Another commenter stated that this proposal 
is consistent with the OPTN's evaluation of proposed revisions to its 
criteria for performance review as part of an effort to reduce 
disincentives to transplant and encourage innovation. One commenter 
stated that the original threshold was based on the threshold for OPTN 
Membership and Professional Standards Committee (MPSC) peer review of 
potentially underperforming transplant centers, was never intended as a 
regulatory criterion, and that the threshold has always been too 
stringent, resulting in a high number of false positive citations. This 
commenter also supported CMS' decision not to adopt the SRTR Bayesian 
methodology for flagging underperforming transplant centers.
    Response: We appreciate the commenters' support for our proposal to 
increase the threshold for observed/expected events from 1.5 to 1.85 
for all organ types in the transplant outcome requirements standards.
    Comment: One commenter believed that the proposed changes would 
bring relevant OPTN policies and CMS standards into alignment. The 
commenter urged CMS to continue to develop policies and requirements 
that align current or future standards in an expeditious manner and/or 
develop regulatory provisions in alignment with OPTN policy that would 
ensure that changes to OPTN policy are automatically reflected in CMS' 
standards. The commenter believed that this action would allow the 
transplant community to ensure that limited resources are focused more 
on efforts to successfully complete transplants for candidates on a 
waiting list than on ensuring compliance with multiple, inconsistent 
standards and requirements.
    Response: We appreciate the commenter's support. We agree that 
future coordination between CMS and OPTN, where appropriate, will 
support efforts toward more successful transplantations.
    Comment: A few commenters stated that a recent study documented a 
``survival benefit'' for transplants as opposed to dialysis, even in 
transplant centers with low performance ratings. One commenter 
requested that CMS acknowledge this study and use the information to 
support the development of policies that reduce barriers that currently 
limit transplant centers in this and future rulemakings. Another 
commenter believed that transplant outcomes should be considered in the 
context of patient outcomes in the absence of transplantation. The 
commenter opined that variations in transplant center performance 
ratings are clinically insignificant when compared with the outcomes of 
patients who are not transplanted. The commenter further stated that, 
for this reason, any regulation that has the potential to reduce access 
to transplantation, whether by increasing risk aversion or otherwise, 
warrants careful scrutiny.
    Response: We acknowledge the significant issues that are associated 
with dialysis treatment. We note that the outcome measures within the 
CoPs establish minimum quality standards for protecting the health and 
safety of transplant recipients in Medicare-certified facilities.
    Comment: A few commenters believed that the proposed increase in 
the O/E threshold to 1.85 continues to limit access to 
transplantations. One commenter expressed concern that the proposed 
change would only impact a few transplant programs and that the 
increase in the threshold would not

[[Page 79830]]

provide a meaningful increase in access to transplantations. Some 
commenters requested that CMS increase the threshold to at least 2.0. 
One commenter stated that the threshold of 2.0 more closely 
approximates the performance threshold for graft survival in 2007. 
Other commenters opined that the O/E threshold adopted in 2007 has 
always been too stringent, and that a threshold of at least 2.0 strikes 
a suitable balance.
    Response: At this time, we believe that it is most advisable to 
implement the proposed 1.85 threshold and study the impacts and effects 
of that revision. We will consider further changes in the future if 
data suggest that the threshold is too low or too high.
    Comment: A few commenters expressed support for a recent Survey and 
Certification Memorandum (S & C 16-24--Hospitals) that provided 
guidance that Medicare approval will generally not be at risk solely 
due to noncompliance with the outcome standards at 42 CFR 482.80 and 
482.82, as long as a transplant program's O/E ratio is within 185 
percent of the risk-adjusted expected number.
    Response: We believe that this comment is outside the scope of the 
proposed rule. However, we note that the requirements of this finalized 
provision will supersede this Survey and Certification Memorandum, and 
we will consider issuing an updated memorandum in the future if 
necessary.
    Comment: A few commenters stated that, while they supported the 
proposal to revise the transplant outcome requirements standards, clear 
data will be required to assess the effects of this change both on 
organ utilization and patient outcomes. Another commenter noted that 
future analysis will be required to assess whether the change results 
in increases in the number of organs transplanted and decreases in 
organ wastage.
    Response: We agree with the commenters.
    Comment: One commenter stated that multiple published reports 
highlight the impact of regulatory thresholds on risk aversion and 
reduced rates of transplantation and patient listing. The commenter 
also stated that reports of regulatory oversight reveal a sustained 
negative impact on transplant activity with no identified decrease in 
outcomes based on the flagging methodologies.
    Response: We understand that these perceptions are present in the 
transplant community. We proposed the change to the outcome 
requirements standard in part to address and acknowledge these 
perceptions regarding risk aversion. However, on a whole, the outcome 
measures for transplant centers do provide minimal standards of 
acceptable quality to protect the health and safety of beneficiaries.
    Comment: One commenter stated that CMS should work with HRSA to 
ensure that less egregious deviations from expected practice are 
handled through the OPTN review process.
    Response: We appreciate the commenter's recommendation. However, we 
believe this comment is outside the scope of the proposed rule.
    Comment: One commenter appreciated that CMS acknowledged the need 
to ensure that SRTR and CMS' requirements are consistent and supported 
the proposed changes. The commenter recommended that additional 
attention be given to the current ``disconnect'' between OPO and 
transplant center outcome measures. The commenter believed that CMS' 
regulations indirectly discourage OPOs from increasing the recovery of 
organs from older, ``marginal donors'' because this practice reduces 
organs transplanted per donor, which will reduce the incentive to 
aggressively pursue all donors. The commenter stated that these 
regulations incentivize OPOs to maximize organ retrieval from multi-
organ donors, without consideration of whether the organs retrieved are 
appropriate for transplantation or whether transplantation of these 
organs will result in positive patient outcomes. The commenter stated 
that, by contrast, transplant centers are required to meet stringent 
post-transplant recipient outcome requirements, regardless of donor 
organ quality. The commenter believed that acceptance of these organs 
that result in a higher transplant rate, while good for OPOs and 
patients, may actually hurt the centers if the rate of graft failure is 
excessive.
    Response: We appreciate the commenter's observations. However, we 
believe that these issues and observations are outside the scope of the 
proposed rule.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to revise the 
performance threshold specified at Sec. Sec.  482.80(c)(2)(ii)(C) and 
482.82(c)(2(ii)(C) from 1.5 to 1.85.

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 the Secretary 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

[[Page 79831]]

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.'' \243\
---------------------------------------------------------------------------

    \243\ 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 and Finalized Provisions

1. Definition of ``Eligible Death''
    Transplant hospitals and OPOs report data to the OPTN and those 
data are transmitted on a monthly basis to the SRTR contractor. 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 changes to its ``eligible death'' definition, 
which is scheduled to go into effect on January 1, 2017. The changes to 
the OPTN definition \244\ 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 HIV Organ Policy Equity Act (HOPE Act) (November 21, 2013, 
Pub. L. 113-51).
---------------------------------------------------------------------------

    \244\ 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.
---------------------------------------------------------------------------

    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 OPOs' conformance with 
Sec.  486.318.
    Therefore, in order to ensure more consistent requirements, in the 
CY 2017 OPPS/ASC proposed rule (81 FR 45743 through 45744), we proposed 
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 requested public comments 
on our proposed definition. We indicated that if, as a result of the 
public comments we receive on the proposal, additional changes are 
necessary to this definition, we will work with the OPTN to harmonize 
the definition.
    Comment: One commenter noted that the changes to the ``eligible 
death'' definition were approved by the OPTN Board of Directors in June 
2013. According to the commenter, following the passage of the HOPE Act 
on November 21, 2013, a workgroup was formed to review OPTN policies 
and make recommendations for policy changes to allow for research as 
outlined in the HOPE Act. The commenter stated that this workgroup 
considered including patients with HIV as part of the ``eligible 
death'' definition. However, according to the commenter, because the 
components of the ``eligible death'' definitions were developed as a 
comparative metric for OPO performance and are not intended to affect 
acceptance or allocation, the workgroup recommended no changes to the 
``eligible death'' definition components. The commenter believed that 
the definitions will not impact the use of HIV organs within a HOPE Act 
research study.
    Response: We appreciate the commenter's input. We have retained an 
exclusion for HIV if the organ is not being recovered for an HIV 
positive transplant recipient under the definition of ``eligible 
death.'' We have added the phrase ``consistent with the HIV Organ 
Policy Equity Act (the HOPE Act)'' to paragraph (8) of the definition 
of ``eligible death'' under Sec.  486.302 for clarity.
    Comment: Several commenters supported the proposed revision to the 
definition of ``eligible death'' at Sec.  486.302 to be consistent with 
the revised OPTN definition of ``eligible death.''
    Response: We appreciate the commenters' support.

[[Page 79832]]

    Comment: One commenter, while supporting the overall effort to 
align definitions, stated that the new definition of ``eligible death'' 
is intended to improve reporting consistency and clinical refinement in 
determination of organ suitability for transplantation. However, the 
commenter believed that the associated measure itself falls short of 
meeting the statutory requirements for recertification based on 
performance measures because the commenter believed that the proposed 
outcome measures may not be based on empirical data as required by the 
statute.
    Response: We appreciate the commenter's overall support. However, 
we do not agree that adoption of the OPTN yield metric falls short of 
statutory requirements for performance measures for OPOs. We believe 
that the revised measure is based on empirical evidence and will enable 
more precise measurement of OPO performance because of the multiple 
risk adjustments that are applied to each individual donation service 
area (DSA), including environmental factors and patient population.
    Comment: Several commenters supported CMS' proposed regulatory 
changes, which would extend the benefits of transplantation to 
individuals with both HIV and ESRD by allowing recovery and 
transplantation of kidneys from HIV positive donors into HIV positive 
recipients. One commenter stated that the possibility of renal 
transplantation in HIV donors was explored by an association several 
years ago and that it was recently suggested that there is potential 
for approximately 500 people on the donor list who are HIV positive to 
receive organs from HIV positive people every year.
    Response: We appreciate the commenters' support.
    Comment: One commenter believed that the proposed changes will 
promote consistency in requirements between OPTN and CMS and ultimately 
allow for more transplantable organs and clear requirements between the 
two organizations. Several commenters stated that the proposed changes 
to the ``eligible death'' definition (as well as the proposed aggregate 
donor yield metric and transport documentation) are necessary updates 
to reflect advances in technology and promote greater utilization of 
organs.
    Response: We appreciate the commenters' support.
    Comment: One commenter stated that the donation rate metric is a 
fundamentally appropriate measure of OPO performance and supported 
efforts to identify a measure that is an accurate and validated 
measure. The commenter also supported data collection under the new 
definition of ``eligible death,'' but disagreed with the proposed 
adoption of this measure for OPO performance assessment.
    Response: We appreciate the commenter's input. The commenter did 
not provide specifics as to why the commenter disagreed with the 
proposed adoption of the measure. Therefore, we are unable to respond 
to the commenter's disagreement.
    Comment: One commenter recommended that CMS adopt a donation rate 
metric defined as a ratio of actual donors over a surrogate measure for 
the pool of possible organ donors. The commenter believed that the best 
donation rate measure currently available is the proposed OPTN measure 
of donation rate and supported the use of this measure while current 
efforts of OPTN, SRTR, and AOPO members are completed. The commenter 
noted that the potential for stronger measures of donation rate are on 
the horizon, and suggested that the measure be named, but not defined 
in the regulations. The commenter believed that this would allow for a 
more fluid adoption of improved measures once completed and established 
by the donation and transplant community.
    Response: We appreciate the commenter's recommendation. However, we 
did not propose to include a donation rate metric as a new outcome 
measure, and therefore consider this comment to be outside the scope of 
the proposed rule. We will continue to evaluate the effectiveness of 
the performance measures for OPOs and will propose changes to the 
regulations if necessary.
    Comment: One commenter supported any regulatory proposals for OPOs 
that would encourage or expect them to evaluate all potential deaths as 
a possibility for organ donation regardless of the definition of 
``eligible death'' or the number of organs that can be recovered. The 
commenter requested that CMS continue to reevaluate OPO metrics for 
performance because organ recovery is so variable throughout the 
country.
    Response: We appreciate the commenter's support. We will continue 
to evaluate OPO performance measures.
    After consideration of the public comments we received, we are 
finalizing our proposal to replace the current definition of ``eligible 
death'' at Sec.  486.302 with the revised OPTN definition of ``eligible 
death.'' The CMS revised definition includes donors up to the age of 75 
and replaces the automatic exclusion of potential donors with MSOF with 
the clinical criteria listed in the definition, that specify the 
suitability for procurement.
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 2012 (incorrectly referenced in the proposed rule as ``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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45744), we 
proposed 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 stated that we intend to revisit and revise 
the other OPO measures at a future date.
    Comment: One commenter noted that the date for the implementation 
of SRTR's OPO donor yield models was incorrect and stated that this was 
first produced and used by the OPTN in 2012.
    Response: We appreciate the commenter for recognizing the 
misstatement. We have revised the preamble language of this final rule 
with comment period to reflect the 2012 date.
    Comment: Several commenters supported consistency between the OPTN 
and CMS in the use of the current SRTR donor yield metric to evaluate 
OPO performance. The commenters encouraged CMS to operationalize the 
use of these measures in a way that would provide the OPTN sufficient 
time to work with an OPO to improve donor yield after they are 
initially flagged, but

[[Page 79833]]

prior to engagement with CMS. The commenters believed that this action 
would be consistent with the current application of CMS' performance 
requirements for transplant programs.
    Response: We appreciate the commenters' support. While we also 
appreciate the suggested operationalization for use of these measures, 
we must measure OPO performance as specified by the regulations. There 
is delay between our publication of the final rule and its effective 
date in order to provide an opportunity for OPOs to prepare for the new 
standard. In addition to the aggregate donor yield measure, there are 
two other outcome measures pertaining to the donation rate within the 
OPO CfCs. Measure one is the donation rate of eligible donors as a 
percentage of eligible deaths, and measure two is the observed donation 
rate compared to the expected donation rate. We will continue to 
evaluate our OPO performance measures and will propose additional 
changes in the future if we believe additional changes are warranted.
    Comment: Several commenters supported the proposed methodology for 
more accurate measures for organ yield performance and accounting for 
differences between donor case-mixes across DSAs.
    Response: We appreciate the commenters' support.
    Comment: One commenter expressed concern regarding the utilization 
of the OPTN proposed definition of ``eligible death'' as a measure of 
donation potential. The commenter stated that the utilization of these 
data as part of an overall donation metric does not adhere to the 
requirement to use empirical evidence to measure OPO potential and 
performance.
    Response: We disagree that the OPTN Yield Metric does not meet the 
statutory requirement for the development of OPO measures utilizing 
empirical data. The OPTN Yield Metric was developed based upon, and 
utilizes, actual data submitted by the OPOs to the OPTN and, therefore, 
is based on observation or experience.
    Comment: One commenter noted that current OPO outcome measures one 
and two utilize eligible death as part of the calculation and believed 
the implementation of a revised definition mid-cycle impairs the 
ability for an OPO to track and adjust its performance as needed to 
remain compliant. The commenter supported inclusion of the proposed 
donation metric outlined, but requested that this measure be defined in 
subregulatory documents to allow for refinement as needed based on 
changes in the donation and transplantation community.
    Response: We appreciate the commenter's support. While we also 
appreciate the suggested operationalization for use of these measures, 
we must measure OPO performance as specified in the regulations. There 
is a delay between our publication of the final rule and its effective 
date in order to provide an opportunity for OPOs to prepare for the new 
standard. In addition to the aggregate donor yield measure, there are 
two other outcome measures pertaining to the donation rate within the 
OPO CfCs. Measure one is the donation rate of eligible donors as a 
percentage of eligible deaths, and measure two is the observed donation 
rate compared to the expected donation rate. We will continue to 
evaluate our OPO performance measures and will propose additional 
changes in the future if we believe additional changes are warranted.
    Comment: One commenter stated that the current certification cycle 
for OPOs will be complete in 2018 and, therefore, the new definitions 
will be implemented within an existing performance cycle. The commenter 
believed that the required timeframes for data review and evaluation 
would not be met, based on the adoption of a new definition of 
``eligible death'' and a new yield metric for the current certification 
cycle. The commenter requested clarification on how the data collection 
timeframes and designation cycle would be reconciled.
    Response: We understand that the OPO community has concerns with 
the implementation of a new definition in the middle of a certification 
cycle. However, we believe that the change is imperative to support 
increased organ availability, and we will make any needed adjustments 
in interpretation through the mid-cycle change. OPOs will continue to 
receive 6-month data reports indicating compliance and noncompliance 
with the outcome measures. Each OPO's performance will be measured 
based on the current definition and yield measures for the time period 
ending December 31, 2016. The new definition and yield measure will be 
effective on January 1, 2017. The June 2017 OPO data reports will be 
based on the new definition and yield metric. OPOs will receive two 
data reports based on the new definition and yield measure prior to the 
2018 survey cycle. We will review both reports during the 2018 survey 
cycle.
    Comment: One commenter requested clarification of the update to the 
final rule published in December 2013, which changed requirements for 
OPOs to meet only two of the three outcome measures. The commenter 
stated that it was unclear if this requirement will remain in place for 
this next review certification cycle with the proposed revised measures 
and requested that these facts be considered prior to formalizing 
changes that may impact the donation and transplantation community in a 
negative manner.
    Another commenter questioned whether, under the proposed revisions, 
the existing requirement to meet two of the three measures would 
continue. The commenter supported the CMS 2013 final rule (78 FR 74826) 
that modified the requirement at Sec.  486.318 to specify that two of 
the three measures must be met for recertification. The commenter 
agreed with CMS' statement in that final rule that the requirement to 
automatically decertify an OPO for failure to meet all three measures 
was unnecessarily stringent. The commenter stated that, in the absence 
of a process to review mitigating factors or consider corrective 
action, as well as given ongoing concerns about the outcome measures 
themselves, a threshold of compliance with two of the three measures 
was appropriate.
    Response: We appreciate the commenters' concern. The proposed 
change to Measure 3 will not impact the requirement at Sec.  486.318(a) 
that states that ``with the exception of OPOs operating exclusively in 
noncontiguous States, Commonwealths, Territories, or possessions, an 
OPO must meet two out of the three outcome measures.'' The proposed 
change also will not impact the requirement at Sec.  486.318(b) that 
states that ``for OPOs operating exclusively in noncontiguous States, 
Commonwealths, Territories, or possessions, an OPO must meet two out of 
the three outcome measures.''
    Comment: One commenter believed that CMS intended to replace the 
three current yield measures with one proposed O/E measure and 
requested that this be clarified in the final rule with comment period. 
The commenter noted that current regulations require OPOs to meet two 
out of three yield measures defined as: (1) The number of organs 
transplanted per standard criteria donor; (2) the number of organs 
transplanted per expanded criteria donor; and (3) the number of organs 
used for research per donor. The commenter supported the concept of 
replacing these three yield measures with an aggregate O/E measure. 
However, the commenter also urged CMS to adopt larger regulatory reform 
that includes process improvement and corrective action opportunities. 
The

[[Page 79834]]

commenter supported, in the context of such a regulatory structure, a 
CMS requirement that OPOs meet both the donation rate and the yield 
measures to remain in compliance.
    Response: We thank the commenter for expressing this concern. In 
the proposed rule, we did not clearly articulate our intention to 
retain the requirement that the number of organs for research per donor 
continues to be included as one of the yield measure criteria. It was 
not our intention to eliminate this requirement, and we have revised 
the regulation text in this final rule with comment period to retain 
the number of organs for research per donor as a yield measure 
criterion. The requirements in the 2006 final rule at Sec. Sec.  
486.318(a)(3)(iii) and (b)(3)(iii) have been renumbered as Sec. Sec.  
486.318(a)(3)(ii) and (b)(3)(ii), respectively, in this final rule with 
comment period due to the reduction in the total number of yield 
measure criteria included in Sec. Sec.  486.318(a)(3) and (b)(3). 
Because there will only be two yield measure criteria under Sec. Sec.  
486.318(a)(3) and (b)(3), the language in the proposed rule that ``at 
least 2 of the 3 yield measures specified are more than 1 standard 
deviation below the national mean'' has been removed and replaced with 
language that now reads ``The OPO data reports, averaged over the 4 
years of the recertification cycle, must meet the rules and 
requirements of the most current OPTN aggregate donor yield measure.'' 
In response to the commenter's request for CMS to adopt larger 
regulatory reform, while we understand the concerns raised by the 
commenter, we believe that the recommendations are outside the scope of 
the proposed rule.
    Comment: One commenter recommended that CMS' definition of the 
yield measure refer to the OPTN Observed to Expected Risk-Adjusted 
Process and not to a detailed description of the current methodology.
    Response: We appreciate the commenter's observation regarding the 
detailed description of the components of the revised definition. In 
accordance with statutory requirements, we must include outcome 
measures as a regulation.
    Comment: One commenter recommended that the number of organs used 
for research be eliminated from the performance measures. The commenter 
stated that the measure is imprecisely defined, influenced by physical 
proximity to research clearinghouse agencies, and conflicts with the 
organ yield measure.
    Response: We appreciate the commenter's input. In the proposed rule 
(81 FR 45776), our proposed amendments to Sec. Sec.  486.318(a)(3) and 
(b)(3) did not propose to eliminate the performance measure on 
research. Our regulation is consistent with the Pancreatic Islet Cell 
Transplantation Act which requires that pancreata used for islet cell 
research be counted for OPO certification.
    Comment: One commenter stated that the current proposed changes 
present modest progress in improving definitions for and measures of 
OPO performance. However, the commenter believed that the most pressing 
and significant components of regulatory reform have not been 
addressed. The commenter further stated that regulatory change was 
needed to develop and implement outcome measures that have technical 
integrity, are meaningful and understandable, and drive towards 
increasing the number of transplants that save more lives, through a 
defined process for continuous improvement in establishing risk-
adjusted, verifiable and meaningful measures of performance, that are 
not misaligned with transplant program outcome measures.
    Specifically, the commenter recommended that CMS:
     Establish a process of continuous OPO performance 
measurement and monitoring over a rolling 36-month period, updated in 6 
month intervals.
     Establish a preemptive review and corrective action 
process to be implemented before an OPO falls out of compliance with 
outcome measures.
     Establish a process for OPOs that fall out of compliance 
with outcome measures, to include the ability to request a review of 
mitigating factors and/or the ability to enter a formal corrective 
action process.
     Define two distinct OPO outcome measures in the regulation 
(the Donation Measure and the Yield Measure). Define the methodology 
for calculating the outcome measures outside of the regulation to allow 
for future refinement and adjustment of the calculation as needed and 
as the data and science advance.
     Establish OPTN/SRTR oversight responsibilities for 
development, ongoing review and refinement of the two OPO outcome 
measure algorithms and calculations, with enhanced OPO representation. 
This oversight group should include equal OPO and transplant 
representation.
    Response: While we understand the concerns raised by the commenter, 
we believe that the recommendations are outside the scope of the 
proposed rule. However, we will consider these comments for future 
rulemaking.
    Comment: One commenter stated that the current yield metrics 
provide alternative performance thresholds for OPOs operating 
exclusively in noncontiguous U.S. States, commonwealths, territories, 
or possessions. The commenter expressed concern that, while the 
proposed OPTN/SRTR yield metric includes in the risk model a variable 
for geographic location, the unique challenges faced by these OPOs may 
not be sufficiently identified and accounted for in the current risk 
model. The commenter asked what provisions CMS would include for 
appropriate evaluation for OPOs operations exclusively in these 
regions.
    Response: Due to the specificity of the risk adjustments in the 
proposed yield metric, which are based on 29 risk factors regarding 
donor medical characteristics and social complexities, the 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 among donor case-mixes across DSAs.
    Comment: One commenter stated that the proposed changes would 
further advance efforts to foster quality improvement by modernizing 
the quantitative criteria for both performance standards for transplant 
centers and the conditions of participation for OPOs.
    Response: We appreciate the commenter's support.
    Comment: One commenter noted that the OPTN system compares each 
OPO's actual donor yield with its expected donor yield, given the 
characteristics of the OPO's donor pool and that the OPTN's Membership 
and Professional Standards Committee will monitor results and review 
OPOs that meet each of the following three criteria:
     Observed (O) transplants per 100 donors minus Expected (E) 
transplants per 100 donors is less than -10, that is, more than 10 
fewer organs transplanted than expected per 100 donors.
     O divided by E (O/E) is less than 0.9, that is, more than 
10 percent fewer transplanted organs than expected.
     O/E is statistically significantly lower than 1.0 using a 
two-sided p-value of less than 0.05.
    Response: We appreciate the commenter's input.
    Comment: One commenter recommended that measures be defined outside 
of the regulations to allow for refinement as needed, based on changes 
in the donation and transplantation community. The commenter also

