[Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)]
[Rules and Regulations]
[Pages 59216-59497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: R1-2017-23932]



[[Page 59215]]

Vol. 82

Thursday,

No. 239

December 14, 2017

Part II

Book 2 of 2 Books

Pages 59215-59502





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 414, 416, and 419



Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Rule

  Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 414, 416, and 419

[CMS-1678-FC]
RIN 0938-AT03


Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs

Republication

    Editorial Note:  Rule document 2017-23932 was originally 
published on pages 52356 through 52637 in the issue of Monday, 
November 13, 2017. In that publication, a section of the document 
was omitted due to a printing error. The corrected document is 
published here in its entirety.

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

ACTION: 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 2018 to 
implement 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.

DATES: 
    Effective date: This final rule with comment period is effective on 
January 1, 2018, unless otherwise noted.
    Comment period: To be assured consideration, comments on the 
payment classifications assigned to HCPCS codes identified in Addenda 
B, AA, and BB with the comment indicator ``NI'' and on other areas 
specified throughout this 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, 2017.

ADDRESSES: In commenting, please refer to file code CMS-1678-FC when 
commenting on the issues in this proposed rule. 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-1678-FC, 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-1678-FC, 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: (We note that public comments must be 
submitted through one of the four channels outlined in the ADDRESSES 
section above. Comments may not be submitted via email.)

    Advisory Panel on Hospital Outpatient Payment (HOP Panel), 
contact the HOP Panel mailbox at [email protected].
    Ambulatory Surgical Center (ASC) Payment System, contact 
Elisabeth Daniel via email [email protected] or at 410-
786-0237.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Administration, Validation, and Reconsideration Issues, contact 
Anita Bhatia via email [email protected] or at 410-786-7236.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Measures, contact Vinitha Meyyur via email 
[email protected] or at 410-786-8819.
    Blood and Blood Products, contact Josh McFeeters via email 
[email protected] at 410-786-9732.
    Cancer Hospital Payments, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    Care Management Services, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    CPT Codes, contact Marjorie Baldo via email 
[email protected] or at 410-786-4617.
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver via email [email protected] or at 410-786-6719.
    Composite APCs (Low Dose Brachytherapy and Multiple Imaging), 
contact Twi Jackson via email [email protected] or at 410-786-
1159.
    Comprehensive APCs (C-APCs), contact Lela Strong via email 
[email protected] or at 410-786-3213.
    Hospital Outpatient Quality Reporting (OQR) Program 
Administration, Validation, and Reconsideration Issues, contact 
Anita Bhatia via email [email protected] or at 410-786-7236.
    Hospital Outpatient Quality Reporting (OQR) Program Measures, 
contact Vinitha Meyyur via email [email protected] or at 
410-786-8819.
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Twi Jackson via email 
[email protected] or at 410-786-1159.
    Inpatient Only (IPO) Procedures List, contact Lela Strong via 
email [email protected] or at 410-786-3213.
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email [email protected] or at 410-786-4142.
    No Cost/Full Credit and Partial Credit Devices, contact Twi 
Jackson via email [email protected] or at 410-786-1159.
    OPPS Brachytherapy, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios

[[Page 59217]]

(CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, 
and Wage Index), contact Erick Chuang via email 
[email protected] or at 410-786-1816 or Elisabeth Daniel via 
email [email protected] or at 410-786-0237.
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Elisabeth Daniel via email 
[email protected] or at 410-786-0237.
    OPPS New Technology Procedures/Services, contact the New 
Technology APC email at [email protected].
    OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via 
email [email protected] or at 410-786-4617.
    OPPS Packaged Items/Services, contact Elisabeth Daniel via email 
[email protected] or at 410-786-0237.
    OPPS Pass-Through Devices, contact the Device Pass-Through email 
at [email protected].
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email [email protected] or at 410-
786-2682.
    Partial Hospitalization Program (PHP) and Community Mental 
Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox 
at [email protected].
    Revisions to the Laboratory Date of Service Policy, contact 
Craig Dobyski via email [email protected] or at 410-786-4584 
or Rasheeda Johnson via email [email protected] or at 
410-786-3434 or Marjorie Baldo (for OPPS) via email 
[email protected] or at 410-786-4617.
    Rural Hospital Payments, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.
    Skin Substitutes, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.

    All Other Issues Related to Hospital Outpatient and Ambulatory 
Surgical Center Payments Not Previously Identified, contact Lela Strong 
via email [email protected] or 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 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

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
CASPER Certification and Survey Provider Enhanced Reporting
CAUTI Catheter-associated urinary tract infection
CBSA Core-Based Statistical Area
CCM Chronic care management
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American 
Medical Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and 
Supplies
DOS Date of service
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
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

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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
IDTF Independent diagnostic testing facility
IGI IHS Global, 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 Aureus
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
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
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDC Per day cost
PDE Prescription Drug Event
PE Practice expense
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
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
TOPs Transitional Outpatient Payments
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 2017 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. Calculation of Single Procedure APC Criteria-Based Costs
    (1) Blood and Blood Products
    (2) Brachytherapy Sources
    b. Comprehensive APCs (C-APCs) for CY 2018
    (1) Background
    (2) C-APCs for CY 2018
    (3) Brachytherapy Insertion Procedures
    (4) C-APC 5627 (Level 7 Radiation) Stereotactic Radiosurgery 
(SRS)
    (5) Complexity Adjustment for Blue Light Cystoscopy Procedures
    (6) Analysis of C-APC Packaging Under the OPPS
    c. Calculation of Composite APC Criteria-Based Costs
    (1) Mental Health Services Composite APC
    (2) 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. CY 2018 Drug Administration Packaging Policies
    (1) Background of Drug Administration Packaging Policy
    (2) Packaging of Level 1 and Level 2 Drug Administration 
Services
    (3) Discussion and Summary of Comments Received in Response to 
Solicitation Regarding Unconditionally Packaging Drug Administration 
Add-On Codes
    c. Analysis of Packaging of Pathology Services in the OPPS
    d. Summary of Public Comments and Our Responses Regarding 
Packaging of Items and Services Under the OPPS
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes

[[Page 59219]]

    D. Statewide Average Default CCRs
    E. Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act
    F. Payment Adjustment for Certain Cancer Hospitals for CY 2018
    1. Background
    2. Policy for CY 2018
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Outlier Calculation for CY 2018
    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 HCPCS Codes That Were Effective April 1, 
2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC 
Proposed Rule
    2. Treatment of New HCPCS Codes Effective July 1, 2017 for Which 
We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule
    3. Process for New Level II HCPCS Codes That Are Effective 
October 1, 2017 and January 1, 2018 for Which We Are Soliciting 
Public Comments in This CY 2018 OPPS/ASC Final Rule With Comment 
Period
    4. Treatment of New and Revised CY 2018 Category I and III CPT 
Codes That Are Effective January 1, 2018 for Which We Solicited 
Public Comments in the CY 2018 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. Revised and Additional New Technology APC Groups
    3. Procedures Assigned to New Technology APC Groups for CY 2018
    a. Overall Policy
    b. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) 
(APCs 1537, 5114, and 5415)
    c. Retinal Prosthesis Implant Procedure
    d. Pathogen Test for Platelets
    e. Fractional Flow Reserve Derived From Computed Tomography 
(FFRCT)
    D. OPPS APC-Specific Policies
    1. Blood-Driven Hematopoietic Cell Harvesting
    2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)
    a. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related 
Procedures)
    b. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related 
Procedures)
    3. Care Management Coding Changes Effective January 1, 2018 
(APCs 5821 and 5822)
    4. Cardiac Telemetry (APC 5721)
    5. Collagen Cross-Linking of Cornea (C-APC 5503)
    6. Cryoablation Procedures for Lung Tumors (C-APC 5361)
    7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)
    8. Discussion of the Comment Solicitation in the Proposed Rule 
on Intraocular Procedures APCs
    9. Endovascular APCs (C-APCs 5191 Through 5194)
    10. Esophagogastroduodenoscopy (C-APC 5362)
    11. Hemorrhoid Treatment by Thermal Energy (APC 5312)
    12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)
    13. Laparoscopic Nephrectomy (C-APC 5362)
    14. Multianalyte Assays With Algorithmic Analyses (MAAA)
    15. Musculoskeletal APCs (APCs 5111 Through 5116)
    16. Nasal/Sinus Endoscopy Procedures (C-APC 5155)
    17. Nuclear Medicine Services (APCs 5592 and 5593)
    18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 
5192)
    19. Peripherally Inserted Central Venous Catheter (APC 5182)
    20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and 
Cardiac Rehabilitation Services (APC 5771)
    21. Radiology and Imaging Procedures and Services
    a. Imaging APCs
    b. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)
    22. Sclerotherapy (APC 5054)
    23. Skin Substitutes (APCs 5053, 5054, and 5055)
    24. Subdermal Drug Implants for the Treatment of Opioid 
Addiction (APC 5735)
    25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)
    26. Transperineal Placement of Biodegradable Material (C-APC 
5375)
    27. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 
and 5722)
    28. Transurethral Waterjet Ablation of Prostate (C-APC 5375)
    29. Transurethral Water Vapor Thermal Therapy of Prostate (C-APC 
5373)
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
    a. Background
    b. Expiration of Transitional Pass-Through Payment for Certain 
Devices
    2. New Device Pass-Through Applications
    a. Background
    b. Applications Received for Device Pass-Through Payment for CY 
2018
    B. Device-Intensive Procedures
    1. Background
    2. HCPCS Code-Level Device-Intensive Determination
    3. Device Edit Policy
    4. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    a. Background
    b. Policy for No Cost/Full Credit and Partial Credit Devices
    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. 3-Year Transitional Pass-Through Payment Period for All Pass-
Through Drugs, Biologicals, and Radiopharmaceuticals and Expiration 
of Pass-Through Status
    3. Drugs and Biologicals With Expiring Pass-Through Payment 
Status in CY 2017
    4. Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Status in CY 2018
    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 2018 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
    7. Alternative Payment Methodology for Drugs Purchased Under the 
340B Program
    a. Background
    b. OPPS Payment Rate for 340B Purchased Drugs
    c. Summaries of Public Comments Received and Our Responses
    d. Summary of Final Policies for CY 2018
    e. Comment Solicitation on Additional 340B Considerations

[[Page 59220]]

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 2018
    1. PHP APC Geometric Mean per Diem Costs
    2. Development of the PHP APC Geometric Mean per Diem Costs
    a. CMHC Data Preparation: Data Trims, Exclusions, and CCR 
Adjustments
    b. Hospital-Based PHP Data Preparation: Data Trims and 
Exclusions
    3. PHP Service Utilization Updates
    4. Minimum Service Requirement: 20 Hours per Week
    C. Outlier Policy for CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient Only (IPO) List
    1. Methodology for Identifying Appropriate Changes to IPO List
    2. Removal of Procedures Described by CPT Code 55866
    3. Removal of the Total Knee Arthroplasty (TKA) Procedure 
Described by CPT Code 27447
    4. Recovery Audit Contractor (RAC) Review of TKA Procedures
    5. Public Requests for Additions to or Removal of Procedures on 
the IPO List
    6. Summary of Changes to the IPO List for CY 2018
    C. Discussion of Solicitation of Public Comments on the Possible 
Removal of Partial Hip Arthroplasty (PHA) and Total Hip Arthroplasty 
(THA) Procedures From the IPO List
    1. Background
    2. Topics and Questions Posed for Public Comments
X. Nonrecurring Policy Changes
    A. Payment for Certain Items and Services Furnished by Certain 
Off-Campus Departments of a Provider
    1. Background
    2. Expansion of Services by Excepted Off-Campus Hospital 
Outpatient Departments
    3. Section 16002 of the 21st Century Cures Act (Treatment of 
Cancer Hospitals in Off-Campus Outpatient Department of a Provider 
Policy)
    B. Medicare Site-of-Service Price Transparency (Section 4011 of 
the 21st Century Cures Act)
    C. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
    D. Enforcement Instruction for the Supervision of Outpatient 
Therapeutic Services in Critical Access Hospitals (CAHs) and Certain 
Small Rural Hospitals
    E. Payment Changes for Film X-Rays Services and Payment Changes 
for X-Rays Taken Using Computed Radiography Technology
    F. Revisions to the Laboratory Date of Service Policy
XI. CY 2018 OPPS Payment Status and Comment Indicators
    A. CY 2018 OPPS Payment Status Indicator Definitions
    B. CY 2018 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
    3. Definition of ASC Covered Surgical Procedures
    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 Implemented 
in April 2017 for Which We Solicited Public Comments in the CY 2018 
Proposed Rule
    3. Treatment of New and Revised Level II HCPCS Codes Implemented 
in July 2017 for Which We Solicited Public Comments in the CY 2018 
Proposed Rule
    4. Process for New and Revised Level II HCPCS Codes That Are 
Effective October 1, 2017 and January 1, 2018 for Which We Are 
Soliciting Public Comments in this CY 2018 OPPS/ASC Final Rule With 
Comment Period
    5. Process for Recognizing New and Revised Category I and 
Category III CPT Codes That Are Effective January 1, 2018 for Which 
We Are Soliciting Public Comments in This 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
    (2) Changes for CY 2018 to Covered Surgical Procedures 
Designated as Office-Based
    b. ASC Covered Surgical Procedures Designated as Device-
Intensive
    (1) Background
    (2) Changes to List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2018
    c. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    d. Additions to the List of ASC Covered Surgical Procedures
    e. Discussion of Comment Solicitation on Adding Additional 
Procedures to the ASC Covered Procedures List
    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 
CY2018
    2. Payment for Covered Ancillary Services
    a. Background
    b. Payment for Covered Ancillary Services for CY 2018
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests To Establish New NTIOL Classes for CY 2018
    3. Payment Adjustment
    4. Announcement of CY 2019 Deadline for Submitting Requests for 
CMS Review of Applications for a New Class of NTIOLs
    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 2018 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Discussion of Comment Solicitation on ASC Payment System 
Reform
    4. Display of CY 2018 ASC Payment Rates
XIII. Requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program
    A. Background
    1. Overview
    2. Statutory History of the Hospital OQR Program
    3. Regulatory History of the Hospital OQR Program
    B. Hospital OQR Program Quality Measures
    1. Considerations in the Selection of Hospital OQR Program 
Quality Measures
    2. Accounting for Social Risk Factors in the Hospital OQR 
Program
    3. Retention of Hospital OQR Program Measures Adopted in 
Previous Payment Determinations
    4. 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
    c. Measure Removal From the Hospital OQR Program Measure Set
    5. Make Reporting of OP-37a-e: Outpatient and Ambulatory Surgery 
Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) 
Survey-Based Measures Voluntary for CY 2018 Reporting and Subsequent 
Years
    6. Previously Adopted Hospital OQR Program Measure Set for the 
CY 2020 Payment Determination and Subsequent Years
    7. Newly Finalized Hospital OQR Program Measure Set for the CY 
2020 Payment Determination and Subsequent Years
    8. Hospital OQR Program Measures and Topics for Future 
Consideration
    a. Future Measure Topics
    b. Possible Future Adoption of the Electronic Version of OP-2: 
Fibrinolytic Therapy Received Within 30 Minutes of Emergency 
Department Arrival
    9. Maintenance of Technical Specifications for Quality Measures
    10. Public Display of Quality Measures
    a. Background

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    b. Public Reporting of OP-18c: Median Time From Emergency 
Department Arrival to Emergency Department Departure for Discharged 
Emergency Department Patients--Psychiatric/Mental Health Patients
    C. Administrative Requirements
    1. QualityNet Account and Security Administrator
    2. Requirements Regarding Participation Status
    a. Background
    b. Changes to the NOP Submission Deadline
    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 2021 Payment 
Determination and Subsequent Years
    3. Claims-Based Measure Data Requirements for the CY 2020 
Payment Determination and Subsequent Years
    4. Data Submission Requirements for 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
    5. Data Submission Requirements for Previously Finalized 
Measures for Data Submitted via a Web-Based Tool for the CY 2020 
Payment Determination and Subsequent Years
    6. Population and Sampling Data Requirements for the CY 2020 
Payment Determination and Subsequent Years
    7. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2020 
Payment Determination and Subsequent Years
    a. Clarification
    b. Codification
    c. Modifications to the Educational Review Process for Chart-
Abstracted Measures Validation
    8. Extraordinary Circumstances Exception Process for the CY 2020 
Payment Determination and Subsequent Years
    a. ECE Policy Nomenclature
    b. Timeline for CMS Response to ECE Requests
    9. Hospital OQR Program Reconsideration and Appeals Procedures 
for the CY 2020 Payment Determination and Subsequent Years
    E. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2018 Payment 
Determination
    1. Background
    2. Reporting Ratio Application and Associated Adjustment Policy 
for CY 2018
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    1. Overview
    2. Statutory History of the ASCQR Program
    3. Regulatory History of the ASCQR Program
    B. ASCQR Program Quality Measures
    1. Considerations in the Selection of ASCQR Program Quality 
Measures
    2. Accounting for Social Risk Factors in the ASCQR Program
    3. Policies for Retention and Removal of Quality Measures From 
the ASCQR Program
    a. Retention of Previously Adopted ASCQR Program Measures
    b. Measure Removal
    4. Delay of ASC-15a-e: Outpatient and Ambulatory Surgery 
Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) 
Survey-Based Measures Beginning With the 2020 Payment Determination
    5. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    6. ASCQR Program Quality Measures for the CY 2021 and CY 2022 
Payment Determinations and Subsequent Years
    a. Adoption of ASC-16: Toxic Anterior Segment Syndrome Beginning 
With the CY 2021 Payment Determination
    b. Adoption of ASC-17: Hospital Visits After Orthopedic 
Ambulatory Surgical Center Procedures Beginning With the CY 2022 
Payment Determination
    c. Adoption of ASC-18: Hospital Visits After Urology Ambulatory 
Surgical Center Procedures Beginning With the CY 2022 Payment 
Determination
    d. Summary of Previously Adopted Measurers and Newly Adopted 
ASCQR Program Measures for the CY 2022 Payment Determination and 
Subsequent Years
    7. ASCQR Program Measures and Topics for Future Consideration
    8. Maintenance of Technical Specifications for Quality Measures
    9. 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. Requirements for Claims-Based Measure Data
    5. Requirements for Data Submission for ASC-15a-e: Outpatient 
and Ambulatory Surgery Consumer Assessment of Healthcare Providers 
and Systems (OAS CAHPS) Survey-Based Measures
    6. Extraordinary Circumstances Extensions or Exemptions for the 
CY 2019 Payment Determination and Subsequent Years
    a. Background
    b. ECE Policy Nomenclature
    c. Timeline for CMS Response to ECE Requests
    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. Files Available to the Public via the Internet
XVI. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
XVII. Response to Comments
XVIII. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the OPPS and ASC Payment Provisions
    4. Regulatory Review Costs
    5. 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 to Part B Drug Payment on 
340B Eligible Hospitals Paid Under the OPPS
    (3) Estimated Effects of OPPS Changes on Hospitals
    (4) Estimated Effects of OPPS Changes on CMHCs
    (5) Estimated Effects of OPPS Changes on Beneficiaries
    (6) Estimated Effects of OPPS Changes on Other Providers
    (7) Estimated Effects of OPPS Changes on the Medicare and 
Medicaid Programs
    (8) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2018 ASC Payment System Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2018 ASC Payment System Policies on 
ASCs
    (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
    B. Regulatory Flexibility Act (RFA) Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Reducing Regulation and Controlling Regulatory Costs
    E. Conclusion
XIX. Federalism Analysis
Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this final rule with comment period, we are updating the payment

[[Page 59222]]

policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory 
surgical centers (ASCs) beginning January 1, 2018. 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.
2. Summary of the Major Provisions
     OPPS Update: For CY 2018, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 1.35 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 0.6 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 2018 is approximately $70 billion, an 
increase of approximately $5.8 billion compared to estimated CY 2017 
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.
     High Cost/Low Cost Threshold for Packaged Skin 
Substitutes: As we did for CY 2017, we are assigning skin substitutes 
with a geometric mean unit cost (MUC) or a per day cost (PDC) that 
exceeds either the MUC threshold or the PDC threshold to the high cost 
group. In addition, for CY 2018, we are establishing that a skin 
substitute product that does not exceed either the CY 2018 MUC or PDC 
threshold for CY 2018, but was assigned to the high cost group for CY 
2017, is assigned to the high cost group for CY 2018. The goal of our 
policy is to maintain similar levels of payment for skin substitute 
products for CY 2018 while we study our current skin substitute payment 
methodology to determine whether refinements to our existing 
methodologies may be warranted.
     Supervision of Hospital Outpatient Therapeutic Services: 
In the CY 2009 and CY 2010 OPPS/ASC proposed rules and final rules with 
comment period, we clarified that direct supervision is required for 
hospital outpatient therapeutic services covered and paid by Medicare 
that are furnished in hospitals, CAHs, and in provider-based 
departments (PBDs) of hospitals, as set forth in the CY 2000 OPPS final 
rule with comment period. For several years, there has been a 
moratorium on the enforcement of the direct supervision requirement for 
CAHs and small rural hospitals, with the latest moratorium on 
enforcement expiring on December 31, 2016. In this final rule with 
comment period, as we proposed, we are reinstating the nonenforcement 
policy for direct supervision of outpatient therapeutic services 
furnished in CAHs and small rural hospitals having 100 or fewer beds 
and reinstating our enforcement instruction for CY 2018 and CY 2019.
     340B Drug Pricing: We are changing our current Medicare 
Part B drug payment methodology for 340B hospitals that we believe will 
better, and more appropriately, reflect the resources and acquisition 
costs that these hospitals incur. These changes will lower drug costs 
for Medicare beneficiaries for drugs acquired by hospitals under the 
340B Program. For CY 2018, we are exercising the Secretary's authority 
to adjust the applicable payment rate as necessary for separately 
payable drugs and biologicals (other than drugs on pass-through payment 
status and vaccines) acquired under the 340B Program from average sales 
price (ASP) plus 6 percent to ASP minus 22.5 percent. Rural sole 
community hospitals (SCHs), children's hospitals, and PPS-exempt cancer 
hospitals are excluded from this payment adjustment in CY 2018. In 
addition, in this final rule with comment period, we are establishing 
two modifiers to identify whether a drug billed under the OPPS was 
purchased under the 340B Program--one for hospitals that are subject to 
the payment reduction and another for hospitals not subject to the 
payment reduction but that acquire drugs under the 340B Program.
     Device Pass-Through Payment Applications: For CY 2018, we 
evaluated five devices for eligibility to receive pass through payments 
and sought public comments in the CY 2018 proposed rule on whether each 
of these items meet the criteria for device pass-through payment 
status. None of the applications were approved for device pass-through 
payments for CY 2018.
     Rural Adjustment: We are continuing the adjustment of 7.1 
percent to the OPPS payments to certain rural SCHs, including essential 
access community hospitals (EACHs). This adjustment will apply to all 
services paid under the OPPS, excluding separately payable drugs and 
biologicals, devices paid under the pass-through payment policy, and 
items paid at charges reduced to cost.
     Cancer Hospital Payment Adjustment: For CY 2018, 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. However, beginning CY 2018, section 16002(b) of the 21st Century 
Cures Act requires that this weighted average PCR be reduced by 1.0 
percentage point. Based on the data and the required 1.0 percentage 
point reduction, a target PCR of 0.88 will be used to determine the CY 
2018 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 0.88 for each cancer 
hospital.
     Changes to the Inpatient Only List: For CY 2018, we are 
finalizing our proposal to remove total knee arthroplasty (TKA) from 
the inpatient only list. In addition, we are precluding the Recovery 
Audit Contractors from reviewing TKA procedures for ``patient status'' 
(that is, site of service) for a period of 2 years. We note that we 
will monitor changes in site of service to determine whether changes 
may be necessary to certain CMS Innovation Center models. In addition, 
we are removing five other procedures from the inpatient only list and 
adding one procedure to the list.
     Comprehensive APCs: For CY 2018, we did not propose to 
create any new

[[Page 59223]]

C-APCs or make any extensive changes to the already established 
methodology used for C-APCs. There will be a total number of 62 C-APCs 
as of January 1, 2018. For CY 2018, for the C-APC for stereotactic 
radio surgery (SRS), specifically, C-APC 5627 (Level 7 Radiation 
Therapy), we are continuing to make separate payments for the 10 
planning and preparation services adjunctive to the delivery of the SRS 
treatment using either the Cobalt-60-based or LINAC-based technology 
when furnished to a beneficiary within 30 days of the SRS treatment. In 
addition, the data collection period for SRS claims with modifier 
``CP'' is set to conclude on December 31, 2017. Accordingly, for CY 
2018, we are deleting this modifier and discontinuing its required use.
     Packaging Policies: In CY 2015, we implemented a policy to 
conditionally package ancillary services assigned to APCs with a 
geometric mean cost of $100 or less prior to packaging, with some 
exceptions, including drug administration services. For CY 2018, we are 
removing the exception for certain drug administration services and 
conditionally packaging payment for low-cost drug administration 
services. We did not propose to package drug administration add-on 
codes for CY 2018, but solicited comments on this policy. The public 
comments that we received are discussed in this final rule with comment 
period. In addition, we solicited comments on existing packaging 
policies that exist under the OPPS, including those related to drugs 
that function as a supply in a diagnostic test or procedure or in a 
surgical procedure. The public comments that we received are also 
discussed in this final rule with comment period.
     Payment Changes for X-rays Taken Using Computed 
Radiography Technology: 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)(ii) of the Act provides for a phased-in reduction of 
payments for imaging services that are taken using computed radiography 
technology. That section provides that payments for such services 
furnished during CYs 2018 through 2022 shall be reduced by 7 percent, 
and if such services are furnished during CY 2023 or a subsequent year, 
payments for such services shall be reduced by 10 percent. We are 
establishing a new modifier that will be reported on claims to identify 
those HCPCS codes that describe X-rays taken using computed radiography 
technology. Specifically, this modifier, as allowed under the 
provisions of new section 1833(t)(16)(F)(ii) of the Act, will be 
reported with the applicable HCPCS code to describe imaging services 
that are taken using computed radiography technology beginning January 
1, 2018.
     ASC Payment Update: For CY 2018, we are increasing payment 
rates under the ASC payment system by 1.2 percent for ASCs that meet 
the quality reporting requirements under the ASCQR Program. This 
increase is based on a projected CPI-U update of 1.7 percent minus a 
multifactor productivity adjustment required by the Affordable Care Act 
of 0.5 percentage point. Based on this update, we estimate that total 
payments to ASCs (including beneficiary cost-sharing and estimated 
changes in enrollment, utilization, and case-mix) for CY 2018 is 
approximately $4.62 billion, an increase of approximately $130 million 
compared to estimated CY 2017 Medicare payments. In addition, in the CY 
2018 proposed rule, we solicited comment on payment reform for ASCs, 
including the collection of cost data which may support a rate update 
other than CPI-U. We discuss the public comments that we received in 
response to this solicitation in this final rule with comment period.
     Comment Solicitation on ASC Payment Reform: In the CY 2018 
proposed rule, we indicated that we were broadly interested in feedback 
from stakeholders and other interested parties on potential reforms to 
the current payment system, including, but not limited to (1) the rate 
update factor applied to ASC payments, (2) whether and how ASCs should 
submit data relating to costs, (3) whether ASCs should bill on the 
institutional claim form rather than the professional claim form, and 
(4) other ideas to improve payment accuracy for ASCs. We discuss the 
feedback we received in this final rule with comment period.
     Changes to the List of ASC Covered Surgical Procedures: 
For CY 2018, we are adding three procedures to the ASC covered 
procedures list. In addition, in the CY 2018 proposed rule, we 
solicited comment on whether total knee arthroplasty, partial hip 
arthroplasty and total hip arthroplasty meet the criteria to be added 
to the ASC covered procedures list. We also solicited comments from 
stakeholders on whether there are codes that are outside the AMA-CPT 
surgical code range that nonetheless, should be considered to be a 
covered surgical procedure. We discuss the public comments we received 
on this solicitation in this final rule with comment period.
     Revisions to the Laboratory Date of Service Policy: To 
better understand the potential impact of the current date of service 
(DOS) policy on billing for molecular pathology tests and advanced 
diagnostic laboratory tests (ADLTs) under the new private payor rate-
based Clinical Laboratory Fee Schedule (CLFS), in the CY 2018 proposed 
rule, we solicited public comments on billing for molecular pathology 
tests and certain ADLTs ordered less than 14 days of a hospital 
outpatient discharge and discussed potential modifications to our DOS 
policy to address those tests. After considering the public comments 
received, we are adding an additional exception to our current 
laboratory DOS regulations at 42 CFR 414.510. This new exception to the 
laboratory DOS policy generally permits laboratories to bill Medicare 
directly for ADLTs and molecular pathology tests excluded from OPPS 
packaging policy if the specimen was collected from a hospital 
outpatient during a hospital outpatient encounter and the test was 
performed following the patient's discharge from the hospital 
outpatient department. We discuss the public comments we received on 
this solicitation in this final rule with comment period.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are finalizing our proposals to remove and 
delay certain measures for the CY 2020 payment determination and 
subsequent years. Specifically, beginning with the CY 2020 payment 
determination, we are finalizing our proposals to remove: (1) OP-21: 
Median Time to Pain Management for Long Bone Fracture; and (2) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. While we proposed to remove: OP-1: Median Time to 
Fibrinolysis, OP-4: Aspirin at Arrival, OP-20: Door to Diagnostic 
Evaluation by a Qualified Medical Professional, and OP-25: Safe Surgery 
Checklist for the CY 2021 payment determination and subsequent years, 
we are finalizing these proposals with modification, such that we are 
removing them for the CY 2020 payment determination and subsequent 
years, one year earlier than proposed. We are also finalizing our 
proposal to delay the OAS CAHPS Survey-based measures (OP-37 a-e) 
beginning with the CY 2020 payment determination (CY 2018 reporting). 
In addition, for the CY 2020 payment determination and subsequent years 
we are: (1) Providing clarification on our procedures for validation of 
chart-abstracted measures for targeting the poorest performing outlier 
hospitals; (2)