[[Page 79835]]

requested that donor yield measures and its utilization of this measure 
should include the ability for OPOs to submit corrective action plans 
similar to what is allowed in the OPTN construct, noting mitigating 
factors as needed if found to be noncompliant.
    Response: We appreciate the commenter's input. However, in order to 
ensure adequate notice and to provide the public an opportunity to 
participate in establishing the legal standards, we establish the OPO 
performance measures by regulation.
    After consideration of the public comments we received, we are 
finalizing our proposal to revise our regulations at Sec. Sec.  
486.318(a)(3) and (b)(3) to be consistent with the current OPTN/SRTR 
aggregate donor yield metric.
3. Organ Preparation and Transport--Documentation With the Organ
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45744), we proposed 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 proposed 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 proposed a revision to Sec.  
486.346(b) to make it consistent with current OPTN policy 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 could be 
accessed electronically by the transplant center.
    Comment: One commenter noted a discrepancy pertaining to the entity 
to which OPOs submit data and advised CMS that transplant hospitals and 
OPOs report data to the OPTN and those data are transmitted on a 
monthly basis to the SRTR contractor.
    Response: We appreciate the commenter's recognition of the 
discrepancy. We have revised the preamble language in this final rule 
with comment period to provide that transplant hospitals and OPOs 
report data to the OPTN and that those data are transmitted on a 
monthly basis to the SRTR contractor.
    Comment: One commenter noted a policy citation discrepancy between 
OPTN and CMS' proposal to revise Sec.  486.346(b) to make it consistent 
with current OPTN policy at 16.5.A. Organ Documentation, which requires 
that blood type source documentation and infectious disease testing 
results be physically sent in hard copy with the organ. The commenter 
applauded CMS' proposal to align both OPTN and CMS requirements. The 
commenter stated that the issues of not utilizing current technology, 
inefficient use of time, and unnecessary misdirection of resources away 
from donors and their families were brought to light during numerous 
discovery observations made during the development of the OPTN 
electronic tracking and transport project. According to the commenter, 
the OPTN policy change was designed to limit physical paperwork sent 
with the organ down to key elements, ABO results and infectious disease 
results, and expressed full support for the proposed CMS change.
    Response: We appreciate the commenter's input and clarification. We 
have revised the preamble language of this final rule with comment 
period to remove the specific reference citations to an OPTN policy.
    Comment: Several commenters supported the proposal 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. In addition, one 
commenter supported the revision for documentation requirements for 
donor records to be in alignment with OPTN policy.
    Response: We appreciate the commenters' support.
    Comment: One commenter supported the provisions to reduce the 
administrative burden of copying records that are available 
electronically. The commenter suggested that CMS require a minimum 
timeframe for preservation of electronic access to the records for the 
transplant centers. The commenter also suggested that the OPOs complete 
a specified data set in the electronic system and that transplant 
centers have access to any of the records that have been typically 
included in the packet accompanying the organ. Another commenter also 
supported the proposal and stated its appreciation for CMS' efforts to 
streamline the process by reducing paperwork burdens.
    Response: We appreciate the commenters' support. The commenter's 
suggestion regarding a retention timeframe is outside the scope of the 
proposed rule.
    After consideration of the public comments we received, we are 
adopting as final without modification the revision of Sec.  486.346(b) 
to make it consistent with current OPTN policy, which requires that 
blood type source documentation and infectious disease testing results 
be the only records required to be physically sent in hard copy with 
the organ.

XVII. Transplant Enforcement Technical Corrections and Other Revisions 
to 42 CFR 488.61

A. Technical Correction to Transplant Enforcement Regulatory References

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45744), we proposed 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.''

[[Page 79836]]

    We also proposed to amend Sec.  488.61(f)(1) which was added in 
that final rule (79 FR 50359) to correct the same incorrect citations.
    Comment: One commenter supported CMS' vigilance to address needed 
technical corrections and clarifications.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposals to make technical corrections to the preamble 
language and regulatory text of Sec.  488.61(f) in the FY 2015 IPPS/
LTCH PPS final rule regarding enforcement provisions for organ 
transplant centers described above.

B. Other Revisions to 42 CFR 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.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45745), we proposed 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 the proposed 
rule, we proposed 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.
    Comment: One commenter opposed the proposal that a signed Systems 
Improvement Agreement remain in force even if a subsequent SRTR report 
indicates that the program has regained compliance with the CoPs 
because continuing the SIA would result in staff and financial 
implications and possible loss of referrals. One commenter supported 
the proposal and one commenter indicated that it understood CMS' 
proposal to revise Sec.  488.61(h)(2) to provide that a signed SIA 
remains in force even if a subsequent SRTR report indicates that the 
transplant program has regained compliance.
    Response: We believe that our estimated cost for a transplant SIA 
program of $250,000 is reasonable, as it is based on reports from 
programs that have actually completed such agreements in the past. We 
appreciate that the costs may be higher (or lower), depending on the 
extent of the improvements the hospital identifies as needed and 
chooses to undertake. We believe that the additional portion of the 
proposed rule, which includes the ability for CMS to shorten or modify 
the timeframes of the SIA provides an opportunity for CMS to end the 
SIA early if the program has regained compliance and has procedures in 
place to ensure that compliance is maintained. We will determine 
whether the program has procedures for maintaining compliance on a 
case-by-case basis prior to ending the SIA.
    Comment: A few commenters supported the proposed revisions to 42 
CFR 488.61 to clarify and extend the timeframe to submit a letter of 
intent and other materials to apply for mitigating factors.
    Response: We appreciate the commenters' support.
    Comment: One commenter supported CMS' proposal to extend and 
clarify the timeframes for transplant centers to notify the agency of 
the intent to request a mitigating factors approval and submit the 
relevant data for review. Specifically, the commenter agreed that CMS 
should extend the notification period from 10 days to 14 calendar days 
and clarify that the timeframe to submit mitigating factors materials 
is 120 calendar days.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, 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, we are finalizing our proposal 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. 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.
    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,'' \245\ which 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.
---------------------------------------------------------------------------

    \245\ 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).
---------------------------------------------------------------------------

    On October 14, 2016, we posted on our Web site 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 final rule with comment 
period (CMS-5517-FC) (hereinafter referred to as the ``2016 MIPS and 
APMs final rule with

[[Page 79837]]

comment period'').\246\ The 2016 MIPS and APMs final rule with comment 
period establishes the MIPS, a new program for certain Medicare-
enrolled practitioners. MIPS consolidates components of three existing 
programs, the Physician Quality Reporting System (PQRS), the Physician 
Value-Based Payment Modifier (VM), and the Medicare EHR Incentive 
Program for EPs, and focuses on quality--both a set of evidence-based, 
specialty-specific standards as well as practice-based improvement 
activities; cost; and use of CEHRT to support interoperability and 
advanced quality objectives in a single, cohesive program that avoids 
redundancies.
---------------------------------------------------------------------------

    \246\ The 2016 MIPS and APMs final rule with comment period also 
has been posted on the Regulations.gov Web site at: https://www.regulations.gov/document?D=CMS-2016-0060-3921, and is expected 
to be published in the Federal Register on November 4, 2016.
---------------------------------------------------------------------------

B. Summary of Final Policies Included in This Final Rule With Comment 
Period

    In this final rule with comment period, we are adopting final 
policies based on the proposals in the CY 2017 OPPS/ASC proposed rule 
(81 FR 45745 through 45753) to continue advancement of certified EHR 
technology utilization, focusing on interoperability and data sharing. 
We proposed 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 also proposed 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. In addition, we proposed to update the 
Modified Stage 2 and Stage 3 measures with a new naming convention to 
allow for easier reference to a given measure (81 FR 45748 and 45752). 
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.
    In the CY 2017 OPPS/ASC proposed rule, we did not expressly address 
the effect these proposals would have on eligible hospitals and CAHs 
that are eligible to participate in both the Medicare and Medicaid EHR 
Incentive Programs. These hospitals may be eligible for an incentive 
payment under Medicare for meaningful use of CEHRT or subject to the 
Medicare payment reduction for failing to demonstrate meaningful use; 
in addition, they may be eligible to earn a Medicaid incentive payment 
for meaningful use. We refer to these hospitals in this section of the 
final rule with comment period as ``dual-eligible'' hospitals. As 
discussed in our responses to the comments below, we are finalizing 
these proposed changes to the objectives and measures for 2017 and 2018 
for all eligible hospitals and CAHs that submit an attestation to CMS, 
including dual-eligible hospitals that are eligible to participate in 
both the Medicare and Medicaid EHR Incentive Programs. We also are 
making further, minor, refinements to the new naming conventions.
    We proposed to change the EHR reporting period in 2016 to any 
continuous 90 day period within CY 2016 for all returning EPs, eligible 
hospitals and CAHs that have previously demonstrated meaningful use in 
the Medicare and Medicaid EHR Incentive Programs (81 FR 45753). For the 
reasons discussed in section XVIII.D.1. of this final rule with comment 
period, we are finalizing a 90-day EHR reporting period in both CYs 
2016 and 2017 for all returning participants.
    We proposed 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 
the Modified Stage 2 objectives and measures(81 FR 45753 through 
45754). In this final rule with comment period, we are adopting this 
requirement as proposed.
    We proposed 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 (81 FR 45754 through 45755). In this 
final rule with comment period, we are finalizing this policy as 
proposed.
    We proposed to change the policy on measure calculations for 
actions outside the EHR reporting period for the Medicare and Medicaid 
EHR Incentive Programs (81 FR 45755). We are adopting a final policy 
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. In addition, we are finalizing that this requirement 
applies beginning in calendar year 2017.

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

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45746 through 45753), 
we made 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 Summary of Care 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 the proposed rule, our goal was 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.
    We invited public comment on our proposals.
    Comment: Commenters stated that having two different sets of 
meaningful use requirements, one for State Medicaid and one for 
Medicare would be a reporting burden for health systems that have 
providers that participate in both the Medicare and Medicaid EHR 
Incentive Programs. They stated that the best way to reduce the 
administrative burden would be to align all programs to the same 
threshold requirements and the same measures (or as close as possible) 
because there are many different programs to report to now, including 
the EHR Incentive Program for Medicaid providers and MIPS, for Medicare 
EPs, and each is proposed to have similar, but different measures.
    Response: The MACRA requires the establishment of the MIPS for 
eligible clinicians, which is a new program that

[[Page 79838]]

includes aspects of three existing programs (PQRS, VM, and the Medicare 
EHR Incentive Program for EPs) and will have an effect on Part B 
payments to MIPS eligible clinicians beginning in CY 2019. Under 
section 101(b) of the MACRA, the payment adjustment for EPs under the 
Medicare EHR Incentive Program will end after CY 2018. The MACRA did 
not make changes to the Medicare EHR Incentive Program for eligible 
hospitals and CAHs or to the Medicaid EHR Incentive Program, and thus 
our ability to adopt modifications to this program for hospitals 
remains constrained by the relevant provisions of the HITECH Act. Both 
the MIPS and the Medicare EHR Incentive Program for eligible hospitals 
and CAHs have different statutory requirements, which limit our ability 
to align the measures and thresholds between these two programs.
    Comment: Several commenters supported the flexibility proposed but 
believed the requirements remained burdensome and complicated, which 
could have a negative effect on the quality of patient care.
    Some commenters expressed concerns about meeting the requirements 
through relatively untested technology and functionalities related to 
application programming interfaces (APIs) and continue to have concerns 
about practicability of the Modified Stage 2 objectives and measures as 
well as the Stage 3 objectives and measures, including the ability of 
providers to satisfy the objectives and measures. Some commenters 
recommended allowing for a testing period in which providers would not 
incur penalties, thereby allowing new technologies to become more 
widely available and facilitate greater use.
    Many commenters also expressed concern about the potential impact 
the timing of the rule will have on their success and indicated there 
may be a heavy reporting burden for providers.
    Response: We recognize clinical workflows and maintaining 
documentation may require modifications upon implementation of the 
requirements in this final rule with comment period for eligible 
hospitals and CAHs attesting under Medicare and Medicaid. However, we 
believe the modifications will be minimal and the reporting burden may 
be reduced, as we are eliminating the CDS and CPOE objectives and 
associated measures (although the functionalities supporting these 
measures are still required in CEHRT). In addition, we are reducing the 
thresholds for a subset of remaining measures. We believe these final 
policies will help reduce administrative burdens and allow providers to 
focus more on patient care.
    We believe that interoperability and EHR functionalities will 
continue to advance prior to and after implementation of the technology 
certified to the 2015 Edition, which should increase providers' success 
in meeting the objectives and associated measures of the program. 
Furthermore, healthcare providers that experience significant issues 
with their technology vendors may submit an application for a 
significant hardship exception from the Medicare payment adjustment.
    We also recognize the commenters' concerns regarding the timing of 
the publication of this final rule with comment period. For 2016, we 
proposed to shorten the EHR reporting period based on stakeholders' 
concerns that additional time was needed to update CEHRT systems, 
implement APIs for Stage 3 and transition to MIPS for certain EPs. In 
addition, we proposed certain Medicare EPs who are new participants in 
2017 and who are transitioning to MIPS in 2017 may apply for a one-time 
significant hardship exception from the 2018 payment adjustment.
    Comment: A few commenters requested confirmation on whether dual-
eligible hospitals will be able to attest to the Medicare meaningful 
use requirements with CMS, and if State Medicaid programs will be able 
to rely on the Medicare attestations to determine Medicaid EHR 
Incentive Program payment eligibility.
    Response: Dual-eligible hospitals attesting to CMS via such systems 
as the Hospital IQR Program reporting portal (81 FR 45754) will attest 
based on the revised objectives and measures established in this final 
rule with comment period for 2017 and 2018. State Medicaid agencies 
will be able to rely on these Medicare attestations to determine 
whether these hospitals qualify for incentive payments under the 
Medicaid EHR Incentive Program. Medicaid-only hospitals and dual-
eligible hospitals that choose to attest directly to a State for the 
State's Medicaid EHR Incentive Program will continue to attest to the 
measures and objectives as finalized in the 2015 EHR Incentive Programs 
Final Rule (80 FR 62762 through 62955).
    Comment: One commenter recommended that the proposed changes to 
meaningful use should apply in 2016 instead of 2017 as proposed.
    Response: We disagree that the removal of the CDS and CPOE 
objectives and measures or reduction of thresholds for a subset of the 
remaining objectives and measures should begin in CY 2016 as this would 
require upgrades to our attestation system within a short period of 
time, which would be costly and difficult to implement.
    We also note that we received a few comments indicating opposition 
to CMS having direct access to a facility's EHR for data abstraction, 
the States' inability to confirm duplicate payment status and obtain 
national data necessary to run and monitor the Medicaid EHR Incentive 
Program, and application of the same proposed advancing care 
information requirements for both Medicare clinicians participating in 
MIPS and Medicaid clinicians participating in the Medicaid EHR 
Incentive Program. We are not addressing these comments because we 
consider them to be outside the scope of the proposed rule.
1. Removal of the Clinical Decision Support (CDS) and Computerized 
Provider Order Entry (CPOE) Objectives and Measures for Eligible 
Hospitals and CAHs
    We proposed to amend 42 CFR 495.22 (by revising Sec.  495.22(e) and 
by adding a new Sec.  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. In the proposed rule (81 FR 
45745), we indicated this proposal would not apply to eligible 
hospitals and CAHs attesting under a State's Medicaid EHR Incentive 
Program due to the burden of updating technology and reporting systems 
which would incur both additional costs and time. 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 
applied 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 are compared to the required measure threshold. 
Through this analysis it was determined the CPOE objective and measures 
were topped out (81 FR 45746).

[[Page 79839]]

    We also proposed to remove the CDS objective and its associated 
measures which do not have percentage-based thresholds (hospitals 
attest ``yes/no'' to these measures) and therefore, cannot be measured 
by statistical analysis. However, we noted that 99 percent of eligible 
hospitals and CAHs have successfully attested ``yes'' to meeting these 
measures based on attestation data for 2015 and believe that the high 
level of successful attestation indicates achievement of widespread 
adoption of this objective and its associated measures among eligible 
hospitals and CAHs.
    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. We noted in the proposed 
rule (81 FR 45746) that the CDS and CPOE objectives and associated 
measures that we proposed to remove for eligible hospitals and CAHs 
would still be required as part of the eligible hospital's 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 invited public comment on our proposals.
    Comment: Several commenters supported the elimination of the CDS 
and CPOE objectives and associated measures as they agreed that it 
would decrease administrative burden, improve provider satisfaction, 
and would no longer provide useful performance information.
    Response: We thank the commenters for their support. As we stated 
in the proposed rule (81 FR 45746), we proposed the removal of these 
objectives and associated measures to reduce the reporting burden on 
providers for measures already achieving widespread adoption and with 
the goal to reduce administrative burden and allow a greater focus on 
patient care. As noted in the proposed rule (81 FR 45746), performance 
data for the objectives and associated measures have already achieved 
widespread adoption and are now considered topped out based on high 
performance.
    Comment: One commenter suggested that CMS consider ``sidelining'' 
CDS as a temporary measure. A few commenters disagreed with the 
proposal to eliminate the CDS measure because it contributes to 
improving quality and patient care. The commenters expressed concern 
that the functionality would no longer be used, which would jeopardize 
other patient centered uses associated with CDS leading to regression 
in facilities which made progress in this area.
    Response: We reiterate that the technology requirements for CDS 
would still be a required part of the definition of CEHRT for provider 
use. We encourage providers to continue to use functionalities that are 
important to their patient base or practice even if reporting on 
performance is no longer required for the EHR Incentive Programs.
    Comment: A few commenters requested clarification on whether dually 
eligible hospitals need to attest to the CPOE and CDS measures in order 
to receive their Medicaid EHR Incentive payment.
    Response: As previously mentioned, in this final rule with comment 
period we are aligning the removal of the CPOE and CDS objectives and 
measures for dual-eligible hospitals that attest to CMS for both 
Medicare and Medicaid. Therefore, dual-eligible hospitals attesting to 
CMS will attest based on the revised objectives and measures 
established in this final rule with comment period and will not attest 
to the CPOE and CDS objectives and measures. However, eligible 
hospitals and CAHs attesting to a State Medicaid agency will attest to 
the objectives and measures as established in the 2015 EHR Incentive 
Programs Final Rule, which include the CDS and CPOE objectives and 
measures.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the CDS and CPOE objectives and 
measures. In summary, we are finalizing the removal of the CDS and CPOE 
objectives and measures beginning in 2017 for eligible hospitals and 
CAHs attesting to CMS, including dual-eligible hospitals that are 
attesting to CMS for both the Medicare and Medicaid EHR Incentive 
Programs.
2. Reduction of Measure Thresholds for Eligible Hospitals and CAHs for 
2017 and 2018
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45746 through 45748), 
we proposed to 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 years 2017 and 2018 for Stage 3. As previously noted, 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. In addition, we proposed to update the Modified Stage 2 
measures with a new naming convention to allow for easier reference to 
a given measure (81 FR 45747).
    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.
    We invited public comment on our proposals.
    Comment: Many commenters agreed with reducing thresholds for 
eligible hospitals for the remaining Modified Stage 2 measures in 2017 
and Stage 3 measures in 2017 and 2018 because it would reduce 
administrative burden, resolve some of the challenges in meeting 
thresholds, and allow providers to best utilize health IT in their 
practice.
    Response: We thank the commenters for their support. As we stated 
in the proposed rule (81 FR 45746 through45753), we believe that 
reducing thresholds would decrease administrative burdens in order for 
the healthcare providers to focus on providing more quality patient 
care and updating and optimizing CEHRT functionalities to meet the 
requirements and prepare for Stage 3. We agree with commenters 
regarding some of the threshold challenges that hospitals have 
experienced, and therefore considered the concerns via written 
correspondence and proposed a reduction in thresholds accordingly.
    Comment: A few commenters expressed concern that the threshold 
reduction proposals for Stage 2 and 3 objectives will slow progress to 
improve health care quality through use of CEHRT. A few commenters 
stated the threshold reduction proposals for selected objectives and 
measures may not be sufficient and hospitals will still struggle to 
meet them, such as objectives and measures that require patient action.
    Response: We disagree that the threshold reduction proposals will 
slow progress in terms of improving health care quality or advancements 
in the use of CEHRT. Our proposal was intended

[[Page 79840]]

to be responsive to concerns we have received from various stakeholders 
regarding the additional work required to effectively implement 
technologies and workflows to meet current thresholds. We note the 
threshold reductions are generally at the Modified Stage 2 level, which 
would maintain current requirements and are not believed to hinder 
progress on interoperability or improving patient care. Instead, we 
believe this will allow for greater focus on updating and optimizing 
EHR functionalities in preparation for Stage 3 and the implementation 
of technology certified to the 2015 Edition. As we stated in the 
proposed rule (81 FR 45747), we recognize the fact that eligible 
hospitals and CAHs may need additional time to educate patients on how 
to use health information technology and we believe that reducing the 
thresholds 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. If we 
reduce these measures even further, we believe this would stifle 
innovation in health IT and not encourage the widespread adoption of 
CEHRT.
a. Changes to the Objectives and Measures for Modified Stage 2 (42 CFR 
495.22) in 2017
    In the proposed rule, for EHR reporting periods in calendar year 
2017, we proposed to modify the threshold of the Modified Stage 2 View, 
Download or 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 proposed 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 previously stated, these proposals would not 
apply to eligible hospitals and CAHs attesting under a State's Medicaid 
EHR Incentive Program.
    Specifically, we proposed 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 proposed to 
add a new Sec.  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 also proposed a new naming convention for certain 
measures (shown in the table at 81 FR 45748) as well as minor 
conforming changes to Sec. Sec.  495.22(a), (c)(1), and (d)(1).
    We did not receive any public comments specific to the proposed 
updated naming conventions for those measures in Modified Stage 2, and 
therefore are finalizing the proposed updated naming conventions with 
further minor refinements. The naming conventions are included in the 
table below.
Patient Electronic Access (VDT) (42 CFR 495.22(f)(8)(ii)(B))
    View, Download or Transmit (VDT): 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 proposed to reduce the threshold of the VDT 
measure from more than 5 percent to at least one patient. We proposed 
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 included, 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 invited public comment on our proposals.
    Comment: Several commenters supported the reduction in this 
threshold to at least one patient because it provides additional time 
to accustom patients to electronic access of their health information 
and enhance their portal with additional functionalities.
    Response: We thank commenters for their support. As we stated in 
the proposed rule (81 FR 45747), we recognize the fact that eligible 
hospitals and CAHs may need additional time to educate patients on how 
to use health information technology, and we believe that reducing the 
thresholds 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.
    Comment: One commenter expressed concern about this measure because 
it requires patient action and it includes factors outside of the 
commenter's control because some patients do not want to view their 
information or have access to the Internet.
    Response: We thank the commenter for the feedback. We believe that 
providers do have a role in educating patients about the importance of 
engaging with their health information to build understanding and more 
informed decision making about their health and their care. We believe 
providers can also play an essential role in improving patients' health 
literacy. We also acknowledged the concerns stakeholders have had with 
patient action measures in the proposed rule, which led us to propose a 
reduction in threshold for measures such as VDT. We believe the 
reduction in threshold will allow providers additional time to 
determine the best ways to educate patients on the importance of 
accessing their health care information, and assist them to access 
their health information electronically. As technology continues to 
advance, we believe that more patients will have access to the 
Internet, allowing them to access their health information through the 
various formats provided by the eligible hospitals and CAHs.

[[Page 79841]]

    After consideration of the public comments we received, we are 
finalizing the proposed reduction to the VDT measure threshold. 
Specifically, we are finalizing the VDT measure threshold as equal to 
or greater than one patient for Modified Stage 2 in 2017 for eligible 
hospitals and CAHs attesting to CMS. This includes dual-eligible 
hospitals that are attesting to CMS for both the Medicare and Medicaid 
EHR Incentive Programs. This reduced threshold does not apply to 
eligible hospitals and CAHs attesting to a State for the Medicaid EHR 
Incentive Program.
    The objective and measure are as follows:
Patient Electronic Access (VDT) (42 CFR 495.22(f)(8)(ii)(B))
    Objective: Provide patients the ability to view online, download, 
or transmit their health information within 36 hours of hospital 
discharge.
    View, Download or Transmit (VDT): 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.

        Modified Stage 2 Objectives and Measures in 2017 for Eligible Hospitals and CAHs Attesting to CMS
----------------------------------------------------------------------------------------------------------------
                                        Previous measure name/
              Objective                       reference               Measure name        Threshold  requirement
----------------------------------------------------------------------------------------------------------------
Protect Patient Health Information...  Measure................  Security Risk Analysis.  Yes/No attestation.
CDS (Clinical Decision Support) *....  Measure 1..............  Clinical Decision        Five CDS.
                                                                 Support Interventions.
                                       Measure 2..............  Drug Interaction and     Yes/No.
                                                                 Drug-Allergy Checks.
CPOE (Computerized Provider Order      Measure 1..............  Medication Orders......  >60%
 Entry) *.
                                       Measure 2..............  Laboratory Orders......  >30%
                                       Measure 3..............  Radiology Orders.......  >30%
Electronic Prescribing **............  Measure................  e-Prescribing..........  >10%
Health Information Exchange..........  Measure................  Health Information       >10%
                                                                 Exchange.
Patient Specific Education...........  Eligible Hospital/CAH    Patient-Specific         >10%
                                        Measure.                 Education.
Medication Reconciliation............  Measure................  Medication               >50%
                                                                 Reconciliation.
Patient Electronic Access............  Eligible Hospital/CAH    Provide Patient Access.  >50%
                                        Measure 1.
                                       Eligible Hospital/CAH    View, Download or        At least 1 patient.
                                        Measure 2.               Transmit (VDT) ***.
Public Health Reporting..............  Immunization Reporting.  Immunization Registry    Public Health Reporting
                                                                 reporting.               to 3 Registries.
                                       Syndromic Surveillance   Syndromic Surveillance
                                        Reporting.               Reporting.
                                       Specialized Registry     Specialized Registry
                                        Reporting.               Reporting.
                                       Electronic Reportable    Electronic Reportable
                                        Laboratory Result        Laboratory Result
                                        Reporting.               Reporting.
----------------------------------------------------------------------------------------------------------------
* We note that we are finalizing our policy to remove CDS and CPOE for eligible hospitals and CAHs attesting to
  CMS in section XVIII.C. of this final rule with comment period.
** We note that, in the proposed rule (81 FR 45748), we referred to this objective as ``eRx (electronic
  prescribing)''.
*** We note that in the proposed rule (81 FR 45748), we referred to this measure as the ``View Download Transmit
  Measure''.

b. 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 proposed 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 previously stated, these 
proposed modifications would not apply to eligible hospitals and CAHs 
attesting under a State's Medicaid EHR Incentive Program. We also 
proposed, 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 (we refer 
readers to the table in the proposed rule at 81 FR 45752).
    We did not receive any public comments specific to the updated 
naming conventions for those measures in Stage 3, and therefore are 
finalizing the proposed updated naming conventions with further minor 
refinements. The naming conventions are included in the table below.
    We invited public comment on our proposals.
    Comment: A few commenters stated that the electronic prescribing 
threshold is too high and recommended that it remain at 10 percent for 
Stage 3 as the measure is still extremely new for hospitals.
    One commenter stated that including controlled substances should 
continue to be optional since provider and vendor readiness issues are 
still being addressed. The commenter sought clarification on the 
flexibility to include or exclude controlled substances depending on a 
provider's situation. The commenter also expressed disappointment that 
CMS did not

[[Page 79842]]

propose revisions to the additional Stage 3 measure thresholds, 
specifically electronic prescribing and patient-generated health data. 
The commenter urged CMS to modify these thresholds in the final rule 
with comment period.
    Response: We are not maintaining the Stage 2 10 percent threshold 
for the electronic prescribing measure for eligible hospitals and CAHs 
for Stage 3 because the attestation data through March 2015 indicates 
that eligible hospitals in Stage 2 met the threshold in the 1st (30 
percent), 2nd (53 percent) and 3rd (80 percent) quartile (https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/AttestationPerformanceData_Feb2015.pdf (page 27)). We believe 
an increase is warranted based on this attestation data indicating 
hospitals were successful in meeting the threshold.
    We would like to clarify that providers have flexibility to include 
or exclude controlled substances in the denominator for the Stage 3 
electronic prescribing objective and measure. We refer commenters to 
the discussion in the 2016 MIPS and APMs proposed rule (81 FR 28227) 
regarding this topic, which was finalized as proposed in the 2016 MIPS 
and APMs final rule with comment period.
(1) Objective: Patient Electronic Access to Health Information (42 CFR 
495.24(c)(5))
    Objective: The eligible hospital or CAH provides patients (or 
patient-authorized representatives) with timely electronic access to 
their health information and patient-specific education.
    Provide Patient Access: 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 Provide Patient Access 
Threshold for Eligible Hospitals and CAHs Attesting Under the Medicare 
EHR Incentive Program
    We proposed to reduce the threshold for the Provide 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.
    We continued 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 and 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. Vendors also 
expressed concerns around the likely issues surrounding compatibility 
and varying API interface functionalities that could possibly hinder 
interoperability among certified EHR technology. We proposed 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.
    We invited public comment on our proposals.
    Comment: Many commenters supported the reduction of the Provide 
Patient Access threshold to greater than 50 percent because it would 
provide greater flexibility.
    Response: We thank commenters for their support. We believe through 
reducing the threshold to greater than 50 percent we are providing 
eligible hospitals and CAHs with increased flexibility and additional 
time needed to communicate and educate the importance for patience to 
access their medical information.
    Comment: One commenter requested clarification on whether providers 
are obligated to make only the API available, and not also the 
application(s) that could use the API.
    Response: For health care providers to implement an API under this 
measure, they would need to fully enable the API functionality in such 
a way that any application chosen by a patient would enable them to 
gain access to their individual health information. The information 
provided in the application should be configured to meet the technical 
specifications of the API. We refer the commenter to the 2015 EHR 
Incentive Programs Final Rule (80 FR 64842) for additional information 
on API requirements.
    Comment: A few commenters stated that not all patients 
electronically access their health information based on a variety of 
factors such as technology literacy and access of technology, and the 
provider should be able to make the decision on how health information 
is communicated to their patients. The commenters recommended that CMS 
propose additional methods of meeting this objective that better 
reflect differences in patient literacy and levels of access.
    Response: We acknowledged in the proposed rule the difficulties 
stakeholders had with the Provide Patient Access measure which led us 
to propose a reduction in this threshold. We do not believe we need to 
propose additional methods of meeting this objective. We previously 
stated in the 2015 EHR Incentive Programs Final Rule that providers may 
still provide patients with paper based educational materials and 
information, if the provider deems such an action beneficial and of use 
to the patient. We would simply no longer require or allow providers to 
manually count and report on these paper-based exchanges beginning in 
Stage 3 (80 FR 62783 through 62784).
    Patient-Specific Education: 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

[[Page 79843]]

(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 proposed 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 continued 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 indicated that they believe patients benefit from this 
information at the time of their interaction with the healthcare 
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.
    We invited public comment on our proposal.
    Comment: Several commenters supported the reduction of the 
threshold to greater than 10 percent and indicated this will reduce 
reporting burden.
    Response: We thank commenters for their support. As noted in the 
proposed rule (81 FR 45749), we believe this reduction in threshold 
will provide hospitals the ability to continue to meet the needs of 
their patients while allowing additional time for advancements on 
workflows and processes to make patient-educational materials available 
electronically after discharge.
    Comment: A few commenters believed that the reduction in the 
threshold does not address concerns that patient education must be 
tailored to meet the needs of the patients, which may not include 
electronic methods, and urged CMS to consider alternative methods of 
meeting this objective.
    Response: As previously stated, we do not believe we need to 
propose additional methods for meeting this objective. We previously 
stated in the 2015 EHR Incentive Programs Final Rule that providers may 
still provide patients with paper based educational materials and 
information, if the provider deems such an action beneficial and of use 
to the patient. We would simply no longer require or allow providers to 
manually count and report on these paper-based exchanges beginning in 
Stage 3 (80 FR 62783 through 62784).
    After consideration of the public comments we received, we are 
finalizing the reduction to the thresholds. Specifically, we are 
finalizing for the Provide Patient Access measure a threshold of more 
than 50 percent and for the Patient-Specific Education measure a 
threshold of more than 10 percent for eligible hospitals and CAHs 
attesting to CMS, including dual-eligible hospitals that are attesting 
to CMS for both the Medicare and Medicaid EHR Incentive Programs. These 
reduced thresholds do not apply to eligible hospitals and CAHs 
attesting to a State for the Medicaid EHR Incentive Program.
    The objective and measures are as follows:
Objective: Patient Electronic Access to Health Information (42 CFR 
495.24(c)(5))
    Objective: The eligible hospital or CAH provides patients (or 
patient-authorized representatives) with timely electronic access to 
their health information and patient-specific education.
    Provide Patient Access: 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 to 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.
    Patient-Specific Education: 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.

[[Page 79844]]

(2) Objective: Coordination of Care Through Patient Engagement (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.
    We invited public comment on our proposals.
    Comment: One commenter stated it is premature to include measure 3 
(Patient Generated Health Data measure) as a requirement which requires 
provider use of certified EHR functionality that supports receiving 
patient-generated data or data from nonclinical settings and 
recommended that CMS either remove this measure or reduce the threshold 
to at least one patient.
    Response: We are not removing or reducing the threshold for this 
measure. We note that, for the Coordination of Care through Patient 
Engagement objective, providers must attest to the numerators and 
denominators for all three measures, but must only meet the thresholds 
for two of three measures, which provides flexibility in meeting the 
objective. We also refer readers to the 2015 EHR Incentive Programs 
Final Rule in which we state the types of data that will count in the 
numerator are broad, which we believe will assist providers in meeting 
the threshold of greater than 5 percent.
    View, Download or Transmit (VDT): 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 engages with the electronic health 
record made accessible by the provider and engages in 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 or Transmit 
(VDT) Threshold
    As discussed above, under the Modified Stage 2 Objectives and 
Measures, we proposed to reduce the threshold of the View, Download or 
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 proposed to reduce the threshold for Stage 3 because we 
had 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 included, 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 invited public comment on our proposal.
    Comment: Several commenters supported the reduction of the 
threshold to at least one patient because it provides eligible 
hospitals and CAHs with greater flexibility.
    Response: We thank commenters for their support. The reduction of 
this threshold takes into consideration the challenges voiced by 
providers on ``patient action'' including ``opting out,'' limitation of 
knowledge, and limitation of access. We believe the reduction will 
allow additional time for providers to teach patients the importance of 
accessing their health information while increasing participation.
    Comment: A few commenters disagreed with CMS' proposal to retain 
the Stage 3 requirements which included use of APIs to connect any app 
of the patient's choice to the EHR in support of patient engagement and 
coordination of care through patient engagement objectives and believed 
the use of APIs was premature. The commenters requested that CMS make 
the API an option or not require it as part of the measure.
    Response: We proposed to reduce the threshold for the VDT measure 
under the Coordination of Care Through Patient Engagement objective and 
the Provide Patient Access measure under the Patient Electronic Access 
to Health Information objective in response to concerns voiced by 
stakeholders and specific to concerns voiced about implementation of 
APIs in Stage 3 and difficulty in implementing objectives and measures 
that require patient action. We continue to believe that patient access 
to their electronic health information is a high priority for the EHR 
Incentive Programs and enabling an API will generate innovation and 
allow patients to access information in a manner that best suits their 
needs. We also note that for the Coordination of Care through Patient 
Engagement Objective (which includes the VDT measure and Patient 
Generated Health Data measure), providers must attest to the numerators 
and denominators of all three measures, but must only meet the 
thresholds for two of three measures, providing flexibility. We are not 
making changes to the current requirement of providing API 
functionality as part of the measure. However, due to the concerns 
voiced by stakeholders on the implementation of this technology, we are 
extending the 90-day EHR reporting period to include 2017 to allow 
additional time to test and implement this Stage 3 requirement. We 
address the extension of a 90-day EHR reporting period for 2017 in 
further detail in section XVIII.D.1. of this final rule with comment 
period.
    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

[[Page 79845]]

(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 proposed 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 proposed to reduce the threshold because we had 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 had 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 to meet this 
threshold as a result of their patients' limited knowledge of, 
proficiency with, and access to information technology.
    We invited public comment on our proposal.
    Comment: Several commenters supported the reduction of the 
threshold to more than 5 percent because it would provide greater 
flexibility and agree that it would take more time for patients to 
become more willing to use secure messaging.
    Response: We thank commenters for their support. As we stated in 
the proposed rule (81 FR 45750), we believe that, with time, patients 
will become more willing to use secure messaging as a means to 
communicate and eligible hospitals and CAHs will be able to positively 
influence their patients in their use.
    Comment: A few commenters expressed concerns with the limitations 
of existing vendor tools and systems used in secure messaging, as well 
as patient capabilities to comply with the requirements of secure 
messaging including patient technology literacy which could result in a 
patient not receiving critical care. A few commenters requested that 
CMS eliminate this measure for hospitals as the expectation for the 
hospital to follow up with patients is inefficient and an 
administrative burden.
    Response: We acknowledge the concerns expressed by commenters on 
being able to meet the threshold. We proposed to reduce the threshold 
to more than 5 percent which we believe is attainable and allows 
providers additional time to educate patients on the benefits of secure 
messaging as a form of healthcare provider to patient communication. We 
also believe that EHR technology will continue to evolve and produce 
innovative functionalities to benefit providers and patients alike.
    We decline to eliminate this measure for hospitals because we 
believe there is value in communication between members of the care 
team and a patient post discharge. This provides an opportunity to 
enhance coordination of care, transitions of care between providers, 
and improve health outcomes.
    After consideration of the public comments we received, we are 
finalizing the reduction to the thresholds. Specifically, for Stage 3 
in 2017 and 2018, we are finalizing the threshold for the View, 
Download or Transmit (VDT) measure as at least one patient and the 
threshold for the Secure Messaging Measure as more than 5 percent for 
eligible hospitals and CAHs attesting to CMS, including dual-eligible 
hospitals that are attesting to CMS for both the Medicare and Medicaid 
EHR Incentive Programs. These reduced thresholds do not apply to 
eligible hospitals and CAHs attesting to a State for the Medicaid EHR 
Incentive Program.
    The objective and measures are as follows:
Objective: Coordination of Care Through Patient Engagement (42 CFR 
495.24(c)(6))
    Objective: Use CEHRT to engage with patients or their authorized 
representatives about the patient's care.
    Providers must attest to the numerator and denominator for all 
three measures, but are only required to successfully meet the 
threshold for two of the three measures to meet the Coordination of 
Care through Patient Engagement Objective.
    View, Download or Transmit (VDT): 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 engages with the electronic health 
record made accessible by the provider and engages in 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.
    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.

[[Page 79846]]

     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.
(3) Objective: Health Information Exchange (HIE) (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 are only required to 
successfully meet the threshold for two of the three measures to meet 
the Health Information Exchange Objective.
    Comment: Many commenters supported the exchange of patient data to 
ensure better coordination of care between providers.
    Response: We thank the commenters for their support. We agree that 
technology and access will continue to increase over time, which we 
believe will lead to expansion in the exchange of patient health 
information between health care providers.
    Comment: A few commenters noted that the threshold reduction for 
each measure is not sufficient to address core concerns which are 
outside the control of hospitals such as functionality, data blocking 
and interoperability issues, as adoption of health IT is not universal 
among all care providers.
    Response: We acknowledged the concerns in the proposed rule and 
believe the reduction in threshold is reasonable. We are encouraged by 
the continued advancement in health information exchange, as well as 
feedback by various stakeholders providing that the majority of 
hospitals are involved in some form of health information exchange. In 
May 2016, ONC published a report noting that the percentage of 
hospitals engaging in health information exchange through electronic 
means has increased from 50 percent in 2011 to over 80 percent in 2015 
with more than 85 percent of hospitals sending patient health 
information electronically in CY 2015.\247\ However, the report also 
notes that one primary barrier to increasing health information 
exchange identified by hospitals is a lack of trading partners that 
have adopted and implemented certified health IT systems. To support 
flexibility in this transition, we note that hospitals exchanging 
health information may leverage a wide range of exchange methods to 
accommodate the range of health IT adoption in the industry. We further 
note that CMS and ONC continue to support the expansion of health 
information exchange in the industry and are in alignment with other 
CMS programs, to continue to increase adoption among a wider range of 
healthcare providers. In addition, we refer readers to the new EHR 
contracting guide on the ONC Web site which is a resource that will 
help providers address data blocking and other challenges as they 
continue to adopt and leverage health IT to improve the way they 
deliver care.\248\
---------------------------------------------------------------------------

    \247\ ONC Data Brief 36: May 2016 ``Interoperability among U.S. 
Non-federal Acute Care Hospitals in 2015: http://dashboard.healthit.gov/evaluations/data-briefs/non-federal-acute-care-hospital-interoperability-2015.php.
    \248\ EHR Contracts Untangled: Selecting Wisely, Negotiating 
Terms, and Understanding the Fine Print--https://www.healthit.gov/sites/default/files/EHR_Contracts_Untangled.pdf.
---------------------------------------------------------------------------

    Finally, we reiterate the fact that providers continue to have the 
option to apply for a hardship exception for circumstances related to 
health IT issues that are outside of a provider's control and impact 
their ability to demonstrate meaningful use.
    Send a Summary of Care: 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 Send a Summary of Care 
Measure for Eligible Hospitals and CAHs Attesting Under the Medicare 
EHR Incentive Program
    We proposed to reduce the threshold for the Send a Summary of Care 
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 showed that there were still challenges to 
achieving wide scale interoperable health information exchange.\249\ 
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. 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.
---------------------------------------------------------------------------

    \249\ ONC Data Brief: No. 36; May 2016. Available at: https://www.healthit.gov/sites/default/files/briefs/onc_data_brief_36_interoperability.pdf.
---------------------------------------------------------------------------

    We invited public comment on our proposal.
    Comment: Several commenters supported the reduction of the 
threshold to greater than 10 percent.
    Response: We thank the commenters for their support. We continue to 
believe that technology and access will continue to increase as more 
healthcare providers implement EHR systems and there is greater focus 
on interoperability. In addition, we agree that the creation and 
electronic exchange of a summary of care is beneficial to delivery 
system reform and facilitating coordination of care.
    Comment: A few commenters stated hospitals should not be penalized 
for interacting with other healthcare providers who are still in the 
process of implementing health IT.
    A few commenters stated that primary care physicians are at a 
disadvantage in attempting to meet the Health Information Exchange 
requirements. The commenters believed that it is difficult to find 
other providers with which they could successfully exchange

[[Page 79847]]

a patient's summary of care and requested that CMS consider excluding 
this objective until widespread adoption could be achieved.
    Other commenters stated there is room for both CMS and healthcare 
providers to improve data sharing as a way to improve patient care and 
safety.
    Response: We understand the difficulties that providers have in 
health information exchange requirements. However, the majority of 
hospitals are engaging in health information exchange as indicated in 
the ONC data brief (https://www.healthit.gov/sites/default/files/briefs/onc_data_brief_36_interoperability.pdf). We believe advancement 
in health information exchange will increase trading partners and allow 
for greater ability to meet the thresholds. We decline to remove this 
measure based on the comment that there is a lack of trading partners. 
We have provided flexibility in that providers must attest to the 
numerator and denominator for all three measures, but are only required 
to successfully meet the threshold for two of the three measures to 
meet the Health Information Exchange objective.
    We agree that data sharing will continue to progress as 
interoperability and health information exchanges improve in number and 
innovation.
    Request/Accept Summary of Care: 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 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 Summary of 
Care Threshold for Eligible Hospitals and CAHs Attesting Under the 
Medicare EHR Incentive Program
    We proposed to reduce the threshold for eligible hospitals and CAHs 
attesting under the Medicare EHR Incentive Program for the Request/
Accept Summary of Care 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 showed that there were still challenges to 
achieving wide scale interoperable health information exchange.\250\ 
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. 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.
---------------------------------------------------------------------------

    \250\ Ibid.
---------------------------------------------------------------------------

    We invited public comment on our proposal.
    Comment: Several commenters supported the reduction of the 
threshold to greater than 10 percent.
    Response: We thank the commenters for their support. We believe the 
reduction of this threshold will allow additional time for focus on 
interoperability and an increase in trading partners. We are encouraged 
by the state of interoperable exchange activity among U.S. non-Federal 
acute care hospitals found in ONC's data brief and believe this trend 
will continue.\251\
---------------------------------------------------------------------------

    \251\ ONC Data Brief: No. 36 [ssquf] May 2016. Available at: 
https://www.healthit.gov/sites/default/files/briefs/onc_data_brief_36_interoperability.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters recommended lowering this threshold from 
10 percent to at least one patient due to significant technical 
problems with receiving an electronic summary-of-care document.
    Response: A review of the Stage 2 eligible hospital summary of care 
performance data through March 2015 found that eligible hospitals met 
the requirements at the 1st (19 percent) 2nd (29 percent) and 3rd (48 
percent) quartile at a threshold of 10 percent for measure 2 under the 
Stage 2 Summary of Care objective (https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/AttestationPerformanceData_Feb2015.pdf) (page 25)). We believe the data 
support the proposed threshold reduction to more than 10 percent and 
indicate that providers have been successful with meeting this 
threshold.
    Clinical Information Reconciliation: 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 proposed 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