[[Page 59224]]

formalizing the validation educational review process and updating it 
to allow corrections of incorrect validation results for chart-
abstracted measures, and modifying the CFR accordingly; (3) aligning 
the first quarter for which to submit data for hospitals that did not 
participate in the previous year's Hospital OQR Program and make 
corresponding changes to the CFR; and (4) aligning the naming of the 
Extraordinary Circumstances Exceptions (ECE) policy with that used in 
our other quality reporting and value-based payment programs and making 
corresponding changes to the CFR. We are not finalizing our proposal to 
extend the Notice of Participation (NOP) deadline and make 
corresponding changes to the CFR. Lastly, we are finalizing with 
modifications, our proposal to publicly report OP-18c: Median Time from 
Emergency Department Arrival to Emergency Department Departure for 
Discharged Emergency Department Patients--Psychiatric/Mental Health 
Patients.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are finalizing measures and policies 
for the CY 2019 payment determination, 2021 payment determination, and 
CY 2022 payment determination and subsequent years. Specifically, we 
are finalizing our proposals to, beginning with the CY 2019 payment 
determination, remove three measures from the ASCQR Program measure 
set: (1) ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing; (2) 
ASC-6: Safe Surgery Checklist Use; and, (3) ASC-7: Ambulatory Surgical 
Center Facility Volume Data on Selected Ambulatory Surgical Center 
Surgical Procedures. In addition, we are also finalizing our proposal 
to delay the OAS CAHPS Survey measures (ASC-15a-e) beginning with the 
CY 2020 payment determination (CY 2018 data collection). Furthermore, 
starting with CY 2018, we are finalizing our proposals to: (1) Expand 
the CMS online tool to also allow for batch submission of measure data 
and make corresponding changes to the CFR; and (2) align the naming of 
the Extraordinary Circumstances Exceptions (ECE) policy with that used 
in our other quality reporting and value-based payment programs and 
make corresponding changes to the CFR. We are not finalizing our 
proposal to adopt one new measure, ASC-16: Toxic Anterior Segment 
Syndrome, beginning with the CY 2021 payment determination. However, we 
are finalizing proposals to adopt two new measures collected via 
claims, beginning with the CY 2022 payment determination, ASC-17: 
Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures 
and ASC-18: Hospital Visits after Urology Ambulatory Surgical Center 
Procedures.
3. Summary of Costs and Benefits
    In sections XVIII. and XIX. of this final rule with comment period, 
we set forth a detailed analysis of the regulatory and Federalism 
impacts that the 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 88 in section XVIII. 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 2018 compared to all estimated 
OPPS payments in CY 2017. We estimate that policies in this final rule 
with comment period will result in a 1.4 percent overall increase in 
OPPS payments to providers. We estimate that total OPPS payments for CY 
2018, including beneficiary cost-sharing, to the approximate 3,900 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will increase by 
approximately $690 million compared to CY 2017 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 17.2 percent increase in CY 2018 
payments to CMHCs relative to their CY 2017 payments.
(2) Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the FY 
2018 IPPS final rule wage indexes results in no change for urban and 
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 2018 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 hospital payment adjustments. While 
we are implementing the required reduction to the cancer hospital 
payment adjustment in Section 16002 of the 21st Century Cures Act for 
CY 2018, the adjustment amounts do not significantly impact the budget 
neutrality adjustments for these policies.
(4) Impacts of the OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the OPD 
fee schedule increase factor of 1.35 percent to the conversion factor 
for CY 2018 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 1.3 percent for 
urban hospitals and 2.7 percent for rural hospitals. Classifying 
hospitals by teaching status, we estimate non-teaching hospitals will 
experience increases of 2.9 percent, minor teaching hospitals will 
experience increases of 1.7 percent, and major teaching hospitals will 
experience decreases of -0.9 percent. We also classified hospitals by 
type of ownership. We estimate that hospitals with voluntary ownership 
will experience increases of 1.3 percent, hospitals with proprietary 
ownership will experience increases of 4.5 percent and hospitals with 
government ownership will experience no change in payments.
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 2018 payment 
rates, compared to estimated CY 2017 payment rates, generally ranges 
between an increase of 1 to 5 percent, depending on the service, with 
some exceptions.

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-

[[Page 59225]]

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; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, and the 21st Century Cures Act (Pub. L. 
114-255), enacted on December 13, 2016.
    Under the OPPS, we generally 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 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 does not include 
applicable items and services (as defined in subparagraph (A) of 
paragraph (21)) that are furnished on or after January 1, 2017 by an 
off-campus outpatient department of a provider (as defined in 
subparagraph (B) of paragraph (21). We set forth the services that are 
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include:
     Critical access hospitals (CAHs);

[[Page 59226]]

     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/Hospital-Outpatient-Regulations-and-Notices.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 HOP 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 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--
     May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
     May advise on the appropriate supervision level for 
hospital outpatient services;
     Continues to be technical in nature;
     Is governed by the provisions of the FACA;
     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 Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 21, 2016, for a 2-year period 
(81 FR 94378).
    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 21, 2017. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership, to announce new members and 
to announce any other changes of which the public should be aware. 
Beginning in CY 2017, we have transitioned to one meeting per year (81 
FR 31941). Further information on the 2017 summer meeting can be found 
in the meeting notice titled ``Medicare Program: Announcement of the 
Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on 
August 21-22, 2017'' (82 FR 24128).
    In addition, 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 
include the following:
     APC Groups and Status Indicator Assignments Subcommittee, 
which advises the Panel on 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, as 
well as the appropriate APC assignment of HCPCS codes regarding 
services for which separate payment is made;
     Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
     Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    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 21, 2017 meeting that the subcommittees 
continue. We accepted this recommendation.
    In addition, discussions of the other recommendations made by the 
Panel at the August 21, 2017 Panel meeting 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.

[[Page 59227]]

    We note that we received some public comments on the CY 2018 OPPS/
ASC proposed rule related to the HOP Panel meeting presentations, which 
we address below.
    Comment: One commenter supported CMS' extension of the HOP Panel 
meeting presentation submission deadline when there is a truncated 
submittal timeframe due to delayed publication of the OPPS/ASC proposed 
rule. However, to avoid the need to modify the submission deadline in 
the future, the commenter suggested that CMS revise the submission 
deadline in the Federal Register notice from a firm date to a fluid 21 
days from the proposed rule display date to avoid this deadline issue 
in the future.
    Response: We appreciate the commenter's request to modify the HOP 
Panel meeting submission deadline format. However, frequency, timing, 
and presentation deadlines are outside the scope of the proposed rule 
and are generally announced through either a separate Federal Register 
notice or subregulatory channel such as the CMS Web site, or both.
    Comment: One commenter requested that CMS reinstate the winter 
Panel meetings as part of a multifaceted process that would allow for 
multiple proposal refinements with Panel input prior to finalization of 
a policy. The commenter also suggested that CMS use this winter meeting 
as a vehicle to allow stakeholders to review and discuss updated cost 
data for HCPCS codes and APCs prior to the release of the data in the 
proposed rule.
    Response: We appreciate the commenter's request to modify the Panel 
meeting processes. However, the frequency of Panel meetings is outside 
the scope of the proposed rule; meetings are generally announced 
through either a separate Federal Register notice or a subregulatory 
channel such as the CMS Web site, or both.

F. Public Comments Received on the CY 2017 OPPS/ASC Final Rule With 
Comment Period

    We received 39 timely pieces of correspondence on the CY 2017 OPPS/
ASC final rule with comment period that appeared in the Federal 
Register on November 14, 2016 (81 FR 79562), 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), the potential limitation on clinical service line 
expansion or volume of service increases by nonexcepted off-campus 
provider-based departments, and 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. Summaries of the public comments are set forth in the CY 
2018 proposed rule and this final rule with comment period under the 
appropriate subject matter headings. Summaries of public comments on 
the MPFS payment rates for nonexcepted items and services are set forth 
in the CY 2018 MPFS 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
    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 2018 OPPS/ASC proposed rule (82 FR 33568), for CY 2018, 
we proposed to recalibrate the APC relative payment weights for 
services furnished on or after January 1, 2018, and before January 1, 
2019 (CY 2018), using the same basic methodology that we described in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79574 
through 79595). For this final rule with comment period, for CY 2018, 
we recalibrated the APC relative payment weights for services furnished 
on or after January 1, 2018, and before January 1, 2019 (CY 2018), 
using the same basic methodology that we described in the CY 2017 OPPS/
ASC final rule with comment period, using updated CY 2016 claims data. 
That is, we 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 APC relative payment weights 
for CY 2018, we began with 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, 2016, and before January 1, 2017, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 86 
million final action claims to develop the CY 2018 OPPS payment 
weights. 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 2018 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.
    Addendum N to this final rule with comment period (which is 
available via the Internet on the CMS Web site) includes the list of 
bypass codes for CY 2018. The list of bypass codes contains codes that 
were reported on claims for services in CY 2016 and, therefore, 
includes codes that were in effect in CY 2016 and used for billing, but 
were deleted for CY 2017. We retained these deleted bypass codes on the 
CY 2018 bypass list because these codes existed in CY 2016 and were 
covered OPD services in that period, and CY 2016 claims data are used 
to calculate CY 2018 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 multiple imaging composite APCs are 
identified by asterisks (*) in the third column of Addendum N to this 
final rule with comment period. HCPCS codes that we are adding for CY 
2018 are identified by asterisks (*) in the fourth column of Addendum 
N.
    Table 1 below contains the list of codes that we are removing from 
the CY 2018 bypass list.

        Table 1--HCPCS Codes Removed From the CY 2018 Bypass List
------------------------------------------------------------------------
           HCPCS code                     HCPCS short descriptor
------------------------------------------------------------------------
77305...........................  Teletx isodose plan simple.
77310...........................  Teletx isodose plan intermed.
77315...........................  Teletx isodose plan complex.
77327...........................  Brachytx isodose calc intern.
90801...........................  Psy dx interview.
90802...........................  Intac psy dx interview.
90804...........................  Psytx office 20-30 min.
90805...........................  Psytx off 20-30 min w/e&m.
90806...........................  Psytx off 45-50 min.
90807...........................  Psytx off 45-50 min w/e&m.
90808...........................  Psytx office 75-80 min.
90809...........................  Psytx off 75-80 w/e&m.
90810...........................  Intac psytx off 20-30 min.
90811...........................  Intac psytx 20-40 w/e&m.
90812...........................  Intac psytx off 45-50 min.
90857...........................  Intac group psytx.
90862...........................  Medication management.
95115...........................  Immunotherapy one injection.
95117...........................  Immunotherapy injections.

[[Page 59228]]

 
95144...........................  Antigen therapy services.
95147...........................  Antigen therapy services.
95165...........................  Antigen therapy services.
96402...........................  Chemo hormon antineopl sq/im.
99201...........................  Office/outpatient visit new.
99202...........................  Office/outpatient visit new.
99203...........................  Office/outpatient visit new.
99204...........................  Office/outpatient visit new.
99205...........................  Office/outpatient visit new.
99212...........................  Office/outpatient visit est.
99213...........................  Office/outpatient visit est.
99214...........................  Office/outpatient visit est.
C1300...........................  Hyperbaric oxygen.
G0340...........................  Robt lin-radsurg fractx 2-5.
G9141...........................  Influenza A H1N1, admin w cou.
M0064...........................  Visit for drug monitoring.
------------------------------------------------------------------------

b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2018, in this CY 2018 OPPS/ASC final rule with comment 
period, as we proposed, we are continuing 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 2018 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 2016 claims data by comparing these claims 
data to the most recently available hospital cost reports, which, in 
most cases, are from CY 2015. For the final CY 2018 OPPS payment rates, 
we used the set of claims processed during CY 2016. 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 2016 
(the year of claims data we used to calculate the CY 2018 OPPS payment 
rates) and found that the National Uniform Billing Committee (NUBC) did 
not add any new revenue codes to the NUBC 2016 Data Specifications 
Manual.
    In accordance with our longstanding policy, we calculate CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculate CCRs is 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.a.(1) of this final rule with comment period.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 
through 74847), we finalized our policy of creating new cost centers 
and distinct CCRs for implantable devices, MRIs, CT scans, and cardiac 
catheterization. However, in response to the CY 2014 OPPS/ASC proposed 
rule, commenters reported that some hospitals currently use an 
imprecise ``square feet'' allocation methodology for the costs of large 
moveable equipment like CT scan and MRI machines. They indicated that 
while CMS recommended using two alternative allocation methods, 
``direct assignment'' or ``dollar value,'' as a more accurate 
methodology for directly assigning equipment costs, industry analysis 
suggested that approximately only half of the reported cost centers for 
CT scans and MRIs rely on these preferred methodologies. In response to 
concerns from commenters, we finalized a policy for the CY 2014 OPPS to 
remove claims from providers that use a cost allocation method of 
``square feet'' to calculate CCRs used to estimate costs associated 
with the CT and MRI APCs (78 FR 74847). Further, we finalized a 
transitional policy to estimate imaging APC relative payment weights 
using only CT and MRI cost data from providers that do not use ``square 
feet'' as the cost allocation statistic. We provided that this 
finalized policy would sunset in 4 years to provide a sufficient time 
for hospitals to transition to a more accurate cost allocation method 
and for the related data to be available for ratesetting purposes (78 
FR 74847). Therefore, beginning CY 2018, with the sunset of the 
transition policy, we will estimate the imaging APC relative payment 
weight using cost data from all providers, regardless of the cost 
allocation statistic employed.
    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 
33570), some stakeholders have raised concerns regarding using claims 
from all providers to calculate CT and MRI CCRs, regardless of the cost 
allocations statistic employed (78 FR 74840 through 74847). 
Stakeholders noted that providers continue to use the ``square feet'' 
cost allocation method and that including claims from such providers 
would cause significant reductions in imaging APC payment rates.
    Table 2 below demonstrates the relative effect on imaging APC 
payments after removing cost data for providers that report CT and MRI 
standard cost centers using ``square feet'' as the cost allocation 
method by extracting HCRIS data on Worksheet B-1. Table 3 below 
provides statistical values based on the CT and MRI standard cost 
center CCRs using the different cost allocation methods.

  Table 2--Percentage Change in Estimate Cost for CT and MRI APCs When
    Excluding Claims From Provider Using ``Square Feet'' as the Cost
                            Allocation Method
------------------------------------------------------------------------
                                                            Percentage
              APC                    APC descriptor           change
------------------------------------------------------------------------
5521..........................  Level 1 Imaging without             -3.8
                                 Contrast.
5522..........................  Level 2 Imaging without              5.3
                                 Contrast.
5523..........................  Level 3 Imaging without              6.3
                                 Contrast.
5524..........................  Level 4 Imaging without              5.0
                                 Contrast.
5571..........................  Level 1 Imaging with                 9.0
                                 Contrast.
5572..........................  Level 2 Imaging with                 7.0
                                 Contrast.
5573..........................  Level 3 Imaging with                 2.1
                                 Contrast.
8005..........................  CT and CTA without                  14.4
                                 Contrast Composite.
8006..........................  CT and CTA with Contrast            11.9
                                 Composite.

[[Page 59229]]

 
8007..........................  MRI and MRA without                  7.2
                                 Contrast Composite.
8008..........................  MRI and MRA with                     7.5
                                 Contrast Composite.
------------------------------------------------------------------------


                Table 3--CCR Statistical Values Based on Use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
                                                                CT                              MRI
             Cost allocation method              ---------------------------------------------------------------
                                                    Median CCR       Mean CCR       Median CCR       Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers...................................          0.0387          0.0538          0.0795          0.1059
Square Feet Only................................          0.0317          0.0488          0.0717          0.0968
Direct Assign...................................          0.0557          0.0650          0.1032          0.1222
Dollar Value....................................          0.0457          0.0603          0.0890          0.1178
Direct Assign and Dollar Value..................          0.0457          0.0603          0.0893          0.1175
----------------------------------------------------------------------------------------------------------------

    Our analysis showed that since the CY 2014 OPPS in which we 
established the transition policy, the number of valid MRI CCRs has 
increased by 17.5 percent to 2,177 providers and the number of valid CT 
CCRs has increased by 15.1 percent to 2,251 providers. However, in the 
proposed rule, we noted that, as shown in Table 2 above, nearly all 
imaging APCs would see an increase in payment rates for CY 2018 if 
claims from providers that report ``square feet'' cost allocation 
method were removed. This can be attributed to the generally lower CCR 
values from providers that use a cost allocation method of ``square 
feet'' as shown in Table 3 above. We stated in the proposed rule that 
we believe that the imaging CCRs that we have are appropriate for 
ratesetting. However, in response to provider concerns and to provide 
added flexibility for hospitals to improve their cost allocation 
methods, we proposed to extend the transition policy an additional 
year, for the CY 2018 OPPS.
    For the CY 2018 OPPS, we proposed to continue to remove claims from 
providers that use a cost allocation method of ``square feet'' to 
calculate CCRs used to estimate costs with the CT and MRI APCs 
identified in Table 2 above. Beginning in CY 2019, we would estimate 
the imaging APC relative payment weights using cost data from all 
providers, regardless of the cost allocation statistic employed.
    Comment: Commenters supported CMS' proposal to extend the 
transition policy an additional year, for the CY 2018 OPPS. Several 
commenters recommended that CMS continue to remove claims from 
providers that use a cost allocation method of ``square feet'' to 
calculate CT and MRI CCRs in subsequent calendar years.
    Response: We thank the commenters for their support. As we 
discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33570), our 
analysis shows that the number of valid MRI and CT CCRs has increased 
since we established the transition policy. We believe extending our 
transition policy for 1 additional year will provide hospitals adequate 
time to implement a more accurate cost allocation method for the costs 
of large moveable equipment like CT scan and MRI machines.
    Comment: Some commenters recommended that CMS discontinue the use 
of CT and MRI cost centers for developing CT and MRI CCRs. One 
commenter believed that creating separate CT and MRI cost centers has 
resulted in a decline in geometric means for imaging APCs which can be 
attributed to costs being dropped out and changes in hospital charging 
practices.
    Response: We are not convinced that the change in CT and MRI CCRs 
over the previous years is a result of costs not being reported 
accurately. The standard cost centers for CT scans and MRIs have been 
in effect since cost reporting periods beginning on or after May 1, 
2010, on the revised Medicare cost report Form CMS-2552-10. Therefore, 
the cost reports that we used to develop the CY 2018 OPPS relative 
payment weights were the fifth or sixth opportunity for hospitals to 
submit cost reports with the CT and MRI cost centers. However, we will 
continue to monitor cost reporting practices with respect to CT scan 
and MRI cost centers as well as trends in CT and MRI CCRs.
    After consideration of the public comments we received, we are 
finalizing our proposal to extend our transition policy for 1 
additional year and continue to remove claims from providers that use a 
cost allocation method of ``square feet'' to calculate CT and MRI CCRs 
for the CY 2018 OPPS.
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 2018. 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 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 upon payment of an administrative fee 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 obtaining the ``OPPS Limited Data Set,'' which now 
includes the additional variables previously available only in the OPPS 
Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue 
code payment amounts. This file is derived from the CY 2016 claims that 
were used to calculate the payment rates for the CY 2018 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

[[Page 59230]]

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 2018, in this CY 2018 OPPS/
ASC final rule with comment period, as we proposed, we are continuing 
to use geometric mean costs to calculate the relative weights on which 
the CY 2018 OPPS payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.c. of this final rule with comment period to calculate the costs 
we used to establish the relative payment weights used in calculating 
the OPPS payment rates for CY 2018 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 2018 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.
a. 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.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33571), 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 proposed CY 2018 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 2018 
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 CYs 2014 
through 2017 OPPS/ASC final rules with comment period (78 FR 74861 
through 74910, 79 FR 66798 through 66810, 80 FR 70325 through 70339, 
and 81 FR 79580 through 79585, respectively), 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. In the CY 2018 OPPS/ASC proposed rule (82 FR 33571), 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 would be reflected 
in the overall costs of the C-APCs (and, as a result, in the proposed 
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 also referred readers to Addendum B to the proposed rule (which 
is available via the Internet on the CMS Web site) for the proposed CY 
2018 payment rates for blood and blood products (which are identified 
with status indicator ``R''). For a more detailed discussion of the 
blood-specific CCR methodology, we refer readers to the CY 2005 OPPS 
proposed rule (69 FR 50524 through 50525). For a full history of OPPS 
payment for blood and blood products, we refer readers to the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66807 through 66810).
    We invited public comments on our proposals.
    Comment: Several commenters continued to support using the blood-
specific CCR methodology to establish payment rates for blood and blood 
products, 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. The commenters also supported 
using a blood-specific APC with a separate APC for each blood and blood 
product service code. The commenters viewed the blood-specific CCR 
methodology as the best current methodology to report the costs of 
blood and blood products.
    Response: We appreciate the commenters' support.
    Comment: Several commenters expressed concerns about reduced 
payment for several blood and blood products HCPCS codes, including 
HCPCS codes P9010 (Blood (whole), for transfusion, per unit), P9011 
(Blood, split unit), P9012 (Cryoprecipitate, each

[[Page 59231]]

unit), P9016 (Red blood cells, leukocytes reduced, each unit), P9023 
(Plasma, pooled multiple donor, solvent/detergent treated, frozen, each 
unit), P9035 (Platelets, pheresis, leukocytes reduced, each unit), 
P9043 (Infusion, plasma protein fraction (human), 5%, 50 ml), P9048 
(Infusion, plasma protein fraction (human), 5%, 250 ml), P9055 
(Platelets, leukocytes reduced, cmv-negative, apheresis/pheresis, each 
unit), and P9060 (Fresh frozen plasma, donor retested, each unit). 
Commenters supported the higher payment rates for several HCPCS codes, 
including HCPCS codes P9019 (Platelets, each unit) and P9034 
(Platelets, pheresis, each unit).
    Response: We used claims data from CY 2016 and the same blood-
specific CCR methodology we used in previous years to calculate these 
proposed payment rates and believe the changes in costs for the 
services mentioned by these commenters are a result of normal 
variations in the claims data.
    Comment: Two commenters expressed concern that the proposed payment 
rate for HCPCS code P9070 (Plasma, pooled multiple donor, pathogen 
reduced, frozen, each unit) does not accurately reflect the cost of the 
blood product.
    Response: HCPCS code P9070 was established on January 1, 2016, and 
for CY 2016 and CY 2017, we linked the payment of HCPCS code P9070 to a 
blood product, HCPCS code P9059 (Fresh frozen plasma between 8-24 hours 
of collection, each unit), that we believed would have a comparable 
cost to HCPCS code P9070. CY 2018 is the first year for which we have 
claims data that will allow us to directly determine the cost of HCPCS 
code P9070. In this case, the payment rate for HCPCS code P9070 in CY 
2018 is lower than the CY 2017 payment rate. However, we believe the CY 
2018 payment rate is appropriate because it is based on actual claims 
data for HCPCS code P9070 rather than for HCPCS code P9059.
    Comment: Commenters requested that CMS immediately include the cost 
of newly implemented FDA blood safety measures for blood and blood 
products prior to receiving claims data that would contain the costs 
for the new safety measures.
    Response: As stated earlier in this section, the OPPS covers 
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. The cost of blood and blood products is determined using 
claims data and blood-specific CCRs from hospitals. To the extent that 
compliance with blood safety measures is included in hospital reporting 
of the cost of collecting, processing and storing blood and blood 
products, these costs would be reflected in the hospital rates. It is 
not possible to estimate the potential costs of new safety measures 
outside of claims data.
    Comment: Several commenters resubmitted the comments they made in 
response to a solicitation for public comments in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45617 through 45618) and summarized in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79577) 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 commenters 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 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. The 
safety of the nation's blood supply continues to be among the highest 
priorities, and we will work with the commenters and other stakeholders 
to ensure that any future updates to the HCPCS P-codes will support our 
goal of maintaining the safety of the blood supply.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to establish payment 
rates for blood and blood products using our blood-specific CCR 
methodology. Addendum B to this final rule with comment period (which 
is available via the Internet on the CMS Web site) contains the final 
CY 2018 payment rates for blood and blood products (which are 
identified with status indicator ``R'').
(b) Pathogen-Reduced Platelets and Rapid Bacterial Testing for 
Platelets
    In March 2016, the Food and Drug Administration (FDA) issued draft 
guidance for blood collection establishments and transfusion services 
entitled ``Bacterial Risk Control Strategies for Blood Collection 
Establishments and Transfusion Services to Enhance the Safety and 
Availability of Platelets for Transfusion'' (available at: https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/Blood/UCM425952.pdf). 
This draft guidance recommended, among other things, the use of rapid 
bacterial testing devices secondary to testing using a culture-based 
bacterial detection device or the implementation of 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), we established HCPCS code P9072 (Platelets, pheresis, pathogen 
reduced, each unit). The CMS HCPCS Workgroup later revised HCPCS code 
P9072 to include the use of pathogen-reduction technology or rapid 
bacterial testing. Specifically, the descriptor for this code was 
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).
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33571 and 
33572), after the release of the CY 2017 OPPS/ASC final rule with 
comment period, several blood and blood product stakeholders expressed 
concerns about the revised code descriptor for HCPCS code P9072. The 
stakeholders believed that the revision to HCPCS code P9072 to describe 
both pathogen reduction and rapid bacterial testing was an 
inappropriate code descriptor. They stated that separate coding is 
needed to describe each service because each service is distinct. The 
stakeholders also noted that the code descriptor for