[[Page 79848]]

mentioned in both the Send a Summary of Care measure and the Request/
Accept Summary of Care 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 will continue to review adoption and 
performance and consider increasing the threshold in future rulemaking.
    We invited public comment on our proposal.
    Comment: A few commenters supported the reduction of the threshold 
to greater than 50 percent.
    Response: We thank commenters for their support and note that our 
intent in maintaining a 50-percent threshold for this measure is to 
allow providers to continue to improve on reconciliation workflows both 
involving HIE and through other methods as well as to provide 
flexibility, as providers continue to move toward reconciliation of a 
wider range of information beyond medications alone.
    Comment: A few commenters stated that the proposed 50-percent 
threshold is not reasonably achievable as the industry has no 
experience implementing technology capable of clinical information 
reconciliation.
    A few commenters suggested that the threshold for pulling the 
record and reconciling the information should be the same. The 
commenters stated that 10 percent is reasonable, given that this is the 
initial year of this objective and that a minority of patients are 
likely to have this information electronically available.
    Response: We note that this measure builds on the existing 
Medication Reconciliation Objective for the EHR Incentive Programs in 
2015 through 2017 (we refer readers to section II.B.2.a. of the 
preamble to the 2015 EHR Incentive Programs Final Rule (80 FR 62809 
through 62811)). We further stated in the 2015 EHR Incentive Programs 
Final Rule that this process may include electronic and manual 
reconciliation through use of certified EHR technology and discussion 
with the patient. In addition, we stated the process of reconciliation 
may consist of simply verifying that fact or reviewing a record 
received on referral and determining that such information is merely 
duplicative of existing information in the patient record (80 FR 
62861).
    A review of the Stage 2 eligible hospital summary of care 
performance data through March 2015 found that eligible hospitals met 
the requirements for Medication Reconciliation at the 1st (81 percent) 
2nd (91 percent) and 3rd (97 percent) quartile at a threshold of 50 
percent (https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/AttestationPerformanceData_Feb2015.pdf 
(page 23)). We believe the data support the proposed threshold 
reduction to 50 percent and indicate providers have been successful 
with meeting this threshold. We believe the success of the medication 
reconciliation measure, shown in our data, will transcend to the 
Clinical Information Reconciliation measure because it builds on the 
medication reconciliation measure and allows for the provider's 
clinical judgment on what information is included in the process.
    We stated in the 2015 EHR Incentive Programs Final Rule (80 FR 
62861) that we believe many providers may conduct some form of 
reconciliation in conjunction with measure 2, or that providers in 
certain specialties may elect to conduct reconciliation of clinical 
information even beyond our requirement. We do not believe that the 
thresholds for measures 2 and 3 should both be at greater than 10 
percent, and reiterate that while providers must attest to the 
numerator and denominator of all three measures, they are only required 
to successfully meet the threshold for two of three measures, providing 
additional flexibility.
    After consideration of the public comments we received, we are 
finalizing the reduction to the thresholds. Specifically, for Stage 3 
in 2017 and 2018, we are finalizing the Send a Summary of Care measure 
threshold as more than 10 percent, Request/Accept Summary of Care 
measure threshold as more than 10 percent, and Clinical Information 
Reconciliation measure threshold as more than 50 percent for eligible 
hospitals and CAHs attesting to CMS, including dual-eligible hospitals 
that are attesting to CMS for both the Medicare and Medicaid EHR 
Incentive Programs. These reduced thresholds do not apply to eligible 
hospitals and CAHs attesting to a State for the Medicaid EHR Incentive 
Program.
    The objective and measures are as follows:
Objective: Health Information Exchange (HIE) (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.
    Send a Summary of Care: 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.
    Request/Accept Summary of Care: 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 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:

[[Page 79849]]

      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.
    Clinical Information Reconciliation: 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.
(4) Objective: Public Health and Clinical Data Registry Reporting (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 (42 CFR 495.24(c)(8)(A))
Syndromic Surveillance Reporting (42 CFR 495.24(c)(8)(B))
Electronic Case Reporting (42 CFR 495.24(c)(8)(C))
Public Health Registry Reporting (42 CFR 495.24(c)(8)(D))
Clinical Data Registry Reporting (42 CFR 495.24(c)(8)(E))
Electronic Reportable Laboratory Result Reporting (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 proposed to reduce the reporting requirement for eligible 
hospitals and CAHs attesting to CMS for Public Health and Clinical Data 
Registry Reporting, 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 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 to successfully attest. Hospitals 
and hospital associations had 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 had received 
written correspondence from hospitals indicating that in some instances 
additional technologies were required to transmit data, which prevented 
them from doing so.
    We invited public comment on our proposal.
    Comment: Several providers supported the reduction of Public Health 
and Clinical Data Registry Reporting requirements for Stage 3 because 
they believed there is a lack of entities ready to accept the 
electronic reporting data.
    Response: We thank the commenters for their support. As we 
discussed in the proposed rule (81 FR 45751 through 45752), we have 
received written communication regarding the difficulty in finding 
registries that are able to accept data that will allow hospitals to 
successfully attest. We believe the number of available registries will 
increase over time. In addition, we are in the process of developing a 
centralized repository for public health agency and clinical data 
registry reporting, which should be available early in 2017. The 
repository will assist eligible professionals, eligible hospitals and 
CAHs in finding entities that accept electronic public health data. We 
further note that the lack of an available registry capable of 
receiving electronic data remains an acceptable reason for exclusion 
from a given measure under this objective.
    Comment: A few commenters disagreed with reducing the reporting 
requirement for eligible hospitals and CAHs to three measures for the 
Public Health and Clinical Data Registry Reporting objective. A few 
commenters noted that providers still struggle to identify the 
certified clinical registries to which they must submit measures and 
suggested that CMS maintain a list of clinical and public health 
registries that can support the active engagement requirement.
    Response: We proposed to reduce the threshold for the Public Health 
and Clinical Data Registry Reporting objective based on concerns voiced 
by stakeholders who were having difficulty finding registries to report 
to. We believe a reduction in the reporting requirement will relieve 
the administrative burden providers indicated they were experiencing 
with this objective. We note that, for the 2015 and 2016 EHR reporting 
periods, we implemented alternate exclusions based on the issues 
associated with the specialized registry measure including acquisition 
of additional technologies they did not already have. We also note that 
providers that wish to attest to additional measures may do so.
    We are developing a centralized repository for public health agency 
and clinical data registry reporting to help EPs, eligible hospitals, 
and CAHs find entities that accept electronic public health data as 
discussed in the 2015 EHR Incentive Programs Final Rule (80 FR 62863).
    After consideration of the public comments we received, we are 
finalizing the reduction of the reporting requirements for Stage 3 
Public Health and Clinical Data Registry Reporting to any combination 
of three measures out of six total measures for eligible hospitals and 
CAHs attesting to CMS, including dual-eligible hospitals that are 
attesting to CMS for both the Medicare and Medicaid EHR Incentive 
Programs. This reduction does not apply to eligible hospitals and CAHs 
attesting to a State for the Medicaid EHR Incentive Program.

[[Page 79850]]



       Stage 3 Objectives and Measures for 2017 and 2018 for Eligible Hospitals and CAHs Attesting to CMS
----------------------------------------------------------------------------------------------------------------
                                       Previous  measure name/
              Objective                       reference               Measure name        Threshold requirement
----------------------------------------------------------------------------------------------------------------
Protect Patient Health Information...  Measure................  Security Risk Analysis.  Yes/No attestation.
Electronic Prescribing...............  Eligible hospital/CAH    e-Prescribing..........  >25%
                                        Measure.
CDS (Clinical Decision Support) *....  Measure 1..............  Clinical Decision        Five CDS.
                                                                 Support Interventions.
                                       Measure 2..............  Drug Interaction and     Yes/No.
                                                                 Drug-Allergy Checks.
CPOE (Computerized Provider Order      Measure 1..............  Medication Orders......  >60%
 Entry *.
                                       Measure 2..............  Laboratory Orders......  >60%
                                       Measure 3..............  Diagnostic Imaging       >60%
                                                                 Orders.
Patient Electronic Access to Health    Measure 1..............  Provide Patient Access.  >50%
 Information.
                                       Measure 2..............  Patient-Specific         >10%
                                                                 Education **.
Coordination of Care through Patient   Measure 1..............  View, Download or        At least 1 patient.
 Engagement.                                                     Transmit (VDT) **.
                                       Measure 2..............  Secure Messaging.......  >5%
                                       Measure 3..............  Patient Generated        >5%
                                                                 Health Data.
Health Information Exchange..........  Measure 1..............  Send a Summary of Care   >10%
                                                                 ***.
                                       Measure 2..............  Request/Accept Summary   >10%
                                                                 of Care ***.
                                       Measure 3..............  Clinical Information     >50%
                                                                 Reconciliation **.
Public Health and Clinical Data        Immunization Registry    Immunization Registry    Report to 3 Registries
 Registry Reporting.                    Reporting.               Reporting.               or claim exclusions.
                                       Syndromic Surveillance   Syndromic Surveillance
                                        Reporting.               Reporting.
                                       Case Reporting.........  Electronic Case
                                       Public Health Registry    Reporting.
                                        Reporting.              Public Health Registry
                                       Clinical Data Registry    Reporting.
                                        Reporting.              Clinical Data Registry
                                       Electronic Reportable     Reporting.
                                        Laboratory Result       Electronic Reportable
                                        Reporting.               Laboratory Result
                                                                 Reporting.
----------------------------------------------------------------------------------------------------------------
* We note that we are finalizing the removal of CDS and CPOE for eligible hospitals and CAHs attesting to CMS
  section XVIII.C.1. of this final rule with comment period. These objectives are included in the table to
  demonstrate what their measures and thresholds would have been if we were not finalizing our proposal to
  remove them.
** We note that, in the proposed rule (81 FR 45752), we referred to this measure as the ``View Download Transmit
  Measure.''
*** We note that, in the proposed rule (81 FR 45752), we referred to this measure as the ``Patient Care Record
  Exchange Measure.''
** We note that, in the proposed rule (81 FR 45752), we referred to this measure as the ``Request/Accept Patient
  Care Record Measure.''

    We sought 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. 
In addition, we sought public comments on new and more stringent 
measures for future years of the EHR Incentive Program and 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 noted that our proposed revisions to the 
regulation text at Sec.  495.24 would only include objectives and 
measures for eligible hospitals and CAHs for Stage 3 in 2017 and 2018. 
We requested 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.
    Comment: One commenter disagreed with CMS making further changes to 
meaningful use objectives and measures in 2019 and subsequent years as 
this conflicted with the 2015 EHR Incentive Programs Final Rule that 
indicated meaningful use Stage 3 requirements would continue unchanged 
in 2018, 2019, and through future years (80 FR 62776) and that Stage 3 
is intended to be the last stage of the program (80 FR 62766). The 
commenter indicated confusion on whether an additional stage was 
planned or if the intention was to make changes without the distinction 
of a separate stage and disagreed with same-stage changes to 
requirements. In addition, the commenter stated if CMS intends to make 
changes in 2019, vendors and healthcare organizations need sufficient 
advance notice to plan and prepare for those changes. Based on the 
timeline of previous rulemaking for Stage 2 and Stage 3, the commenter 
believed CMS would need to issue a proposed rule by March 2017 to allow 
for public comments and a final rule by August 2017 so there is enough 
time to implement changes before the start of the 2019 EHR reporting 
period.
    Response: We previously stated that there would be three stages of 
meaningful use. However, we do not want to hinder advancement of health 
information technology and additional program revisions are likely 
necessary in achieving widespread adoption of CEHRT. Therefore, 
continual advancements, changes and evolution in technology and other 
aspects of the program such as privacy, security, and practice 
standards will impact the EHR Incentive Program and may spur additional 
rulemaking, possibly resulting in additional stages to the EHR 
Incentive Program.
    We understand the concern regarding the timeline for any changes we 
might make for 2019 and intend to work with stakeholders to ensure 
sufficient time is provided for updates and implementation of 
requirements in future rulemaking.
    As stated in the previous sections, in the proposed rule, we did 
not propose 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 to 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

[[Page 79851]]

and time burdens in having to update their technology and reporting 
systems within a short period of time, we proposed these changes only 
for eligible hospitals and CAHs attesting to the Medicare EHR Incentive 
Program. We requested comments on whether these proposed changes should 
also apply for eligible hospitals and CAHs attesting to a State's 
Medicaid EHR Incentive Program. Specifically, we requested comments on 
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 requested 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.
    Comment: The majority of commenters requested that the proposed 
changes to the objectives and measures, including removal of the CDS 
and CPOE objectives beginning in 2017 and a reduction in thresholds for 
a subset of the remaining objectives and measures, also be applied to 
the Medicaid EHR Incentive Program for eligible hospitals, CAHs, and 
EPs. The commenters indicated that differing requirements vastly 
increase the burden of reporting and complexity, especially for 
hospitals that participate in both the Medicare and Medicaid EHR 
Incentive Programs. A few commenters suggested that CMS collect all 
data through the Medicare attestation process and pass the results to 
the appropriate State Medicaid program indicated by the participant or 
that CMS could assess its ability to intake Medicaid-only attestations 
and communicate them to the States because it currently does for 
hospitals participating in both the Medicare and Medicaid EHR Incentive 
Programs. This would leverage existing reporting and communication 
capabilities to ensure alignment across Medicare and Medicaid.
    A few commenters believed that dual-eligible hospitals are required 
to attest to both the Medicare and Medicaid programs.
    Some commenters proposed that, for objectives proposed for 
elimination, hospitals attesting under Medicaid should be able to 
attest with either 0 percent or NO as appropriate for 2017 and 2018 
without penalty.
    Response: We recognize the challenges associated with the proposal 
to require different sets of objectives and measures for hospitals 
participating in the Medicaid EHR Incentive Program versus the Medicare 
EHR Incentive Program beginning in 2017. The vast majority of 
commenters supported aligning the proposed changes for dual-eligible 
hospitals participating in both the Medicare EHR Incentive Program and 
the Medicaid EHR Incentive Program because doing so will eliminate the 
need for additional attestation and reporting requirements. Section 
1903(t)(8) of the Act provides that a State and the Secretary shall 
seek, to the maximum extent practicable, to avoid duplicative 
requirements to demonstrate meaningful use of certified EHR technology 
under Medicaid and Medicare.
    Based on this statutory directive and for the reasons identified by 
the commenters, under our final policy, eligible hospitals and CAHs 
participating in both the Medicare and Medicaid EHR Incentive Programs 
that attest to CMS will attest based on the revised objectives and 
measures that we are adopting in this final rule with comment period, 
including the 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. Dual-eligible hospitals 
may submit one attestation for both the Medicare and Medicaid EHR 
Incentive Programs to CMS and the attestation data will be shared with 
the appropriate State Medicaid agency to process the Medicaid incentive 
payment. Medicaid-only hospitals and dual-eligible hospitals that 
attest directly to a State for the State's Medicaid EHR Incentive 
Program will continue to attest based on the measures and objectives as 
finalized in the 2015 EHR Incentive Programs Final Rule (80 FR 62793 
through 80 FR 62871).
    Comment: One commenter stated that Medicare providers should have 
to meet the higher standards for objectives and measures in the 2015 
EHR Incentive Programs Final Rule that would apply for Medicaid 
providers.
    Response: We thank the commenter for its input. We have previously 
stated that the proposals were meant to reduce reporting burden and 
allow providers to focus more on patient care. In addition, under our 
final policies stated above, the changes to the objectives and measures 
that we are adopting in this final rule with comment period apply to 
dual-eligible hospitals that participate in both the Medicare and 
Medicaid EHR Incentive Programs that submit an attestation to CMS, in 
addition to Medicare-only hospitals. In addition, we requested public 
comments on how we could make the measures more stringent in future 
years. We did not receive any public comments on how to make the 
measures more stringent in future years.
    After consideration of the public comments we received, we are 
finalizing that eligible hospitals and CAHs participating in both the 
Medicare and Medicaid EHR Incentive Programs that attest to CMS will 
attest based on the revised objectives and measures that we are 
adopting in this final rule with comment period, including the 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. Dual-eligible hospitals may submit one attestation 
for both the Medicare and Medicaid EHR Incentive Programs to CMS. 
Medicaid-only hospitals and dual-eligible hospitals that attest 
directly to a State for the State's Medicaid EHR Incentive Program will 
continue to attest based on the measures and objectives as finalized in 
the 2015 EHR Incentive Programs Final Rule (80 FR 62793 through 80 FR 
62871).

D. Changes 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 CY 2017 OPPS/ASC proposed rule (81 FR 45753), we proposed 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 proposed corresponding changes to 
the definition of ``EHR reporting period'' and ``EHR reporting period 
for a payment adjustment year'' at 42 CFR 495.4.
    We invited public comment on our proposals.
    Comment: Several commenters supported the 90-day EHR reporting 
period because they believed it would reduce the burden of reporting 
and meeting all the thresholds for a 12-month period, increase program 
flexibility, and allow clinicians to spend

[[Page 79852]]

more time on patient care and implement new program requirements 
without affecting clinician workflow. These commenters also stated that 
this additional time would allow health care providers to focus more 
time and attention on preparing for the upcoming implementation of 
MACRA/MIPS and train new physicians on the use of a group's EHR, 
including work flows and processes, and allows the extra time needed to 
upgrade to the 2015 Edition CEHRT.
    Several commenters also requested CMS to extend the 90-day EHR 
reporting period for 2017 and 2018. These commenters believed that this 
reduction from a full calendar year reporting to a 90-day EHR reporting 
period will increase flexibility and prepare them for success in MPS 
starting in 2017. Some commenters also expressed concerns about 
implementing APIs and other functionalities for Stage 3 and encouraged 
CMS to adopt a 90-day EHR reporting period in 2017 to allow for extra 
time needed to upgrade to the 2015 Edition CEHERT.
    Response: We agree with the commenters that the change in the EHR 
reporting period will reduce burden on all EPs, eligible hospitals and 
CAHs preparing for Stage 3, as well as for EPs who will begin 
participating in MIPS in 2017. We also agree with health care providers 
that allowing a 90-day EHR reporting period does allow clinicians to 
spend more time on patient care and implement new requirements without 
negatively affecting clinician workflow.
    Comment: Several commenters urged CMS to adopt the 90-day EHR 
reporting period as expeditiously as possible. Some commenters further 
urged the rapid launch of the Web site to prepare for these 
attestations.
    Response: We note that after this final rule with comment period is 
published, we will work on a rapid implementation of this policy.
    Comment: Several commenters recommended that CMS permanently keep 
the 90-day EHR reporting period for hospitals and EPs to avoid having 
to make yearly changes and streamline the attestation process.
    Response: We disagree that we should permanently retain a 90-day 
EHR reporting period for returning participants. We do understand that 
it can cause uncertainty when we change the EHR reporting period in 
rulemaking from year to year. However, considering the implementation 
of MIPS in 2017 for EPs, as well as Stage 3 and the 2015 Edition for 
all EPs, eligible hospitals and CAHs in 2018 (optional in 2017), we 
believe adopting a 90-day EHR reporting period in 2016 for all 
participants will reduce the burden of reporting for a full year and 
assist healthcare providers in establishing and testing their processes 
and workflows for the new requirements and implementation 
functionalities required for EHR technology certified to the 2015 
Edition. We believe a full year EHR reporting period is the most 
effective way to ensure that all actions related to patient safety that 
leverage CEHRT are fully enabled for the duration of the year. This is 
one of the primary considerations of our continued push for a full year 
EHR reporting period, in addition to promoting greater alignment with 
other CMS quality reporting programs.
    Comment: Some commenters stated that they are concerned with the 
proposed rule's late notice of the proposed change to the EHR reporting 
period in 2016 because they will have to monitor EPs and eligible 
hospitals for both 365-day reporting periods and 90-day reporting 
periods because they will not know if CMS will finalize the proposed 
change until the fourth quarter of 2016
    Response: We thank the commenters for their views on this proposal. 
While we understand the concerns of these commenters, we believe that 
we have provided EPs, eligible hospitals, and CAHs sufficient time to 
report on any continuous 90-day EHR reporting period from January 1, 
2016-December 31, 2016.
    Comment: Several commenters welcomed having a longer EHR reporting 
period because it allows them opportunity to evaluate their progress 
and improve in subsequent months.
    Response: We thank the commenters for their feedback. We note that 
we are establishing in this final rule with comment period an EHR 
reporting period of any continuous 90 days from January 1, 2016 through 
December 31, 2016. However, we note that health care providers are 
required to report on a minimum of 90 days, but may choose to report on 
the full calendar year in 2016.
    Comment: Some commenters stated that they need more time to 
implement and upgrade technology in order to meet the complex Stage 3 
requirements, which they stated adds to the existing challenges they 
face. In addition, some commenters disagreed with the proposed changes 
in the proposed rule because they stated they must adapt to new changes 
every year.
    Response: We thank the commenters for their feedback. We believe 
that reducing the EHR reporting period from the full CY 2016 to any 
continuous 90-day period from January 1, 2016 through December 31, 
2016, in fact, reduces challenges because it allows for the EPs, 
eligible hospitals and CAHs to report based on a shorter period of 
time.
    Comment: Some commenters suggested that CMS issue guidance 
notifying physicians of the 90-day EHR reporting period and begin 
educating physicians about the change as quickly as possible.
    Response: We thank the commenters for their feedback. This final 
rule with comment period serves as the notice to all EPs, eligible 
hospitals, and CAHs. We understand the need to implement the policies 
adopted in this rule as quickly as possible.
    Comment: Some commenters were unclear if they should prepare for a 
90-day or 365-day EHR reporting period in 2016.
    Response: We are finalizing an EHR reporting period of any 
continuous 90-day period within CY 2016. Therefore, EPs, eligible 
hospitals, and CAHs should prepare for a 90-day EHR reporting period.
    After consideration of the public comments we received, we are 
finalizing a change to the EHR reporting periods in 2016 and 2017 for 
returning participants, from the full calendar year to any continuous 
90-day period within the CY. For all EPs, eligible hospitals and CAHs, 
the EHR reporting period in CY 2016 is any continuous 90-day period 
from January 1, 2016 through December 31, 2016, and the EHR reporting 
period in CY 2017 is any continuous 90-day period from January 1, 2017 
through December 31, 2017. The applicable incentive payment year and 
payment adjustment years for the EHR reporting periods in 2016 and 
2017, as well as the deadlines for attestation and other related 
program requirements, will remain the same as established in prior 
rulemaking. We are finalizing corresponding changes to the definitions 
of ``EHR reporting period'' and ``EHR reporting period for a payment 
adjustment year'' in the regulations under Sec.  495.4.
2. Clinical Quality Measurement
    In connection with the proposal to establish a 90-day EHR reporting 
period in 2016, we also proposed a 90-day reporting period for CQMs (81 
FR 45753) which would have no impact on the requirements for CQM data 
that are electronically reported as established in prior rulemaking. In 
2016, we proposed 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

[[Page 79853]]

     Electronically report CQM data in accordance with the 
requirements established in prior rulemaking.
    We noted 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.
    Comment: Several commenters agreed with a 90-day EHR reporting 
period because it would allow EPs, eligible hospitals, and CAHs the 
opportunity to implement the changes from the 2015 Final Rule for CQMs 
and urged CMS to finalize this change.
    Response: We believe that this change will reduce provider burden 
and further simplify the program through alignment of the EHR reporting 
period and CQM reporting period for CY 2016.
    We are finalizing our policy to allow 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 intend to continue to allow the States to determine the form and 
manner of reporting CQMs for their respective State Medicaid EHR 
Incentive Programs subject to CMS approval.