[[Page 59232]]

HCPCS code P9072 results in hospitals receiving the same payment rate 
for platelets undergoing rapid bacterial testing that the hospitals 
receive for platelets treated with pathogen reduction technology, 
despite the fact that pathogen reduction is significantly more 
expensive than rapid bacterial testing.
    After review of the concerns expressed by the blood and blood 
product stakeholders, the CMS HCPCS Workgroup deactivated HCPCS code 
P9072 for Medicare reporting and replaced the code with two new HCPCS 
codes effective July 1, 2017. Specifically, effective July 1, 2017, 
HCPCS code Q9988 (Platelets, pheresis, pathogen reduced, each unit) is 
used to report the use of pathogen-reduction technology and HCPCS code 
Q9987 (Pathogen(s) test for platelets) is used to report rapid 
bacterial testing or other pathogen tests for platelets, instead of 
HCPCS code P9072. We note that HCPCS code Q9987 should be reported to 
describe the test used for the detection of bacterial contamination in 
platelets as well as any other test that may be used to detect pathogen 
contamination. HCPCS code Q9987 should not be used for reporting 
donation testing for infectious agents such as viruses. The coding 
changes associated with these codes were published on the CMS HCPCS 
Quarterly Update Web site, effective July 2017, at: https://www.cms.gov/Medicare/Coding/HCPCSReleaseCodeSets/HCPCS-Quarterly-Update.html. In addition, for OPPS, we announced the new HCPCS codes 
that were effective July 1, 2017 through the July 2017 OPPS quarterly 
update Change Request (Transmittal 3783, Change Request 10122, dated 
May 26, 2017). We note that, effective July 1, 2017, HCPCS code Q9988 
is assigned to APC 9536 (Pathogen Reduced Platelets), with a payment 
rate of $647.12, and HCPCS code Q9987 is assigned to New Technology APC 
1493, with a payment rate of $25.50.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 
through 70323), we reiterated that we calculate 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. Because HCPCS code P9072 was new for CY 2016, there 
were no claims data available on the charges and costs for this blood 
product upon which to apply our blood-specific CCR methodology. 
Therefore, we established an interim payment rates for this HCPCS code 
based on a crosswalk to existing blood product HCPCS code P9037, which 
we believed provided the best proxy for the costs of the new blood 
product. In addition, we stated that once we had claims data for HCPCS 
code P9072, we would calculate its payment rate using the claims data 
that should be available for the code beginning in CY 2018, which is 
our practice for other blood product HCPCS codes for which claims data 
have been available for 2 years.
    We stated in the proposed rule that, although our standard practice 
for new codes involves using claims data to set payment rates once 
claims data become available, we are concerned that there may have been 
confusion among the provider community about the services that HCPCS 
code P9072 described. That is, as early as 2016, there were discussions 
about changing the descriptor for HCPCS code P9072 to include the 
phrase ``or rapid bacterial tested'', which is a much less costly 
technology than pathogen reduction. In addition, as noted above, 
effective January 2017, the code descriptor for HCPCS code P9072 was, 
in fact, changed to also describe rapid bacterial testing of platelets 
and, effective July 1, 2017, the descriptor for the temporary successor 
code for HCPCS code P9072 (that is, HCPCS code Q9988) was changed again 
back to the original descriptor for HCPCS code P9072 that was in place 
for 2016.
    Based on the ongoing discussions involving changes to the original 
HCPCS code P9072 established in CY 2016, we believe that claims for 
pathogen reduced platelets may potentially reflect certain claims for 
rapid bacterial testing of platelets. The geometric mean costs based on 
submitted claims for HCPCS code P9072 based on available claims data 
from CY 2016 is $491.53, which is a 24-percent reduction from the CY 
2017 payment rate of $647.12. Because we believe that there may have 
been confusion related to ongoing discussions about changes to the 
original code descriptor for HCPCS code P9072, we believe it is 
appropriate to continue to crosswalk the payment amount for at least 1 
additional year. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33571 and 33572), we proposed for CY 2018 to determine the payment 
rate for HCPCS code Q9988 (the successor code to HCPCS code P9072) by 
continuing to use the payment rate that has been crosswalked from HCPCS 
code P9037 of $647.12.
    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments 
on the proposed APC and status indicator assignments for HCPCS codes 
Q9987 and Q9988 for the CY 2018 OPPS update. The proposed payment rates 
for HCPCS codes Q9987 and Q9988 were included in Addendum B to the 
proposed rule (which is available via the Internet on the CMS Web 
site).
    Comment: Commenters expressed their appreciation to CMS for working 
collaboratively with the American Red Cross and other stakeholders in 
the blood banking community to respond to their concerns about HCPCS 
code P9072. The commenters supported the actions of CMS to deactivate 
HCPCS code P9072 and replace it with HCPCS codes Q9987 and Q9988 to 
have coding options that more accurately reflect available 
technologies. The commenters also appreciated that separate payment for 
each code was established in the OPPS and is proposed to continue in CY 
2018.
    Response: We appreciate the support for our actions in CY 2017 and 
our proposal for CY 2018.
    Comment: One commenter requested that the description of HCPCS code 
Q9987 (Pathogen(s) test for platelets) be modified by adding the word 
``secondary'' to clarify in the procedure code descriptor that HCPCS 
code Q9987 is intended to be used for secondary bacterial testing of 
platelets.
    Response: We believe the guidance we have provided through the CY 
2018 proposed rule (82 FR 33571 and 33572) and associated subregulatory 
guidance (Pub. 100-04 Medicare Claims Processing, Transmittal 3783, 
Change Request 10122) are sufficient for providers to understand how to 
appropriately report HCPCS code Q9987. We do not agree with the 
suggestion to modify the descriptor of HCPCS code Q9987, as we want the 
code to have the flexibility to be used to report new tests that may be 
developed in the future that are designed to identify pathogen 
contamination of platelets.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 proposal for reporting pathogen-reduced 
platelets and rapid bacterial testing for platelets. The only changes 
are to replace HCPCS code Q9987 (Pathogen(s) test for platelets) with 
HCPCS code P9100 (Pathogen(s) test for platelets) and to replace HCPCS 
code Q9988 (Platelets, pheresis, pathogen-reduced, each unit) with 
HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each unit). 
Details of the replacement of HCPCS codes Q9987 and Q9988 with HCPCS 
codes P9100 and P9073, respectively, are found in Table 4 below. The 
final payment rates for HCPCS codes P9100 and P9073 can be found in 
Addendum B to this final rule with comment period

[[Page 59233]]

(which is available via the Internet on the CMS Web site).

                Table 4--Replacement Codes for HCPCS Codes Q9987 and Q9988 as of January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY  2018  Final CY  2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
Q9987....................  P9100                     Pathogen(s) test for                     S             1493
                                                      platelets.
Q9988....................  P9073                     Platelets, pheresis,                     R             9536
                                                      pathogen-reduced, each
                                                      unit.
----------------------------------------------------------------------------------------------------------------

(2) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 through 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges adjusted to cost, also would provide 
hospitals with incentives for efficiency in the provision of 
brachytherapy services to Medicare beneficiaries. Moreover, this 
approach is consistent with our payment methodology for the vast 
majority of items and services paid under the OPPS. We refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33572), for CY 2018, 
we proposed to use the costs derived from CY 2016 claims data to set 
the proposed CY 2018 payment rates for brachytherapy sources because CY 
2016 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 2018 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). 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 2018 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''. For CY 2018, we proposed to assign status indicator ``E2'' 
(Items and Services for Which Pricing Information and Claims Data Are 
Not Available) to HCPCS code C2645 (Brachytherapy planar, palladium-
103, per square millimeter) because this code was not reported on CY 
2016 claims. Therefore, we are unable to calculate a proposed payment 
rate based on the general OPPS ratesetting methodology described 
earlier. Although HCPCS code C2645 became effective January 1, 2016, 
and although we would expect that if a hospital furnished a 
brachytherapy source described by this code in CY 2016, HCPCS code 
C2645 should appear on the CY 2016 claims, there were no CY 2016 claims 
reporting this code available for the proposed rule. In addition, 
unlike our policy for new brachytherapy sources HCPCS codes, we did not 
consider external data to determine a proposed payment rate for HCPCS 
code C2645 for CY 2018. Therefore, we proposed to assign status 
indicator ``E2'' to HCPCS code C2645.
    In addition, we assigned status indicator ``E2'' to HCPCS code 
C2644 (Brachytherapy, cesium-131 chloride, per square millimeter) 
because this code was not reported on any CY 2015 claims (that is, 
there were no Medicare claims submitted by any hospitals in 2015 that 
reported this HCPCS code). In our review of CY 2016 claims (which are 
used to set rates for CY 2018), we found that one hospital submitted 
one claim reporting HCPCS code C2644. Therefore, we proposed to assign 
status indicator ``U'' to HCPCS code C2644.
    We invited public comments on our proposals.
    Comment: One commenter suggested that CMS set the CY 2018 APC 
payment rate for HCPCS code C2636 (Brachytherapy linear, non-stranded, 
palladium-103, per 1mm) at $26.99 per millimeter.
    Response: As noted in past rulemaking cycles and in the CY 2018 
OPPS/ASC proposed rule (82 FR 33572), we believe that adopting the 
general OPPS prospective payment methodology for brachytherapy sources 
is consistent with our payment methodology for the vast majority of 
items and services paid under the OPPS. Further, while we 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

[[Page 59234]]

relevant information regarding the expected costs of the sources to 
hospitals, HCPCS code C2636 is neither new nor lacks claim information. 
HCPCS code C2636 became effective July 1, 2007. The final CY 2018 APC 
payment rate for HCPCS code C2636 is $27.08 based on data for the 8 
claims we received for the CY 2018 OPPS standard ratesetting process 
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).
    Comment: Some commenters suggested that HCPCS code C2645 
(Brachytherapy, planar, palladium-103) had been incorrectly assigned 
status indicator ``E2'' (Items and Services for Which Pricing 
Information and Claims Data Are Not Available). These commenters stated 
that CMS has considered external data and other relevant information 
where no claims data exist for new HCPCS codes for new brachytherapy 
sources. For example, commenters included the following excerpt from 
the CY 2008 OPPS/ASC final rule with comment period regarding CMS' 
policy with respect to establishing a payment rate for HCPCS code C2637 
(Brachytherapy non-stranded, ytterbium-169, per source) for which CMS 
lacked claims data: ``if in public comments to the proposed rule or 
later in CYs 2007 or 2008, we would receive relevant and reliable 
information on the hospital cost for ytterbium-169 and information that 
this source is being marketed, we could establish a prospective payment 
rate for the source in the CY 2008 final rule with comment period or in 
a quarterly OPPS update, respectively'' (72 FR 66786).
    In addition, commenters noted that, for CY 2016 and CY 2017, HCPCS 
code C2645 was assigned an OPPS status indicator of ``U'' 
(Brachytherapy Sources, Paid under OPPS; separate APC payment) and a 
payment rate of $4.69 per mm\2\ and that the payment rate was based 
upon external pricing data previously supplied by the developer of the 
brachytherapy source described by HCPCS code C2645. The developer of 
the brachytherapy source noted that there were no outpatient claims 
from CY 2016 for HCPCS code C2645 because all of the cases in CY 2016 
that used the brachytherapy source were inpatient cases. However, the 
commenter noted its expectation that such source would begin to be used 
in the hospital outpatient department setting beginning approximately 
in mid-2018. This commenter noted that the ``E2'' status indicator 
would effectively render the outpatient payment rate as $0 for CY 2018. 
The commenter supplied external invoices to support maintaining the 
current payment rate of $4.69 per mm\2\.
    Response: We note that the CY 2008 final rule with comment period 
preamble language that the commenters referenced to support their 
argument that external data have been used in the past was in reference 
to a brachytherapy source for which there appeared to have been 
erroneous claims submitted since the claims were from 2006, but the 
brachytherapy source did not come to market until 2007. This is 
distinguishable from the situation with HCPCS code C2645 which has been 
on the market since August 29, 2014 and had a code effective date of 
January 1, 2016. Nonetheless, as the commenters noted, there are no 
Medicare claims data available at this time. While this brachytherapy 
source is no longer ``new,'' the absence of even a single Medicare 
claim in the outpatient hospital data leads us to agree with the 
commenter that using an external source of data would be appropriate at 
this time. Accordingly, for CY 2018, we are assigning status indicator 
``U'' to HCPCS code C2645 and are using external data (invoice prices) 
and other relevant information to establish the APC payment rate for 
HCPCS code C2645. Specifically, we are setting the payment rate at 
$4.69 per mm\2\, the same rate that was in effect for CYs 2016 and 
2017.
    After consideration of the public comments we received, we are 
finalizing our proposal to assign status indicator ``U'' to HCPCS code 
C2636 (Brachytherapy linear, non-stranded, palladium-103, per 1mm) and 
assigning an APC payment rate for HCPCS code C2636 at $27.08 based on 
the 8 claims we received for the CY 2018 OPPS standard ratesetting 
process. We also are finalizing our proposal to assign status indicator 
``U'' to HCPCS code C2644 (Brachytherapy, cesium-131 chloride, per 
millicurie) and are modifying our proposal to assign status indicator 
``E2'' to HCPCS code C2645 (Brachytherapy planar, palladium-103, per 
square millimeter) and instead adopting a status indicator of ``U'' for 
CY 2018. The final CY 2018 payment rates for brachytherapy sources can 
be found 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.
b. Comprehensive APCs (C-APCs) for CY 2018
(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 and added one additional 
level to both the Orthopedic Surgery and Vascular Procedures clinical 
families. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584 through 79585), we finalized another 25 C-APCs.
    Under this policy, we designate 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

[[Page 59235]]

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 under the OPPS 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 payment 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 to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2''. Specifically, we make a payment through C-APC 
8011 for a claim that:
     Does not contain a procedure described by a HCPCS code to 
which we have assigned 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;
     Contains 8 or more units of services described by HCPCS 
code G0378 (Observation services, per hour);
     Contains services provided on the same date of service or 
1 day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
referral of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); CPT code 99284 
(Emergency department visit for the evaluation and management of a 
patient (Level 4)); CPT code 99285 (Emergency department visit for the 
evaluation and management of a patient (Level 5)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1''.
    The assignment of status indicator ``J2'' to a specific combination 
of services performed in combination with each other allows for all 
other OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
provided during the delivery of the comprehensive service, include 
diagnostic procedures, laboratory tests, and other diagnostic tests and 
treatments that assist in the delivery of the primary procedure; visits 
and evaluations performed in association with the procedure; uncoded 
services and supplies used during the service; durable medical 
equipment as well as prosthetic and orthotic items and supplies when 
provided as part of the outpatient service; and any other components 
reported by HCPCS codes that represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services and delivered either by therapists 
or nontherapists is included as part of the payment for the packaged 
complete comprehensive service. These services that are provided during 
the perioperative period are adjunctive services and are deemed not to 
be 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 hospital outpatient department services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is included in the payment for the packaged complete comprehensive 
service. We note that these services, even though they are reported 
with therapy codes, are hospital 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

[[Page 59236]]

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). Line 
item charges for services included on the C-APC claim are converted to 
line item costs, which are then summed to develop the estimated APC 
costs. These claims are then assigned one unit of the service with 
status indicator ``J1'' and later used to develop the geometric mean 
costs for the C-APC relative payment weights. (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, 
which exclude 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 its 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 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 paired ``J1'' service 
code combinations or paired 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 apply this type of complexity adjustment when the paired 
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).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment 
eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    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 there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) 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 claim including 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 claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 
33575), 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 for the primary ``J1'' service. 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 (based on meeting the criteria outlined above), 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 
to the next higher cost C-APC within the same clinical family of C-
APCs. As previously stated, we package payment for add-on codes into 
the C-APC

[[Page 59237]]

payment rate. If any add-on code reported in conjunction with the 
``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and is not reassigned to the 
next higher cost C-APC. We listed the complexity adjustments proposed 
for ``J1'' and add-on code combinations for CY 2018, 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).
    Addendum J to the proposed rule included the 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 paired code combinations that describe a complex code combination 
that would qualify for a complexity adjustment and were 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 were 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), included all paired code combinations that were 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 claims with each of the 
paired code combinations eligible for a complexity adjustment.
    Comment: Several commenters requested exceptions to the current 
complexity adjustment criteria of 25 or more claims reporting the code 
combination (frequency) and a violation of the 2 times rule in the 
originating C-APC (cost) to allow claims with code combinations that do 
not currently meet these criteria to be paid at the next higher paying 
C-APC. The C-APC complexity adjustments requested by the commenters are 
listed in Table 5 below. We did not propose for claims with these code 
combinations to receive complexity adjustments because they failed to 
meet either the cost or frequency criteria.

                        Table 5--C-APC Complexity Adjustments Requested by the Commenters
----------------------------------------------------------------------------------------------------------------
                                                                                                     Requested
                                                                                    Primary APC     complexity
         Primary ``J1'' HCPCS code               Secondary ``J1'' HCPCS code        assignment     adjusted APC
                                                                                                    assignment
----------------------------------------------------------------------------------------------------------------
20983 (Ablation therapy for reduction or     22513 (Percutaneous vertebral                  5114            5115
 eradication of 1 or more bone tumors         augmentation, including cavity
 (e.g., metastasis including adjacent soft    creation (fracture reduction and
 tissue when involved by tumor extension,     bone biopsy included when
 percutaneous, including imaging guidance     performed) using mechanical device
 when performed; radio frequency)).           (e.g., kyphoplasty), 1 vertebral
                                              body, unilateral or bilateral
                                              cannulation, inclusive of all
                                              imaging guidance; thoracic).
20983 (Ablation therapy for reduction or     22514 (Percutaneous vertebral                  5114            5115
 eradication of 1 or more bone tumors         augmentation, including cavity
 (e.g., metastasis including adjacent soft    creation (fracture reduction and
 tissue when involved by tumor extension,     bone biopsy included when
 percutaneous, including imaging guidance     performed) using mechanical device
 when performed; radio frequency)).           (e.g., kyphoplasty), 1 vertebral
                                              body, unilateral or bilateral
                                              cannulation, inclusive of all
                                              imaging guidance; lumbar).
28297 (Correction, hallux valgus             28285 (Correction, hammertoe (e.g.,            5114            5115
 (bunionectomy), with sesamoidectomy, when    interphalangeal fusion, partial or
 performed; with first metatarsal and         total phalangectomy)).
 medial cuneiform joint with arthrodesis,
 any method).
28297 (Correction, hallux valgus             28292 (Correction, hallux valgus               5114            5115
 (bunionectomy), with sesamoidectomy, when    (bunionectomy), with
 performed; with first metatarsal and         sesamoidectomy, when performed;
 medial cuneiform joint with arthrodesis,     with resection of proximal phalanx
 any method).                                 base, when performed, any method).
28740 (Arthrodesis, midtarsal or             28285 (Correction, hammertoe (e.g.,            5114            5115
 tarsometatarsal, single joint).              interphalangeal fusion, partial or
                                              total phalangectomy)).
61885 (Insertion or replacement of cranial   61885 (Insertion or replacement of             5463            5464
 nuerostimulator pulse generator or           cranial nuerostimulator pulse
 receiver, direct or inductive coupling;      generator or receiver, direct or
 with connection to a single electrode        inductive coupling; with
 array).                                      connection to a single electrode
                                              array).
28740 (Arthrodesis, midtarsal or             28292 (Correction, hallux valgus               5114            5115
 tarsometatarsal, single joint).              (bunionectomy), with
                                              sesamoidectomy, when performed;
                                              with resection of proximal phalanx
                                              base, when performed, any method).
52234 (Cystourethroscopy, with biopsy(s))..  C9738 * (Adjunctive blue light                 5374            5375
                                              cystoscopy with fluorescent
                                              imaging agent (List separately in
                                              addition to code for primary
                                              procedure)).
52235 (Cystourethroscopy, with fulguration   C9738 * (Adjunctive blue light                 5374            5375
 (including cryosurgery or laser surgery)     cystoscopy with fluorescent
 of trigone, bladder neck, prostatic fossa,   imaging agent (List separately in
 urethra, or periurethral glands).            addition to code for primary
                                              procedure)).
52240 (Cystourethroscopy with fulgration     C9738 * (Adjunctive blue light                 5375            5376
 (including cryosurgery or laser surgery)     cystoscopy with fluorescent
 or treatment of MINOR (less than 0.5 cm)     imaging agent (List separately in
 lesion(s) with or without biopsy).           addition to code for primary
                                              procedure)).
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9738 was identified in the proposed rule as HCPCS code C97XX.


[[Page 59238]]

    Other commenters requested various changes to the complexity 
adjustment criteria. One commenter requested that CMS amend the current 
cost criterion for a complexity adjustment to allow for code 
combinations that have qualified for a complexity adjustment in the 
previous year to qualify for a complexity adjustment for the subsequent 
year if the code combination is within 5 percent of the cost criterion 
for the subsequent year. Another commenter requested that CMS eliminate 
the criterion that the code combination must create a violation of the 
2 times rule in the originating C-APC in order to qualify for a 
complexity adjustment.
    Some commenters recommended that CMS create a complexity adjustment 
for endoscopic sinus surgery claims that include a drug or device code 
(C-code or a J-code), or more than two ``J1'' procedures. Other 
commenters requested that CMS revise its complexity adjustment 
methodology to account for the higher costs that essential hospitals 
incur when performing complex procedures and treating sicker patients.
    Response: We appreciate these comments. However, at this time, we 
do not believe changes to the C-APC complexity adjustment criteria are 
necessary or that we should make exceptions to the criteria to allow 
claims with the code combinations suggested by the commenters to 
receive complexity adjustments. As stated previously (81 FR 79582), 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, are 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 or eliminating this threshold 
could remove so many claims from the accounting for the primary ``J1'' 
service that the geometric mean costs attributed to the primary 
procedure could be skewed.
    Regarding the request for a code combination that qualified 
previously for a complexity adjustment to qualify for the subsequent 
year if the code combination is within 5 percent of the cost criterion 
for the subsequent year, we evaluate code combinations each year 
against our complexity adjustment criteria using the latest available 
data. We do not believe it is necessary to expand the ability for code 
combinations to meet the cost criterion in this manner.
    We also do not believe that it is necessary to adjust the 
complexity adjustment criteria to allow claims that include a drug or 
device code, more than two ``J1'' procedures, or procedures performed 
at certain hospitals to qualify for a complexity adjustment. As 
mentioned earlier, we believe the current criteria are adequate to 
determine if a combination of procedures represents a complex, costly 
subset of the primary service.
    Comment: Some commenters noted that there were certain code 
combinations that met the complexity adjustment criteria that were not 
included in Addendum J of the CY 2018 OPPS/ASC proposed rule. 
Specifically, commenters noted that the combinations of procedures 
described by the following codes were not included in Addendum J:
     CPT code 22510 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; cervicothoracic) and CPT 
code 22512 (Percutaneous vertebroplasty (bone biopsy included when 
performed), 1 vertebral body, unilateral or bilateral injection, 
inclusive of all imaging guidance; each additional cervicothoracic or 
lumbosacral vertebral body) for multi-level vertebroplasty in the 
cervicothoracic region);
     CPT code 22511 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; lumbosacral) and CPT code 
22512 (Percutaneous vertebroplasty (bone biopsy included when 
performed), 1 vertebral body, unilateral or bilateral injection, 
inclusive of all imaging guidance; each additional cervicothoracic or 
lumbosacral vertebral body); and
     CPT code 22511 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; lumbosacral) and CPT code 
20982 (Ablation therapy for reduction or 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; radiofrequency).
    Response: These code combinations were inadvertently excluded from 
Addendum J to the CY 2018 OPPS/ASC proposed rule. These code 
combinations and all other code combinations that qualify for 
complexity adjustments are included in Addendum J to this final rule 
with comment period.
    Comment: One commenter stated that CMS should have included the 
following add-on CPT codes in the complexity adjustment evaluation:
     CPT code 92978 (Endoluminal imaging of coronary vessel or 
graft using intravascular ultrasound (IVUS) or optical coherence 
tomography (OCT) during diagnostic evaluation and/or therapeutic 
intervention including imaging supervision, interpretation and report; 
initial vessel (List separately in addition to code for primary 
procedure);
     CPT code 92979 (Endoluminal imaging of coronary vessel or 
graft using intravascular ultrasound (IVUS) or optical coherence 
tomography (OCT) during diagnostic evaluation and/or therapeutic 
intervention including imaging supervision, interpretation and report; 
each additional vessel (List separately in addition to code for primary 
procedure));
     CPT code 93571 (Intravascular Doppler velocity and/or 
pressure derived coronary flow reserve measurement (coronary vessel or 
graft) during coronary angiography including pharmacologically induced 
stress; initial vessel (List separately in addition to code for primary 
procedure)); and
     CPT code 93572 ((Intravascular Doppler velocity and/or 
pressure derived coronary flow reserve measurement (coronary vessel or 
graft) during coronary angiography including pharmacologically induced 
stress; each additional vessel (List separately in addition to code for 
primary procedure)) in the complexity adjustment evaluation.
    Response: We note that CPT codes 92978 and 93571 were both included 
in the complexity adjustment evaluation in Addendum J to the CY 2018 
OPPS/ASC proposed rule. However, CPT codes

[[Page 59239]]

92979 and 93572 are not add-on codes to primary ``J1'' services. As 
stated in the CY 2018 OPPS/ASC proposed rule, to determine the code 
combinations that qualify for complexity adjustments, we apply the 
established frequency and cost criteria thresholds and tests 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 for 
the primary ``J1'' service (82 FR 33575). Accordingly, because CPT 
codes 92979 and 93572 are not add-on codes for any primary ``J1'' 
services, it would not have been appropriate to include them in our 
complexity adjustment evaluation.
    After consideration of the public comments we received, we are 
applying the complexity adjustment criteria as proposed. The finalized 
complexity adjustments for CY 2018 can be found in Addendum J to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).
(2) C-APCs for CY 2018
    For CY 2018 and subsequent years, in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33576), we proposed to continue to apply the C-APC payment 
policy methodology made effective in CY 2015 and updated with the 
implementation of status indicator ``J2'' in CY 2016. A discussion of 
the C-APC payment policy methodology can be found at 81 FR 79583.
    As a result of our annual review of the services and APC 
assignments under the OPPS, we did not propose any additional C-APCs to 
be paid under the existing C-APC payment policy beginning in CY 2018. 
Table 4 of the proposed rule listed the proposed C-APCs for CY 2018, 
all of which were established in past rules. All C-APCs were displayed 
in Addendum J to the proposed rule (which is available via the Internet 
on the CMS Web site). Addendum J to the proposed rule 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: Several commenters supported the proposed C-APCs for CY 
2018.
    Response: We appreciate the commenters' support.
    Comment: Several commenters noted that CPT code 67027 (Implantation 
of intravitreal drug delivery system (e.g., ganciclovir implant), 
includes concomitant removal of vitreous) is assigned to a single-
procedure C-APC (C-APC 5494 (Level 4 Intraocular Procedures)) with 
status indicator ``J1''. The commenters stated that the C-APC policy 
packages payment for adjunctive services into the payment for the 
primary ``J1'' procedure at the claim level, and that when the drug 
Retisert (described by HCPCS code J7311) is included on the claim with 
CPT code 62707, payment for the drug is packaged into the C-APC 
payment. The commenters noted that the costs of claims for the 
procedure, including the drug (approximately $18,433), were more than 
twice the proposed CY 2018 geometric mean cost for C-APC 5494 
(approximately $9,134) and that, as such, this represents a violation 
of the 2 times rule. The commenters suggested that CMS address this 
issue by either separately paying for Retisert (described by HCPCS code 
J7311) or creating a unique APC for procedures with which HCPCS code 
J7311 may be billed.
    Response: As stated in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79612), section 1833(t)(2) of the Act provides that 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 APC group is more than 2 times greater than the lowest 
cost for an item or service within the same APC group (the 2 times 
rule). In accordance with section 1833(t)(2) of the Act and Sec.  
419.31 of the regulations, we annually review the items and services 
within an APC group to determine 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.
    It is the cost of the primary item or service that drives 
assignment to an APC group. In this case, the primary service is 
described by CPT code 67027, which is the only CPT code assigned to C-
APC 5494 (Level 4 Intraocular Procedures). The costs of drugs or other 
packaged ancillary items or services that may be used with a primary 
service are packaged into the costs of the primary service and are not 
separately paid. In this case, because CPT code 67027 is assigned to a 
C-APC, the costs of drugs, such as Retisert, and any other items or 
services that are billed with the ``J1'' service are packaged into the 
geometric mean cost for HCPCS code 67027 and are bundled into the C-APC 
payment. The geometric mean cost is based on reported costs for all 
hospitals paid under the OPPS; to the extent that Retisert or other 
items are billed with the primary service, those costs are also 
reflected in the cost of the primary service. Therefore, because the 
cost of the Retisert drug is packaged into the cost of CPT code 67027, 
assignment of HCPCS code 67027 to C-APC 5494 does not create a 2 times 
rule violation.
    In addition, with regard to the packaging of the drug Retisert 
based on the C-APC policy, as stated in previous rules (78 FR 74868 
through 74869 and 74909 and 79 FR 66800), items included in the 
packaged payment provided with the primary ``J1'' service 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. Therefore, we believe that HCPCS 
code J3711 is appropriately packaged, and we are not providing separate 
payment for the drug.
    Comment: One commenter suggested that APC 5491 (Level 1 Intraocular 
Procedures) no longer be labeled a C-APC and instead be considered a 
traditional APC. The commenter noted that there was little cost 
difference for APC 5491 if it is considered a C-APC or a traditional 
APC and that no specific justification was given for making APC 5491 a 
C-APC. The commenter suggested that only higher level Intraocular 
Procedure APCs have enough complexity to suggest that they should be 
classified as C-APCs.
    Response: We continue to believe that the procedures assigned to C-
APC 5491 are appropriately paid through a comprehensive APC. As stated 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584), 
procedures assigned to C-APCs are primary services (mostly major 
surgical procedures) that are typically the focus of the hospital 
outpatient stay. Therefore, we believe that these procedures are 
appropriately assigned to a C-APC.
    Comment: One commenter expressed concern that the proposal to 
continue to assign status indicator ``J2'' to CPT code 99291 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; first 30-74 minutes) and to assign it to C-APC 8011 
(Comprehensive Observation Services) when certain criteria are met 
would have negative effects on critical care (CPT codes 99291 and 99292 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; each additional 30 minutes)) provided in 
the intensive care unit ICU). Specifically, the commenter was concerned 
that the proposal would impact payment for tests that were ordered and 
furnished in the emergency room when they are appropriately repeated in 
the ICU and urged CMS to

[[Page 59240]]

move with caution, and provide transparency and impact tables for 
hospitals, in continuing C-APC 8011.
    Response: We appreciate this comment and will continue to monitor 
the impact of this C-APC on critical care services. We note that in 
situations where a patient receives critical care services in the 
hospital outpatient setting and is subsequently transferred to the ICU 
as part of an appropriate hospital inpatient admission, payment for the 
services furnished in the hospital outpatient setting, including 
critical care services, may be bundled into the Part A hospital 
inpatient claim via the ``Payment Window for Outpatient Services 
Treated as Inpatient Services (also known as the 3-day payment rule), 
when certain criteria are met. In addition, when a patient receiving 
critical care services in the hospital outpatient setting is 
transferred to the ICU but is not admitted to the hospital as an 
inpatient, payment for all eligible services is made through C-APC 
8011, when certain criteria are met. We also note that CPT code 99292 
is an add-on code which is packaged under the OPPS and is not one of 
the codes eligible to trigger payment through C-APC 8011.
    After consideration of the public comments we received, we are 
finalizing the proposed C-APCs for CY 2018. Table 6 below lists the 
final C-APCs for CY 2018, all of which were established in past rules. 
All C-APCs are displayed 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 all of 
the data related to the C-APC payment policy methodology, including the 
list of complexity adjustments and other information for CY 2018.

                         Table 6--CY 2018 C-APCs
------------------------------------------------------------------------
         C-APC              CY 2018 APC title         Clinical  family
------------------------------------------------------------------------
5072..................  Level 2 Excision/Biopsy/   EBIDX
                         Incision and Drainage.
5073..................  Level 3 Excision/Biopsy/   EBIDX
                         Incision and Drainage.
5091..................  Level 1 Breast/Lymphatic   BREAS
                         Surgery and Related
                         Procedures.
5092..................  Level 2 Breast/Lymphatic   BREAS
                         Surgery and Related
                         Procedures.
5093..................  Level 3 Breast/Lymphatic   BREAS
                         Surgery & Related
                         Procedures.
5094..................  Level 4 Breast/Lymphatic   BREAS
                         Surgery & Related
                         Procedures.
5112..................  Level 2 Musculoskeletal    ORTHO
                         Procedures.
5113..................  Level 3 Musculoskeletal    ORTHO
                         Procedures.
5114..................  Level 4 Musculoskeletal    ORTHO
                         Procedures.
5115..................  Level 5 Musculoskeletal    ORTHO
                         Procedures.
5116..................  Level 6 Musculoskeletal    ORTHO
                         Procedures.
5153..................  Level 3 Airway Endoscopy.  AENDO
5154..................  Level 4 Airway Endoscopy.  AENDO
5155..................  Level 5 Airway Endoscopy.  AENDO
5164..................  Level 4 ENT Procedures...  ENTXX
5165..................  Level 5 ENT Procedures...  ENTXX
5166..................  Cochlear Implant           COCHL
                         Procedure.
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                    EPHYS
                         Electrophysiologic
                         Procedures.
5212..................  Level 2                    EPHYS
                         Electrophysiologic
                         Procedures.
5213..................  Level 3                    EPHYS
                         Electrophysiologic
                         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           GIXXX
                         Procedures.
5303..................  Level 3 Upper GI           GIXXX
                         Procedures.
5313..................  Level 3 Lower GI           GIXXX
                         Procedures.
5331..................  Complex GI Procedures....  GIXXX
5341..................  Abdominal/Peritoneal/      GIXXX
                         Biliary 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.

[[Page 59241]]

 
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,       EXEYE
                         Repair, and Plastic Eye
                         Procedures.
5504..................  Level 4 Extraocular,       EXEYE
                         Repair, 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.
------------------------------------------------------------------------
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.

(3) Brachytherapy Insertion Procedures
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584), we finalized 25 new C-APCs. Some of the HCPCS codes assigned to 
the C-APCs established for CY 2017 described surgical procedures for 
inserting brachytherapy catheters/needles and other related 
brachytherapy procedures such as the insertion of tandem and/or ovoids 
and the insertion of Heyman capsules. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79583), we stated that we received 
public comments which noted that claims that included several insertion 
codes for brachytherapy devices often did not also contain a 
brachytherapy treatment delivery code (CPT codes 77750 through 77799). 
The brachytherapy insertion codes that commenters asserted were not 
often billed with a brachytherapy treatment code included the 
following:
     CPT code 57155 (Insertion of uterine tandem and/or vaginal 
ovoids for clinical brachytherapy);
     CPT code 20555 (Placement of needles or catheters into 
muscle and/or soft tissue for subsequent interstitial radioelement 
application (at the time of or subsequent to the procedure));
     CPT code 31643 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; with placement of catheter(s) 
for intracavitary radioelement application);
     CPT code 41019 (Placement of needles, catheters, or other 
device(s) into the head and/or neck region (percutaneous, transoral, or 
transnasal) for subsequent interstitial radioelement application);
     CPT code 43241 (Esophagogastroduodenoscopy, flexible, 
transoral; with insertion of intraluminal tube catheter);
     CPT code 55920 (Placement of needles or catheters into 
pelvic organs and/or genitalia (except prostate) for subsequent 
interstitial radioelement application); and
     CPT code 58346 (Insertion of Heyman capsules for clinical 
brachytherapy).
    The commenters concluded that brachytherapy delivery charges are 
being underrepresented in ratesetting under the C-APC methodology 
because a correctly coded claim should typically include an insertion 
and treatment delivery code combination. The commenters stated that the 
insertion procedure and brachytherapy treatment delivery generally 
occur on the same day or within the same week and therefore the 
services should appear on a claim together. In the CY 2017 OPPS/ASC 
final rule with comment period, we indicated that we would not exclude 
claims from the CY 2017 ratesetting calculation because we generally do 
not remove claims from the claims accounting when stakeholders believe 
that hospitals included incorrect information on some claims (81 FR 
79583). However, we stated that we would examine the claims for the 
brachytherapy insertion codes in question and determine if any future 
adjustment to the methodology (or possibly code edits) would be 
appropriate.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33577 
through 33578), we analyzed the claims that include brachytherapy 
insertion codes assigned to status indicator ``J1'' and that received 
payment through a C-APC, and we determined that several of these codes 
are frequently billed without an associated brachytherapy treatment 
code. As mentioned above, stakeholders have expressed concerns that 
using claims for ratesetting for brachytherapy insertion procedures 
that do not also include a brachytherapy treatment code may not capture 
all of the costs associated with the insertion procedure. To address 
this issue and base payment on claims for the most common clinical 
scenario, for CY 2018 and subsequent years, we indicated in the CY 2018 
OPPS/ASC proposed rule (82 FR 33578) that we were establishing a code 
edit that requires a brachytherapy treatment code when a brachytherapy 
insertion code is billed.
    As noted in section II.A.2.c. of the proposed rule and this final 
rule with comment period, we also proposed to delete composite APC 8001 
(LDR Prostate Brachytherapy Composite) and assign HCPCS code 55875 
(Transperineal placement of needles or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) to 
status indicator ``J1'' and to provide payment for this procedure 
through the C-APC payment methodology, similar to the payment 
methodology for other surgical insertion procedures related to 
brachytherapy. Specifically, when HCPCS code 55875 is the primary 
service reported on a hospital outpatient claim, we proposed to package 
payments for all adjunctive services reported on the claim into the 
payment for HCPCS code 55875. We proposed to assign HCPCS code 55875 to 
C-APC 5375 (Level 5 Urology and Related Services). The code edit for 
claims with brachytherapy services described above that will be 
effective January 1, 2018, will require the brachytherapy application 
HCPCS code 77778 (Interstitial radiation source application; complex) 
to be included on the claim with the brachytherapy insertion procedure 
(HCPCS code 55875).
    Comment: Several commenters opposed the implementation of a code

[[Page 59242]]

edit that requires a brachytherapy treatment code when a brachytherapy 
insertion code is billed. These commenters noted that, in some cases, 
the insertion procedure and the brachytherapy treatment are performed 
on different days and reported on separate claims. The commenters also 
noted that the brachytherapy insertion procedure and radiation 
treatment delivery are not always performed in the same facility, in 
which case they would be on different claims. The commenters stated 
that this practice pattern is especially common in the treatment of 
breast cancer and related breast brachytherapy catheter codes.
    Response: We appreciate the commenters' views. We intended to 
address the concerns raised by commenters in CY 2017 rulemaking 
regarding ratesetting for C-APCs for brachytherapy insertion procedures 
by establishing a code edit to require a brachytherapy treatment code 
when a brachytherapy insertion code is billed. This was largely based 
on information received from commenters last year, in which commenters 
had suggested that brachytherapy insertion procedures and brachytherapy 
radiation treatment are often performed on the same day or within the 
same week and are often billed on the same claim. However, based on 
comments received in response to the code edit, it appears that there 
may be some clinical scenarios where that is not the case. Accordingly, 
in light of the numerous comments opposing this code edit and the 
information provided by commenters that suggests that brachytherapy 
insertion and treatment services may be appropriately furnished on 
different dates and different claims, we have decided not to implement 
an edit which would require a brachytherapy treatment code when a 
brachytherapy insertion code is billed. As we have previously stated, 
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). We 
will continue to examine the issues involving ratesetting for 
brachytherapy insertion procedures assigned to C-APCs and welcome the 
public's input regarding alternative payment policies that could 
appropriately address the issue while maintaining the C-APC policy.
    Comment: Some commenters requested that CMS discontinue the C-APC 
payment policy for all brachytherapy insertion codes identified in the 
CY 2018 OPPS/ASC proposed rule. These commenters expressed concerns 
that hospital billing practices for radiation oncology services are 
variable and inconsistent with the C-APC policy which packages services 
at the claim level. The commenters stated that, in some cases, needles 
or catheters are surgically placed prior to the brachytherapy treatment 
delivery, which consists of multiple fractions over several days or 
weeks and may be delivered at a different site of service. The 
commenters also requested that CMS continue the composite APC for Low 
Dose Rate Brachytherapy instead of assigning CPT code 55875 
(Transperineal placement of needles or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) to a 
C-APC (Level 5 Urology and Related Services). The commenters stated 
that CPT codes 55920 and 19298 should be assigned to a different C-APC 
if CMS maintained the C-APC payment policy for brachytherapy insertion 
procedures in CY 2018.
    Response: We continue to believe that the C-APC payment policy is 
appropriately applied to brachytherapy insertion procedures, including 
the procedure described by CPT code 55875. These procedures, like other 
procedures assigned to C-APCs, are primary services (mostly major 
surgical procedures) that are typically the focus of the hospital 
outpatient stay. As mentioned previously, we welcome input on 
alternative payment policies to address concerns surrounding the 
variation in hospital billing practices for radiation oncology while 
maintaining the C-APC policy, and we will continue to monitor this 
issue. The APC assignments for CPT codes 55920 and 19298 are discussed 
in greater detail in section XII.D.2. of this final rule with comment 
period.
    Comment: Some commenters requested that CMS continue to provide 
payment for the brachytherapy insertion procedures through the C-APC 
policy, but exclude all radiation oncology codes on the claim (defined 
as CPT codes 77261 through 77799) and make separate payment for the 
brachytherapy treatment delivery and related planning and preparation 
services in addition to the C-APC payment for the brachytherapy 
insertion procedures. These commenters stated that this was similar to 
the C-APC policy for stereotactic radiosurgery (SRS) treatment.
    Response: The policy intent of C-APCs is to bundle payment for all 
services related and adjunctive to the primary ``J1'' procedure. We do 
not believe that providing separate payment for radiation oncology 
codes that are included on a claim with a brachytherapy insertion 
procedure assigned to status indicator ``J1'' is in accordance with the 
C-APC policy. With regard to the SRS treatment policy to pay separately 
for the planning and preparation procedures, as stated in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583), this policy is a 
temporary special exception to the C-APC packaging policy that packages 
all adjunctive services (with a few exceptions listed in Addendum J to 
this final rule with comment period).
    After consideration of the public comments we received, we are not 
establishing a code edit that requires a brachytherapy treatment code 
when a brachytherapy insertion code is billed. We are finalizing our 
proposal to delete composite APC 8001 (LDR Prostate Brachytherapy 
Composite) and assign HCPCS code 55875 (Transperineal placement of 
needles or catheters into prostate for interstitial radioelement 
application, with or without cystoscopy) to status indicator ``J1'' and 
to provide payment for this procedure through the C-APC payment 
methodology, similar to the payment methodology for other surgical 
insertion procedures related to brachytherapy.
(4) C-APC 5627 (Level 7 Radiation Therapy) Stereotactic Radiosurgery 
(SRS)
    Stereotactic radiosurgery (SRS) is a type of radiation therapy that 
targets multiple beams of radiation to precisely deliver radiation to a 
brain tumor while sparing the surrounding normal tissue. SRS treatment 
can be delivered by Cobalt-60-based (also referred to as gamma knife) 
technology or robotic linear accelerator-based (LINAC)-based 
technology. As stated in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70336), section 634 of the American Taxpayer Relief Act 
(ATRA) of 2012 (Pub. L. 112-240) amended section 1833(t)(16) of the Act 
by adding a new subparagraph (D) to require that OPPS payments for 
Cobalt-60-based SRS be reduced to equal that of payments for LINAC-
based SRS for covered OPD services furnished on or after April 1, 2013. 
Because section 1833(t)(16)(D) of the Act requires equal payment for 
SRS treatment delivered by Cobalt-60-based or LINAC-based technology, 
the two types of services involving SRS delivery instruments (which are 
described by HCPCS code 77371 (Radiation treatment delivery, 
stereotactic radiosurgery [SRS], complete course of treatment cranial 
lesion(s) consisting of 1 session; multi-source Cobalt 60-based) and

[[Page 59243]]

HCPCS code 77372 (Linear accelerator-based)) are assigned to the same 
C-APC (C-APC 5627 Level 7 Radiation Therapy).
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70336), we stated that we had identified differences in the billing 
patterns for SRS procedures delivered using Cobalt-60-based and LINAC-
based technologies. In particular, our claims data analysis revealed 
that services involving SRS delivered by Cobalt-60-based technologies 
(as described by HCPCS code 77371) typically included SRS treatment 
planning services (for example, imaging studies, radiation treatment 
aids, and treatment planning) and the actual deliveries of SRS 
treatment on the same date of service and reported on the same claim. 
In contrast, claims data analysis results revealed that services 
involving SRS delivered by LINAC-based technologies (as described by 
HCPCS code 77372) frequently included services related to SRS treatment 
(for example, imaging studies, radiation treatment aids, and treatment 
planning) that were provided on different dates of service and reported 
on claims separate from the actual delivery of SRS treatment.
    We stated in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70336) that the intent of the C-APC policy is to package payment 
for all services adjunctive to the primary ``J1'' procedure and that we 
believed that all essential planning and preparation services related 
to the SRS treatment are adjunctive to the SRS treatment delivery 
procedure. Therefore, payment for these adjunctive services should be 
packaged into the C-APC payment for the SRS treatment instead of 
reported on a different claim and paid separately. To identify services 
that are adjunctive to the primary SRS treatment described by HCPCS 
codes 77371 and 77372, but reported on a different claim, we 
established modifier ``CP'' which became effective in CY 2016 and 
required the use of the modifier for CY 2016 and CY 2017.
    To ensure appropriate ratesetting for the SRS C-APC, we believed it 
was necessary to unbundle payment for the adjunctive services for CY 
2016 and CY 2017. Therefore, we finalized a policy to change the 
payment for SRS treatment for the 10 SRS planning and preparation 
services identified in our claims data (HCPCS codes 70551, 70552, 
70553, 77011, 77014, 77280, 77285, 77290, 77295, and 77336) that were 
reported differentially using HCPCS codes 77371 and 77372 both on the 
same claim as the SRS services and on claims 1 month prior to the 
delivery of SRS services. These codes were removed from the geometric 
mean cost calculations for C-APC 5627. In addition, for CY 2016 and CY 
2017, we provided separate payment for the 10 planning and preparation 
services adjunctive to the delivery of the SRS treatment using either 
the Cobalt-60-based or LINAC-based technology, even when the planning 
service was included on the same claim as the primary ``J1'' SRS 
treatment service. The use of the modifier ``CP'' was not required to 
identify these 10 planning and preparation codes.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33564 and 
33465), the data collection period for SRS claims with modifier ``CP'' 
began on January 1, 2016 and concludes on December 31, 2017. Based on 
our analysis of preliminary data collected with modifier ``CP'', we 
have identified some additional services that are adjunctive to the 
primary SRS treatment and reported on a different claim outside of the 
10 SRS planning and preparation codes that were removed from the SRS C-
APC costs calculations and paid separately.
    However, the ``CP'' modifier has been used by a small number of 
providers since its establishment. In addition, our analysis showed 
that several of the HCPCS codes that were billed with modifier ``CP'' 
belonged to the group of 10 SRS planning and preparation codes that we 
pay separately and do not require the use of modifier ``CP''. Also, 
some providers erroneously included the modifier when reporting the 
HCPCS code for the delivery of the LINAC-based SRS treatment. As stated 
above, the data collection period for SRS claims with modifier ``CP'' 
was set to conclude on December 31, 2017. Accordingly, for CY 2018, we 
are deleting this modifier and discontinuing its required use.
    For CY 2018, we also proposed to continue to make separate payments 
for the 10 planning and preparation services adjunctive to the delivery 
of the SRS treatment using either the Cobalt-60-based or LINAC-based 
technology when furnished to a beneficiary within 1 month of the SRS 
treatment. The continued separate payment of these services will allow 
us to complete our analysis of the claims data including modifier 
``CP'' from both CY 2016 and CY 2017 claims. As stated in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583), 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.
    We invited public comments on these proposals.
    Comment: Commenters generally supported the proposal to continue to 
make separate payments for the planning and preparation services 
adjunctive to the delivery of the SRS treatment and requested that CMS 
continue to pay separately for these services in the future. Commenters 
also supported the deletion of modifier ``CP''.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to make separate payments for the 10 planning 
and preparation services adjunctive to the delivery of the SRS 
treatment using either the Cobalt-60-based or LINAC-based technology 
when furnished to a beneficiary within 1 month of the SRS treatment.
(5) Complexity Adjustment for Blue Light Cystoscopy Procedures
    As discussed in prior OPPS/ASC final rules with comment period, and 
most recently in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79668), we continue to believe that Cysview[supreg] 
(hexaminolevulinate HCl) (described by HCPCS code C9275) is a drug that 
functions as a supply in a diagnostic test or procedure and is 
therefore packaged with payment for the primary procedure. In addition, 
as discussed in section II.A.2.b.(1) of the CY 2018 OPPS/ASC proposed 
rule and this final rule with comment period, drugs that are not 
eligible for pass-through payment are always packaged when billed with 
a comprehensive service. To maintain the integrity of the OPPS, we 
believe it is generally not appropriate to allow exceptions to our drug 
packaging policy or comprehensive APC policy that would result in 
separate payment for the drug based on the product's ASP+6 percent 
payment rate. While we did not propose in the CY 2018 proposed rule to 
pay separately for Cysview[supreg], we have heard concerns from 
stakeholders that the payment for blue light cystoscopy procedures 
involving Cysview[supreg] may be creating a barrier to beneficiaries 
receiving access to reasonable and necessary care for which there may 
not be a clinically comparable alternative. Therefore, as we stated in 
the proposed rule, we revisited our payment policy for blue light 
cystoscopy procedures. As described in more detail below, we believe 
certain code combinations for blue light cystoscopy procedures should 
be eligible to qualify for a complexity

[[Page 59244]]

adjustment, given the unique properties of the procedure and resource 
costs.
    Traditionally, white light (or standard) cystoscopy, typically 
performed by urologists, has been the gold standard for diagnosing 
bladder cancer. Enhanced bladder cancer diagnostics, such as narrow 
band imaging or blue light cystoscopy, increase tumor detection in 
nonmuscle invasive bladder cancer over white light cystoscopy alone, 
thus enabling more precise tumor removal by the urologist. Blue light 
cystoscopy can only be performed after performance of white light 
cystoscopy. Because blue light cystoscopy requires specialized imaging 
equipment to view cellular uptake of the dye that is not otherwise used 
in white light cystoscopy procedures, some practitioners consider blue 
light cystoscopy to be a distinct and adjunctive procedure to white 
light cystoscopy. However, the current CPT coding structure for 
cystoscopy procedures does not identify blue light cystoscopy in the 
coding descriptions separate from white light cystoscopy. Therefore, 
the existing cystoscopy CPT codes do not distinguish cystoscopy 
procedures involving only white light cystoscopy from those involving 
both white and blue light cystoscopy, which require additional 
resources compared to white light cystoscopy alone.
    As discussed in the CY 2018 OPPS/ASC proposed rule, after 
discussion with our clinical advisors (including a urologist), we 
believe that blue light cystoscopy represents an additional elective 
but distinguishable service as compared to white light cystoscopy that, 
in some cases, may allow greater detection of bladder tumors in 
beneficiaries relative to white light cystoscopy alone. Given the 
additional equipment, supplies, operating room time, and other 
resources required to perform blue light cystoscopy in addition to 
white light cystoscopy, for CY 2018, in the proposed rule, we proposed 
to create a new HCPCS C-code to describe blue light cystoscopy and to 
allow for a complexity adjustment to APC 5374 (Level 4 Urology and 
Related Services) for certain code combinations in APC 5373 (Level 3 
Urology and Related Services). (In the proposed rule, we cited HCPCS 
code ``C97XX'' as a placeholder for the new code. However, for ease of 
reading, hereafter in this section, we refer to the replacement code 
HCPCS code C9738 (Adjunctive blue light cystoscopy with fluorescent 
imaging agent (List separately in addition to code for primary 
procedure)) instead of the placeholder code.) Specifically, to 
determine which code pair combinations of a procedure described by 
proposed new HCPCS code C9738 and a cystoscopy procedure would qualify 
for a complexity adjustment, we first crosswalked the costs of the 
procedure described by HCPCS code C9275 (Hexaminolevulinate hcl) to the 
procedure described by proposed new HCPCS code C9738 assigned status 
indicator ``N''. Next, we identified the procedure codes used to 
describe white light cystoscopy of the bladder which include the 
following CPT codes and APC assignments:

 APC 5372 (Level 2 Urology and Related Services)
    [squ] CPT code 52000
 APC 5373 (Level 3 Urology and Related Services)
    [squ] CPT code 52204
    [squ] CPT code 52214
    [squ] CPT code 52224
 APC 5374 (Level 4 Urology and Related Services)
    [squ] CPT code 52234
    [squ] CPT code 52235
 APC 5375 (Level 5 Urology and Related Services)
    [squ] CPT code 52240