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

    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, in the CY 2017 OPPS/ASC proposed rule (81 FR 45753 through 
45754), we proposed 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 to 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 proposed 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 proposed 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 invited public comment on our proposals.
    Comment: Several commenters agreed that new participants to the 
Medicare EHR Incentive program should attest to Modified Stage 2 
objectives and measures in 2017 and stated that the proposed 
requirements protect new participants from having to attest to Stage 3 
requirements which they believe are challenging and unattainable.
    Response: We agree that allowing for new participants to attest to 
Modified Stage 2 objectives and measures provide them an opportunity to 
successfully participate in the EHR Incentive Program. We reiterate 
that we are requiring new participants seeking to avoid the payment 
adjustment in 2018 by attesting early in 2017 to attest to only the 
Modified Stage 2 objectives and measures and will not allow these 
providers to attest to the Stage 3 objectives and measures. We are 
adopting this policy because as we are transitioning EPs to the 
advancing care information category of MIPS in 2017 and eligible 
hospitals will be reporting under the Hospital IQR Program in 2017 as 
well, Therefore, it is not feasible for providers attesting early in 
2017 to avoid the payment adjustment in 2018 to attest to the Stage 3 
objectives and measures and they will instead be allowed to attest to 
only the Modified Stage 2 objectives and measures.
    We believe this requirement will prepare these participants for 
success in MIPS and Stage 3 of the EHR Incentive Program in 2018. Also, 
while we agree that the objectives and measures for Stage 3 are 
challenging, we do not believe that they are unattainable.
    Comment: Several commenters recommended that the Modified Stage 2 
attestation date for new participants be pushed back from October 1, 
2017 to a later date. One commenter disagreed with CMS' statement that 
new participants attesting to Stage 3 is not technically feasible, and 
stated it would be beneficial for health care organizations if CMS 
could technically support Stage 3 attestation for new participants in 
2017. One commenter stated that CMS should establish modified criteria 
for new program participants that will prepare them to meet subsequent 
stages successfully, stating that Modified Stage 2 requirements place 
an unfair burden on new participants.
    Response: We thank the commenters for their recommendations. 
However, we do not agree that we should push the date back later. The 
reason for having an October 1, 2017 attestation deadline is to 
accommodate all the changes to the new systems that will occur 
specifically to the technology certified to the 2015 edition updates in 
the attestation system.
    We also believe that developing modified requirements for new 
participants would further create confusion among health care providers 
and would create undue administrative burden, in addition to not being 
technically feasible. In addition, requiring new participants to attest 
to Modified Stage 2 in 2017 provides new participants with the 
experience necessary to attest to future stages of meaningful use and 
prepares those EPs who will transition to MIPS in 2017.
    Comment: One commenter asked whether the proposals extend to the 
Medicaid EHR Incentive Program.
    Response: The proposal to require attestation to Modified Stage 2 
is for all new participants, including those who participate in the 
Medicaid EHR Incentive Program.
    Comment: One commenter asked CMS to present the proposal in a table 
or grid format for clarity.
    Response: We will provide guidance materials on our Web page at: 
https://www.cms.gov/EHRIncentivePrograms/ after this final rule with 
comment period is published.
    After consideration of the public comments we received, we are

[[Page 79854]]

finalizing our proposed policy at 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 did not receive any public comments specific to our proposed 
editorial correction to 42 CFR 495.40(b), and we are finalizing the 
correction as proposed.

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

    In the 2016 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 the reasons 
stated in the CY 2017 OPPS/ASC proposed rule (81 FR 45754), we proposed 
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 limited 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.
    To apply for this significant hardship exception, we proposed 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 6 years post attestation.
    We stated in the proposed rule that we believed 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 in the MIPS. 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 also proposed to amend the regulations by 
adding new Sec.  495.102(d)(4)(v) to include this new category of 
significant hardship exception.
    We invited public comment on our proposals.
    Comment: Several commenters agreed with limiting the hardship 
exception to certain EPs by allowing new program participants to focus 
on meeting the requirements of MIPS instead of meeting the requirements 
of a program that will end soon.
    Response: We thank the commenters for their support of the hardship 
exception for certain EPs. As stated in the propose rule (81 FR 45753), 
we want to provide first time participants who are new to meaningful 
use and will participate in MIPS ample time to adjust to the new 
reporting requirements. We believe that limiting this hardship 
exception to these new EPs, who would otherwise have to report to the 
Medicare EHR Incentive Program and MIPS, will provide these EPs more 
time to get adjusted to MIPS.
    Comment: Several commenters supported the proposal. They also 
requested that CMS adopt a hardship exception application process that 
is as simple and readily available as possible for EPs affected by this 
policy.
    Response: We thank the commenters for their support in this one-
time significant hardship exception. Once this proposal is finalized, 
we will develop an application process that will be accessible for 
those who are applying for such an exception.
    Comment: Several commenters appreciated CMS' flexibility in 
proposing to allow certain EPs to apply for a one time significant 
hardship exception. Commenters agreed that the hardship exception will 
help new participants focus on preparing for and successfully 
participating in MIPS.
    Response: We thank the commenters for their support. As discussed 
previously we are providing this one-time hardship exception to improve 
chances of successful participation in MIPS.
    Comment: Several commenters requested that the application deadline 
for a hardship exception be extended.
    Response: We thank the commenters for their suggestion. However, as 
provided in the proposed rule the first time participants to the EHR 
Incentive Program have to attest by October 1, 2017. Therefore, it 
would not be desirable to extend the application deadline beyond this 
date.
    Comment: Several commenters urged CMS not to finalize the hardship 
exception because they believed it provides incentives for 
procrastination and noncompliance.
    Response: We thank the commenters for their views. However, we 
disagree with the commenters. We believe that, with this one-time 
hardship exception, we are providing new EPs an opportunity to prepare 
for the work to follow under MIPS. We believe that, through providing 
this hardship exception, we are improving the chances of successful 
participation under the MIPS.
    Comment: Several commenters recommended that CMS include all new 
participants, rather than just certain EPs, in the hardship exception.
    Response: We disagree that this policy should be extended to all 
new participants, as only EPs are transitioning to MIPS. This policy is 
to help those participants transitioning to MIPS to not have to attest 
to two different programs in order for them to focus their efforts on 
the new requirements under MIPS.
    Comment: Several commenters stated that the hardship application 
requirement is unnecessary and too burdensome on physicians. Commenters 
suggested that EPs who have not previously participated in meaningful 
use automatically be granted a hardship exception from the meaningful 
use payment adjustment in 2018.
    Response: We believe an application process is warranted for this 
significant hardship exception because we do not know how else we would 
verify that an EP meets the criteria for this exception, including the 
requirement that the EP show that, 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. We also 
believe that for some EPs this may not be a significant hardship, and 
thus we do not want to take the opportunity away for them to 
successfully participate in both the EHR Incentive Program and MIPS in 
2017.
    Comment: Several commenters urged CMS to communicate clearly the 
availability of the hardship exception to

[[Page 79855]]

all program participants prior to the 2017 EHR reporting period. These 
commenters stated that it is important that new participants who intend 
to transition into MIPS have the opportunity to focus on the measures 
and requirements specified for the proposed advancing care information 
performance category in 2017.
    Response: We thank the commenters for their suggestion and 
rationale. We will work with our stakeholders to clearly communicate 
the availability of the hardship exception application once available. 
We plan to do this early enough in 2017 to ensure these new 
participants can focus on the relevant categories under MIPS.
    After consideration of the public comments we received, we are 
finalizing the significant hardship exception for new participants 
transitioning to MIPS in 2017 as proposed. We are codifying this final 
policy at Sec.  495.102(d)(4)(v).

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

    In the CY 2017 OPPS/ASC proposed rule (81 FR 45755), we proposed 
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 
the 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 invited public comment on our proposals.
    Comment: Several commenters agreed with the proposal to require for 
all actions included in the numerator to occur within the EHR reporting 
period.
    Response: We thank the commenters for their support. We believe 
that actions which occur outside of the EHR reporting period should be 
kept within the same calendar year because it could lead to attesting 
more than once on the same action but for different calendar year 
reporting periods.
    Comment: Several commenters suggested that CMS revise FAQ 8231 in 
order to further clarify this change if it is finalized.
    Response: We plan to update FAQ 8231 to explain the new policy.
    Comment: Several commenters suggested that if CMS were to make a 
change to the reporting logic, it should be implemented as part of 
Stage 3, not to the Stage 2 modification.
    Response: We thank the commenters for their suggestion. We do not 
believe that this change should be implemented as part of Stage 3 only. 
We believe that the intention of this policy is to be inclusive of both 
Modified Stage 2 objectives and measures and Stage 3 objectives and 
measures in order to accurately measure how EPs, eligible hospitals and 
CAHs are performing on the measures affected by this policy.
    Comment: Several commenters suggested clarifying and maintaining 
the current policy to allow physicians to count actions that take place 
from the beginning of the calendar year of the EHR reporting period.
    Response: We do not agree with the suggestion that we maintain the 
current policy. The goal of the new policy is to require all actions 
that occur during an EHR reporting period to only be counted once. We 
note that with the previous policy there was potential that some 
actions could be counted during two separate EHR reporting periods.
    Comment: Several commenters requested that CMS clarify reporting 
timelines, specifically related to actions outside of the EHR reporting 
period.
    Response: We clarify that the action do not have to occur within 
the 90 day EHR reporting period timeframe, but must occur between 
January 1 and December 31 (or within the calendar year).
    Comment: Several commenters asked CMS to clarify whether this 
proposed policy applies to all EPs, eligible hospitals, and CAHs.
    Response: The proposed policy for actions outside the EHR reporting 
period applies to all EPs, eligible hospitals and CAHs beginning 
January 1, 2017.
    After consideration of the public comments we received, we are 
finalizing 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 that 
period is less than a calendar year, actions included in the numerator 
must occur within the calendar year in which the EHR reporting period 
occurs. This policy applies beginning with EHR reporting periods in CY 
2017.

XIX. 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 final rule for a full discussion of the Hospital VBP Program and 
its finalized policies (81 FR 56979 through 57011).

B. 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

[[Page 79856]]

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 (#0166).
2. Background of the Patient- and Caregiver-Centered Experience of 
Care/Care Coordination Domain Performance Scoring Methodology
    As previously finalized in the FY 2016 IPPS/LTCH PPS final rule (80 
FR 49565 through 49566), beginning with the FY 2018 program year, 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 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. 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,\252\ as follows:
---------------------------------------------------------------------------

    \252\ Available at: http://www.hcahpsonline.org/surveyinstrument.aspx.
---------------------------------------------------------------------------

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

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

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

[square] Never
[square] Sometimes
[square] Usually
[square] Always

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

[square] Never
[square] Sometimes
[square] Usually
[square] 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.\253\
---------------------------------------------------------------------------

    \253\ 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

[[Page 79857]]

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 for any future measures 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 process for developing modifications to the Pain 
Management dimension questions, we proposed in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45755 through 45757) 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, and subject to the statutory requirements 
listed in sections 1886(o)(2)(A) and 1886(o)(2)(C)(i) of the Act, we 
intend to propose to adopt them in future rulemaking.
    In the proposed rule, we stated that finalizing our proposal to 
remove the Pain Management dimension would leave eight dimensions in 
the HCAHPS Survey, 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 Pain Management dimension 
from the HCAHPS Survey, we proposed 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) (81 FR 45756). Each of the remaining eight 
dimensions would be of equal weight, so that the 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45757), we 
proposed 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.

                               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), and finalized 
performance standards in the FY 2017 IPPS/LTCH PPS final rule (81 FR 
57006 through 57007). The table below reflects the finalized 
performance standards for the FY 2019 program year. In the CY 2017 
OPPS/ASC proposed rule (81 FR 45757), we proposed 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 the FY 2017 IPPS/LTCH PPS final rule, we also finalized 
our proposal to change the name of this domain to the Person and 
Community Engagement domain beginning with the FY 2019 program year (81 
FR 56984)). The performance standards for the other eight dimensions 
would remain unchanged, as the table below illustrates.

[[Page 79858]]



                               Performance Standards for the FY 2019 Program Year
----------------------------------------------------------------------------------------------------------------
                                                                                    Achievement
                     HCAHPS survey dimension                          Floor *      threshold **    Benchmark ***
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Communication with Nurses.......................................           28.10           78.69           86.97
Communication with Doctors......................................           33.46           80.32           88.62
Responsiveness of Hospital Staff................................           32.72           65.16           80.15
Pain Management.................................................             N/A             N/A             N/A
Communication about Medicines...................................           11.38           63.26           73.53
Hospital Cleanliness & Quietness................................           22.85           65.58           79.06
Discharge Information...........................................           61.96           87.05           91.87
3-Item Care Transition..........................................           11.30           51.42           62.77
Overall Rating of Hospital......................................           28.39           70.85           84.83
----------------------------------------------------------------------------------------------------------------
* 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 invited public comments on these proposals.
    Comment: Many commenters supported CMS' proposal to remove the Pain 
Management dimension of the HCAHPS Survey from the Hospital VBP Program 
based on their concern that the survey questions may inadvertently 
create incentives and undue pressure for providers to prescribe opioids 
in order to achieve higher scores on the HCAHPS Survey, which may 
contribute to the opioid epidemic. Commenters also noted that removing 
the Pain Management dimension will resolve the perceived conflict 
between appropriate management of opioid use and patient satisfaction 
by allowing practitioners to use their best judgment in managing 
patients' pain and providing effective, appropriate patient care. Some 
of these commenters believed that removing these questions from 
hospitals' scores will reduce providers' fear of negative feedback on 
the HCAHPS Survey and, in turn, reduce inappropriately high opioid 
prescription dosages and durations.
    Other commenters supported removing the Pain Management dimension 
of the HCAHPS Survey from the Hospital VBP Program based on a belief 
that scoring hospitals on patients' perception of the adequacy of their 
pain management unfairly penalizes providers by inappropriately linking 
clinical decision-making to payment. These commenters also expressed 
concern that linking assessment of patient experience of care with pain 
management has led to an increase in opioid prescription when other 
pain management, such as use of nonsteroidal anti-inflammatory drugs, 
has failed.
    A number of commenters noted the importance of measuring patients' 
experience of pain management despite these concerns with the current 
Pain Management dimension questions, and urged CMS to develop 
alternative questions to assess patients' pain management as soon as 
practicable. A few of these commenters also encouraged CMS to act to 
ensure that patients receive an appropriate level of pain control 
through methods that do not encourage excessive opioid prescription.
    Response: We thank the commenters for their support. We are not 
aware of any scientific studies that support an association between 
scores on the Pain Management dimension questions and opioid 
prescribing practices. In addition, we continue to believe that 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; that pain control is an 
appropriate part of routine patient care that hospitals should manage; 
and that pain control is an important concern for patients, their 
families, and their caregivers.\254\ However, we believe that removing 
the Pain Management dimension from the Hospital VBP Program scoring 
calculations will address potential confusion about the appropriate use 
of the Pain Management dimension, and provide us with an opportunity to 
further refine the pain management questions used in the HCAHPS Survey.
---------------------------------------------------------------------------

    \254\ 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.
---------------------------------------------------------------------------

    Comment: A number of commenters disagreed with the assertion that 
the HCAHPS Survey Pain Management questions influence clinical 
decision-making, citing the lack of empirical evidence to support this 
position, but supported CMS' proposal to remove the Pain Management 
dimension of the HCAHPS Survey from the Hospital VBP Program because it 
will provide CMS and the hospital community with an opportunity to 
refine the pain management questions on the HCAHPS Survey.
    Response: We thank the commenters for their support. As noted 
above, we are not aware of any scientific studies that support an 
association between scores on the Pain Management dimension questions 
and opioid prescribing practices. Nevertheless, we believe that 
removing the Pain Management dimension from the Hospital VBP Program 
scoring calculations will address potential confusion about the 
appropriate use of the Pain Management dimension, and provide us with 
an opportunity to further refine the pain management questions used in 
the HCAHPS Survey.
    Comment: Several commenters supported CMS' proposal to remove the 
Pain Management dimension of the HCAHPS Survey from the Hospital VBP 
Program because the current questions focus on pain control rather than 
pain communication, which the commenters believe could create a 
perverse incentive to inappropriately prescribe opioids and other pain 
medication. One commenter supported removal of the Pain Management 
dimension based on concerns regarding the wording of the pain 
management questions and how it may influence patient responses to 
these questions. Specifically, the commenter expressed concern that the 
current question wording may imply that pain is only an issue if the 
patient needed medicine, that medicine is the only means to reduce 
pain, and that medication should be administered to the point of 
cessation of all pain. Another commenter expressed concern that the 
current pain management questions may not accurately reflect the 
quality of care received at the hospital because they do not factor in 
all

[[Page 79859]]

elements of clinical decision-making and the individual circumstances 
of a patient's episode of care.
    Response: We acknowledge commenters' concerns about the current 
Pain Management questions, and we will take the feedback into 
consideration as we continue to develop, test, and empirically assess 
potential alternative questions that focus on communication with 
patients about pain management as potential replacements for the Pain 
Management questions currently included in the HCAHPS Survey. As 
discussed in the CY 2017 OPPS/ASC proposed rule, we are following our 
standard survey development processes, which include drafting 
alternative questions, cognitive interviews and group evaluation, field 
testing, statistical analysis, and soliciting stakeholder input.
    Comment: One commenter supported CMS' proposal to remove the Pain 
Management dimension from the Hospital VBP Program because the 
commenter believed that only the most reliable and valid measures 
should be included when Medicare payment is at risk.
    Response: We thank the commenter for the support of our proposal. 
We continue to believe the HCAHPS Survey Pain Management questions, and 
the HCAHPS Survey as a whole, are valid and reliable measures of 
hospital quality that encourage hospitals to assess and improve patient 
experience. We further note that the HCAHPS Survey, including the Pain 
Management questions, is NQF-endorsed (NQF #0166). However, we believe 
that removing the Pain Management dimension from the Hospital VBP 
Program scoring calculations will address potential confusion about the 
appropriate use of the Pain Management dimension, and provide us with 
an opportunity to further refine the pain management questions used in 
the HCAHPS Survey.
    Comment: One commenter recommended that hospitals continue to 
survey patients about their inpatient pain management experience 
because pain management is an important aspect of quality care.
    Response: We agree with commenter that management of patients' pain 
is an important aspect of quality care. We note that the administration 
and reporting of the full HCAHPS Survey, including the current Pain 
Management questions, remains part of the Hospital IQR Program. In 
addition, we will continue to make publicly available the data reported 
under the Hospital IQR Program on our Hospital Compare Web site.
    Comment: Some commenters did not support CMS' proposal to remove 
the HCAHPS Survey Pain Management dimension from the Hospital VBP 
Program due to the lack of evidence linking these questions to opioid 
overprescribing. Specifically, commenters stated that there is a lack 
of evidence that the HCAHPS Survey has inappropriately influenced 
providers' prescribing patterns; that there is no evidence that 
prescribed opioids are primarily responsible for opioid abuse or 
opioid-related deaths; and that there is no evidence to suggest that 
assessing and controlling pain in hospitalized inpatients is 
responsible for initiating or perpetuating the opioid epidemic. One 
commenter expressed concern that removing these pain management 
questions from hospitals' scores in the Hospital VBP Program would 
eliminate an important driver of progress to develop improved means of 
acute pain assessment. Another commenter expressed concern that 
removing the Pain Management dimension from the Hospital VBP Program 
may result in pain management issues being excluded from hospitals' 
quality improvement efforts. These commenters recommended that CMS 
explore opportunities to modify the Pain Management dimension questions 
in the HCAHPS Survey, but not remove these questions from the HCAHPS 
Survey or the Hospital VBP Program's scoring calculations until 
alternative questions are available to replace them.
    Other commenters did not support CMS' proposal to remove the Pain 
Management dimension from the Hospital VBP Program because they believe 
doing so ignores the needs of patients who require treatment for pain. 
These commenters also expressed their concern that removing these 
questions may result in inadequate pain treatment for patients in need 
of such treatment.
    Response: We remain dedicated to improving the quality of care 
provided to patients, including the appropriate management of pain and 
communication between patients and their providers regarding pain. 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. Furthermore, we are 
unaware of any empirical evidence demonstrating that failing to 
prescribe opioids lowers a hospital's HCAHPS Survey scores. However, we 
believe the potential confusion about the appropriate use of the Pain 
Management dimension questions, coupled with the public health concern 
about the opioid epidemic, warrants removing these questions from 
Hospital VBP Program scoring calculations until alternative pain 
management questions are available. We note that hospitals would 
continue to administer the full HCAHPS Survey, including the current 
Pain Management questions, to eligible patients. In addition, we note 
that hospital performance rates on all HCAHPS Survey measures will 
still be publicly reported under the Hospital IQR Program on Hospital 
Compare and used in calculating HCAHPS star ratings and Hospital 
Compare overall ratings. We believe continued public reporting of Pain 
Management performance rates appropriately balances the need to provide 
the public with important quality data for use in health care decision-
making and to incentivize quality improvement regarding pain management 
and communication with our desire to address the perceived conflict 
between appropriate management of opioid use and patient satisfaction 
by relieving the pressure physicians may feel to overprescribe opioids. 
We further believe continued public reporting of Pain Management 
performance rates will provide important information to patients and 
consumers and encourage hospitals to appropriately manage patients' 
pain and continue engaging in quality improvement efforts.\255\
---------------------------------------------------------------------------

    \255\ 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.
---------------------------------------------------------------------------

    Comment: One commenter recommended that CMS make concerted efforts 
to inform Medicare providers of the CDC's recently published 
``Guideline for Prescribing Opioids for Chronic Pain.''
    Response: We thank the commenter for the recommendation and note 
that this information is publicly available on the CDC's Web site at: 
http://www.cdc.gov/drugoverdose/prescribing/guideline.html. The 
guideline provides recommendations that focus on the use of opioids in 
treating chronic pain (defined as pain lasting longer than 3 months or 
past the time of normal tissue healing) outside of active cancer 
treatment, palliative care, and end-of-life care. We encourage 
prescribing clinicians to follow this guideline for prescribing opioids 
for chronic pain.
    Comment: Many commenters supported the development of alternative 
questions regarding pain management for the HCAHPS Survey and 
recommended that CMS submit the revised survey to NQF for endorsement

[[Page 79860]]

following a rigorous survey development process. A large number of 
commenters provided specific recommendations regarding the context and 
content of these alternative questions. Numerous commenters recommended 
that the alternative questions should include whether a patient's pain 
was assessed; whether treatment options were discussed with the 
patient, including discussion of the risks and benefits associated with 
opioid prescription and the potential for use of alternative, non-
opioid pain management therapy, and interventions made; and whether the 
patient's pain was reassessed following intervention to determine its 
effectiveness. Other commenters recommended that the alternative 
questions focus on effective provider communication with patients about 
pain management-related issues, appropriate expectations about pain 
relief, patient understanding of interventions offered to address pain, 
and shared decision-making and proper prescription practices. Some 
commenters specifically recommended that CMS assess patients' 
understanding of the interventions offered to address the patient's 
pain. Some commenters urged CMS to pay particular attention to the 
difference between acute and chronic pain treatment, individual 
patient's pain management goals, and the risks of the particular 
clinical situation in pain management decision-making. Commenters also 
urged CMS to acknowledge the role of palliative care in pain management 
decision-making.
    One commenter recommended that CMS define a high-quality patient 
experience as one in which the health care provider discussed pain 
management treatment options with patients and patients believed they 
had the opportunity to engage in the discussion to determine the most 
appropriate treatment option. Another commenter recommended the 
development of alternative questions regarding pain management for the 
HCAHPS Survey that align with the pain control and communication 
questions in the OAS CAHPS Survey. Other commenters recommended that 
these alternative questions be studied for their potential effect on 
clinical behavior and patient outcomes, including any unintended 
consequences such as creating barriers to access opioids when they are 
clinically appropriate.
    Response: We thank the commenters for their recommendations 
regarding the alternative questions for the HCAHPS Survey. We will take 
these recommendations into consideration as we continue to develop, 
test, and empirically assess potential alternative questions that focus 
on communication with patients about pain management as potential 
replacements for the Pain Management questions currently included in 
the HCAHPS Survey. As discussed in the CY 2017 OPPS/ASC proposed rule, 
we are following our standard survey development processes, which 
include drafting alternative questions, cognitive interviews and group 
evaluation, field testing, statistical analysis, and soliciting 
stakeholder input. Any specific Pain Management questions that would be 
considered for use in a CMS program will proceed through the 
prerulemaking process, including listing of measures on the ``Measures 
Under Consideration'' list and review by the Measures Application 
Partnership, as well as notice-and-comment rulemaking in the future. In 
addition, we intend to seek NQF endorsement for the alternative 
questions we decide to propose to use in the HCAHPS Survey once these 
survey development processes are complete.
    Comment: Several commenters recommended that CMS exclude all 
patients with substance use disorders on their problem list, not just 
those patients admitted with a primary diagnosis of a substance use 
disorder, from the HCAHPS Survey because the commenters believed these 
patients' survey responses are affected by their underlying conditions, 
which in turn creates a perverse incentive for providers to prescribe 
opioids rather than referring patients for substance use disorder 
treatment.
    Response: We thank the commenters for their comments. Since its 
inception in 2006, HCAHPS has classified eligible patients into three 
service line categories: Medical, surgical, or maternity care.\256\ The 
recommended method of assignment to service line is the patient's MS-
DRG at discharge; if unavailable, CMS permits several alternative 
methods of service line assignment. Due to methodological 
considerations, the requirements of national standardization, and the 
data collection burden placed on hospitals and their HCAHPS Survey 
vendors, CMS does not collect or employ patients' secondary diagnoses 
or any other codes, designations, or notes, including ``problem 
lists.'' We note that patients whose primary diagnosis MS-DRG is 
substance abuse are ineligible for the HCAHPS Survey under the current 
HCAHPS Quality Assurance Guidelines.\257\ We will take into 
consideration public comments received as we continually seek to 
improve our quality measures.
---------------------------------------------------------------------------

    \256\ HCAHPS Quality Assurance Guidelines, V11.0, pp. 53-55; 75-
76 (2016). http://www.hcahpsonline.org/qaguidelines.aspx.
    \257\ HCAHPS Quality Assurance Guidelines, V11.0, p. 75 (2016). 
http://www.hcahpsonline.org/qaguidelines.aspx.
---------------------------------------------------------------------------

    Comment: One commenter encouraged CMS to conduct further 
assessments of whether, and to what extent, removal of the Pain 
Management dimension from the Hospital VBP Program scoring calculations 
influences providers' management of pain. Another commenter urged CMS 
to study the impact of the HCAHPS Pain Management questions (both the 
current and alternative questions) on clinician behavior, use of other 
approaches to pain management, and patient outcomes.
    Response: We thank the commenter for the recommendations and will 
take these concerns into consideration as we continue to develop and 
test the alternative pain management questions. We note that HHS is 
also conducting further research to help better understand stakeholder 
concerns regarding the current HCAHPS Survey Pain Management dimension 
questions and to determine whether there are any unintended 
consequences that link the Pain Management dimension questions to 
opioid prescribing practices.
    Comment: One commenter recommended that CMS conduct mode testing 
for an electronic administration option for the HCAHPS Survey.
    Response: We thank the commenter for its recommendation. While 
email and a Web-based survey are not available survey modes at present, 
we are actively investigating these modes as possible new options for 
the future. This ongoing investigation includes exploring whether 
hospitals receive reliable email addresses and whether there is 
adequate access to the Internet across all types of inpatients. 
Ultimately, the purpose of the investigation is to ensure that any new 
survey administration method does not introduce bias to the survey 
process.
    Comment: One commenter believed that if the HCAHPS Survey can be 
used for public reporting, the data should also have the ability to be 
used to change the behavior of individual providers. Furthermore, the 
commenter believed that individual and groups of providers should be 
held accountable for HCAHPS Survey results.
    Response: While we agree that the HCAHPS Survey can be used to 
identify general areas for improvement within a hospital, some of which 
may be addressed through changes in provider

[[Page 79861]]

behavior generally, we disagree with the commenter's assertion that 
individual providers or provider groups should be held ``accountable'' 
for hospital scores on the HCAHPS Survey. The HCAHPS Survey is designed 
to evaluate the performance of a hospital as a whole, not individuals 
or groups within the larger hospital setting; \258\ therefore, its use 
for evaluating or incentivizing individual providers or groups within 
the hospital is contrary to the survey's design and policy aim.\259\
---------------------------------------------------------------------------

    \258\ 80 FR 49551 through 49552.
    \259\ 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.
---------------------------------------------------------------------------

    Comment: One commenter sought clarification regarding CMS' concerns 
about hospitals' use of disaggregated HCAHPS Survey results to evaluate 
individual provider performance on a given question or domain, and 
whether those concerns are limited to use of disaggregated results on 
the Pain Management questions. Specifically, the commenter believed 
that HCAHPS Survey data should be used to improve clinician-patient 
communication, which is important in quality of care.
    Response: We agree with the commenter that clinician-patient 
communication about pain and pain management are important aspects of 
quality care. However, disaggregation of HCAHPS Survey results for use 
in evaluating individual providers' performance on any dimension within 
the HCAHPS Survey, not just the Pain Management dimension, is not how 
the HCAHPS Survey was intended to be used. As noted above, the HCAHPS 
Survey is designed to assess hospital-level performance and is not 
suitable for evaluating or incentivizing individual providers or 
provider groups within a hospital. Hospitals can and should use HCAHPS 
Survey results to identify general areas for improvement within the 
hospital setting, but should not ascribe those results to individual 
providers within the hospital.\260\
---------------------------------------------------------------------------

    \260\ 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.
---------------------------------------------------------------------------

    Comment: A few commenters expressed concern regarding the 
application of the HCAHPS Survey to the emergency department (ED) 
setting. These commenters stated that the available evidence indicates 
ED physicians are most affected by low ratings on patient experience of 
care surveys, particularly on questions regarding the adequacy of pain 
medication prescriptions. One commenter asserted that the use of the 
HCAHPS Survey in the ED setting is inappropriate and urged CMS to 
refine the pain management questions included in the Emergency 
Department Patient Experience of Care Survey currently under 
development and implement the survey in order to better capture patient 
experience of care in the ED setting.
    Response: We agree that use of the HCAHPS Survey in the ED setting 
to assess outpatient ED care instead of inpatient care is 
inappropriate. HCAHPS was designed, developed, and intended for 
hospital level measurement for inpatient stays, not EDs or other 
individual hospital departments. Other uses of the HCAHPS Survey are 
not consistent with its design or validation metrics. Accordingly, we 
encourage hospitals and HCAHPS Survey vendors to review the HCAHPS 
Survey specifications in order to avoid such instances of misuse. We 
are continuing our evaluation of the Emergency Department Patient 
Experience of Care Survey in an effort to develop a survey that will 
provide patient experience data that enable comparison of EDs across 
the nation and promote effective communication and coordination, and we 
intend to address its potential use in CMS' quality programs in the 
future. We also note that, in section XIII.B.5.c. of this final rule 
with comment period, we are finalizing adoption of five survey-based 
measures in the Hospital OQR Program utilizing the OAS CAHPS Survey, a 
patient experience of care survey developed for use with selected 
outpatient surgical procedures.
    Comment: A number of commenters expressed concern about the 
continued public reporting of the HCAHPS Pain Management measure in 
other CMS quality reporting programs, specifically the Hospital IQR 
Program, including HCAHPS star ratings and Hospital Compare overall 
ratings. Commenters stated that use of these questions in these quality 
reporting programs may still lead to potential overprescribing of 
opioids to at-risk patients. Some commenters also expressed concern 
that public reporting of these scores could distort the public's 
perception of the quality of care provided at certain hospitals. 
Commenters recommended that CMS remove or exclude hospital scores on 
the HCAHPS Survey's Pain Management questions from Hospital Compare 
reporting, including HCAHPS star ratings and Hospital Compare overall 
ratings, until alternative questions are developed and adopted for 
these programs.
    Response: Pain management is an important component of the quality 
of care provided at a hospital, and we believe continued public 
reporting of hospital rates on the HCAHPS Survey Pain Management 
questions, without linkage to payment, properly balances these concerns 
with our desire to provide patients with critical information for use 
in selecting a hospital setting for their care, ensure hospitals 
continue to appropriately manage patients' pain, and encourage 
hospitals to engage in quality improvement efforts addressing pain 
management and communication. We continue to believe that pain control 
is a critical part of routine patient care that hospitals should manage 
and is an important concern for patients, their families, and their 
caregivers. Therefore, we believe there is continued benefit to 
publicly reporting the HCAHPS Survey Pain Management questions in other 
CMS quality programs. As noted previously, we are not aware of any 
empirical evidence that failing to prescribe opioids lowers a 
hospital's HCAHPS rates. We also continue to believe that 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, such as misuse of the survey, 
disaggregation of surveys results to assess the performance of 
individual hospital staff, and/or failure to recognize that the HCAHPS 
Survey excludes certain populations from the sampling frame.
    Comment: A number of commenters supported continued collection and 
public reporting of the current HCAHPS Survey Pain Management questions 
in the Hospital IQR Program until alternative pain management questions 
are developed and adopted. Commenters noted that these questions are 
currently the only source of nationally comparable data on pain 
management, and stated that the importance of pain management to 
patient care and experience during a hospital stay makes this 
information useful for the public. One commenter supported continued 
collection of these data because hospitals can use the information to 
improve patient quality of care as new survey questions are developed 
and tested. One commenter recommended that CMS provide a notation on 
the publicly reported HCAHPS Survey Pain Management dimension rates, 
stating that CMS is reviewing the pain management questions for 
possible revision.
    Response: We thank the commenters for their support and note that, 
in July

[[Page 79862]]

2016, we began displaying a footnote on the Hospital Compare Web site 
along with the Pain Management measure information, which reads: 
``Note: CMS is reviewing the pain management questions on the HCAHPS 
Survey for possible revision.''
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the Pain Management dimension of the 
HCAHPS Survey in the Patient- and Caregiver-Centered Experience of 
Care/Care Coordination domain of the Hospital VBP Program beginning 
with the FY 2018 program year.

XX. 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 final rule with comment 
period pertaining to 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-FC'' from the list of regulations. All 
OPPS Addenda to this final rule with comment period are contained in 
the zipped folder entitled ``2017 OPPS 1656-FC Addenda'' at the bottom 
of the page. To view the Addenda to this final rule with comment period 
pertaining to the 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-FC'' from the list of regulations. All ASC 
Addenda to this final rule with comment period are contained in the 
zipped folders entitled ``Addendum AA, BB, DD1, DD2, and EE''.

XXI. 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 the CY 2017 OPPS/ASC proposed rule (81 FR 45758 through 45761), 
we solicited 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 final rule with comment period.
2. Estimated Burden of Hospital OQR Program Newly Finalized Proposals 
for the CY 2018 Payment Determination and Subsequent Years
    In section XIII.B.8. of this final rule with comment period, we are 
finalizing our proposal 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 finalizing 
our proposal that hospitals will generally have approximately 30 days 
to preview their data. Both of these policies are consistent with 
current practice. Lastly, we are finalizing our proposal 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 
changes to the public display policies because hospitals will not be 
required to submit additional data or forms to CMS.
3. Estimated Burden of Hospital OQR Program Newly Finalized Proposals 
for the CY 2019 Payment Determination and Subsequent Years
a. Extraordinary Circumstances Extension or Exemptions Process
    In section XIII.D.8. of this final rule with comment period, we are 
finalizing our proposal 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 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 will 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 necessary 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 final rule with comment period, we are 
finalizing 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 Newly Finalized Proposals 
for the CY 2020 Payment Determination and Subsequent Years
    In sections XIII.B.5.a. and XIII.B.5.b. of this final rule with 
comment period, we are finalizing our proposals to add

[[Page 79863]]

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 final rule with comment period, we also are 
finalizing our proposal to add 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.
    OP-35 and OP-36 are claims-based measures. As noted in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68530), we calculate 
claims-based measures using Medicare FFS claims data that do not 
require additional hospital data submissions. As a result, as we stated 
in the CY 2017 OPPS/ASC proposed rule (81 FR 45758), we do not 
anticipate that the proposed OP-35 or OP-36 measures will 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 
newly adopted OAS CAHPS survey-based measures (OP-37a, OP-37b, OP-37c, 
OP-37d, and OP-37e) are currently approved under OMB Control Number 
0938-1240. For this reason, in the CY 2017 OPPS/ASC proposed rule (81 
FR 45758), we did not provide an independent estimate of the burden 
associated with OAS CAHPS Survey-based measures for the Hospital OQR 
Program.
    We invited public comment on the burden associated with these 
information collection requirements. We did not receive any public 
comments on our estimates of the burden associated with these 
information collection requirements. Therefore, we are finalizing our 
burden estimates as discussed above.

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 final rule with comment period.
2. 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 finalizing our proposal to 
update our burden calculation methodology to standardize elements 
within our burden calculation. Specifically, we are finalizing our 
proposals 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, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45759), we proposed 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, in the CY 2017 OPPS/ASC proposed rule (81 FR 
45759), we proposed to align these numbers and use one hourly labor 
cost across programs for purposes of burden calculations. Specifically, 
we proposed 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 Bureau of Labor Statistics (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.'' \261\ 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 will 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.\262\
---------------------------------------------------------------------------

    \261\ http://www.bls.gov/bls/infohome.htm.
    \262\ 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, in the CY 2017 OPPS/
ASC proposed rule (81 FR 45759), we proposed to calculate the cost of 
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 final rule (81 FR 57260, 57266, and 
57339), we used

[[Page 79864]]

a similar adjustment for a couple other quality reporting programs. 
Therefore, we proposed to apply an hourly labor cost of $32.84 ($16.42 
base salary + $16.42 fringe and overhead) to our burden calculations.
    We did not receive any public comments on our proposals 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, specifically, 15 minutes; and (2) a standard hourly labor 
cost for chart abstraction activities, specifically, $32.84. Therefore, 
we are finalizing our proposals as proposed.
3. Estimated Burden of ASCQR Program Newly Finalized Proposals for the 
CY 2018 Payment Determination
    For the CY 2018 payment determination and subsequent years, we are 
finalizing a few proposals. In section XIV.B.7 of this final rule with 
comment period, we are finalizing our proposal 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 finalizing our proposal that ASCs will generally have approximately 
30 days to preview their data. Both of these finalized proposals are 
consistent with current practice. Lastly, we are finalizing our 
proposal 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 finalized changes to the 
ASCQR Program public reporting policies will have no effect on burden 
for ASCs because these changes will not require participating ASCs to 
submit additional data to CMS.
4. Estimated Burden of ASCQR Program Newly Finalized Proposals for the 
CY 2019 Payment Determination
    For the CY 2019 payment determination and subsequent years, we are 
finalizing two new proposals. In section XIV.D.3. of this final rule 
with comment period, we are finalizing our proposal to implement a 
submission deadline with an end date of May 15 for all data submitted 
via a CMS Web-based tool beginning with the CY 2019 payment 
determination as proposed. (For all data submitted via a non-CMS Web-
based tool, ASCs are already required to submit by May 15 of the year 
prior to the affected payment determination year (79 FR 66985 through 
66986).) We do not anticipate additional burden as the data collection 
and submission requirements have not changed; only the deadline will be 
moved to a slightly earlier date that we anticipate will alleviate 
burden by aligning data submission deadlines. We also are finalizing 
our proposal to make corresponding changes to the regulations at 42 CFR 
416.310(c)(1)(ii) to reflect this change in submission deadline, as 
proposed. 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 final rule with comment 
period, we are finalizing our proposal to extend the time for filing an 
Extraordinary Circumstance Exception or Exemption from within 45 days 
of the date that the extraordinary circumstance occurred to within 90 
days of the date that the extraordinary circumstance occurred as 
proposed. We do not anticipate that there will 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 finalizing our proposal to make corresponding changes to the 
regulations at 42 CFR 416.310(d)(1) to reflect this change to 90 days, 
as proposed. We do not anticipate any additional burden to ASCs as a 
result of codifying this policy.
5. Estimated Burden of ASCQR Program Newly Finalized Proposals for the 
CY 2020 Payment Determination
    For the CY 2020 payment determination and subsequent years, we are 
finalizing our proposals 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 final rule with 
comment period, we are finalizing our proposals, as proposed, to add 
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 finalizing our proposals 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 will incur a financial burden associated with 
abstracting numerators, denominators, and exclusions for the two newly 
adopted measures collected and reported via a CMS online data 
submission tool (ASC-13 and ASC-14). Using the burden estimate values 
for chart-abstracted measures discussed in section XXI.C.2. of this 
final rule with comment period, we estimate that each participating ASC 
will 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 newly finalized ASC-13 and ASC-14 will 
be 1,315 hours and $43,185 \263\ (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.
---------------------------------------------------------------------------

    \263\ We note that in the CY 2017 OPPS/ASC proposed rule (81 FR 
45760) this value appeared as $42,185. This was a typographical 
error; the correct value for this burden estimate is $43,185, the 
product of 1,315 hours multiplied by $32.84 per hour.
---------------------------------------------------------------------------

    The information collection requirements associated with the five 
newly adopted OAS CAHPS Survey-based measures (ASC-15a, ASC-15b, ASC-
15c, ASC-15d, and ASC-15e) are currently approved under OMB Control 
Number 0938-1240. For this reason, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45760), we did not provide an independent estimate of the 
burden associated with OAS CAHPS Survey administration for the ASCQR 
Program.
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). In the CY 2017 OPPS/ASC proposed rule, we did not 
propose 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 invited public comment on the burden associated with these 
information collection requirements. We did not receive any public 
comments on

[[Page 79865]]

our estimates of the burden associated with these information 
collection requirements. Therefore, we are finalizing our burden 
estimates as discussed above.

D. ICRs Relating to Changes in Transplant Enforcement Performance 
Thresholds

    In section XV. of this final rule with comment period, we discuss 
changes to the enforcement performance thresholds relating to patient 
and graft survival outcomes. The changes will impose no new burdens on 
transplant programs. The changes 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 Changes Relating to Organ Procurement Organizations (OPOs)

    In section XVI. of this final rule with comment period, we are 
finalizing several proposed changes to definitions, outcome measures 
and documentation requirements for OPOs. In section XVI.B.1. of this 
final rule with comment period, we are revising the definition of 
``eligible death.'' In section XVI.B.2 of this final rule with comment 
period, we are finalizing our proposal to adjust the outcome 
performance yield measure to align CMS with the SRTR yield metric. In 
section XVI.B.3. of this final rule with comment period, we are 
finalizing our proposal to reduce the amount of hard copy documentation 
that is packaged and shipped with each organ. These finalized changes 
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 final rule with comment period, 
we are finalizing our proposal to make a technical correction to the 
enforcement provisions for transplant centers and to clarify our policy 
regarding SIAs. These changes 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 Changes to the Electronic Health Record (EHR) 
Incentive Program

    In section XVIII. of this final rule with comment period, we 
discuss our proposed and finalized policy changes for eligible 
hospitals and CAHs attesting to CMS 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 will reduce the 
total burden associated with these measures by a total of 11 minutes. 
This will 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 will 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.
    We discuss our proposed and finalized policies to change the EHR 
reporting period in 2016 and 2017 from the full calendar year to any 
continuous 90-day period within the calendar year 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 
attest to the Modified Stage 2 objectives and measures. We do not 
believe that modifying the EHR reporting period will 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 proposed and finalized policy changes 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 Additional Hospital VBP Program Policies

    In section XIX. of this final rule with comment period, we discuss 
finalizing our proposal to change the scoring methodology for the 
Patient- and Caregiver-Centered Experience of Care/Care Coordination 
domain in the Hospital VBP Program 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, 
the removal of the Pain Management dimension from the survey for 
purposes of the Hospital VBP Program does not change the reporting 
burden for hospitals because the data will still be used for the 
Hospital IQR Program. The finalized change to the scoring methodology 
for the Patient- and Caregiver-Centered Experience of Care/Care 
Coordination domain in the Hospital VBP Program also will not result in 
any change to the reporting burden.

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

    In section X.A. of this final rule with comment period, we discuss 
finalized proposals for the implementation of section 603 of the 
Bipartisan Budget Act of 2015. The finalized proposals will impose no 
new information collection 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.
    Any public comments on estimates of the burden associated with 
implementation of section 603 of the Bipartisan Budget Act of 2015 are 
summarized and addressed in section X.A. of this final rule with 
comment period.

XXII. Waiver of Proposed Rulemaking and Response to Comments

A. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on a proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and substance 
of the proposed rule or a description of the subjects and issues 
involved. This

[[Page 79866]]

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

B. Response to Comments

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

XXIII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this final rule with comment 
period, as required by Executive Order 12866 on Regulatory Planning and 
Review (September 30, 1993), Executive Order 13563 on Improving 
Regulation and Regulatory Review (January 18, 2011), the Regulatory 
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 
1102(b) of the Social Security Act, section 202 of the Unfunded 
Mandates Reform Act of 1995 (UMRA) (March 22, 1995, Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), and the Contract 
with America Advancement Act of 1996 (Pub. L. 104-121) (5 U.S.C. 
804(2)). This section of the final rule with comment period contains 
the impact and other economic analyses for the provisions that we are 
finalizing 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 final rule with comment period has been designated as 
an economically significant rule under section 3(f)(1) of Executive 
Order 12866 and a major rule under the Contract with America 
Advancement Act of 1996 (Pub. L. 104-121). Accordingly, this final rule 
with comment period has been reviewed by the Office of Management and 
Budget. We have prepared a regulatory impact analysis that, to the best 
of our ability, presents the costs and benefits of this final rule with 
comment period. In the CY 2017 OPPS/ASC proposed rule (81 FR 45761), we 
solicited public comments on the regulatory impact analysis in the 
proposed rule, and we are addressing any public comments we received in 
this final rule with comment period as appropriate.
2. Statement of Need
    This final rule with comment period is necessary to make updates to 
the Medicare hospital OPPS rates. It is necessary to make changes to 
the payment policies and rates for outpatient services furnished by 
hospitals and CMHCs in CY 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 revising 
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 June 30, 2016, and updated cost report 
information.
    This final rule with comment period also is necessary to make 
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 79867]]

3. Overall Impacts for the OPPS and ASC Payment Provisions
    We estimate that the total increase in Federal government 
expenditures under the OPPS for CY 2017, compared to CY 2016 due to the 
changes in this final rule with comment period, will be approximately 
$773 million. Taking into account our estimated changes in enrollment, 
utilization, and case-mix, we estimate that the OPPS expenditures for 
CY 2017 will be approximately $5.0 billion higher relative to 
expenditures in CY 2016. We note that this estimate of $5.0 billion 
does not include the implementation of section 603 of the Bipartisan 
Budget Act of 2015 in CY 2017, which we estimate will reduce Part B 
expenditures by $50 million in CY 2017. Because this final rule with 
comment period 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 52 displays the 
distributional impact of the CY 2017 changes in OPPS payment to various 
groups of hospitals and for CMHCs.
    We estimate that the update to the conversion factor and other 
adjustments (not including the effects of outlier payments, the pass-
through estimates, and the application of the frontier State wage 
adjustment for CY 2016) will increase total OPPS payments by 1.7 
percent in CY 2017. The changes to the APC relative payment weights, 
the changes to the wage indexes, the continuation of a payment 
adjustment for rural SCHs, including EACHs, and the payment adjustment 
for cancer hospitals will not increase OPPS payments because these 
changes to the OPPS are budget neutral. However, these updates will 
change the distribution of payments within the budget neutral system. 
We estimate that the total change in payments between CY 2016 and CY 
2017, considering all payments, changes in estimated total outlier 
payments, pass-through payments, and the application of the frontier 
State wage adjustment outside of budget neutrality, in addition to the 
application of the OPD fee schedule increase factor after all 
adjustments required by sections 1833(t)(3)(F), 1833(t)(3)(G), and 
1833(t)(17) of the Act, will increase total estimated OPPS payments by 
1.7 percent.
    We estimate the total increase (from changes to the ASC provisions 
in this final rule with comment period as well as from enrollment, 
utilization, and case-mix changes) in Medicare expenditures under the 
ASC payment system for CY 2017 compared to CY 2016 to be approximately 
$177 million. Because the provisions for the ASC payment system are 
part of a final rule that is economically significant as measured by 
the $100 million threshold, we have prepared a regulatory impact 
analysis of the changes to the ASC payment system that, to the best of 
our ability, presents the costs and benefits of this portion of this 
final rule with comment period. Table 53 and 54 of this final rule with 
comment period display the redistributive impact of the 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 OPPS Changes in This Final Rule With Comment 
Period
(1) Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the CY 2017 policy changes on various hospital groups. We post on 
the CMS Web site our hospital-specific estimated payments for CY 2017 
with the other supporting documentation for this final rule with 
comment period. To view the hospital-specific estimates, we refer 
readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the Web 
site, select ``regulations and notices'' from the left side of the page 
and then select ``CMS-1656-FC'' from the list of regulations and 
notices. The hospital-specific file layout and the hospital-specific 
file are listed with the other supporting documentation for this final 
rule with comment period. We show hospital-specific data only for 
hospitals whose claims were used for modeling the impacts shown in 
Table 52 below. We do not show hospital-specific impacts for hospitals 
whose claims we were unable to use. We refer readers to section II.A. 
of this final rule with comment period for a discussion of the 
hospitals whose claims we do not use for ratesetting and impact 
purposes.
    We estimate the effects of the individual policy changes by 
estimating payments per service, while holding all other payment 
policies constant. We use the best data available, but do not attempt 
to predict behavioral responses to our policy changes. In addition, we 
have not made adjustments for future changes in variables such as 
service volume, service-mix, or number of encounters.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45762), we solicited 
public comment and information about the anticipated effects of the 
proposed changes included in the proposed rule on providers and our 
methodology for estimating them. Any public comments that we receive 
are addressed in the applicable sections of this final rule with 
comment period that discuss the specific policies.
(2) Estimated Effects of OPPS Changes on Hospitals
    Table U1 below shows the estimated impact of this final rule with 
comment period on hospitals. Historically, the first line of the impact 
table, which estimates the change in payments to all facilities, has 
always included cancer and children's hospitals, which are held 
harmless to their pre-BBA amount. We also include CMHCs in the first 
line that includes all providers. We now include a second line for all 
hospitals, excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 52, 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 paying CMHCs for partial 
hospitalization services under only one APC 5853 (Partial 
Hospitalization for CMHCs), and we are paying hospitals for partial 
hospitalization services under only one APC 5863 (Partial 
Hospitalization for Hospital-Based PHPs).
    The estimated increase in the total payments made under the OPPS is 
determined largely by the increase to the conversion factor under the 
statutory methodology. The distributional impacts presented do not 
include assumptions about changes in volume and service-mix. The 
conversion factor is updated annually by the OPD fee schedule increase 
factor as discussed in detail in section II.B. of this final rule with 
comment period. Section 1833(t)(3)(C)(iv) of the Act provides that the 
OPD fee schedule increase factor is equal to the market basket 
percentage increase applicable under section 1886(b)(3)(B)(iii) of the 
Act, which we refer to as the IPPS market basket percentage increase. 
The IPPS market basket percentage increase for FY 2017 is 2.7 percent 
(81 FR 56938). Section 1833(t)(3)(F)(i) of the Act reduces that 2.7 
percent by the multifactor productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act, which is 0.3 percentage point for FY 
2017 (which is also the MFP adjustment for FY 2017 in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56939)), and sections 1833(t)(3)(F)(ii) and 
1833(t)(3)(G)(v) of the Act further