    Because APC 5372 is not a C-APC, cystoscopy procedures assigned to 
Level 2 Urology are not eligible for a complexity adjustment, and 
therefore, we did not analyze these codes to determine whether they met 
the criteria for this adjustment. We modeled the data to determine 
which code pair combinations exceed the claim frequency and cost 
threshold in APC 5373, APC 5374, and APC 5375, which are all C-APCs. In 
the proposed rule, we stated that the results of our analysis indicate 
that the code pair combination of procedures described by proposed new 
HCPCS code C9738 and cystoscopy procedures assigned to APC 5373 would 
be eligible for a complexity adjustment based on current criteria and 
cost data because they meet the frequency and cost criteria thresholds. 
Likewise, our results indicated that the combination of procedures 
described by proposed new HCPCS code C9738 and cystoscopy procedures 
assigned to APC 5374 and APC 5375 would not qualify for a complexity 
adjustment because they do not meet the frequency and cost criteria 
thresholds.
    We indicated in the proposed rule that, under the C-APC policy, 
blue light cystoscopy would be packaged, but when performed with a 
cystoscopy procedure in APC 5373 and reported with proposed new HCPCS 
code C9738 in addition to the cystoscopy CPT code, there would be a 
complexity adjustment to the next higher level APC in the series, 
resulting in a higher payment than for the white light cystoscopy 
procedure alone. That is, if the code pair combination of proposed new 
HCPCS code C9738 with CPT code 52204, 52214, or 52224 is reported on a 
claim, the claim will qualify for payment reassignment from APC 5373 to 
APC 5374. We stated that we plan to track the utilization and the costs 
associated with white light/blue light cystoscopy procedure 
combinations that will receive a complexity adjustment.
    We invited public comments on our CY 2018 proposal to allow for a 
complexity adjustment when a white light cystoscopy procedure followed 
by a blue light cystoscopy procedure is performed. In addition, we 
sought public comments on whether alternative procedures, such as 
narrow band imaging, may be disadvantaged by this proposed policy.
    Comment: One commenter agreed that there are differences in 
resource utilization between cystoscopy procedures involving white 
light only and cystoscopy procedures involving both white light and 
blue light. However, the commenter recommended that a proposal to 
expand the cystoscopy CPT codes be submitted to the American Medical 
Association (AMA) to capture the resource distinction. The commenter 
stated that the use of CPT codes and HCPCS C-codes (for example, the 
proposed HCPCS code C9738) to capture cystoscopy procedures is 
duplicative, administratively burdensome, and can affect the quality of 
claims data.
    Response: We appreciate the commenter's concerns. However, we 
proposed to establish this code based on programmatic need under the 
OPPS to accurately describe blue light cystoscopy procedures. Given 
that a CPT code that describes blue light cystoscopy with an optical 
imaging agent does not exist in the CY 2018 CPT code set published by 
the AMA, it is unclear to us why the commenter believes HCPCS code 
C9738 would be duplicative, administratively burdensome, or affect the 
quality of claims data. Moreover, it is the combination of two 
different procedures that trigger a complexity adjustment; therefore, 
two distinct CPT or HCPCS codes are necessary to effectuate a 
complexity adjustment. If the AMA establishes a CPT code that describes 
blue light cystoscopy with an optical imaging agent, we would consider 
recognizing that CPT code under the OPPS as a replacement for HCPCS 
code C9738.
    Comment: A few commenters generally supported the proposal to allow 
for a complexity adjustment for

[[Page 59245]]

blue light cystoscopy with Cysview procedures. Many commenters, 
including several commenters with experience utilizing blue light 
cystoscopy with Cysview, shared their views on how this procedure has 
positively affected patient care management. These commenters 
recommended that CMS apply a complexity adjustment to all blue light 
cystoscopy with Cysview procedures performed in HOPDs to improve 
utilization and beneficiary access to care. Alternatively, the 
commenters recommended that CMS pay separately for Cysview to allow 
access in both white light and blue light cystoscopies in HOPD and ASC 
settings or establish a payment methodology conceptually similar to the 
device-intensive payment procedure for ASCs. The commenters suggested 
that a ``device-intensive like'' payment for a cystoscopy procedure 
performed in the ASC would be set based on the service cost and the 
drug cost (as determined by the manufacturer-reported average sales 
price).
    Response: We appreciate the commenters' support. In developing the 
blue light cystoscopy procedure complexity adjustment payment proposal, 
we considered the unique properties and resources required to perform 
blue light cystoscopy with Cysview. As described in the proposal, we 
approximated the costs for the additional resources required to perform 
blue light cystoscopy by crosswalking the costs associated with HCPCS 
code C9275 to HCPCS code C9738. We then applied the established 
complexity adjustment criteria to determine which cystoscopy 
procedures, when performed with blue light cystoscopy, would qualify 
for a complexity adjustment. For this final rule with comment period, 
we repeated the analysis to determine which code pair combinations of 
HCPCS code C9738 with a cystoscopy procedure CPT code satisfied the 
complexity adjustment criteria. Consistent with the proposed rule 
results, based on the updated final rule with comment period claims 
data, the code pair combination of HCPCS code C9738 with CPT code 
52204, 52214, or 52224 each will qualify for a complexity adjusted 
payment from APC 5373 to APC 5374. Because APC 5372 is not a C-APC, 
cystoscopy procedures assigned to Level 2 Urology are not eligible for 
a complexity adjustment. Therefore, we did not analyze these codes to 
determine whether they were eligible for a complexity adjustment. 
Likewise, our analysis of the final rule claims data indicated that the 
combination of proposed HCPCS code C9738 and cystoscopy procedures 
assigned to APC 5374 and APC 5375 would not qualify for a complexity 
adjustment because they do not meet the frequency and cost criteria 
thresholds.
    We did not propose and the commenters did not provide evidence to 
support waiving application of the complexity adjustment criteria and 
allowing for a complexity adjustment whenever a blue light cystoscopy 
procedure is performed with any white light cystoscopy procedure. To 
allow for a complexity adjustment under any circumstance would require 
a change to the complexity adjustment criteria, which we did not 
propose. Therefore, we are finalizing the blue light cystoscopy 
complexity adjustment proposal, without modification. In addition we 
are establishing HCPCS code C9738 (Adjunctive blue light cystoscopy 
with fluorescent imaging agent (List separately in addition to code for 
primary procedure)), which replaces proposed HCPCS code C97XX. For CY 
2018, the code pair combination of HCPCS code C9738 with CPT code 
52204, 52214, or 52224 will qualify for a complexity adjusted payment 
from APC 5373 to APC 5374.
    With respect to the public comments on unpackaging Cysview to allow 
for separate payment in both the HOPD and ASC settings, as we stated in 
the background section for the proposal, we continue to believe that 
Cysview is a drug that functions as a supply in a diagnostic test or 
procedure and therefore is packaged with payment for the primary 
procedure. In the CY 2018 OPPS/ASC proposed rule, we did not propose to 
make any changes to the ``drugs that function as a supply'' packaging 
policy or make any corresponding proposals to pay separately for 
Cysview in the HOPD and ASC settings. Therefore, Cysview will remain 
packaged.
    With respect to the recommendation that we establish a payment 
methodology for blue light cystoscopy with Cysview procedures 
conceptually similar to the ASC device intensive payment policy, we did 
not propose revisions to the ASC device-intensive procedure policy. In 
addition, it is unclear to us exactly how such a policy would work and 
to what precise procedures in addition to blue light cystoscopy it 
might apply. Further, we believe that the C-APC payment adequately 
reflects the average resources expended by hospitals as reflected in 
hospital claims data. In addition, for especially costly cases, we 
believe our proposed policy appropriately recognizes the additional 
costs of blue light cystoscopy with white light cystoscopy through the 
complexity adjustment. We will continue to analyze the data and 
evaluate whether refinements to the C-APC policy, including the 
complexity adjustment criteria, should be considered in future 
rulemaking.
    Comment: A few commenters responded to the solicitation for public 
comments on whether an alternative procedure, such as narrow band 
imaging, would be disadvantaged by the blue light cystoscopy with 
Cysview complexity adjustment proposal. One commenter, the manufacturer 
of Cysview, requested that CMS not establish a complexity adjustment 
for narrow band imaging because this imaging does not require a drug, 
additional technology, or additional resource. The commenter stated 
that the equipment used in narrow band imaging cystoscopy procedures is 
not different than the equipment for white light cystoscopy and does 
not require more resource time, expense, or cost to the hospital 
because narrow band imaging technology is part of the standard 
equipment available for cystoscopic procedures. Another commenter, the 
developer of narrow band imaging, contended that the procedure shares 
many clinical and procedural similarities with blue light cystoscopy 
with Cysview procedures, and therefore narrow band imaging should be 
eligible for a complexity adjustment. In addition, the commenter 
expressed concern that a complexity adjustment for blue light 
cystoscopy with Cysview and not narrow band imaging would provide a 
financial incentive for providers to choose one technology over the 
other. However, the commenter did not provide cost information for 
narrow band imaging.
    Response: We appreciate the commenters' responses. We do not 
believe that the information presented supports a complexity adjustment 
for narrow band imaging. The lack of cost information for narrow band 
imaging and the fact that narrow band imaging does not require use of a 
contrast agent (and, therefore, avoids the cost of contrast and the 
time associated with the administration of contrast) lead us to 
question whether the resource costs of narrow band imaging are the same 
as those of blue light cystoscopy with Cysview. For these reasons, we 
do not believe it is appropriate to modify the proposal to allow for a 
complexity adjustment when narrow band imaging is performed with white 
light cystoscopy.
    After consideration of the public comments we received, we are

[[Page 59246]]

finalizing our proposal, without modification, to allow for a 
complexity adjustment when HCPCS code C9738 is reported on the same 
claim as CPT code 52204, 52214, or 52224. The result of billing any one 
of these three code pair combinations is a payment reassignment from 
APC 5373 to APC 5374.
(6) Analysis of C-APC Packaging Under the OPPS
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584), we accepted a recommendation made at the August 22, 2016 HOP 
Panel meeting to analyze the effects of C-APCs. The HOP panel 
recommendation did not elucidate specific concerns with the C-APC 
policy or provide detailed recommendations on particular aspects of the 
policy to analyze. Therefore, we took a broad approach in studying 
HCPCS codes and APCs subject to the C-APC policy to determine whether 
aberrant trends in the data existed. Overall, we observed no such 
aberrancies and believe that the C-APC policy is working as intended.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33580), 
specifically, using OPPS claims data for the CY 2016 final rule with 
comment period, the CY 2017 final rule with comment period, and the CY 
2018 proposed rule, which reflect an observation period of CY 2014 to 
CY 2016, we examined the effects of C-APCs and their impact on OPPS 
payments. We started with all hospital outpatient claims billed on the 
13X claim-type and, from that, separately identified HCPCS codes and 
APCs that were subject to the comprehensive methodology in CYs 2015 and 
2016 (that is, HCPCS codes or APCs assigned status indicator ``J1'' or 
``J2''). Next, we analyzed the claims to create a subset of claims that 
contain the HCPCS codes and APCs that were subject to the comprehensive 
methodology. Using the claims noted above, we analyzed claim frequency, 
line frequency, number of billing units, and the total OPPS payment 
between CYs 2014 and 2016 for each HCPCS code and APC that had been 
previously identified. In reviewing the cost statistics for HCPCS codes 
for procedures with status indicator ``S'', ``T'', or ``V'' in CY 2014 
that were assigned to a C-APC in either CY 2015 or CY 2016, overall, we 
observed an increase in claim line frequency, units billed, and 
Medicare payment, which suggest that the C-APC payment policy did not 
adversely affect access to care or reduce payments to hospitals. 
Decreases in these cost statistics would suggest our comprehensive 
packaging logic is not working as intended and/or the C-APC payment 
rates were inadequate, resulting in lower volume due to migration of 
services to other settings or the cessation of providing these 
services. Likewise, because the cost statistics of major separately 
payable codes (that is, HCPCS codes with status indicator ``S'', ``T'', 
or ``V'') that were packaged into a C-APC prospectively were consistent 
with the cost statistics of the codes packaged on the claim, in 
actuality, indicate that costs were appropriately redistributed, we 
believe the C-APC payment methodology is working as intended.
    Comment: A few commenters appreciated CMS' analysis of C-APC 
packaging under the OPPS and urged CMS to continue to monitor the data 
and report on any changes in billing patterns or utilization for 
particular items or services.
    Response: We appreciate the commenters' support. We will continue 
to monitor the impact of our C-APC policy on OPPS rate setting and 
evaluate if future adjustments are needed.
c. Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for low dose rate (LDR) prostate brachytherapy, 
mental health services, and multiple imaging services. We refer readers 
to the CY 2008 OPPS/ASC final rule with comment period for a full 
discussion of the development of the composite APC methodology (72 FR 
66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74163) for more recent 
background.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), for CY 2018 
and subsequent years, we proposed to continue our composite APC payment 
policies for mental health services and multiple imaging services, as 
discussed below. As discussed in section II.A.2.b. of the proposed rule 
and this final rule with comment period, we proposed to assign CPT code 
55875 (Transperineal placement of needs or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) a 
status indicator of ``J1'' and assign it to a C-APC. In conjunction 
with this proposal, we also proposed to delete the low dose rate (LDR) 
prostate brachytherapy composite APC for CY 2018 and subsequent years. 
We refer readers to section II.A.2.b. of the CY 2018 OPPS/ASC proposed 
rule and this final rule with comment period for our discussion on our 
low dose rate (LDR) prostate brachytherapy APC proposal for CY 2018 and 
subsequent years.
(1) Mental Health Services Composite APC
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), 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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 
through 79589), we finalized a policy 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 APC 5863 (Partial Hospitalization (3 or more 
services per day)). For CY 2018, and subsequent years, we proposed 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

[[Page 59247]]

by a hospital, those specified mental health services would be paid 
through composite APC 8010 (Mental Health Services Composite) for CY 
2018. In addition, we proposed to set the payment rate for composite 
APC 8010 for CY 2018 at the same payment rate that we proposed for 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. 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 5863 for all of the specified mental health 
services furnished by the hospital on that single date of service. We 
stated that 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.
    We did not receive any public comments on these proposals. 
Therefore, we are finalizing our CY 2018 proposal, without 
modification, that when aggregate payment for specified mental health 
services provided by one hospital to a single beneficiary on a date of 
service, based on the payment rates 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 for CY 2018. In 
addition, we are finalizing our CY 2018 proposal, without modification, 
to set the payment rate for composite APC 8010 for CY 2018 at the same 
payment rate that we established for 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.
(2) 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 2018 OPPS/ASC proposed rule (82 FR 33581), we proposed, 
for CY 2018 and subsequent years, 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 stated that we continue to believe that this policy 
would reflect and promote the efficiencies hospitals can achieve when 
performing multiple imaging procedures during a single session.
    The proposed CY 2018 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 2016 
claims available for the CY 2018 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 2018 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 2018 OPPS/ASC proposed rule.
    For the CY 2018 OPPS/ASC proposed rule, we were able to identify 
approximately 634,918 ``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 36 percent of 
all eligible claims, to calculate the proposed CY 2018 geometric mean 
costs for the multiple imaging composite APCs. Table 6 of the CY 2018 
OPPS/ASC proposed rule listed 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 2018.
    Comment: One commenter supported the composite APC policy for 
imaging services and recommended that CMS pay composite imaging APCs 
separately when billed on a claim with a service

[[Page 59248]]

that has been assigned a ``J1'' status indicator, that is, as a C-APC.
    Response: We appreciate the commenter's support. Regarding the 
recommendation about paying for composite APCs separately when billed 
on a claim with a service that has been assigned a ``J1'' status 
indicator, procedures assigned to C-APCs are primary services that are 
typically the focus of the hospital outpatient stay. As discussed in 
section II.A.2.b. of this final rule with comment period, our C-APC 
policy packages payment for adjunctive and secondary items, services, 
and procedures, including diagnostic procedures, into the most costly 
procedure under the OPPS at the claim level. We believe that paying for 
composite APCs separately when billed with a service that has been 
assigned a ``J1'' status indicator would be in conflict with the intent 
of our C-APC policy and would not be appropriate.
    After consideration of the public comments we received, 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. 
Table 7 below lists the HCPCS codes that will be subject to the 
multiple imaging composite APC policy and their respective families and 
approximate composite APC proposed geometric mean costs for CY 2018.

 Table 7--OPPS Imaging Families and Multiple Imaging Procedure Composite
                                  APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
CY 2018 APC 8004 (ultrasound composite)      CY 2018 approximate APC
                                            geometric mean cost = $300
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
76700..................................  Us exam, abdom, complete.
76705..................................  Echo exam of abdomen.
76770..................................  Us exam abdo back wall, comp.
76776..................................  Us exam k transpl w/Doppler.
76831..................................  Echo exam, uterus.
76856..................................  Us exam, pelvic, complete.
76857..................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
  CY 2018 APC 8005 (CT and CTA without       CY 2018 approximate APC
         contrast composite) *              geometric mean cost = $275
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
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 2018 APC 8006 (CT and CTA with         CY 2018 approximate APC
          contrast composite)               geometric mean cost = $501
------------------------------------------------------------------------
70487..................................  Ct maxillofacial w/dye.
70460..................................  Ct head/brain w/dye.
70470..................................  Ct head/brain w/o & w/dye.
70481..................................  Ct orbit/ear/fossa w/dye.
70482..................................  Ct orbit/ear/fossa w/o & w/dye.
70488..................................  Ct maxillofacial w/o & w/dye.
70491..................................  Ct soft tissue neck w/dye.
70492..................................  Ct sft tsue nck w/o & w/dye.
70496..................................  Ct angiography, head.
70498..................................  Ct angiography, neck.
71260..................................  Ct thorax w/dye.
71270..................................  Ct thorax w/o & w/dye.
71275..................................  Ct angiography, chest.
72126..................................  Ct neck spine w/dye.
72127..................................  Ct neck spine w/o & w/dye.
72129..................................  Ct chest spine w/dye.
72130..................................  Ct chest spine w/o & w/dye.
72132..................................  Ct lumbar spine w/dye.
72133..................................  Ct lumbar spine w/o & w/dye.
72191..................................  Ct angiograph pelv w/o & w/dye.
72193..................................  Ct pelvis w/dye.
72194..................................  Ct pelvis w/o & w/dye.
73201..................................  Ct upper extremity w/dye.
73202..................................  Ct uppr extremity w/o & w/dye.
73206..................................  Ct angio upr extrm w/o & w/dye.
73701..................................  Ct lower extremity w/dye.

[[Page 59249]]

 
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..
------------------------------------------------------------------------
 CY 2018 APC 8007 (MRI and MRA without       CY 2018 approximate APC
         contrast composite) *              geometric mean cost = $556
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
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 2018 APC 8008 (MRI and MRA with        CY 2018 approximate APC
          contrast composite)               geometric mean cost = $871
------------------------------------------------------------------------
70549..................................  Mr angiograph neck w/o & w/dye.
70542..................................  Mri orbit/face/neck w/dye.
70543..................................  Mri orbt/fac/nck w/o & w/dye.
70545..................................  Mr angiography head w/dye.
70546..................................  Mr angiograph head w/o & w/dye.
70547..................................  Mr angiography neck w/o dye.
70548..................................  Mr angiography neck w/dye.
70552..................................  Mri brain w/dye.
70553..................................  Mri brain w/o & w/dye.
71551..................................  Mri chest w/dye.
71552..................................  Mri chest w/o & w/dye.
72142..................................  Mri neck spine w/dye.
72147..................................  Mri chest spine w/dye.
72149..................................  Mri lumbar spine w/dye.
72156..................................  Mri neck spine w/o & w/dye.
72157..................................  Mri chest spine w/o & w/dye.
72158..................................  Mri lumbar spine w/o & w/dye.
72196..................................  Mri pelvis w/dye.
72197..................................  Mri pelvis w/o & w/dye.
73219..................................  Mri upper extremity w/dye.
73220..................................  Mri uppr extremity w/o & w/dye.
73222..................................  Mri joint upr extrem w/dye.
73223..................................  Mri joint upr extr w/o & w/dye.
73719..................................  Mri lower extremity w/dye.
73720..................................  Mri lwr extremity w/o & w/dye.
73722..................................  Mri joint of lwr extr w/dye.
73723..................................  Mri joint lwr extr w/o & w/dye.
74182..................................  Mri abdomen w/dye.
74183..................................  Mri abdomen w/o & w/dye.

[[Page 59250]]

 
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 payments 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 occurs 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 payments 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), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70343), and the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79592). 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 2018, we examined the items and services currently provided 
under the OPPS, reviewing categories of integral, ancillary, 
supportive, dependent, or adjunctive items and services for which we 
believe payment would be appropriately packaged into payment of the 
primary service that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and outpatient 
hospital billing patterns to determine whether there were categories of 
codes for which packaging would be appropriate according to existing 
OPPS packaging policies or a logical expansion of those existing OPPS 
packaging policies. In the CY 2018 OPPS/ASC proposed rule (82 FR 33584 
through 33585), for CY 2018, we proposed to conditionally package the 
costs of selected newly identified ancillary services into payment with 
a primary service where we believe that the packaged item or service is 
integral, ancillary, supportive, dependent, or adjunctive to the 
provision of care that was reported by the primary service HCPCS code. 
Below we discuss the items and services that we proposed to package 
beginning in CY 2018.

[[Page 59251]]

b. Drug Administration Packaging Policy
(1) Background of Drug Administration Packaging Policy
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74942 
through 74945), we finalized a policy to unconditionally package 
procedures described by add-on codes. Procedures described by add-on 
codes represent an extension or continuation of a primary procedure, 
which means that they are typically supportive, dependent, or 
adjunctive to a primary service. The primary code defines the purpose 
and typical scope of the patient encounter and the add-on code 
describes incremental work, when the extent of the procedure 
encompasses a range rather than a single defined endpoint applicable to 
all patients. Given the dependent nature and adjunctive characteristics 
of procedures described by add-on codes and in light of longstanding 
OPPS packaging principles, we finalized a policy to unconditionally 
package add-on codes with the primary procedure. However, in response 
to stakeholder comments on the appropriateness of packaging drug 
administration add-on codes, we did not finalize our proposal to 
package drug administration add-on codes (78 FR 74945).
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819 
through 66822), we conditionally packaged payment for ancillary 
services assigned to APCs with a geometric mean cost of less than or 
equal to $100 (prior to application of the conditional packaging status 
indicator). The ancillary services that we identified are primarily 
minor diagnostic tests and procedures that are often performed with a 
primary service, although there are instances where hospitals provide 
such services alone and without another primary service during the same 
encounter. Under this policy, we assigned the conditionally packaged 
services to status indicator ``Q1'', which indicates that the service 
is separately payable when not billed on the same claim as a HCPCS code 
assigned status indicator ``S'', ``T'', or ``V''. Exclusions to this 
ancillary service packaging policy include preventive services, certain 
psychiatric and counseling-related services, and certain low-cost drug 
administration services. In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66819), we indicated that we did not propose to 
package certain low-cost drug administration services because we were 
examining various alternative payment policies for drug administration, 
including the associated drug administration add-on codes.
(2) Packaging of Level 1 and Level 2 Drug Administration Services
    As stated earlier, 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. To achieve this goal, it is important that we are consistent 
in our approach to packaging items and services under the established 
packaging categories. Although we excluded packaging of low-cost drug 
administration services from the ancillary services packaging policy in 
the CY 2015 rulemaking, separate payment for drug administration 
services is an example of inconsistent application of our packaging 
policy where we are continuing to pay separately for a service, 
regardless of cost and performance with another service. Given the 
frequency of drug administration in hospital outpatient care, in the CY 
2018 OPPS/ASC proposed rule, we stated that we believe it is 
appropriate for us to reconsider whether payment for drug 
administration services with a geometric mean cost of less than or 
equal to $100 (prior to application of the conditional packaging status 
indicator) should continue to be excluded from the ancillary services 
packaging policy.
    As part of our review of CY 2016 claims data used for ratesetting 
in the CY 2018 OPPS/ASC proposed rule, we examined drug administration 
billing patterns and payment for drug administration services under the 
OPPS. Based on our analysis of CY 2016 claims data used for the CY 2018 
proposed rule ratesetting, we found that the geometric mean cost for 
APC 5691 (Level 1 Drug Administration) is approximately $37 and the 
geometric mean cost for APC 5692 (Level 2 Drug Administration) is 
approximately $59. In addition, we observed that drug administration 
services in APC 5692 are frequently reported on the same claim with 
other separately payable services, such as an emergency department or 
clinic visit, while drug administration services in APC 5691 are 
sometimes reported with other separately payable services. Accordingly, 
Medicare data show that these drug administration services are 
currently being provided as part of another separately payable service 
for which two separate payments are made, and support that packaging 
these services, when they are reported with another separately payable 
service, is appropriate. Further, packaging for Levels 1 and 2 Drug 
Administration services is consistent with the ancillary packaging 
policy that was adopted in CY 2015, as noted earlier in this section. 
Therefore, given the low geometric mean costs of drug administration 
services in APC 5691 and APC 5692 as well as their associated billing 
patterns, we stated in the CY 2018 OPPS/ASC proposed rule that we 
believe that when these services are performed with another separately 
payable service, they should be packaged, but that they should be 
separately paid when performed alone. That is, we stated that we 
believe it is no longer necessary to exclude low-cost drug 
administration services from packaging under the ancillary services 
packaging policy adopted in CY 2015.
    In addition, as we examine payment differences between the hospital 
outpatient department and the physician office for similar services, 
under the OPPS, hospitals may receive separate payments for a clinic 
(office) visit and a drug administration service. In contrast, 
physicians are not eligible to receive payment for an office visit when 
a drug administration service is also provided. As a result, for 
furnishing the same drug administration service, hospitals receive an 
additional payment for which physician offices are not eligible. We 
stated in the proposed rule that we believe that conditional packaging 
of drug administration services would promote equitable payment between 
the physician office and the hospital outpatient hospital department. 
Accordingly, for CY 2018, we proposed to conditionally package payment 
for HCPCS codes describing drug administration services in APC 5691 and 
APC 5692, except for add-on codes and preventive services, when these 
services are performed with another service.
    Because preventive services are excluded from our packaging 
policies, we proposed to continue to pay separately for Medicare Part B 
vaccine administration services. In addition, at that time, we did not 
propose to package any drug administration services in APC 5693 (Level 
3 Drug Administration) or APC 5694 (Level 4 Drug Administration), but 
indicated our interest in public comments pertaining to whether payment 
for the services in these APCs may be appropriate for packaging. The 
proposed status indicators for drug administration services in APC 5691 
and APC 5692 were listed in Table 7 of the proposed rule.
    Comment: Numerous commenters disagreed with CMS' proposal to 
conditionally package low-cost drug administration services assigned to 
APC

[[Page 59252]]