[[Page 79868]]

reduce the market basket percentage increase by 0.75 percentage point, 
resulting in the OPD fee schedule increase factor of 1.65 percent. We 
are using the OPD fee schedule increase factor of 1.65 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 52.
    To illustrate the impact of the 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 52 
shows the estimated redistribution of the 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 APC reconfiguration 
and recalibration changes between CY 2016 and CY 2017 (Column 2); the 
wage indexes and the provider adjustments (Column 3); the combined 
impact of all of the changes described in the preceding columns plus 
the 1.65 percent OPD fee schedule increase factor update to the 
conversion factor; and the estimated impact taking into account all 
payments for CY 2017 relative to all payments for CY 2016, including 
the impact of changes in estimated outlier payments, the frontier State 
wage adjustment, and 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 maintaining the current 
adjustment percentage for CY 2017. Because the updates to the 
conversion factor (including the update of the OPD fee schedule 
increase factor), the estimated cost of the rural adjustment, and the 
estimated cost of projected pass-through payment for CY 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 
wage index changes on the hospital. However, total payments made under 
this system and the extent to which this final rule with comment period 
will redistribute money during implementation also will depend on 
changes in volume, practice patterns, and the mix of services billed 
between CY 2016 and CY 2017 by various groups of hospitals, which CMS 
cannot forecast.
    Overall, we estimate that the rates for CY 2017 will increase 
Medicare OPPS payments by an estimated 1.7 percent. Removing payments 
to cancer and children's hospitals because their payments are held 
harmless to the pre-OPPS ratio between payment and cost and removing 
payments to CMHCs results in an estimated 1.8 percent increase in 
Medicare payments to all other hospitals. These estimated payments will 
not significantly impact other providers.
Column 1: Total Number of Hospitals
    The first line in Column 1 in Table U1 shows the total number of 
facilities (3,906), 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 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 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 
final rule with comment period. At this time, we are unable to 
calculate a disproportionate share hospital (DSH) variable for 
hospitals that are not also paid under the IPPS because 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 
(3,789), 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 50 CMHCs at the bottom of the impact table and 
discuss that impact separately below.
Column 2: APC Recalibration--All Changes
    Column 2 shows the estimated effect of APC recalibration. Column 2 
also reflects any changes in multiple procedure discount patterns or 
conditional packaging that occur as a result of the changes in the 
relative magnitude of payment weights. As a result of APC 
recalibration, we estimate that urban hospitals will experience no 
change, with the impact ranging from an increase of 0.2 percent to a 
decrease of 0.3 percent, depending on the number of beds. Rural 
hospitals will experience a 0.2 percent increase, with the impact 
ranging from an increase of 0.1 percent to 0.3 percent, depending on 
the number of beds. Major teaching hospitals will experience a decrease 
of 0.2 percent overall.
Column 3: Wage Indexes and the Effect of the Final Provider Adjustments
    Column 3 demonstrates the combined budget neutral impact of the APC 
recalibration; the updates for the wage indexes with the FY 2017 IPPS 
post-reclassification wage indexes; the rural adjustment; and the 
cancer hospital payment adjustment. We modeled the independent effect 
of the budget neutrality adjustments and the OPD fee schedule increase 
factor by using the relative payment weights and wage indexes for each 
year, and using a CY 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 updated wage 
indexes, including the application of budget neutrality for the rural 
floor policy on a nationwide basis. This column excludes the effects of 
the frontier State wage index adjustment, which is not budget neutral 
and is included in Column 5. We did not model a budget neutrality 
adjustment for the rural adjustment for SCHs because we are continuing 
the rural payment adjustment of 7.1 percent to rural SCHs for CY 2017, 
as described in section II.E. of this final rule with comment period.
    We modeled the independent effect of updating the wage indexes by 
varying only the wage indexes, holding APC relative payment weights, 
service-mix, and the rural adjustment constant and using the CY 2017 
scaled weights and a CY 2016 conversion factor that included a budget 
neutrality adjustment for the effect of the changes to the wage indexes 
between CY 2016 and CY 2017. The FY 2017 wage policy results in modest 
redistributions.

[[Page 79869]]

    There is a slight increase of less than 0.1 in Column 3 for the CY 
2017 cancer hospital payment adjustment budget neutrality calculation, 
because we are using a payment-to-cost ratio target for the cancer 
hospital payment adjustment in CY 2017 of 0.91, compared to the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70362 through 70363) 
payment-to-cost ratio target of 0.92.
Column 4: All Budget Neutrality Changes Combined With the Market Basket 
Update
    Column 4 demonstrates the combined impact of all of the changes 
previously described and the update to the conversion factor of 1.65 
percent. Overall, these changes will increase payments to urban 
hospitals by 1.7 percent and to rural hospitals by 2.2 percent. Most 
classes of hospitals will receive an increase in line with the 1.7 
percent overall increase after the update is applied to the budget 
neutrality adjustments. Additionally, this column includes a slight 
increase of less than 0.1 to account for our final policy to package 
unrelated laboratory tests into OPPS payment.
Column 5: All Changes for CY 2017
    Column 5 depicts the full impact of the CY 2017 policies on each 
hospital group by including the effect of all of the 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 OPD 
fee schedule increase; the impact of the frontier State wage index 
adjustment; the impact of estimated OPPS outlier payments as discussed 
in section II.G. of this final rule with comment period; the change in 
the Hospital OQR Program payment reduction for the small number of 
hospitals in our impact model that failed to meet the reporting 
requirements (discussed in section XIII. of this final rule with 
comment period); and the difference in total OPPS payments dedicated to 
transitional pass-through payments.
    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2016 update (and assumed, for 
modeling purposes, to be the same number for CY 2017), we included 50 
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 changes for CY 2017 will increase payments to all facilities by 
1.7 percent for CY 2017. We modeled the independent effect of all of 
the changes in Column 5 using the final relative payment weights for CY 
2016 and the final relative payment weights for CY 2017. We used the 
final conversion factor for CY 2016 of $73.725 and the final CY 2017 
conversion factor of $75.001 discussed in section II.B. of this final 
rule with comment period.
    Column 5 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 57286) of 4.8 percent (1.0481) to increase individual 
costs on the CY 2015 claims, and we used the most recent overall CCR in 
the July 2016 Outpatient Provider-Specific File (OPSF) to estimate 
outlier payments for CY 2016. Using the CY 2015 claims and a 4.8 
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 will 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 charge inflation factor of 9.8 percent (1.0984) and the 
CCRs in the July 2016 OPSF, with an adjustment of 0.9688, to reflect 
relative changes in cost and charge inflation between CY 2015 and CY 
2017, to model the CY 2017 outliers at 1.0 percent of estimated total 
payments using a multiple threshold of 1.75 and a fixed-dollar 
threshold of $3,825. The charge inflation and CCR inflation factors are 
discussed in detail in the FY 2017 IPPS/LTCH PPS final rule (81 FR 
57286).
    Overall, we estimate that facilities will experience an increase of 
1.7 percent under this final rule with comment period in CY 2017 
relative to total spending in CY 2016. This projected increase (shown 
in Column 5) of Table 52 reflects the 1.65 percent OPD fee schedule 
increase factor, plus 0.04 percent to account for our finalized policy 
to package unrelated laboratory tests into OPPS payment, plus 0.02 
percent for the 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 (1.0 percent). We 
estimate that the combined effect of all of the changes for CY 2017 
will increase payments to urban hospitals by 1.8 percent. Overall, we 
estimate that rural hospitals will experience a 2.2 percent increase as 
a result of the combined effects of all of the changes for CY 2017.
    Among hospitals by teaching status, we estimate that the impacts 
resulting from the combined effects of all changes will include an 
increase of 1.5 percent for major teaching hospitals and an increase of 
2.0 percent for nonteaching hospitals. Minor teaching hospitals will 
experience an estimated increase of 1.9 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
will experience an increase of 1.9 percent, proprietary hospitals will 
experience an increase of 1.8 percent, and governmental hospitals will 
experience an increase of 1.6 percent.

    Table 52--Estimated Impact of the CY 2017 Changes for the Hospital Outpatient Prospective Payment System
----------------------------------------------------------------------------------------------------------------
                                                                                      All budget
                                                           APC         New wage    neutral changes
                                         Number of    recalibration   index and   (combined cols 2,  All changes
                                         hospitals    (all changes)    provider    3)  with market
                                                                     adjustments    basket update
                                                (1)             (2)          (3)                (4)          (5)
----------------------------------------------------------------------------------------------------------------
ALL FACILITIES *......................        3,906             0.0          0.0                1.7          1.7
ALL HOSPITALS (excludes hospitals             3,789             0.0          0.0                1.8          1.8
 permanently held harmless and CMHCs).
URBAN HOSPITALS.......................        2,958             0.0          0.0                1.7          1.8
    LARGE URBAN (GT 1 MILL.)..........        1,616             0.0         -0.1                1.6          1.7
    OTHER URBAN (LE 1 MILL.)..........        1,342             0.1          0.1                1.8          1.8
RURAL HOSPITALS.......................          831             0.2          0.3                2.2          2.2
    SOLE COMMUNITY....................          376             0.2          0.4                2.3          2.2
    OTHER RURAL.......................          455             0.2          0.2                2.1          2.1

[[Page 79870]]

 
BEDS (URBAN):
    0-99 BEDS.........................        1,045            -0.3          0.2                1.6          1.7
    100-199 BEDS......................          834             0.2         -0.1                1.8          1.8
    200-299 BEDS......................          465             0.2          0.0                1.9          1.9
    300-499 BEDS......................          405             0.1          0.0                1.8          1.9
    500+ BEDS.........................          209            -0.2          0.0                1.5          1.5
BEDS (RURAL):
    0-49 BEDS.........................          340             0.3          0.5                2.5          2.5
    50-100 BEDS.......................          299             0.2          0.4                2.4          2.3
    101-149 BEDS......................          108             0.1         -0.2                1.6          1.7
    150-199 BEDS......................           45             0.1          0.5                2.3          2.2
    200+ BEDS.........................           39             0.2          0.2                2.1          2.1
REGION (URBAN):
    NEW ENGLAND.......................          146             0.0         -1.1                0.6          0.6
    MIDDLE ATLANTIC...................          350             0.0          0.1                1.7          1.7
    SOUTH ATLANTIC....................          465             0.0          0.0                1.7          1.8
    EAST NORTH CENT...................          473             0.1          0.1                1.8          1.9
    EAST SOUTH CENT...................          177            -0.3          0.3                1.7          1.7
    WEST NORTH CENT...................          182            -0.1          0.0                1.6          1.5
    WEST SOUTH CENT...................          527            -0.2          0.3                1.8          1.9
    MOUNTAIN..........................          206             0.2          1.0                2.9          3.0
    PACIFIC...........................          383             0.4         -0.3                1.7          1.8
    PUERTO RICO.......................           49             0.4         -0.3                1.8          1.8
REGION (RURAL):
    NEW ENGLAND.......................           21             0.9          0.5                3.0          2.9
    MIDDLE ATLANTIC...................           55             0.1          1.2                3.0          3.0
    SOUTH ATLANTIC....................          126             0.3         -0.3                1.7          1.7
    EAST NORTH CENT...................          121             0.2          0.4                2.3          2.3
    EAST SOUTH CENT...................          158             0.0          0.2                1.9          1.9
    WEST NORTH CENT...................          100             0.0          0.4                2.2          2.0
    WEST SOUTH CENT...................          168             0.1          0.7                2.6          2.6
    MOUNTAIN..........................           58             0.3         -0.1                1.9          1.8
    PACIFIC...........................           24             0.3         -0.3                1.7          1.7
TEACHING STATUS:
    NON-TEACHING......................        2,712             0.1          0.1                1.9          2.0
    MINOR.............................          731             0.1          0.0                1.9          1.9
    MAJOR.............................          346            -0.2         -0.1                1.4          1.5
DSH PATIENT PERCENT:
    0.................................           10            -1.7         -0.2               -0.3         -0.2
    GT 0-0.10.........................          305            -0.4          0.0                1.2          1.3
    0.10-0.16.........................          270             0.0          0.1                1.8          1.8
    0.16-0.23.........................          600             0.1          0.1                1.9          2.0
    0.23-0.35.........................        1,135             0.1          0.1                1.9          1.9
    GE 0.35...........................          895             0.1         -0.1                1.7          1.8
    DSH NOT AVAILABLE **..............          574            -1.4         -0.2                0.1          0.1
URBAN TEACHING/DSH:
    TEACHING & DSH....................          975             0.0          0.0                1.6          1.7
    NO TEACHING/DSH...................        1,425             0.1          0.1                1.9          1.9
    NO TEACHING/NO DSH................           10            -1.7         -0.2               -0.3         -0.2
    DSH NOT AVAILABLE **..............          548            -1.4         -0.3                0.0          0.1
TYPE OF OWNERSHIP:
    VOLUNTARY.........................        1,983             0.1          0.1                1.8          1.9
    PROPRIETARY.......................        1,306             0.0          0.1                1.7          1.8
    GOVERNMENT........................          500            -0.1         -0.1                1.5          1.6
CMHCs.................................           50           -15.1         -0.4              -13.9        -13.7
----------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all 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 final FY 2017 hospital
  inpatient wage index, including all hold harmless policies and transitional wages. The rural adjustment
  continues our current policy of 7.1 percent so the budget neutrality factor is 1. The budget neutrality
  adjustment for the cancer hospital adjustment is 1.0003 because the target payment-to-cost ratio target
  changes from 0.92 in CY 2016 to 0.91 in CY 2017 (80 FR 70362 through 70364).
Column (4) shows the impact of all budget neutrality adjustments and the addition of the final 1.65 percent OPD
  fee schedule update factor. It also includes the impact of the additional adjustment of 1.0004 for laboratory
  services with ``L1'' modifiers packaged into the OPPS.
Column (5) shows the additional adjustments to the conversion factor resulting from the frontier adjustment, a
  change in the pass[dash]through payment estimate, and adding estimated outlier payments.
* These 3,906 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.


[[Page 79871]]

(3) Estimated Effects of OPPS Changes on CMHCs
    The last line of Table U1 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 to combining APCs 5851 and 5852 into new APC 5853 
(Partial Hospitalization (3 or more services) for CMHCs). We modeled 
the impact of this APC policy assuming that CMHCs will continue to 
provide the same number of days of PHP care as seen in the CY 2015 
claims data used for this final rule with comment period. We excluded 
days with 1 or 2 services because our policy only pays a per diem rate 
for partial hospitalization when 3 or more qualifying services are 
provided to the beneficiary. We estimate that CMHCs will experience an 
overall 13.7 percent decrease in payments from CY 2016 (shown in Column 
5). We note that this includes the trimming methodology described in 
section VIII.B. of this final rule with comment period.
    Column 3 shows that the estimated impact of adopting the FY 2017 
wage index values will result in a small decrease of 0.4 percent to 
CMHCs. Column 4 shows that combining this OPD fee schedule increase 
factor, along with changes in APC policy for CY 2017 and the FY 2017 
wage index updates, will result in an estimated decrease of 13.9 
percent. Column 5 shows that adding the changes in outlier and pass-
though payments will result in a total 13.7 percent decrease in payment 
for CMHCs. This reflects all changes to CMHCs for CY 2017.
(4) Estimated Effect of OPPS Changes on Beneficiaries
    For services for which the beneficiary pays a copayment of 20 
percent of the payment rate, the beneficiary's payment will increase 
for services for which the OPPS payments will rise and will decrease 
for services for which the OPPS payments will fall. For further 
discussion on the calculation of the national unadjusted copayments and 
minimum unadjusted copayments, we refer readers to section II.I. of 
this final rule with comment period. In all cases, section 
1833(t)(8)(C)(i) of the Act limits beneficiary liability for copayment 
for a procedure performed in a year to the hospital inpatient 
deductible for the applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
will be 18.5 percent for all services paid under the OPPS in CY 2017. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including the CY 2017 comprehensive APC payment policy 
discussed in section II.A.2.e. of this final rule with comment period.
(5) Estimated Effects of OPPS Changes on Other Providers
    The relative payment weights and payment amounts established under 
the OPPS affect the payments made to ASCs as discussed in section XII. 
of this final rule with comment period. No types of providers or 
suppliers other than hospitals, CMHCs, and ASCs will be affected by the 
changes in this final rule with comment period.
(6) Estimated Effects of OPPS Changes on the Medicare and Medicaid 
Programs
    The effect on the Medicare program is expected to be an increase of 
$773 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 XXIII.A.4.a.(4) of this final 
rule with comment period.
(7) Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we are making and the reasons for 
our selected alternatives are discussed throughout this final rule with 
comment period.
b. Estimated Effects of 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 final rule with comment period, we are 
setting the CY 2017 ASC relative payment weights by scaling the CY 2017 
OPPS relative payment weights by the ASC scalar of 0.9000. The 
estimated effects of the updated relative payment weights on payment 
rates are varied and are reflected in the estimated payments displayed 
in Tables 53 and 54 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 CY 2017 ASC conversion factor by adjusting the 
CY 2016 ASC conversion factor by 0.9997 to account for changes in the 
pre-floor and pre-reclassified hospital wage indexes between CY 2016 
and CY 2017 and by applying the CY 2017 MFP-adjusted CPI-U update 
factor of 1.9 percent (projected CPI-U update of 2.2 percent minus a 
projected productivity adjustment of 0.3 percentage point). The CY 2017 
ASC conversion factor is $45.016.
(1) Limitations of Our Analysis
    Presented here are the projected effects of the 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 CY 2017 changes will be small in the 
aggregate for all ASCs. However, such changes may have differential 
effects across surgical specialty groups as ASCs continue to adjust to 
the payment rates based on the policies of the revised ASC payment 
system. We are unable to accurately project such changes at a 
disaggregated level. Clearly, individual ASCs will experience changes 
in payment that differ from the aggregated estimated impacts presented 
below.
(2) Estimated Effects of ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform the gamut of 
surgical procedures from excision of lesions to hernia repair to 
cataract extraction; others focus on a single specialty and perform 
only a limited range of surgical procedures, such as eye, digestive 
system, or orthopedic procedures. The combined effect on an individual 
ASC of the update to the CY 2017 payments will depend on a number of 
factors, including, but not limited to, the mix of services the ASC 
provides, the volume of specific services provided by the ASC, the 
percentage of its patients who are Medicare

[[Page 79872]]

beneficiaries, and the extent to which an ASC provides different 
services in the coming year. The following discussion presents tables 
that display estimates of the impact of the CY 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 53 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 CY 2017 payments, and Table 54 shows a comparison 
of estimated CY 2016 payments to estimated CY 2017 payments for 
procedures that we estimate will receive the most Medicare payment in 
CY 2016.
    Table 53 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 53.
     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 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 updates to ASC payment rates for CY 2017 
compared to CY 2016.
    As seen in Table 53, for the six specialty groups that account for 
the most ASC utilization and spending, we estimate that the update to 
ASC payment rates for CY 2017 will result in a 2-percent increase in 
aggregate payment amounts for eye and ocular adnexa procedures, a 1-
percent increase in aggregate payment amounts for digestive system 
procedures, no change in aggregate payment amounts for nervous system 
procedures, a 8-percent increase in aggregate payment amounts for 
musculoskeletal system procedures, a 1-percent decrease in aggregate 
payment amounts for genitourinary system procedures, and a 3-percent 
decrease in aggregate payment amounts for integumentary system 
procedures.
    Also displayed in Table 53 is a separate estimate of Medicare ASC 
payments for the group of separately payable covered ancillary items 
and services. The payment estimates for the covered surgical procedures 
include the costs of packaged ancillary items and services. We estimate 
that aggregate payments for these items and services will be $31 
million for CY 2017.

   Table 53--Estimated Impact of the CY 2017 Update to the ASC Payment
    System on Aggregate CY 2017 Medicare Program Payments by Surgical
             Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated CY
                                             2016 ASC      Estimated  CY
        Surgical specialty group           payments (in    2017  percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $3,993               2
Eye and ocular adnexa...................           1,556               2
Digestive system........................             813               1
Nervous system..........................             687               0
Musculoskeletal system..................             466               8
Genitourinary system....................             178              -1
Integumentary system....................             132              -3
------------------------------------------------------------------------

    Table 54 below shows the estimated impact of the 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 CY 2017 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2016 and 
the estimated payment for CY 2017 based on the update.