5691 and APC 5692. The commonly cited concerns among the commenters who 
opposed the proposal were as follows:
     Low-cost drug administration services are dissimilar from 
other low cost ancillary services in that drug administration services 
are separate and distinct stand-alone services and not adjunctive, 
supportive, or dependent to a primary procedure.
     The proposal would not promote equitable payment between 
the physician's office and the hospital outpatient department because, 
in accordance with CMS guidelines, there are clinical circumstances 
where a physician may receive payment for both a drug administration 
service and an office visit.
     Because all drugs are separately payable in the 
physician's office, unlike under the OPPS, the proposal, if 
implemented, would exacerbate differences in payment between the 
hospital outpatient department and the physician office setting. 
Commenters expressed doubt that the full cost of a packaged drug 
administration service or drug would be appropriately and accurately 
reflected in the payment for another separately payable procedure.
     Packaging drug administration services with other services 
could result in hospitals scheduling patients for multiple visits, 
thereby reducing access to care and quality of care.
     Further analysis of the impact packaging drug 
administration services would have on APCs should be conducted prior to 
making a policy change.
     In general, packaging discourages full reporting of 
hospital costs, which impacts the accuracy of cost data that are used 
to calculate OPPS payment rates.
    In addition, at the summer 2017 meeting of the HOP Panel, the HOP 
Panel recommended that CMS not implement its proposal to package drug 
administration services described under APC 5691 (Level 1 Drug 
Administration) and APC 5692 (Level 2 Drug Administration).
    Response: We appreciate the detailed responses to our proposal and 
agree with the statements concerning the importance of payment accuracy 
to maintain access to care. However, we disagree that conditional 
packaging of low-level drug administration services, which are commonly 
furnished both in the hospital outpatient setting and in the physician 
office setting, would lead to payment inaccuracy for hospital rates for 
these services (which would include the packaged costs of these 
services) or to decreased access to drug administration services. As 
stated in the proposed rule, we believe it is no longer necessary to 
exclude low-cost drug administration services from packaging under the 
ancillary services packaging policy adopted in CY 2015, which is 
supported by our analysis of drug administration billing patterns. As 
described earlier in the introduction to this section, our analysis of 
CY 2016 OPPS claims data showed that low-cost drug administration 
services are currently being provided as part of another separately 
payable service for which two separate payments are made, and supported 
a policy that packaging low-cost drug administration services, when 
they are reported with another separately payable service, is 
appropriate. In response to the commenters who raised concerns 
regarding potential behavioral changes by providers as a consequence of 
the proposal, we will continue to monitor the data for changes in drug 
administration billing patterns.
    Furthermore, regarding the comments that low-cost drug 
administration services are separate and distinct standalone services 
and not adjunctive, supportive, or dependent to a primary procedure, we 
disagree based on typical billing patterns for these services. As 
stated earlier in the introduction to this section, ancillary services 
are often performed with a primary service. Because these low-cost drug 
administration services are typically furnished with another primary 
service and are assigned to APCs with a geometric mean cost of less 
than or equal to $100 (prior to the application of the conditional 
packaging status indicator), we believe these services fall under the 
ancillary services packaging policy.
    In addition, as stated in the proposed rule, we believe that 
conditional packaging of drug administration services will promote 
equitable payment between the physician office and the hospital 
outpatient department. However, we clarify that while typically 
physicians are not eligible to receive payment for an office visit when 
a drug administration service is also provided, we acknowledge that 
Medicare will pay for both services when the office visit CPT code is 
reported with Modifier 25 (Significant, separately identifiable 
evaluation and management services by the same physician on the day of 
the procedure).
    With respect to data availability and general requests for further 
CMS analysis, we believe that the data made available to the public as 
part of the proposed rule were appropriate, clear, and sufficient for 
interested parties to conduct analyses to evaluate facility-specific 
impacts of the proposed policy. It is unclear what the commenters meant 
by requesting that CMS further analyze the effects of the proposal on 
APCs, as the commenters did not specify any particular analysis that 
CMS should conduct or data that CMS should provide that is not already 
available to the public. Because the OPPS is a budget neutral payment 
system, packaging a procedure does not remove its costs from 
ratesetting.
    With respect to commenters' concerns on reporting of hospital costs 
for packaged services, we remind commenters that hospitals are expected 
to report all HCPCS codes that describe the services provided, 
regardless of whether or not those services are separately paid or 
their payment is packaged. 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 report appropriately 
(77 FR 68324).
    Therefore, for the reasons stated above, we believe that it is 
appropriate, and a logical expansion of our ancillary services policy, 
to finalize our proposal to unconditionally package low-cost drug 
administration services assigned to APCs 5691 and 5692. Accordingly, we 
are not accepting the HOP Panel's recommendation to not finalize our 
proposal.
    Comment: One commenter stated that the packaging proposal is a 
logical expansion of the current ancillary packaging policy but 
recommended a 1-year implementation delay to allow providers time to 
assess the administrative and fiscal impact.
    Response: We appreciate the commenter's support. Packaging is a 
longstanding payment principle under the OPPS and CMS has packaged a 
number of items and services through the years and makes OPPS data 
available to all interested parties on its Web site. Therefore, we do 
not see a reason to delay implementation of the policy. With each 
proposed and final rule release, CMS posts on its Web site various 
public use files (PUFs), including payment rates and cost statistics 
for applicable items and procedures. Stakeholders interested in a more 
comprehensive analysis of OPPS claims data used to derive the CY 2018 
OPPS/ASC payment rates may purchase the ``OPPS Limited Data Set'' (LDS) 
that is available on the CMS Web site at:

[[Page 59253]]

https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/HospitalOPPS.html. We believe the information 
contained in the PUF and LDS files is sufficient to allow stakeholders 
to analyze the effects of our policies on their areas of interest. 
Therefore, we are finalizing our proposal to conditionally package low-
cost drug administration services assigned to APC 5691 and APC 5692, 
effective January 1, 2018.
    Comment: Some commenters believed that the proposal would 
conditionally package Medicare Part B vaccine administration. In 
addition, some commenters believed that if a hospital provides a low-
cost drug administration service for a drug that is unconditionally 
packaged, CMS would make no payment to the hospital.
    Response: We believe that some commenters may have misunderstood 
the proposal. Consistent with our existing policy to exclude preventive 
services from packaging, administration of Part B vaccines--influenza, 
pneumococcal, and hepatitis B--are exempt from packaging and will 
continue to be paid separately. With respect to payment for a 
conditionally packaged low-cost drug administration service and an 
unconditionally packaged drug, the drug administration service is 
separately payable when not billed on the same claim as a HCPCS code 
with status indicator ``S'', ``T'', or ``V''. Payment for the 
threshold-packaged drug would be packaged with the payment for the 
highest paying separately payable procedure reported on the claim. For 
example, if a threshold-packaged drug, a low-cost drug administration 
service, and a clinic visit are reported on the same claim, payment for 
the drug and drug administration service would be packaged with the 
clinic visit payment.
    In summary, after consideration of the public comments we received, 
we are finalizing, without modification, the proposed policy to 
conditionally package low-cost drug administration services assigned to 
APC 5691 and APC 5692.
    Because preventive services are excluded from our packaging 
policies, we are continuing to pay separately for Medicare Part B 
vaccine administration services. In addition, at this time, we are not 
packaging any drug administration services assigned to APC 5693 (Level 
3 Drug Administration) or APC 5694 (Level 4 Drug Administration). The 
status indicators for drug administration services in APC 5691 and APC 
5692 for CY 2018 are listed in Table 8 below.

 Table 8--CY 2018 Status Indicators for Drug Administration Services in
              Level 1 and Level 2 Drug Administration APCs
------------------------------------------------------------------------
                                                               CY 2018
           HCPCS code                 Short descriptor         status
                                                              indicator
------------------------------------------------------------------------
                  APC 5691--Level 1 Drug Administration
------------------------------------------------------------------------
95115...........................  Immunotherapy one                  Q1
                                   injection.
95117...........................  Immunotherapy injections           Q1
95144...........................  Antigen therapy services           Q1
95145...........................  Antigen therapy services           Q1
95146...........................  Antigen therapy services           Q1
95165...........................  Antigen therapy services           Q1
95170...........................  Antigen therapy services           Q1
96361...........................  Hydrate iv infusion add-            S
                                   on.
96366...........................  Ther/proph/diag iv inf              S
                                   addon.
96370...........................  Sc ther infusion addl hr            S
96375...........................  Tx/pro/dx inj new drug              S
                                   addon.
96377...........................  Application on-body                Q1
                                   injector.
96379...........................  Ther/prop/diag inj/inf             Q1
                                   proc.
96423...........................  Chemo ia infuse each                S
                                   addl hr.
96549...........................  Chemotherapy unspecified           Q1
G0008...........................  Admin influenza virus               S
                                   vac.
G0009...........................  Admin pneumococcal                  S
                                   vaccine.
G0010...........................  Admin hepatitis b                   S
                                   vaccine.
------------------------------------------------------------------------
                  APC 5692--Level 2 Drug Administration
------------------------------------------------------------------------
90471...........................  Immunization admin......           Q1
90473...........................  Immune admin oral/nasal.           Q1
95147...........................  Antigen therapy services           Q1
95148...........................  Antigen therapy services           Q1
95149...........................  Antigen therapy services           Q1
96367...........................  Tx/proph/dg addl seq iv             S
                                   inf.
96371...........................  Sc ther infusion reset             Q1
                                   pump.
96372...........................  Ther/proph/diag inj sc/            Q1
                                   im.
96401...........................  Chemo anti-neopl sq/im..           Q1
96402...........................  Chemo hormon antineopl             Q1
                                   sq/im.
96405...........................  Chemo intralesional up             Q1
                                   to 7.
96411...........................  Chemo iv push addl drug.            S
96415...........................  Chemo iv infusion addl              S
                                   hr.
96417...........................  Chemo iv infus each addl            S
                                   seq.
------------------------------------------------------------------------


[[Page 59254]]

(3) Discussion of Comment Solicitation Regarding Unconditionally 
Packaging Drug Administration Add-On Codes
    With respect to drug administration add-on codes, as discussed in 
the CY 2014 OPPS/ASC proposed rule (78 FR 43573), we proposed to 
unconditionally package all drug administration services described by 
add-on codes. In response to the proposal, commenters objected to 
packaging drug administration add-on codes, which typically describe 
each additional hour of infusion or each additional intravenous push, 
among others, in addition to the initial drug administration service. 
The commenters believed that such a policy could disadvantage providers 
of longer drug administration services, which are often protocol-driven 
and are not necessarily dictated by the hospital, but by the 
characteristics of the specific drug or biological being administered 
to the patient. In response to these comments, we stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74945) that, given the 
frequency of drug administration services in the hospital outpatient 
department and their use in such a wide variety of different drug 
treatment protocols for various diseases in all types of hospitals, 
further study of the payment methodology for these services was 
warranted at that time. Therefore, we did not finalize our proposal to 
package the drug administration add-on codes in CY 2014. However, we 
stated we would continue to explore other payment options, including 
packaging and variations on packaging, in future years.
    In the CY 2018 OPPS/ASC proposed rule, we did not propose to 
package drug administration add-on codes for CY 2018 because we wanted 
stakeholder input on a payment methodology that supports the principles 
of a prospective payment system while ensuring patient access to 
prolonged infusion services. Instead, we solicited public comment on 
whether conditionally or unconditionally packaging such codes would 
create access to care issues or have other unintended consequences. 
Specifically, we requested public comments on the following: (1) 
Whether we should conditionally or unconditionally package drug 
administration services add-on codes; (2) how we should consider or 
incorporate the varied clinical drug protocols that result in different 
infusion times into a drug administration service add-on code payment 
proposal; and (3) other recommendations on an encounter-based payment 
approach for drug administration services that are described by add-on 
codes when furnished in the hospital outpatient department setting.
    Comment: Many commenters raised concerns about the appropriateness 
of packaging drug administration services add-on codes, given the 
variation in clinical treatment protocols. The commenters believed that 
packaging drug administration services add-on codes could create a 
barrier to access for drugs or biologicals with a long infusion time. 
Without explicit incremental payment for additional hours of infusion, 
some commenters suggested hospitals could discontinue offering the 
infusion. A few commenters suggested that CMS consider the creation of 
a drug administration C-APC for common drug administration encounters 
but did not provide details on what specific services should comprise 
the C-APC.
    Response: We appreciate the comments we received on this topic and 
will take them into consideration for future rulemaking.
c. Analysis of Packaging of Pathology Services in the OPPS
    At the August 22, 2016 HOP Panel meeting, a stakeholder expressed 
concern regarding conditional packaging of multiple pathology services. 
When multiple conditionally packaged services are billed on the same 
claim, the costs of the lowest paying services are bundled into the 
cost of the highest paying service and payment is made based on the 
highest single payable service. The stakeholder requested that CMS 
create a pathology composite APC to more appropriately pay for claims 
with only multiple pathology services and no other separately payable 
service such as a surgical procedure or a clinic visit. The HOP panel 
recommended that CMS develop a composite APC for pathology services 
when multiple pathology services are provided on a claim with no other 
payable services. The HOP Panel also requested that CMS take into 
consideration the stakeholder presentation comments made at the August 
22, 2016 HOP Panel meeting regarding hospital pathology laboratories as 
CMS evaluates conditional packaging to determine whether an 
accommodation can be made. Specifically, the stakeholder expressed 
concern with conditional packaging of pathology services, particularly 
when payment is limited to the single highest paying code, regardless 
of the number of services provided or specimens tested.
    In response to these HOP Panel requests and recommendation, we 
stated that we may consider the stakeholders' request for a pathology 
composite APC as well as additional composite APCs for future 
rulemaking (81 FR 79588). In light of these requests and 
recommendation, in development of the CY 2018 OPPS/ASC proposed rule, 
we evaluated and considered a pathology composite APC when multiple 
pathology services are performed and billed without a separately 
payable service on the same claim. To understand the frequency of 
billing multiple pathology services and no other separately payable 
codes on the same claim by hospital outpatient departments, we examined 
currently available claims data to identify the frequency distribution 
of pathology codes within the CPT code range 88300 to 88361. The claim 
frequency breakdown was displayed in Table 8 of the proposed rule (82 
FR 33587).
    Based on our analysis of claims data for the proposed rule, the 
majority of pathology only OPPS claims are reported with one pathology 
code. Therefore, as we stated in the CY 2018 OPPS/ASC proposed rule (82 
FR 33588), we believe that it is neither a frequent occurrence nor a 
common occurrence for a provider to submit a claim for payment under 
the OPPS with multiple pathology services and no other separately 
payable service.
    With regard to the HOP Panel's recommendation to develop a 
composite APC for pathology services when multiple pathology services 
are provided on a claim with no other payable services, we used CY 2016 
claims data available for the CY 2018 OPPS/ASC proposed rule to model 
four hypothetical pathology composite APCs. That is, following our 
standard packaging methodology, we modeled four hypothetical pathology 
composite APCs based on the following clinical scenarios that were 
specifically requested by a stakeholder at the August 2016 HOP Panel 
meeting:
     Hypothetical Composite APC A: Claims that contain 2-4 
pathology units (CPT codes 88302 through 88309) with or without special 
stains (CPT codes 88312 through 88314);
     Hypothetical Composite APC B: Claims that contain 5 or 
more pathology units (CPT codes 88302 through 88309) with or without 
special stains (CPT codes 88312 through 88314);
     Hypothetical Composite APC C: Claims that contain 2-4 
pathology units (CPT codes 88302 through 88309) with immunostains (CPT 
codes 88341, 88342, 88346, 88350, 88360, 88361); and
     Hypothetical Composite APC D: Claims that contain 5 or 
more pathology units (CPT codes 88302 through 88309)

[[Page 59255]]

with immunostains (CPT codes 88341, 88342, 88346, 88350, 88360, 88361).
    In addition, for the proposed rule, we evaluated the volume of 
services and costs for each hypothetical composite. Results from 
modeling the four composite scenarios showed low claim volume, which 
indicates that the suggested pathology code combinations are 
infrequently billed by hospital outpatient departments and which may 
mean that these are not likely clinical scenarios in hospital 
outpatient departments. A summary of the results from our composite 
analysis was presented in Table 9 of the proposed rule (82 FR 33587). 
We refer readers to Addendum B to the CY 2018 OPPS/ASC proposed rule 
(which is available via the Internet on the CMS Web site) for the CPT 
code descriptors.
    As we move toward larger payment bundles under the OPPS, the 
necessity of composite APCs diminishes. For example, in the CY 2018 
OPPS/ASC proposed rule, we proposed to delete composite APC 8001 (LDR 
Prostate Brachytherapy Composite) and to provide payment for the 
component procedures through the C-APC payment methodology. Composite 
APCs were a precursor to C-APCs. In CY 2008, we implemented 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 (72 FR 66650 through 
66652). Because a C-APC would treat all individually reported codes as 
representing components of the comprehensive service, all of the 
elements of the composite service are included in the C-APC payment. In 
addition, given the infrequent occurrence of multiple pathology 
services on the same claim without a separately payable service, we do 
not believe a composite APC is necessary or warranted.
    Therefore, for CY 2018, we did not propose to create a pathology 
composite APC or additional composite APCs for stakeholder-requested 
services, such as X-ray services, respiratory services, cardiology 
services, or allergy testing services. However, we solicited public 
comments on our packaging policies, as discussed under section 
II.A.3.d. of this final rule with comment period.
    We did not receive any public comments on our analysis of packaging 
of pathology services.
d. Summary of Public Comments and Our Responses Regarding Packaging of 
Items and Services Under the OPPS
    As previously noted, packaging is an inherent principle of a 
prospective payment system. The OPPS, like other prospective payment 
systems, relies on the concept of averaging, where the payment may be 
more or less than the estimated costs of providing a service or package 
of services for a particular patient, but with the exception of outlier 
cases, is adequate to ensure access to appropriate care. Packaging and 
bundling payments for multiple interrelated services into a single 
payment create incentives for providers to furnish services in the most 
efficient way by enabling hospitals to manage their resources with 
maximum flexibility, thereby encouraging long-term cost containment. 
Decisions about packaging and bundling payment involve a balance 
between ensuring some separate payment for individual services or items 
while establishing incentives for efficiency through larger units of 
payment.
    As the OPPS continues to move toward prospectively determined 
encounter-based payments and away from separate fee schedule-like 
payments, we continue to hear concerns from stakeholders that our 
packaging policies may be hampering patient access or resulting in 
other undesirable consequences. However, we have not observed 
significant fluctuations in our data that show a sharp decline of the 
volume of packaged items and services, nor have we heard from Medicare 
beneficiaries specifically about access issues or other concerns with 
packaged items and services. However, given that aggregate spending and 
utilization continue to increase for covered hospital outpatient 
services, it is unclear what, if any, adverse effect packaging has on 
beneficiary access to care. Specifically, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33588), within the framework of existing packaging 
categories, such as drugs that function as supplies in a surgical 
procedure or diagnostic test or procedure, we expressed interest in 
stakeholder feedback on common clinical scenarios involving currently 
packaged HCPCS codes for which stakeholders believe packaged payment is 
not appropriate under the OPPS. Likewise, outside the framework of 
existing packaging categories, we expressed interest in stakeholder 
feedback on common clinical scenarios involving separately payable 
HCPCS codes for which payment would be most appropriately packaged 
under the OPPS. In the proposed rule, we solicited public comments from 
a broad cross-section of stakeholders, including beneficiaries, patient 
advocates, hospital providers, clinicians, manufacturers, and other 
interested parties.
    Comment: Commenters expressed a variety of views on packaging under 
the OPPS. The comments ranged from requests to unpackage most items and 
services that are either conditionally or unconditionally packaged 
under the OPPS, including drugs and devices, to specific requests to 
unpackage a specific drug or device.
    Response: We appreciate the comments received and will review them 
as we continue to explore and evaluate packaging policies that apply 
under the OPPS and take them into consideration for future rulemaking.
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 2017 OPPS/
ASC final rule with comment period (81 FR 79594 through 79595), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2017 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 2018, as we did 
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 2018 
using geometric mean-based APC costs (82 FR 33588).
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a 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.

[[Page 59256]]

    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). In the CY 2018 OPPS/ASC proposed rule 
(82 FR 33588), for CY 2018, as we did for CY 2017, we proposed to 
continue to standardize all of the relative payment weights to APC 
5012. We stated that 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 2018, as we did for CY 2017, 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.
    We did not receive any public comments on our proposal to use the 
geometric mean cost of APC 5012 to standardize relative payment weights 
for CY 2018. 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 2018.
    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 2018 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, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33588), we proposed to compare the estimated aggregate weight using 
the CY 2017 scaled relative payment weights to the estimated aggregate 
weight using the proposed CY 2018 unscaled relative payment weights.
    For CY 2017, we multiplied the CY 2017 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2016 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 2018, we 
proposed to apply the same process using the estimated CY 2018 unscaled 
relative payment weights rather than scaled relative payment weights. 
We proposed to calculate the weight scalar by dividing the CY 2017 
estimated aggregate weight by the unscaled CY 2018 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 2018 OPPS 
final rule link and open the claims accounting document link at the 
bottom of the page.
    We proposed to compare the estimated unscaled relative payment 
weights in CY 2018 to the estimated total relative payment weights in 
CY 2017 using CY 2016 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 2018 unscaled 
relative payment weights for purposes of budget neutrality. We proposed 
to adjust the estimated CY 2018 unscaled relative payment weights by 
multiplying them by a proposed weight scalar of 1.328 to ensure that 
the proposed CY 2018 relative payment weights are scaled to be budget 
neutral. The proposed CY 2018 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.
    The final CY 2018 relative payment weights listed in Addenda A and 
B to the final rule with comment period (which are available via the 
Internet on the CMS Web site) were scaled and incorporate the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
this final rule with comment period.
    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.2. of this final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2018 OPPS.
    We did not receive any public comments on the proposed weight 
scalar calculation. Therefore, we are finalizing our proposal to use 
the calculation process described in the proposed rule, without 
modification, for CY 2018. Using updated final rule claims data, we are 
updating the estimated CY 2018 unscaled relative payment weights by 
multiplying them by a weight scalar of 1.4457 to ensure that the final 
CY 2018 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. As stated in the CY 2018 OPPS/
ASC proposed rule, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
19931), consistent with current law, based on IHS Global, Inc.'s fourth 
quarter 2016 forecast of the FY 2018 market basket increase, the 
proposed FY 2018 IPPS market basket update was 2.9 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 2018.
    Specifically, section 1833(t)(3)(F)(i) of the Act requires that, 
for 2012 and subsequent years, the OPD fee schedule increase factor 
under subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51689 through 51692), we finalized our methodology for calculating and 
applying the MFP adjustment, and then

[[Page 59257]]

revised this methodology as discussed in the FY 2016 IPPS/LTCH PPS 
final rule (80 FR 49509). In the FY 2018 IPPS/LTCH PPS proposed rule 
(82 FR 19931 through 19932), the proposed MFP adjustment for FY 2018 
was 0.4 percentage point.
    In the CY 2018 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 2018 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 2018 OPPS/ASC final rule with comment period. 
Consistent with that proposal, and the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38177), we applied the final FY 2018 market basket percentage 
increase (2.7 percent) and the final FY 2018 MFP adjustment (0.6 
percent) to the OPD fee schedule increase factor for the CY 2018 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 2018, 
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 2018 OPPS/
ASC proposed rule, we proposed to apply a 0.75 percentage point 
reduction to the OPD fee schedule increase factor for CY 2018.
    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 1.35 
percent for the CY 2018 OPPS (which is 2.7 percent, the final estimate 
of the hospital inpatient market basket percentage increase, less the 
final 0.6 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 2018 OPPS/ASC proposed rule, we proposed to amend 42 CFR 
419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2018, 
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 2018.
    We did not receive any public comments on our proposal. Therefore, 
we are implementing our proposal without modification.
    To set the OPPS conversion factor for the CY 2018 OPPS/ASC proposed 
rule, we proposed to increase the CY 2017 conversion factor of $75.001 
by 1.75 percent (82 FR 33589). In accordance with section 1833(t)(9)(B) 
of the Act, we proposed further to adjust the conversion factor for CY 
2018 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 0.9999 for wage index 
changes by comparing proposed total estimated payments from our 
simulation model using the proposed FY 2018 IPPS wage indexes to those 
payments using the FY 2017 IPPS wage indexes, as adopted on a calendar 
year basis for the OPPS.
    For the CY 2018 OPPS/ASC 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 2018 OPPS/ASC 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 2018 budget neutrality adjustment factor for 
the cancer hospital payment adjustment by comparing estimated total CY 
2018 payments under section 1833(t) of the Act, including the proposed 
CY 2018 cancer hospital payment adjustment, to estimated CY 2018 total 
payments using the CY 2017 final cancer hospital payment adjustment as 
required under section 1833(t)(18)(B) of the Act. The CY 2018 proposed 
estimated payments applying the proposed CY 2018 cancer hospital 
payment adjustment were less than estimated payments applying the CY 
2017 final cancer hospital payment adjustment. Therefore, we proposed 
to apply a budget neutrality adjustment factor of 1.0003 to the 
conversion factor for the cancer hospital payment adjustment. In 
accordance with section 16002(b) of the 21st Century Cures Act, we 
stated in the proposed rule that we are applying a budget neutrality 
factor calculated as if the proposed cancer hospital adjustment target 
payment-to-cost ratio was 0.90, not the 0.89 target payment-to-cost 
ratio we are applying as stated in section II.F. of the proposed rule.
    For the CY 2018 OPPS/ASC proposed rule, we estimated that proposed 
pass-through spending for drugs, biologicals, and devices for CY 2018 
would equal approximately $26.2 million, which represented 0.04 percent 
of total projected CY 2018 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 2017 and the 0.04 
percent estimate of proposed pass-through spending for CY 2018, 
resulting in a proposed adjustment for CY 2018 of 0.22 percent. 
Proposed estimated payments for outliers would remain at 1.0 percent of 
total OPPS payments for CY 2018. We estimated for the proposed rule 
that outlier payments would be 1.04 percent of total OPPS payments in 
CY 2017; the 1.0 percent for proposed outlier payments in CY 2018 would 
constitute a 0.04 percent decrease in payment in CY 2018 relative to CY 
2017.
    For the CY 2018 OPPS/ASC 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 -0.25 percent (that is, 
the proposed OPD fee schedule increase factor of 1.75 percent further 
reduced by 2.0 percentage points). This would result in a proposed 
reduced conversion factor for CY 2018 of $74.953 for hospitals that 
fail to meet the Hospital OQR Program requirements (a difference of -
1.530 in

[[Page 59258]]

the conversion factor relative to hospitals that met the requirements).
    In summary, for CY 2018, we proposed to amend Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2018 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 $74.953 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -1.530 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2018, we proposed to use a conversion factor of $76.483 in 
the calculation of the national unadjusted payment rates for those 
items and services for which payment rates are calculated using 
geometric mean costs; that is, the proposed OPD fee schedule increase 
factor of 1.75 percent for CY 2018, the required proposed wage index 
budget neutrality adjustment of approximately 0.9999, the proposed 
cancer hospital payment adjustment of 1.0003, and the proposed 
adjustment of 0.22 percentage point of projected OPPS spending for the 
difference in the pass-through spending and outlier payments that 
resulted in a proposed conversion factor for CY 2018 of $76.483.
    We invited public comments on these proposals. However, we did not 
receive any public comments. Therefore, we are finalizing these 
proposals without modification, as discussed below.
    For CY 2018, 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 updated 
claims data for this final rule with comment period used in calculating 
the cancer hospital payment adjustment in section II.F. of this final 
rule with comment period, the target PCR for the cancer hospital 
payment adjustment, which was 0.91 for CY 2017, is 0.88 for CY 2018. 
Because we budget neutralize using the target PCR ratio prior to 
implementation of section 16002 (b) of the 21st Century Cures Act, we 
are applying a budget neutrality adjustment factor of 1.0008 to the 
conversion factor for the cancer hospital payment adjustment for CY 
2018.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33712), we estimated a 
1.4 percent adjustment to nondrug OPPS payment rates as a result of the 
proposed payment adjustment to separately payable nonpass-through drugs 
purchased under the 340B Program. As part of that proposed policy, we 
noted that our adjustment in the final rule could potentially change as 
a result of changes such as updated data, modifications to the estimate 
methodology, and other factors. Applying the final payment policy for 
drugs purchased under the 340B Program, as described in section V.B.7. 
of this final rule with comment period, results in an estimated 
reduction of approximately $1.6 billion in separately paid OPPS drug 
payments. To ensure budget neutrality under the OPPS after applying 
this alternative payment methodology for drugs purchased under the 340B 
Program, we applied an offset of approximately $1.6 billion into the 
OPPS conversion factor, which results in a final adjustment of 1.0319 
to the OPPS conversion factor.
    As a result of these finalized policies, the OPD fee schedule 
increase factor for the CY 2018 OPPS is 1.35 percent (which is 2.7 
percent, the estimate of the hospital inpatient market basket 
percentage increase, less the 0.6 percentage point MFP adjustment, and 
less the 0.75 percentage point additional adjustment). For CY 2018, we 
are using a conversion factor of $78.636 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 1.35 percent for CY 2018, the 
required wage index budget neutrality adjustment of approximately 
0.9997, the cancer hospital payment adjustment of 1.0008, the 
adjustment for drugs purchased under the 340B Program of 1.0319, and 
the adjustment of 0.2 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 2018 of $78.636.