[[Page 79873]]



  Table 54--Estimated Impact of the 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........          $1,108               1
43239......................................  Egd biopsy single/multiple.........             185              -9
45380......................................  Colonoscopy and biopsy.............             180              13
45385......................................  Colonoscopy w/lesion removal.......             118              13
66982......................................  Cataract surgery complex...........              96               1
64483......................................  Inj foramen epidural l/s...........              87               6
63685......................................  Insrt/redo spine n generator.......              82              10
64493......................................  Inj paravert f jnt l/s 1 lev.......              71             -24
63650......................................  Implant neuroelectrodes............              66              12
66821......................................  After cataract laser surgery.......              65               4
64635......................................  Destroy lumb/sac facet jnt.........              55               2
29827......................................  Arthroscop rotator cuff repr.......              54               7
G0105......................................  Colorectal scrn; hi risk ind.......              53             -14
45378......................................  Diagnostic colonoscopy.............              52             -14
G0121......................................  Colon ca scrn not hi rsk ind.......              50             -14
0191T......................................  Insert ant segment drain int.......              41              43
64590......................................  Insrt/redo pn/gastr stimul.........              38              10
64721......................................  Carpal tunnel surgery..............              32               2
29881......................................  Knee arthroscopy/surgery...........              32              -8
15823......................................  Revision of upper eyelid...........              32              -2
29880......................................  Knee arthroscopy/surgery...........              27              -8
26055......................................  Incise finger tendon sheath........              24             -14
43235......................................  Egd diagnostic brush wash..........              24              -9
64490......................................  Inj paravert f jnt c/t 1 lev.......              24             -24
67042......................................  Vit for macular hole...............              23              -2
52000......................................  Cystoscopy.........................              21               2
G0260......................................  Inj for sacroiliac jt anesth.......              21             -16
50590......................................  Fragmenting of kidney stone........              21               1
64555......................................  Implant neuroelectrodes............              19              14
67904......................................  Repair eyelid defect...............              18               2
----------------------------------------------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Policies on Beneficiaries
    We estimate that the CY 2017 update to the ASC payment system will 
be generally positive for beneficiaries with respect to the new 
procedures that we are adding to the ASC list of covered surgical 
procedures and for those that we are designating as office-based for CY 
2017. First, other than certain preventive services where coinsurance 
and the Part B deductible is waived to comply with sections 1833(a)(1) 
and (b) of the Act, the ASC coinsurance rate for all procedures is 20 
percent. This contrasts with procedures performed in HOPDs under the 
OPPS, where the beneficiary is responsible for copayments that range 
from 20 percent to 40 percent of the procedure payment (other than for 
certain preventive services). Second, in almost all cases, the ASC 
payment rates under the ASC payment system are lower than payment rates 
for the same procedures under the OPPS. Therefore, the beneficiary 
coinsurance amount under the ASC payment system will almost always be 
less than the OPPS copayment amount for the same services. (The only 
exceptions would be if the ASC coinsurance amount exceeds the inpatient 
deductible. The statute requires that copayment amounts under the OPPS 
not exceed the inpatient deductible.) Beneficiary coinsurance for 
services migrating from physicians' offices to ASCs may decrease or 
increase under the revised ASC payment system, depending on the 
particular service and the relative payment amounts under the MPFS 
compared to the ASC. However, for those additional procedures that we 
are designating as office-based in CY 2017, the beneficiary coinsurance 
amount under the ASC payment system generally will be no greater than 
the beneficiary coinsurance under the MPFS because the coinsurance 
under both payment systems generally is 20 percent (except for certain 
preventive services where the coinsurance is waived under both payment 
systems).
(4) Alternative ASC Payment Policies Considered
    Alternatives to the ASC changes we are making and the reasons for 
our selected alternatives are discussed throughout this final rule with 
comment period.
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 
final rule with comment period. The first accounting statement, Table 
55 below, illustrates the classification of expenditures for the CY 
2017 estimated hospital OPPS incurred benefit impacts associated with 
the CY 2017 OPD fee schedule increase, based on the 2016 Trustee's 
Report. The second accounting statement, Table 56 below, illustrates 
the classification of expenditures associated with the 1.9 percent CY 
2017 update to the ASC payment system, based on the provisions of this 
final rule with comment period and the baseline spending estimates for 
ASCs in the 2016 Trustee's Report. Lastly, the tables classify most 
estimated impacts as transfers.

[[Page 79874]]



  Table 55--Accounting Statement: CY 2017 Estimated Hospital OPPS Transfers From CY 2016 to CY 2017 Associated
                         With the CY 2017 Hospital Outpatient OPD Fee Schedule Increase
----------------------------------------------------------------------------------------------------------------
             Category                                                Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...  $773 million.
From Whom to Whom................  Federal Government to outpatient hospitals and other providers who receive
                                    payment under the hospital OPPS.
                                  ------------------------------------------------------------------------------
    Total........................  $773 million.
----------------------------------------------------------------------------------------------------------------


Table 56--Accounting Statement: Classification of Estimated Transfers From CY 2016 to CY 2017 as a Result of the
                                    CY 2017 Update to the ASC Payment System
----------------------------------------------------------------------------------------------------------------
             Category                                                Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...  $63 million.
From Whom to Whom................  Federal Government to Medicare Providers and Suppliers.
                                  ------------------------------------------------------------------------------
    Total........................  $63 million
----------------------------------------------------------------------------------------------------------------

d. Effects of 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 final rule with comment period, 
we are finalizing 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 2016 payment 
determination.\264\ We estimate that approximately 108 to 121 hospitals 
will not receive the full OPD fee schedule increase factor for the CY 
2018 payment determination and subsequent years.
---------------------------------------------------------------------------

    \264\ We note in the CY 2017 OPPS/ASC proposed rule (81 FR 
45769), we stated that the hospitals chose not to participate in the 
Hospital OQR Program for the CY 2015 payment determination instead 
of the CY 2016 payment determination. This was a typographical 
error, and the correct payment determination year is CY 2016.
---------------------------------------------------------------------------

    In section XIII. of this final rule with comment period, we are 
finalizing 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 do not believe that any of the 
other changes we are making will increase burden, as further discussed 
below.
    For the CY 2018 payment determination and subsequent years, we are 
finalizing, as proposed, that we will 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 
finalizing, as proposed, that hospitals will generally have 
approximately 30 days to preview their data. Both of these policies are 
consistent with current practice. Lastly, we are finalizing, as 
proposed, that we will 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 changes to the public display 
policies because hospitals will not be required to submit additional 
data or forms to CMS.
    For the CY 2019 payment determination and subsequent years, we are 
finalizing our proposal to extend the time for filing an extraordinary 
circumstance extension or exemption request from 45 days to 90 days. We 
do not anticipate additional burden to hospitals as a result of this 
policy because the requirements for filing a request have not otherwise 
changed.
    For the CY 2020 payment determination and subsequent years, we are 
finalizing, as proposed, 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 adopting, as proposed, 
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.4. of this final rule with comment period, we do not believe that 
the OP-35 and OP-36 measures will 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 OAS CAHPS Survey-based measures (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 final rule with comment 
period (information collection requirements) for a detailed discussion 
of the burden of the additional requirements for submitting data to the 
Hospital OQR Program.
e. Effects of Requirements for the ASCQR Program
    In section XIV. of this final rule with comment period, we discuss 
our finalized 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).

[[Page 79875]]

    For the CY 2018 payment determination and subsequent years, we are 
making a few changes in policies. In section XIV.B.7. of this final 
rule with comment period, we are finalizing, as proposed, that we will 
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 finalizing, as proposed, that ASCs will 
generally have approximately 30 days to preview their data. Both of 
these policies are consistent with current practice. Lastly, we are 
finalizing, as proposed, that we will 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 
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 
finalizing, as proposed, two new policy changes. In section XIV.D.3. of 
this final rule with comment period, we are finalizing our proposal to 
implement a submission deadline with an end date of May 15 for all data 
submitted via a CMS Web-based tool beginning with the CY 2019 payment 
determination, as proposed. (For all data submitted via a non CMS Web-
based tool, ASCs are already required to submit by May 15 of the year 
prior to the affected payment determination year (79 FR 66985 through 
66986).) We do not anticipate additional burden as the data collection 
and submission requirements have not changed; only the deadline will be 
moved to a slightly earlier date that we anticipate will alleviate 
burden by aligning data submission deadlines. In section XIV.D.6. of 
this final rule with comment period, we are finalizing our proposal to 
extend the time for filing an extraordinary circumstance extension or 
exemption request from 45 days to 90 days. We do not believe this 
policy will result in additional burden to ASCs because the 
requirements for filing a request have not otherwise changed. We are 
not adding any quality measures to the ASCQR Program measure set for 
the CY 2019 payment determination, nor do we believe that the other 
measures we previously adopted will cause any additional ASCs to fail 
to meet the ASCQR Program requirements. (We refer readers to the CY 
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 changes will 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 final rule with comment period, we are 
finalizing, as proposed, two new measures collected via a CMS online 
data submission tool to the ASCQR Program measure set beginning with 
the CY 2020 payment determination--ASC-13: Normothermia Outcome and 
ASC-14: Unplanned Anterior Vitrectomy--and five new OAS CAHPS Survey-
based measures beginning with 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 final rule with 
comment period, 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 ASC-13 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 each for the 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 OAS CAHPS Survey-based measures is already accounted for in a 
previously approved OMB Control Number 0938-1240.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45770 through 45771), 
we invited public comment on the burden associated with our proposals 
in the proposed rule. We did not receive any comments on the burden 
associated with our proposals in the proposed rule, and therefore, are 
finalizing our burden estimates as discussed. We refer readers to the 
information collection requirements in sections XXI.C.2. through 
XXI.C.5. of this final rule with comment period for a detailed 
discussion of the financial and hourly burden of the ASCQR Program's 
current and new requirements.
f. Effects of the Changes to Transplant Performance Thresholds
    In section XV. of this final rule with comment period, we discuss 
our proposed and finalized 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 address 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.

[[Page 79876]]

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 that 
outweigh the value gained from 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.\265\ 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.
---------------------------------------------------------------------------

    \265\ 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 the finalized changes in this final rule with 
comment period will 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 
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 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 will 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 will 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 will be $1 million per 
year ($1 million plus $30,000), and conclude that our finalized 
policies will not have a significant impact on a substantial number of 
small businesses or other small entities, given both the small number 
of programs affected and the large size of many entities with 
transplant programs. Nor will they have a significant impact on small 
rural hospitals.
g. Effects of the Changes Relating to Organ Procurement Organizations 
(OPOs)
    In section XVI. of this final rule with comment period, we discuss 
our proposed and finalized policies 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 will be affected by the changed requirements to a 
greater or lesser degree. Many OPOs have already put into practice many 
of these requirements. Thus, while we do not believe these changed 
requirements will 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 changed requirements 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 will be fully paid under the Medicare program. In 
addition, these changed requirements will have no identifiable economic 
impact on transplant hospitals. It is expected that improved OPO 
performance will result from the proposals and increase organ donation 
and the number of organs available for transplantation.
    The definition and yield metric changes will 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 
will not be asked to report additional data as a result of the changes.
    The change in the documentation requirements of donor information 
sent to the transplant center with the organs will reduce burden for 
the OPOs. This change will reduce the amount of hard copy documentation 
that is packaged and shipped with each organ and will free up the OPO 
transplant coordinator's time to focus on the critical donor management 
and organ preparation tasks. We estimate that this change will 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 will 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

[[Page 79877]]

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 changes will lie with their potential to increase organ 
donation. However, it is difficult to predict precisely what that 
impact will be, but we estimate that, by increasing OPOs' efficiency 
and adherence to continuous quality improvement measures, these changes 
could increase the number of organ donors in the regulation's first 
year.
    With regard to the impact of the transplant enforcement technical 
corrections and other revisions to Sec.  488.61 discussed in section 
XVII. of this final rule with comment period, there is no economic 
impact.
h. Effects of the Changes to the Medicare and Medicaid Electronic 
Health Record (EHR) Incentive Programs
    In section XVIII. of this final rule with comment period, we 
discuss changed requirements for the Medicare and Medicaid EHR 
Incentive Programs. Specifically, in this final rule with comment 
period, for eligible hospitals and CAHs attesting to CMS, we are 
eliminating the Clinical Decision Support (CDS) and Computerized 
Provider Order Entry (CPOE) objectives and measures for Modified Stage 
2 and Stage 3 as well as reducing the reporting thresholds on a subset 
of the remaining objectives and measures to the Modified Stage 2 
thresholds. We do not believe that the changes will increase burden on 
eligible hospitals and CAHs as the objectives and measures remain the 
same; only a subset of thresholds will be reduced. In addition, the 
changes 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 
will be a score near the maximum. While the functions of measures and 
the processes behind them will continue even without a requirement to 
report the results, the provisions will result in a reduction in 
reporting requirements. Based on the public comments we received, we 
are finalizing a policy that these changes to the objectives and 
measures apply for all eligible hospitals and CAHs that attest to CMS, 
including eligible hospitals and CAHs that are eligible to participate 
in both the Medicare and Medicaid EHR Incentive Programs.
    We also are modifying the EHR reporting period in 2016 and 2017 for 
all returning EPs, eligible hospitals and CAHs that have previously 
demonstrated meaningful use to any continuous 90-day period within the 
calendar year. We do not believe that the modification of the EHR 
reporting period in 2016 and 2017 to any continuous 90-day period will 
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 modifying 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 that 
requiring new participants in 2017 to attest to Modified Stage 2 
objectives and measures will 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 will have the 
necessary technical capabilities to attest to the Modified Stage 2 
objectives and measures.
    We are providing 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 change 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 change 
will affect the burden on meaningful users. Finally, we are providing 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 change to allow a one-time significant hardship 
exception from the 2018 payment adjustment for certain EPs will 
increase their burden. Rather, we believe this will reduce the 
reporting burden for 2017 because this change will reduce confusion on 
the different reporting requirements for the EHR Incentive Program and 
MIPs as well as the different systems to which participants will need 
to register and attest.
i. Effects of Requirements for the Hospital VBP Program
    In section XIX. of this final rule with comment period, we discuss 
finalizing our proposal to change the scoring methodology for the 
Patient- and Caregiver-Centered Experience of Care/Care Coordination 
domain in the Hospital VBP Program by removing the HCAHPS Pain 
Management dimension from the Patient- and Caregiver-Centered 
Experience of Care/Care Coordination domain beginning with the FY 2018 
program year.
    As noted in section XXI.G. of this final rule with comment period, 
as required under section 1886(o)(2)(A) of the Act, the HCAHPS Survey 
is included the Hospital IQR Program. Therefore, we believe that 
removing the HCAHPS Pain Management dimension from the Hospital VBP 
Program beginning with the FY 2018 program year will have no effect on 
burden for participating hospitals because this change does not change 
the data that are submitted to CMS; it only affects how the scoring is 
computed under the domain in the Hospital VBP Program.
j. Effects of Implementation of Section 603 of the Bipartisan Budget 
Act of 2015 Relating to Payment for Nonexcepted Items and Services 
Furnished by Nonexcepted Off-Campus Departments of a Provider
    In section X.A. of this final rule with comment period, we discuss 
the implementation of section 603 of the Bipartisan Budget Act of 2015 
relating to payments for nonexcepted items and services furnished by 
nonexcepted 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 final rule with 
comment period 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 final rule with comment period 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. These estimates 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. Additional information 
on the impact of implementing section 603 of Public Law

[[Page 79878]]

114-74 is provided in the interim final rule with comment period under 
section X.B. of this document.

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 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has 100 or fewer beds. We estimate that this final 
rule with comment period will increase payments to small rural 
hospitals by less than 3 percent; therefore, it should not have a 
significant impact on approximately 639 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 final rule with 
comment period does not mandate any requirements for State, local, or 
tribal governments, or for the private sector.

D. Conclusion

    The changes we are making in this final rule with comment period 
will affect all classes of hospitals paid under the OPPS and will 
affect both CMHCs and ASCs. We estimate that most classes of hospitals 
paid under the OPPS will experience a modest increase or a minimal 
decrease in payment for services furnished under the OPPS in CY 2017. 
Table 52 demonstrates the estimated distributional impact of the OPPS 
budget neutrality requirements that will result in a 1.7 percent 
increase in payments for all services paid under the OPPS in CY 2017, 
after considering all of the changes to APC reconfiguration and 
recalibration, as well as the OPD fee schedule increase factor, wage 
index changes, including the frontier State wage index adjustment, 
estimated payment for outliers, and changes to the pass-through payment 
estimate. However, some classes of providers that are paid under the 
OPPS will experience more significant gains or losses in OPPS payments 
in CY 2017.
    The updates to the ASC payment system for CY 2017 will affect each 
of the approximately 5,300 ASCs currently approved for participation in 
the Medicare program. The effect on an individual ASC will depend on 
its mix of patients, the proportion of the ASC's patients who are 
Medicare beneficiaries, the degree to which the payments for the 
procedures offered by the ASC are changed under the ASC payment system, 
and the extent to which the ASC provides a different set of procedures 
in the coming year. Table 53 demonstrates the estimated distributional 
impact among ASC surgical specialties of the MFP-adjusted CPI-U update 
factor of 1.9 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 final rule with comment period in accordance with Executive Order 
13132, Federalism, and have determined that they will not have a 
substantial direct effect on State, local or tribal governments, 
preempt State law, or otherwise have a Federalism implication. As 
reflected in Table 52 of this final rule with comment period, we 
estimate that OPPS payments to governmental hospitals (including State 
and local governmental hospitals) will increase by 1.6 percent under 
this final rule with comment period. While we do not know the number of 
ASCs or CMHCs with government ownership, we anticipate that it is 
small. The analyses we have provided in this section of this final rule 
with comment period, in conjunction with the remainder of this 
document, demonstrate that this final rule with comment period is 
consistent with the regulatory philosophy and principles identified in 
Executive Order 12866, the RFA, and section 1102(b) of the Act. This 
final rule with comment period will affect payments to a substantial 
number of small rural hospitals and a small number of rural ASCs, as 
well as other classes of hospitals, CMHCs, and ASCs, and some effects 
may be significant.

List of Subjects

42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney disease, Medicare, Reporting and recordkeeping

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 amending 42 CFR chapter IV as set 
forth below:

[[Page 79879]]

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
1. The authority citation for part 414 continues to reads as follows:

    Authority:  Secs. 1102, 1871, and 1881(b)(2) of the Social 
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(1)).


Sec.  414.22  [Amended]

0
 2. Section 414.22 is amended by removing and reserving paragraph 
(b)(5)(ii).

PART 416--AMBULATORY SURGICAL SERVICES

0
 3. 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
4. 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
 5. 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. An 
entity must be an approved OAS CAHPS Survey vendor in order to 
administer the OAS CAPHS Survey and submit data to CMS on behalf of one 
or more ambulatory surgical centers.

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

0
6. 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
 7. 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 do not meet the 
definition of excepted items and services under Sec.  419.48(a).

0
 8. 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
 9. 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.
* * * * *

0
 10. 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
 11. 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

[[Page 79880]]

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
 12. 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) By a dedicated emergency department (as defined at Sec.  
489.24(b) of this chapter); or
    (2) By an excepted off-campus provider-based department defined in 
paragraph (b) of this section that has not impermissibly relocated or 
changed ownership.
    (b) For the purpose of this section, ``excepted off-campus 
provider-based department'' means a ``department of a provider'' (as 
defined at Sec.  413.65(a)(2) of this chapter) that as of November 2, 
2015 was 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(a)(2) 
of this chapter) that meets the requirements for provider-based status 
under Sec.  413.65 of this chapter. This definition also includes a 
department of a provider that was billing under the OPPS with respect 
to covered OPD services furnished prior to November 2, 2015.
    (c) Payment for items and services that do not meet the definition 
in paragraph (a) of this section will generally be made under the 
Medicare Physician Fee Schedule on or after January 1, 2017.

0
 13. 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
 14. 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
15. 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
 16. 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
 17. 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
18. 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;
    (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;

[[Page 79881]]

    (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, consistent with the HIV Organ Policy Equity Act (the Hope Act).
* * * * *

0
 19. 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) The OPO data reports, averaged over the 4 years of the 
recertification cycle, 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 number of organs used for research per donor, including 
pancreata used for islet cell research.
    (b) * * *
    (3) The OPO data reports, averaged over the 4 years of the 
recertification cycle, 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 number of organs used for research per donor, including 
pancreata used for islet cell research.
* * * * *

0
 20. 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
    (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
 21. 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
22. 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

[[Page 79882]]

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
 23. 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
 24. Section 495.4 is amended--
0
 a. In the definition of ``EHR reporting period'', by revising 
paragraphs (1)(ii)(B)(2), (1)(ii)(C)(2), (2)(ii)(B)(2), and 
(2)(ii)(C)(2).
0
 b. In the definition of ``EHR reporting period for a payment 
adjustment year'', by revising paragraphs (1)(ii)(B)(2), (2)(ii)(B)(2), 
(2)(ii)(C)(3), and (3)(ii)(B)(2), and (3)(ii)(C)(3).
    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.
    (C) * * *
    (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 2017.
* * * * *
    (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.
    (C) * * *
    (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 2017.
* * * * *
    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.
    (C) * * *
    (3) 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 2017 and applies for the FY 2019 
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.
    (C) * * *
    (3) 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 2017 and applies for the FY 2017 payment adjustment 
year.
* * * * *

0
 25. Section 495.22 is amended by revising paragraphs (a), (c)(1), 
(d)(1), and the paragraph (e) 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 
to CMS 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 
to a State for the 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 this paragraph (d), the measure may be 
calculated by reviewing only the actions for patients whose records are 
maintained using CEHRT. A

[[Page 79883]]

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 to CMS for 2015 and 
2016, and for eligible hospitals and CAHs attesting to a State for the 
Medicaid EHR Incentive Program for 2015 through 2017.
* * * * *
    (f) Meaningful use objectives and measures for eligible hospitals 
and CAHs attesting to CMS 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) 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) Provide 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 or 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 registry reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
immunization data.
    (B) Syndromic surveillance reporting measure. The eligible hospital 
or CAH is in active engagement with a public health agency to submit 
syndromic surveillance data.
    (C) Specialized registry reporting 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.
    (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.

[[Page 79884]]

    (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
26. 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 to CMS 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 to a 
State for the 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 
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 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

[[Page 79885]]

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 to CMS 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) 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) Provide 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 or 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 measure. 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) 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. 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

[[Page 79886]]

(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) through (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) 
through (C) of this section. Subject to paragraph (b)(5) of this 
section--
    (A) Send a summary of care 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 summary of care 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) Electronic 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 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.

[[Page 79887]]

    (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 to a 
State for the 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) 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) 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) Electronic Prescribing--(i) EP Electronic Prescribing--(A) 
Objective. Generate and transmit permissible prescriptions 
electronically (eRx).
    (B) 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 electronic prescribing--(A) Objective. 
Generate and transmit permissible discharge prescriptions 
electronically (eRx).
    (B) 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) 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 EP's scope of 
practice or patient population, the clinical decision support 
interventions must be related to high-priority health conditions; and
    (2) 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

[[Page 79888]]

improving performance on high-priority health conditions.
    (B) Measures--(1) 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) 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) More than 60 percent of medication orders created by the EP 
during the EHR reporting period are recorded using computerized 
provider order entry;
    (2) 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) 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) 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) 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) 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) 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) 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) 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 specifications of the API in the provider's CEHRT.
    (2) 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

[[Page 79889]]

measures in paragraphs (d)(6)(i)(B)(1) through (3) of this section 
except those measures for which an EP qualifies for an exclusion under 
paragraph (a)(3) of this section.
    (1) 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) 
through (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) through (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) through (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) 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) 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 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) through (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 meet the threshold for 2 
of the 3 measures in paragraphs (d)(7)(i)(B)(1) through (3) of this 
section, in order to meet the objective. Subject to paragraph (c) of 
this section--
    (1) Measure 1. 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) Measure 2. 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) Measure 3. 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.

[[Page 79890]]

    (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) through (3) of this section. Subject to paragraph 
(b)(5) of this section--
    (1) Measure 1. 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) Measure 2. 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) Measure 3. 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. 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. 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. The EP is in active engagement with 
a public health agency to submit case reporting of reportable 
conditions.
    (4) Public health registry reporting. The EP is in active 
engagement with a public health agency to submit data to public health 
registries.
    (5) Clinical data registry reporting. 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 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

[[Page 79891]]

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. 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. 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. 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. 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. The eligible hospital or CAH 
is in active engagement to submit data to a clinical data registry.
    (6) Electronic reportable laboratory result reporting. 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 
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

[[Page 79892]]

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
 27. 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 to CMS: 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 to a State for the 
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 to CMS, satisfied the 
required objectives and associated measures under Sec.  495.24(c) for 
meaningful use.
    (2) For an eligible hospital or CAH attesting to a State for the 
Medicaid EHR Incentive Program, satisfied the required objectives and 
associated measures under Sec.  495.24(d) for meaningful use.
* * * * *

0
28. 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: October 25, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare and Medicaid Services.
    Dated: October 26, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-26515 Filed 11-1-16; 4:15 pm]
 BILLING CODE 4120-01-P