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 2018 OPPS/ASC proposed rule (82 
FR 33590), we proposed to continue this policy for the CY 2018 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. We did not 
receive any public comments on this proposal. Therefore, for the 
reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 
FR 33590), we are finalizing our proposal to continue this policy as 
discussed above for the CY 2018 OPPS without modification.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this final rule with comment period (which 
is available via the Internet on the CMS Web site), for estimating APC 
costs, we standardize 60 percent of estimated claims costs for 
geographic area wage variation using the same FY 2018 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)

[[Page 59259]]

to the Act, which defines a frontier State and amended section 1833(t) 
of the Act to add 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 (3) of our 
regulations. For the CY 2018 OPPS, we proposed to implement this 
provision in the same manner as we have since CY 2011 (82 FR 33591). 
Under this policy, the frontier State hospitals would receive a wage 
index of 1.00 if the otherwise applicable wage index (including 
reclassification, the rural floor, and rural floor budget neutrality) 
is less than 1.00 (as discussed below and in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33591 through 33592)), we proposed not to extend 
the imputed floor under the OPPS for CY 2018 and subsequent years, 
consistent with our proposal in the FY 2018 IPPS/LTCH PPS proposed rule 
(81 FR 19904 through 19905) not to extend the imputed floor under the 
IPPS for FY 2018 and subsequent fiscal years). Because the HOPD 
receives a wage index based on the geographic location of the specific 
inpatient hospital with which it is associated, we stated that the 
frontier State wage index adjustment applicable for the inpatient 
hospital also would apply for any associated HOPD. In the proposed rule 
(82 FR 33591), we referred readers to 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. We invited public comments on this 
proposal.
    We did not receive any public comments on this proposal. Therefore, 
for the reasons discussed above and in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33591), we are finalizing our proposal to implement the 
frontier State floor under the OPPS in the same manner as we have since 
CY 2011. We note that, after we made our proposal in the FY 2018 IPPS/
LTCH PPS proposed rule not to extend the imputed floor under the IPPS 
for FY 2018 and subsequent fiscal years (82 FR 19904 through 19905), 
and our proposal in the CY 2018 OPPS/ASC proposed rule not to extend 
the imputed floor under the OPPS for CY 2018 and subsequent years (82 
FR 33592), we decided in the FY 2018 IPPS/LTCH PPS final rule not to 
finalize our proposal to discontinue the imputed floor under the IPPS 
(82 FR 38138 through 38142). As discussed below, consistent with the FY 
2018 IPPS/LTCH PPS final rule, we are not finalizing our proposal to 
discontinue application of the imputed floor under the OPPS. This means 
that the applicable wage index, which can be superseded by the frontier 
State wage index if the applicable criteria are met, could also be 
affected by the imputed floor. We discuss our policy on the extension 
of the imputed floor under the IPPS as finalized in the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38142), and under the OPPS as finalized in 
this rule, in more detail later in this section.
    In addition to the changes required by the Affordable Care Act, we 
note that the FY 2018 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 provisions, an adjustment for occupational mix, 
and an adjustment to the wage index based on commuting patterns of 
employees (the out-migration adjustment). In the CY 2018 OPPS/ASC 
proposed rule, we referred readers to the FY 2018 IPPS/LTCH PPS 
proposed rule (82 FR 19898 through 19915) for a detailed discussion of 
all proposed changes to the FY 2018 IPPS wage indexes. We note that, in 
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), we proposed not 
to apply the imputed floor to the IPPS wage index computations for FY 
2018 and subsequent fiscal years. Consistent with this, we proposed in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33592) not to extend the 
imputed floor policy under the OPPS beyond December 31, 2017 (the date 
the imputed floor policy is set to expire under the OPPS). However, in 
the FY 2018 IPPS/LTCH PPS final rule, we did not finalize our proposal 
to discontinue the imputed floor under the IPPS, and instead decided to 
temporarily extend the imputed floor for an additional year through FY 
2018, while we continue to assess the effects of this policy and 
whether to continue or discontinue the imputed floor for the long term. 
As discussed below, consistent with the FY 2018 IPPS/LTCH PPS final 
rule, we are not finalizing our proposal to discontinue application of 
the imputed floor under the OPPS, but are instead continuing the 
imputed floor policy under the OPPS for an additional year, through 
December 31, 2018. We refer readers to the FY 2018 IPPS/LTCH PPS 
proposed and final rules (82 FR 19898 through 19915 and 82 FR 38129 
through 38157, respectively) for a detailed discussion of all proposed 
and final changes to the FY 2018 IPPS wage indexes (including our 
proposed and final policy regarding the imputed floor for FY 2018 and 
subsequent fiscal years). 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.
    Summarized below are comments we received regarding the application 
of the rural and imputed floor policies under the OPPS, along with our 
responses.
    Comment: One commenter opposed applying budget neutrality for the 
rural floor under the OPPS on a national basis. The commenter believed 
applying budget neutrality on a national basis disadvantages hospitals 
in most States while benefiting hospitals in a few States that have 
taken advantage of the system where a rural hospital has a wage index 
higher than most or all urban hospitals in a State. The commenter 
stated that rural floor budget neutrality currently requires all wage 
indexes for hospitals throughout the nation to be reduced. However, 
hospitals in those States that have higher wage indexes because of the 
rural floor are not substantially affected by the wage index 
reductions. Therefore, the commenter supported calculating rural floor 
budget neutrality under the OPPS for each individual State.
    Response: We appreciate this comment. We acknowledge that the 
application of the wage index and applicable wage index adjustments to 
OPPS payment rates may create distributional payment variations, 
especially within a budget neutral system. However, we continue to 
believe it is reasonable and appropriate to continue the current policy 
of applying budget neutrality for the rural floor under the OPPS on a 
national basis, consistent with the IPPS. We believe that hospital 
inpatient and outpatient departments are subject to the same labor cost 
environment, and therefore, the wage index and any applicable wage 
index adjustments (including the rural floor and rural floor budget 
neutrality) should be applied in the same manner under the IPPS and 
OPPS. Furthermore, we believe that applying the rural floor and rural 
floor budget neutrality in the same manner under the IPPS and OPPS is 
reasonable and logical, given the inseparable, subordinate status of 
the HOPD within the hospital overall. In addition, we believe the 
application of different wage indexes and wage index adjustments under 
the IPPS and OPPS would add a level of administrative complexity that 
is overly burdensome and unnecessary.

[[Page 59260]]

Therefore, we are continuing the current policy of applying budget 
neutrality for the rural floor under the OPPS on a national basis, 
consistent with the IPPS.
    Comment: One commenter supported the proposal to not apply the 
imputed floor to the IPPS wage index computations for FY 2018 and 
subsequent fiscal years when calculating the hospital wage indexes for 
the OPPS.
    Response: In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), 
we proposed not to apply the imputed floor to the IPPS wage index 
computations for FY 2018 and subsequent fiscal years. Consistent with 
this proposal, we proposed in the CY 2018 OPPS/ASC proposed rule (82 FR 
33592) not to extend the imputed floor policy under the OPPS beyond 
December 31, 2017 (the date the imputed floor policy is set to expire 
under the OPPS). As discussed in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38138 through 38142), after consideration of the many comments 
we received both in support of and against our proposal to discontinue 
the imputed floor under the IPPS, we decided to temporarily extend the 
imputed floor for an additional year under the IPPS through FY 2018, 
while we continue to assess the effects of this policy and whether to 
continue or discontinue the imputed floor for the long term. Therefore, 
in the FY 2018 IPPS/LTCH PPS final rule, we extended the imputed floor 
policy under both the original methodology and the alternative 
methodology for an additional year, through September 30, 2018. We 
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 
through 38142) for a detailed discussion of our final policy and 
rationale regarding application of the imputed floor under the IPPS for 
FY 2018. Given the inseparable, subordinate status of the HOPD within 
the hospital overall, we believe that using the IPPS wage index and 
wage index adjustments, including the imputed floor, as the source of 
an adjustment factor for the OPPS is reasonable and logical. 
Furthermore, as we previously stated, we believe that hospital 
inpatient and outpatient departments are subject to the same labor cost 
environment and, therefore, the wage index and any applicable wage 
index adjustments (including the imputed floor) should be applied in 
the same manner under the IPPS and OPPS. In addition, as discussed 
above, we believe the application of different wage index adjustments 
under the IPPS and OPPS would add a level of administrative complexity 
that is overly burdensome and unnecessary. Thus, as discussed further 
below, consistent with the FY 2018 IPPS/LTCH PPS final rule, we are not 
finalizing our proposal to discontinue application of the imputed floor 
under the OPPS, and instead are temporarily extending the imputed floor 
policy under the OPPS for an additional year.
    After consideration of the public comments we received and for the 
reasons discussed above, consistent with the FY 2018 IPPS/LTCH PPS 
final rule, we have decided to extend the imputed floor policy under 
the OPPS for an additional year, through December 31, 2018, while we 
continue to assess the effects of this policy and whether to continue 
or discontinue the imputed floor for the long term. Therefore, we are 
not finalizing our proposal to discontinue the imputed floor policy 
under the OPPS. We continue to believe that using the final fiscal year 
IPPS post-reclassified wage index, inclusive of any adjustments 
(including the imputed floor), as the wage index for the OPPS to 
determine the wage adjustments for both the OPPS payment rate and the 
copayment standardized amount is reasonable and logical, given the 
inseparable, subordinate status of the HOPD within the hospital 
overall.
    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: https://obamawhitehouse.archives.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 contained in OMB Bulletin No. 13-01, 
effective October 1, 2014. In the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56913), we adopted revisions to statistical areas contained in OMB 
Bulletin No. 15-01, issued on July 15, 2015, which provided updates to 
and superseded OMB Bulletin No. 13-01 that was issued on February 28, 
2013. 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 final rule with comment period (81 FR 79598), we adopted the 
revisions to the OMB statistical area delineations contained in OMB 
Bulletin No. 15-01, effective January 1, 2017, beginning with the CY 
2017 OPPS wage indexes.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 19898 through 19899) and final 
rule (82 FR 38130) discuss the two different lists of codes to identify 
counties: Social Security Administration (SSA) codes and Federal 
Information Processing Standard (FIPS) codes. Historically, CMS has 
listed and used SSA and FIPS county codes to identify and crosswalk 
counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. 
However, the SSA county codes are no longer being maintained and 
updated, although the FIPS codes continue to be maintained by the U.S. 
Census Bureau. The Census Bureau's most current statistical area 
information is derived from ongoing census data received since 2010; 
the most recent data are from 2015. In the FY 2018 IPPS/LTCH PPS 
proposed rule (81 FR 19898), for purposes of crosswalking counties to 
CBSAs for the IPPS wage index, we proposed to discontinue the use of 
the SSA county codes and begin using only the FIPS county codes. (We 
note that we finalized the proposal to discontinue use of SSA county 
codes and begin using only the FIPS county codes for purposes of 
crosswalking counties to CBSAs in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38130)). Similarly, for the purposes of crosswalking counties to 
CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC proposed rule 
(82 FR 33591), we proposed to discontinue the use of SSA county codes 
and begin using only the FIPS county codes. We invited public comments 
on this proposal. We did not receive any public comments on this 
proposal. Thus, for the reasons discussed above and in the CY 2018 
OPPS/ASC proposed rule (82 FR 33591), we are finalizing, without 
modification, our proposal to discontinue the use of SSA county codes 
and begin using only the FIPS county codes for the purposes of 
crosswalking counties to CBSAs for the OPPS wage index.
    The Census Bureau maintains a complete list of changes to counties 
or county equivalent entities on the Web site at: https://
www.census.gov/geo/

[[Page 59261]]

reference/county-changes.html. In our proposed transition to using only 
FIPS codes for counties for the IPPS wage index, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19899), we proposed to update the FIPS 
codes used for crosswalking counties to CBSAs for the IPPS wage index 
effective October 1, 2017, to incorporate changes to the counties or 
county equivalent entities included in the Census Bureau's most recent 
list. We proposed to include these updates to calculate the area wage 
indexes in a manner that is generally consistent with the CBSA-based 
methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 
IPPS/LTCH PPS final rule. Based on information included in the Census 
Bureau's Web site, since 2010, the Census Bureau has made the following 
updates to the FIPS codes for counties or county equivalent entities:
     Petersburg Borough, AK (FIPS State County Code 02-195), 
CBSA 02, was created from part of former Petersburg Census Area (02-
195) and part of Hoonah-Angoon Census Area (02-105). The CBSA code 
remains 02.
     The name of La Salle Parish, LA (FIPS State County Code 
22-059), CBSA 14, is now LaSalle Parish, LA (FIPS State County Code 22-
059). The CBSA code remains as 14.
     The name of Shannon County, SD (FIPS State County Code 46-
113), CBSA 43, is now Oglala Lakota County, SD (FIPS State County Code 
46-102). The CBSA code remains as 43.
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for the 
IPPS, we finalized our proposal to implement these FIPS code updates, 
effective October 1, 2017, beginning with the FY 2018 wage indexes. We 
note that while the county update changes listed earlier changed the 
county names, the CBSAs to which these counties map did not change from 
the prior counties. Therefore, there is no impact or change to 
hospitals in these counties; they continue to be considered rural for 
the IPPS wage index under these changes. Consistent with the FY 2018 
IPPS/LTCH PPS proposed rule, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33592), we proposed to implement these revisions for purposes of the 
OPPS, effective January 1, 2018, beginning with the CY 2018 OPPS wage 
indexes. We stated that we believe it is important to use the latest 
counties or county equivalent entities in order to properly crosswalk 
hospitals from a county to a CBSA for purposes of the OPPS wage index. 
In addition, we stated we believe that using the latest FIPS codes will 
allow us to maintain a more accurate and up-to-date payment system that 
reflects the reality of population shifts and labor market conditions. 
We invited public comments on this proposal.
    We did not receive any public comments on this proposal. Therefore, 
for the reasons discussed above and in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33591 through 33592), we are finalizing our proposal, 
without modification, to implement the FIPS code updates described 
above, effective January 1, 2018, beginning with the CY 2018 OPPS wage 
indexes. Tables 2 and 3 associated with the FY 2018 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 these county changes.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we proposed to 
use the FY 2018 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 2018. Therefore, we stated in the proposed 
rule that any adjustments for the FY 2018 IPPS post-reclassified wage 
index would be reflected in the final CY 2018 OPPS wage index. (We 
refer readers to the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19898 
through 19915) and final rule (82 FR 38129 through 38157), and the 
proposed and final FY 2018 hospital wage index files posted on the CMS 
Web site.) We invited public comments on this proposal. As discussed 
above, we received public comments regarding the application of the 
rural and imputed floors under the OPPS. We refer readers to our 
earlier discussion of these comments and our responses. After 
consideration of these comments, for the reasons discussed above and in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing 
this proposal without modification. As stated earlier, we continue to 
believe that using the final fiscal year IPPS post-reclassified wage 
index, inclusive of any adjustments, as the wage index for the OPPS to 
determine the wage adjustments for both the OPPS payment rate and the 
copayment standardized amount is reasonable and logical, given the 
inseparable, subordinate status of the HOPD within the hospital 
overall.
    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. In the CY 2018 OPPS/ASC proposed 
rule, we proposed to continue this policy for CY 2018, and included a 
brief summary of the major proposed FY 2018 IPPS wage index policies 
and adjustments that we proposed to apply to these hospitals under the 
OPPS for CY 2018. These proposals are summarized below. We invited 
public comments on these proposals.
    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 are 
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 applies if the hospital were paid under the 
IPPS. For CY 2018, 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). We did not receive any public comments on 
this proposal. Therefore, for the reasons discussed above and in the CY 
2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing this 
proposal without modification.
    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). Because this 3-
year transition will end at the end of CY

[[Page 59262]]

2017, it will no longer be applied in CY 2018.
    In addition, under the IPPS, the imputed floor policy was set to 
expire effective October 1, 2017. However, as discussed above and in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), we 
did not finalize our proposal not to extend the imputed floor policy 
under the IPPS for FY 2018 and subsequent fiscal years (82 FR 38132), 
and instead decided to extend the imputed floor policy for one 
additional year, through FY 2018. For purposes of the CY 2018 OPPS, we 
proposed not to extend the imputed floor policy beyond December 31, 
2017. However, consistent with the FY 2018 IPPS/LTCH PPS final rule, as 
discussed above, we are extending the imputed floor policy under the 
OPPS for one additional year, through December 31, 2018. Therefore, for 
CY 2018, for hospitals paid under the OPPS but not under the IPPS, the 
imputed floor policy will continue to apply through December 31, 2018.
    For CMHCs, for CY 2018, 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). Because this 3-year transition will end at the end of CY 2017, 
it will not be applied in CY 2018. Furthermore, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33592), we proposed that the wage index that 
applies to CMHCs would include the rural floor adjustment, but not the 
imputed floor adjustment, given that we had proposed not to extend the 
imputed floor policy under the OPPS beyond December 31, 2017 (the 
expiration date for the imputed floor under the OPPS). We also proposed 
that the wage index that applies to CMHCs would not include the out-
migration adjustment because that adjustment only applies to hospitals. 
We did not receive any public comments regarding these proposals, and 
are finalizing these proposals with the following modification. 
Because, as discussed above, we are extending the application of the 
imputed floor under the OPPS for an additional year, through December 
31, 2018, the wage index that applies to CMHCs will continue to include 
the imputed floor adjustment through December 31, 2018.
    Table 2 associated with the FY 2018 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 2018. We are 
including the out-migration adjustment information from Table 2 
associated with the FY 2018 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 2018 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 2018 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 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 earlier 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 2018 OPPS/ASC proposed rule (82 FR 33593), we proposed to 
update the default ratios for CY 2018 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 
2018 OPPS proposed rule Claims Accounting Narrative that is posted on 
the CMS Web site. Table 10 published in the proposed rule (82 FR 33593 
through 33594) listed the proposed statewide average default CCRs for 
OPPS services furnished on or after January 1, 2018, based on proposed 
rule data.
    We did not receive any public comments on our proposal to use 
statewide average default CCRs if a MAC cannot calculate a CCR for a 
hospital and to use these CCRs to adjust charges to costs on claims 
data for setting the final CY 2018 OPPS relative payment weights. 
Therefore, we are finalizing our proposal without modification.
     Table 9 below lists the statewide average default CCRs for OPPS 
services furnished on or after January 1, 2018, based on final rule 
data.

                                     Table 9--CY 2018 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                      CY 2018       default CCR
                     State                                 Urban/rural              default CCR    (CY 2017 OPPS
                                                                                                    final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA........................................  RURAL...........................           0.659           0.449
ALASKA........................................  URBAN...........................           0.218           0.237
ALABAMA.......................................  RURAL...........................           0.190           0.196
ALABAMA.......................................  URBAN...........................           0.155           0.158
ARKANSAS......................................  RURAL...........................           0.186           0.196

[[Page 59263]]

 
ARKANSAS......................................  URBAN...........................           0.200           0.205
ARIZONA.......................................  RURAL...........................           0.232           0.238
ARIZONA.......................................  URBAN...........................           0.160           0.176
CALIFORNIA....................................  RURAL...........................           0.181           0.179
CALIFORNIA....................................  URBAN...........................           0.193           0.188
COLORADO......................................  RURAL...........................           0.346           0.354
COLORADO......................................  URBAN...........................           0.204           0.208
CONNECTICUT...................................  RURAL...........................           0.324           0.402
CONNECTICUT...................................  URBAN...........................           0.249           0.253
DISTRICT OF COLUMBIA..........................  URBAN...........................           0.279           0.286
DELAWARE......................................  URBAN...........................           0.295           0.288
FLORIDA.......................................  RURAL...........................           0.158           0.169
FLORIDA.......................................  URBAN...........................           0.138           0.143
GEORGIA.......................................  RURAL...........................           0.222           0.230
GEORGIA.......................................  URBAN...........................           0.198           0.196
HAWAII........................................  RURAL...........................           0.332           0.338
HAWAII........................................  URBAN...........................           0.322           0.319
IOWA..........................................  RURAL...........................           0.296           0.291
IOWA..........................................  URBAN...........................           0.254           0.252
IDAHO.........................................  RURAL...........................           0.339           0.341
IDAHO.........................................  URBAN...........................           0.369           0.401
ILLINOIS......................................  RURAL...........................           0.214           0.241
ILLINOIS......................................  URBAN...........................           0.208           0.209
INDIANA.......................................  RURAL...........................           0.299           0.272
INDIANA.......................................  URBAN...........................           0.213           0.218
KANSAS........................................  RURAL...........................           0.264           0.269
KANSAS........................................  URBAN...........................           0.199           0.194
KENTUCKY......................................  RURAL...........................           0.184           0.194
KENTUCKY......................................  URBAN...........................           0.187           0.189
LOUISIANA.....................................  RURAL...........................           0.212           0.217
LOUISIANA.....................................  URBAN...........................           0.195           0.201
MASSACHUSETTS.................................  RURAL...........................           0.322           0.316
MASSACHUSETTS.................................  URBAN...........................           0.348           0.345
MAINE.........................................  RURAL...........................           0.419           0.425
MAINE.........................................  URBAN...........................           0.422           0.413
MARYLAND......................................  RURAL...........................           0.258           0.264
MARYLAND......................................  URBAN...........................           0.227           0.229
MICHIGAN......................................  RURAL...........................           0.302           0.295
MICHIGAN......................................  URBAN...........................           0.318           0.324
MINNESOTA.....................................  RURAL...........................           0.379           0.398
MINNESOTA.....................................  URBAN...........................           0.302           0.319
MISSOURI......................................  RURAL...........................           0.220           0.222
MISSOURI......................................  URBAN...........................           0.240           0.261
MISSISSIPPI...................................  RURAL...........................           0.213           0.224
MISSISSIPPI...................................  URBAN...........................           0.160           0.167
MONTANA.......................................  RURAL...........................           0.486           0.450
MONTANA.......................................  URBAN...........................           0.350           0.368
NORTH CAROLINA................................  RURAL...........................           0.206           0.216
NORTH CAROLINA................................  URBAN...........................           0.212           0.223
NORTH DAKOTA..................................  RURAL...........................           0.366           0.411
NORTH DAKOTA..................................  URBAN...........................           0.369           0.334
NEBRASKA......................................  RURAL...........................           0.313           0.294
NEBRASKA......................................  URBAN...........................           0.233           0.238
NEW HAMPSHIRE.................................  RURAL...........................           0.307           0.320
NEW HAMPSHIRE.................................  URBAN...........................           0.255           0.279
NEW JERSEY....................................  URBAN...........................           0.200           0.195
NEW MEXICO....................................  RURAL...........................           0.224           0.225
NEW MEXICO....................................  URBAN...........................           0.284           0.280
NEVADA........................................  RURAL...........................           0.175           0.196
NEVADA........................................  URBAN...........................           0.114           0.123
NEW YORK......................................  RURAL...........................           0.299           0.309
NEW YORK......................................  URBAN...........................           0.303           0.292
OHIO..........................................  RURAL...........................           0.280           0.292
OHIO..........................................  URBAN...........................           0.203           0.207
OKLAHOMA......................................  RURAL...........................           0.215           0.231
OKLAHOMA......................................  URBAN...........................           0.169           0.180
OREGON........................................  RURAL...........................           0.290           0.280
OREGON........................................  URBAN...........................           0.336           0.344

[[Page 59264]]

 
PENNSYLVANIA..................................  RURAL...........................           0.267           0.274
PENNSYLVANIA..................................  URBAN...........................           0.173           0.179
PUERTO RICO...................................  URBAN...........................           0.577           0.527
RHODE ISLAND..................................  URBAN...........................           0.276           0.291
SOUTH CAROLINA................................  RURAL...........................           0.170           0.185
SOUTH CAROLINA................................  URBAN...........................           0.191           0.190
SOUTH DAKOTA..................................  RURAL...........................           0.391           0.383
SOUTH DAKOTA..................................  URBAN...........................           0.242           0.229
TENNESSEE.....................................  RURAL...........................           0.173           0.181
TENNESSEE.....................................  URBAN...........................           0.174           0.180
TEXAS.........................................  RURAL...........................           0.205           0.214
TEXAS.........................................  URBAN...........................           0.168           0.177
UTAH..........................................  RURAL...........................           0.391           0.349
UTAH..........................................  URBAN...........................           0.304           0.315
VIRGINIA......................................  RURAL...........................           0.177           0.191
VIRGINIA......................................  URBAN...........................           0.215           0.226
VERMONT.......................................  RURAL...........................           0.393           0.426
VERMONT.......................................  URBAN...........................           0.378           0.340
WASHINGTON....................................  RURAL...........................           0.256           0.271
WASHINGTON....................................  URBAN...........................           0.323           0.294
WISCONSIN.....................................  RURAL...........................           0.348           0.354
WISCONSIN.....................................  URBAN...........................           0.308           0.290
WEST VIRGINIA.................................  RURAL...........................           0.253           0.266
WEST VIRGINIA.................................  URBAN...........................           0.297           0.285
WYOMING.......................................  RURAL...........................           0.407           0.429
WYOMING.......................................  URBAN...........................           0.327           0.311
----------------------------------------------------------------------------------------------------------------

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential 
Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the 
Act for CY 2018

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(SCHs) of 7.1 percent for all services and procedures paid under the 
OPPS, excluding drugs, biologicals, brachytherapy sources, and devices 
paid under the pass-through payment policy in accordance with section 
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173). Section 1833(t)(13) of the Act provided the 
Secretary the authority to make an adjustment to OPPS payments for 
rural hospitals, effective January 1, 2006, if justified by a study of 
the difference in costs by APC between hospitals in rural areas and 
hospitals in urban areas. Our analysis showed a difference in costs for 
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment 
adjustment for rural SCHs of 7.1 percent for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of 
the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
Sec.  419.43(g) of the regulations to clarify that essential access 
community hospitals (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 2017. 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 2018 OPPS/ASC proposed rule (82 FR 33594 through 33595), 
for the CY 2018 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.
    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 and provide additional resources for 
rural SCHs and EACHs.
    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.

[[Page 59265]]

F. Payment Adjustment for Certain Cancer Hospitals for CY 2018

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 are higher than those of other 
hospitals, 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 recently 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). For CY 2017, the target PCR was 
0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79603 through 7960).
2. Proposed and Finalized Policy for CY 2018
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying 42 CFR 419.43(i), that is, the payment 
adjustment for certain cancer hospitals, for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would otherwise apply. Section 16002(b) 
also provides that, in addition to the percentage reduction, the 
Secretary may consider making an additional percentage point reduction 
to the target PCR that takes into account payment rates for applicable 
items and services described under section 1833(t)(21)(C) of the Act 
for hospitals that are not cancer hospitals described under section 
1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality 
adjustment under section 1833(t) of the Act, the Secretary shall not 
take into account the reduced expenditures that result from application 
of section 1833(t)(18)(C) of the Act. In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33595), for CY 2018, we proposed 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 were available at the time of the 
development of the proposed rule, reduced by 1.0 percentage point to 
comply with section 16002(b) of the 21st Century Cures Act. We did not 
propose an additional reduction beyond the 1.0 percentage point 
reduction required by section 16002(b) for CY 2018. To calculate the 
proposed CY 2018 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 2018 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 2016 claims 
data that we used to model the impact of the proposed CY 2018 APC 
relative payment weights (3,701 hospitals) because it is appropriate to 
use the same set of hospitals that we are using to calibrate the 
modeled CY 2018 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging

[[Page 59266]]

from 2013 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 16 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 3,636 
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 90 percent of reasonable cost 
(weighted average PCR of 0.90). Therefore, after applying the 1.0 
percentage point reduction as required by section 16002(b) of the 21st 
Century Cures Act, 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 0.89 for each cancer hospital.
    Table 11 of the proposed rule indicated the proposed estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2018 due to the cancer hospital payment adjustment policy. We stated in 
the proposed rule that the actual amount of the CY 2018 cancer hospital 
payment adjustment for each cancer hospital will be determined at cost 
report settlement and will depend on each hospital's CY 2018 payments 
and costs. We noted 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.
    Comment: Several commenters supported the proposed cancer hospital 
payment adjustment for CY 2018.
    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, 2017 to update the 
adjustment. This update yields a target PCR of 0.88. We limited the 
dataset to the hospitals with CY 2016 claims data that we used to model 
the impact of the CY 2018 APC relative payment weights (3,724 
hospitals) because it is appropriate to use the same set of hospitals 
that we are using to calibrate the modeled CY 2018 OPPS. The cost 
report data for the hospitals in this dataset were from cost report 
periods with fiscal year ends ranging from 2012 to 2017. 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 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 an analytic file of 3,661 hospitals with cost 
report data.
    Using this smaller dataset of cost report data, we estimated a 
target PCR of 0.89. Therefore, after applying the 1.0 percentage point 
reduction as required by section 16002(b) of the 21st Century Cures 
Act, 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 0.88 for each cancer hospital. Table 10 below indicates the 
estimated percentage increase in OPPS payments to each cancer hospital 
for CY 2018 due to the cancer hospital payment adjustment policy. 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 10--Estimated CY 2018 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 2018
                                                          due to payment
                                                             adjustment
------------------------------------------------------------------------
050146.........................  City of Hope                       31.5
                                  Comprehensive Cancer
                                  Center.
050660.........................  USC Norris Cancer                  16.4
                                  Hospital.
100079.........................  Sylvester Comprehensive            22.9
                                  Cancer Center.
100271.........................  H. Lee Moffitt Cancer              21.7
                                  Center & Research
                                  Institute.
220162.........................  Dana-Farber Cancer                 44.2
                                  Institute.
330154.........................  Memorial Sloan-                    46.9
                                  Kettering Cancer
                                  Center.
330354.........................  Roswell Park Cancer                20.0
                                  Institute.
360242.........................  James Cancer Hospital &            27.5
                                  Solove Research
                                  Institute.
390196.........................  Fox Chase Cancer Center             7.6
450076.........................  M.D. Anderson Cancer               74.9
                                  Center.
500138.........................  Seattle Cancer Care                52.2
                                  Alliance.
------------------------------------------------------------------------


[[Page 59267]]

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 2017, 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 $3,825 (the fixed-dollar 
amount threshold) (81 FR 79604 through 79606). 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. Our estimate of total outlier payments as a percent of 
total CY 2016 OPPS payments, using CY 2016 claims available for this 
proposed rule, is approximately 1.0 percent of the total aggregated 
OPPS payments. Therefore, for CY 2016, we estimate that we paid the 
outlier target of 1.0 percent of total aggregated OPPS payments.
    As stated in the proposed rule, using CY 2016 claims data and CY 
2017 payment rates, we estimated that the aggregate outlier payments 
for CY 2017 would be approximately 1.0 percent of the total CY 2017 
OPPS payments. Using an updated claims dataset and OPPS ancillary CCRs, 
we estimate that we paid approximately 1.11 percent of the total CY 
2017 OPPS payments, in OPPS outliers. We provided estimated CY 2018 
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 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33596), for CY 2018, 
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, 
we proposed to continue our longstanding policy that if a CMHC's cost 
for partial hospitalization services, paid under 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.
    To ensure that the estimated CY 2018 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 $4,325.
    We calculated the proposed fixed-dollar threshold of $4,325 using 
the standard methodology most recently used for CY 2017 (81 FR 79604 
through 79605). For purposes of estimating outlier payments for the 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2017 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 2018 hospital outlier payments for the 
proposed rule, we inflated the charges on the CY 2016 claims using the 
same inflation factor of 1.104055 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2018 IPPS/LTCH PPS proposed 
rule (82 FR 20173). We used an inflation factor of 1.05074 to estimate 
CY 2017 charges from the CY 2016 charges reported on CY 2016 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.
    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 2018 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2018 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2018, we proposed to apply an adjustment factor of 
0.979187 to the CCRs that were in the April 2017 OPSF to trend them 
forward from CY 2017 to CY 2018. The methodology for calculating this 
proposed adjustment was discussed in the FY 2018 IPPS/LTCH PPS proposed 
rule (82 FR 20173).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2017 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 0.979187 to 
approximate CY 2018 CCRs) to charges on CY 2016 claims that were 
adjusted (using the proposed charge inflation factor of 1.104055 to 
approximate CY 2018 charges). We simulated aggregated CY 2018 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

[[Page 59268]]

equaled 1.0 percent of aggregated estimated total CY 2018 OPPS 
payments. We estimated that a proposed fixed-dollar threshold of 
$4,325, 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 referred readers to section XIII. of the 
proposed rule.
    We did not receive any public comments on our hospital outpatient 
outlier payment methodology. Therefore, 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 2018.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period for outlier calculations. For CY 2018, 
we are applying the overall CCRs from the July 2017 OPSF file after 
adjustment (using the CCR inflation adjustment factor of 0.9856 to 
approximate CY 2018 CCRs) to charges on CY 2016 claims that were 
adjusted using a charge inflation factor of 1.0936 to approximate CY 
2018 charges. These are the same CCR adjustment and charge inflation 
factors that were used to set the IPPS fixed-dollar thresholds for the 
FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). We simulated aggregated 
CY 2018 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 
payment equaled 1.0 percent of aggregated estimated total CY 2018 OPPS 
payments. We estimate that a fixed-dollar threshold of $4,150, 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. We note that the difference in our calculation of the final 
fixed-dollar threshold of $4,150 and the proposed fixed-dollar 
threshold of $4,350 is largely attributed to finalized proposals 
related to reducing payments for drugs purchased under the 340B drug 
program for CY 2018, as discussed in section V.B.7. of this final rule 
with comment period.
    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 2018 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 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 2018 scaled weight for the APC by the CY 2018 conversion factor. We 
note that this is the same methodology proposed in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33598), on which we did not receive any public 
comments.
    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.
    We demonstrate below the steps on how to determine the APC payments 
that will be made in a calendar year under the OPPS to a hospital that 
fulfills the Hospital OQR Program requirements and to a hospital that 
fails to meet the Hospital OQR Program requirements for a service that 
has any of the following status indicator assignments: ``J1'', ``J2'', 
``P'', ``Q1'', ``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or 
``V'' (as defined in Addendum D1 to this final rule with comment 
period, which is available via the Internet on the CMS Web site), in a 
circumstance in which the multiple procedure discount does not apply, 
the procedure is not bilateral, and conditionally packaged services 
(status indicator of ``Q1'' and ``Q2'') qualify for separate payment. 
We note that, although blood and blood products with status indicator 
``R'' and brachytherapy sources with status indicator ``U'' are not 
subject to wage adjustment, they are subject to reduced payments when a 
hospital fails to meet the Hospital OQR Program requirements.
    Individual providers interested in calculating the payment amount 
that they will receive for a specific service from the national 
unadjusted payment

[[Page 59269]]

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 
2018 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 2018 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 2018 under 
the IPPS, reclassifications through the Metropolitan Geographic 
Classification Review Board (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 2018 IPPS wage indexes, as applied 
to the CY 2018 OPPS, we refer readers to section II.C. of this final 
rule with comment period. 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 
2018 IPPS, which are listed in Table 2 in the FY 2018 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. (Click on the link on the left side of 
the screen titled ``FY 2018 IPPS Final Rule Home Page'' and select ``FY 
2018 Final Rule Tables.'') This step is to be followed only if the 
hospital is not reclassified or redesignated under section 1886(d)(8) 
or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.

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

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

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

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

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

    We are providing examples below of the calculation of both the 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 2018 full national 
unadjusted payment rate for APC 5071 is approximately $572.81. The 
reduced national unadjusted payment rate for APC 5071 for a hospital 
that fails to meet the Hospital OQR Program requirements is 
approximately $561.35. This reduced rate is calculated by multiplying 
the reporting ratio of 0.980 by the full unadjusted payment rate for 
APC 5071.
    The FY 2018 wage index for a provider located in CBSA 35614 in New 
York is 1.2876. The labor-related portion of the full national 
unadjusted payment is approximately $442.53 (.60 * $572.81 * 1.2876). 
The labor-related portion of the reduced national unadjusted payment is 
approximately $433.68 (.60 * $561.35 * 1.2876). The nonlabor-related 
portion of the full national unadjusted payment is approximately 
$229.12 (.40 * $572.81). The nonlabor-related portion of the

[[Page 59270]]

reduced national unadjusted payment is approximately $224.54 (.40 * 
$561.35). The sum of the labor-related and nonlabor-related portions of 
the full national adjusted payment is approximately $671.65 ($442.53 + 
$229.12). The sum of the portions of the reduced national adjusted 
payment is approximately $658.22 ($433.68 + $224.54).

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 2018 OPPS/ASC proposed rule (82 FR 33599), for CY 2018, 
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.) The proposed national unadjusted copayment 
amounts for services payable under the OPPS that would be effective 
January 1, 2018 were included in Addenda A and B to the proposed rule 
(which are available via the Internet on the CMS Web site).
    We did not receive any public comments on the proposed copayment 
amounts for new and revised APCs using the same methodology we 
implemented beginning in CY 2004 or the standard rounding principles we 
apply to our copayment amounts. Therefore, we are finalizing our 
proposed copayment policies, without modification.
    As discussed in section XIII.E. of this final rule with comment 
period, for CY 2018, 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.
     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

[[Page 59271]]

applies, and with section 1833(t)(3)(B) of the Act, which achieves 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).
3. Calculation of an Adjusted Copayment Amount for an APC Group
    As we stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33600), 
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, $114.57 is approximately 20 percent of the 
full national unadjusted payment rate of $572.81. For APCs with only a 
minimum unadjusted copayment in Addenda A and B to this final rule with 
comment period rule (which are available via the Internet on the CMS 
Web site), the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

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

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H. of this 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, 2018, 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 2018 OPD fee schedule increase factor 
discussed in section II.B. of this final rule with comment period.
    In addition, as noted earlier, 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 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 indicators (SIs) and APCs. 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. Those items, 
procedures, or services not paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment, while other payment status 
indicators do not. Section XI. of this final rule with comment period 
discusses the various status indicators used under the OPPS.
    As we did in the CY 2018 OPPS/ASC proposed rule, in Table 11 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 11--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    OPPS quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2017...................  Level II HCPCS      April 1, 2017.....  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.

[[Page 59272]]

 
July 1, 2017....................  Level II HCPCS      July 1, 2017......  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2017......  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2017.................  Level II HCPCS      October 1, 2017...  CY 2018 OPPS/ASC    CY 2019 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2018.................  Level II HCPCS      January 1, 2018...  CY 2018 OPPS/ASC    CY 2019 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2018...  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   CPT Codes.                              proposed rule.      final rule with
                                                                                               comment period.
----------------------------------------------------------------------------------------------------------------

1. Treatment of New HCPCS Codes That Were Effective April 1, 2017 for 
Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed 
Rule
    Through the April 2017 OPPS quarterly update CR (Transmittal 3728, 
Change Request 10005, dated March 3, 2017), we made effective five new 
Level II HCPCS codes for separate payment under the OPPS. In the CY 
2018 OPPS/ASC proposed rule (82 FR 33601), we solicited public comments 
on the proposed APC and status indicator assignments for these Level II 
HCPCS codes, which were displayed in Table 13 of the proposed rule and 
are now listed in Table 12 of this final rule with comment period. 
Specifically, we solicited public comments on HCPCS codes C9484, C9485, 
C9486, C9487, and C9488. We note that HCPCS code C9487 was deleted on 
June 30, 2017, and replaced with HCPCS code Q9989, effective July 1, 
2017. We indicated that the proposed payment rates for these codes were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site).

                           Table 12--New Level II HCPCS Codes Effective April 1, 2017
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2018    Final CY 2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
C9484....................  J1428                     Injection, eteplirsen, 10                G             9484
                                                      mg.
C9485....................  J9285                     Injection, olaratumab, 10                G             9485
                                                      mg.
C9486....................  J1627                     Injection, granisetron,                  G             9486
                                                      extended-release, 0.1 mg.
C9487 *..................  J3358                     Ustekinumab, for                         G             9487
                                                      intravenous injection, 1
                                                      mg.
C9488....................  C9488                     Injection, conivaptan                    G             9488
                                                      hydrochloride, 1 mg.
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9487, which was effective April 1, 2017, was deleted June 30, 2017 and replaced with HCPCS code
  Q9989 (Ustekinumab, for intravenous injection, 1 mg) effective July 1, 2017.

    We did not receive any public comments on the proposed APC and 
status indicator assignments for the new Level II HCPCS codes 
implemented in April 2017. Therefore, we are finalizing the proposed 
APC and status indicator assignments for these codes, as indicated in 
Table 12 above. We note that several of the HCPCS C-codes have been 
replaced with HCPCS J-codes effective January 1, 2018. Their 
replacement codes are listed in Table 12 above. 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). In addition, the status indicator meanings can be found in 
Addendum A to this final rule with comment period (which is available 
via the Internet on the CMS Web site).
2. Treatment of New HCPCS Codes That Were Effective July 1, 2017 for 
Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed 
Rule
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33602), 
through the July 2017 OPPS quarterly update CR (Transmittal 3783, 
Change Request 10122, dated May 26, 2017), we made 10 new Category III 
CPT codes and 13 Level II HCPCS codes effective July 1, 2017, and 
assigned them to appropriate interim OPPS status indicators and APCs. 
In the CY 2018 OPPS/ASC proposed rule, we solicited public comments on 
the proposed APC and status indicator assignments for CY 2018 for the 
CPT and Level II HCPCS codes implemented on July 1, 2017, all of which 
were displayed in Table 14 of the proposed rule, and are now listed in 
Table 13 of this final rule with comment period. We note that three of 
the new HCPCS codes effective July 1, 2017 replaced four existing HCPCS 
codes. Specifically, HCPCS code Q9986 replaced HCPCS code J1725 
(Injection, hydroxyprogesterone caproate, 1 mg), HCPCS codes Q9987 and 
Q9988 replaced HCPCS code P9072 (Platelets, pheresis, pathogen reduced 
or rapid bacterial tested, each unit), and HCPCS code Q9989 replaced 
HCPCS code C9487 (Ustekinumab, for intravenous injection, 1 mg). With 
the establishment of HCPCS codes Q9986, Q9987, and Q9988, we made their 
predecessor HCPCS codes J1725 and P9072 inactive for reporting and 
revised the status indicators for both codes to ``E1'' (Not Payable by 
Medicare) effective July 1, 2017. In addition, because HCPCS code Q9989 
describes the same drug as HCPCS code C9487, in the CY 2018 OPPS/ASC 
proposed rule, we proposed to continue the drug's pass-through payment 
status and to assign HCPCS code Q9989 to the same APC and status 
indicator as its predecessor HCPCS code

[[Page 59273]]

C9487, as shown in Table 14 of the proposed rule. The proposed payment 
rates and status indicators for these codes, where applicable, were 
included 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 new Category III CPT codes and 
Level II HCPCS codes implemented in July 2017. Therefore, we are 
finalizing the proposed APC and status indicator assignments for these 
codes, as indicated in Table 13 below. We note that several of the 
HCPCS C and Q-codes have been replaced with HCPCS J-codes effective 
January 1, 2018. Their replacement codes are listed in Table 13 below. 
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). In addition, the status indicator 
meanings 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 13--New Category III CPT and Level II HCPCS Codes Effective July 1, 2017
----------------------------------------------------------------------------------------------------------------
                                                                                  Final  CY 2018  Final  CY 2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
C9489....................  J2326...................  Injection, nusinersen, 0.1               G             9489
                                                      mg.
C9490....................  J0565...................  Injection, bezlotoxumab,                 G             9490
                                                      10 mg.
C9745....................  C9745...................  Nasal endoscopy, surgical;              J1             5165
                                                      balloon dilation of
                                                      eustachian tube.
C9746....................  C9746...................  Transperineal implantation              J1             5377
                                                      of permanent adjustable
                                                      balloon continence
                                                      device, with
                                                      cystourethroscopy, when
                                                      performed and/or
                                                      fluoroscopy, when
                                                      performed.
C9747....................  C9747...................  Ablation of prostate,                   J1             5376
                                                      transrectal, high
                                                      intensity focused
                                                      ultrasound (HIFU),
                                                      including imaging
                                                      guidance.
K0553....................  K0553...................  Supply allowance for                     Y              N/A
                                                      therapeutic continuous
                                                      glucose monitor (CGM),
                                                      includes all supplies and
                                                      accessories, 1 month
                                                      supply = 1 Unit Of
                                                      Service.
K0554....................  K0554...................  Receiver (monitor),                      Y              N/A
                                                      dedicated, for use with
                                                      therapeutic glucose
                                                      continuous monitor system.
Q9984....................  J7296...................  Levonorgestrel-releasing                E1              N/A
                                                      intrauterine
                                                      contraceptive system
                                                      (Kyleena), 19.5 mg.
Q9985....................  J1729...................  Injection,                               N              N/A
                                                      hydroxyprogesterone
                                                      caproate, not otherwise
                                                      specified, 10 mg.
Q9986....................  J1726...................  Injection,                               K             9074
                                                      hydroxyprogesterone
                                                      caproate (Makena), 10 mg.
Q9987....................  P9100...................  Pathogen(s) test for                     S             1493
                                                      platelets.
Q9988....................  P9073...................  Platelets, pheresis,                     R             9536
                                                      pathogen reduced, each
                                                      unit.
Q9989....................  J3358...................  Ustekinumab, for                         G             9487
                                                      intravenous injection, 1
                                                      mg.
0469T....................  0469T...................  Retinal polarization scan,              E1              N/A
                                                      ocular screening with on-
                                                      site automated results,
                                                      bilateral.
0470T....................  0470T...................  Optical coherence                        M              N/A
                                                      tomography (OCT) for
                                                      microstructural and
                                                      morphological imaging of
                                                      skin, image acquisition,
                                                      interpretation, and
                                                      report; first lesion.
0471T....................  0471T...................  Optical coherence                        N              N/A
                                                      tomography (OCT) for
                                                      microstructural and
                                                      morphological imaging of
                                                      skin, image acquisition,
                                                      interpretation, and
                                                      report; each additional
                                                      lesion (List separately
                                                      in addition to code for
                                                      primary procedure).
0472T....................  0472T...................  Device evaluation,                      Q1             5743
                                                      interrogation, and
                                                      initial programming of
                                                      intra- ocular retinal
                                                      electrode array (eg,
                                                      retinal prosthesis), in
                                                      person, with iterative
                                                      adjustment of the
                                                      implantable device to
                                                      test functionality,
                                                      select optimal permanent
                                                      programmed values with
                                                      analysis, including
                                                      visual training, with
                                                      review and report by a
                                                      qualified health care
                                                      professional.
0473T....................  0473T...................  Device evaluation and                   Q1             5742
                                                      interrogation of intra-
                                                      ocular retinal electrode
                                                      array (eg, retinal
                                                      prosthesis), in person,
                                                      including reprogramming
                                                      and visual training, when
                                                      performed, with review
                                                      and report by a qualified
                                                      health care professional.
0474T....................  0474T...................  Insertion of anterior                   J1             5492
                                                      segment aqueous drainage
                                                      device, with creation of
                                                      intraocular reservoir,
                                                      internal approach, into
                                                      the supraciliary space.
0475T....................  0475T...................  Recording of fetal                       M              N/A
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; patient
                                                      recording and storage,
                                                      data scanning with signal
                                                      extraction, technical
                                                      analysis and result, as
                                                      well as supervision,
                                                      review, and
                                                      interpretation of report
                                                      by a physician or other
                                                      qualified health care
                                                      professional.
0476T....................  0476T...................  Recording of fetal                      Q1             5734
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; patient
                                                      recording, data scanning,
                                                      with raw electronic
                                                      signal transfer of data
                                                      and storage.
0477T....................  0477T...................  Recording of fetal                      Q1             5734
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; signal
                                                      extraction, technical
                                                      analysis, and result.
0478T....................  0478T...................  Recording of fetal                       M              N/A
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; review,
                                                      interpretation, report by
                                                      physician or other
                                                      qualified health care
                                                      professional.
----------------------------------------------------------------------------------------------------------------


[[Page 59274]]

3. Process for New Level II HCPCS Codes That Became Effective October 
1, 2017 and New Level II HCPCS Codes That Will Be Effective January 1, 
2018 for Which We Are Soliciting Public Comments in This CY 2018 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, as displayed in Table 11 of this final rule 
with comment period. 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 2018, these codes are flagged 
with comment indicator ``NI'' in Addendum B to this OPPS/ASC final rule 
with comment period to indicate that we are assigning them an interim 
payment status which is subject to public comment. 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. In the CY 2018 OPPS/ASC proposed rule (82 FR 33603), we 
proposed to continue this process for CY 2018. Specifically, for CY 
2018, we proposed to include in Addendum B to the CY 2018 OPPS/ASC 
final rule with comment period the following new HCPCS codes:
     New Level II HCPCS codes effective October 1, 2017, that 
would be incorporated in the October 2017 OPPS quarterly update CR; and
     New Level II HCPCS codes effective January 1, 2018, that 
would be incorporated in the January 2018 OPPS quarterly update CR.
    As stated above, the October 1, 2017 and January 1, 2018 codes are 
flagged with comment indicator ``NI'' in Addendum B to this CY 2018 
OPPS/ASC final rule with comment period to indicate that we have 
assigned these codes an interim OPPS payment status for CY 2018. We are 
inviting public comments on the interim status indicator and APC 
assignments for these codes, if applicable, that will be finalized in 
the CY 2019 OPPS/ASC final rule with comment period.
4. Treatment of New and Revised Category I and III CPT Codes That Will 
Be Effective January 1, 2018 for Which We Solicited Public Comments in 
the CY 2018 OPPS/ASC Proposed Rule
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APC and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the codes that would be 
effective January 1 in the OPPS/ASC proposed rules, along with proposed 
APC and status indicator assignments for them, and to finalize the APC 
and status indicator assignments in the OPPS/ASC final rules beginning 
with the CY 2016 OPPS update. For those new/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish and use HCPCS G-codes that mirror 
the predecessor CPT codes and retain the current APC and status 
indicator assignments for a year until we can propose APC and status 
indicator assignments in the following year's rulemaking cycle. We note 
that even if we find that we need to create HCPCS G-codes in place of 
certain CPT codes for the MPFS proposed rule, we do not anticipate that 
these HCPCS G-codes will always be necessary for OPPS purposes. We will 
make every effort to include proposed APC and status indicator 
assignments for all new and revised CPT codes that the AMA makes 
publicly available in time for us to include them in the proposed rule, 
and to avoid the resort to HCPCS G-codes and the resulting delay in 
utilization of the most current CPT codes. Also, we finalized our 
proposal to make interim APC and status indicator assignments for CPT 
codes that are not available in time for the proposed rule and that 
describe wholly new services (such as new technologies or new surgical 
procedures), solicit public comments, and finalize the specific APC and 
status indicator assignments for those codes in the following year's 
final rule.
    For the CY 2018 OPPS update, we received the CY 2018 CPT codes from 
AMA in time for inclusion in the CY 2018 OPPS/ASC proposed rule. The 
new, revised, and deleted CY 2018 Category I and III CPT codes were 
included in Addendum B to the CY 2018 OPPS/ASC proposed rule (which is 
available via the Internet on the CMS Web site). We noted in the 
proposed rule that the new and revised codes are assigned to new 
comment indicator ``NP'' to indicate that the code is new for the next 
calendar year or the code is an existing code with substantial revision 
to its code descriptor in the next calendar year as compared to the 
current calendar year with a proposed APC assignment, and that comments 
will be accepted on the proposed APC assignment and status indicator.
    Further, in the CY 2018 OPPS/ASC proposed rule, we reminded readers 
that the CPT code descriptors that appear in Addendum B are short 
descriptors and do not fully 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 
2018 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 
adequately comment on our proposed APCs and status indicator 
assignments. We indicated that the 5-digit placeholder codes were 
included in Addendum O, specifically under the column labeled ``CY 2018 
OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to the proposed 
rule. We stated that the final CPT code numbers will be included in the 
CY 2018 OPPS/ASC final rule with comment period. We noted that not 
every code listed in Addendum O is subject to comment. For the new and 
revised Category I and III CPT codes, we requested comments on only 
those codes that are 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 the ``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 on July 31-August 1, 2017.
    In summary, we solicited public comments on the proposed APC and 
status indicator assignments for the new and revised Category I and III 
CPT codes that will be effective January 1, 2018. The CPT codes were 
listed in Addendum B to the proposed rule with short descriptors only. 
We listed them again in Addendum O to the proposed rule with long 
descriptors. We also proposed to finalize the status indicator and APC 
assignments for these codes (with their final CPT code numbers) in the 
CY 2018 OPPS/ASC final rule with comment period.
    Commenters addressed several of the new CPT codes that were 
assigned to comment indicator ``NP'' in Addendum

[[Page 59275]]

B to the CY 2018 OPPS/ASC proposed rule. We have responded to those 
public comments in sections II.A.2.b. (Comprehensive APCs), III.D. 
(OPPS APC-Specific Policies), V. (OPPS Payment Changes for Drugs, 
Biologicals, and Radiopharmaceuticals), and XII. (Updates to the ASC 
Payment System) of this CY 2018 OPPS/ASC final rule with comment 
period.
    The final status indicators, APC assignments, and payment rates for 
the new CPT codes that are effective January 1, 2018 can be found in 
Addendum B to this final rule with comment period (which is available 
via the Internet on the CMS Web site). In addition, the status 
indicator meanings can be found in Addendum A 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.  [thinsp]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 2018 OPPS/ASC proposed rule (82 FR 33604), for CY 
2018, 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 HOP 
Panel recommendations for specific services for the CY 2018 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 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 2018 OPPS/ASC proposed 
rule (81 FR 33604 through 33605), 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 2018 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 2018 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 2018 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 2018 OPPS/ASC proposed rule (81 FR 33604 through 
33605), we proposed to reassign these procedure codes to new APCs that 
contain services that are similar with regard to both their clinical 
and

[[Page 59276]]

resource characteristics. In many cases, the proposed procedure code 
reassignments and associated APC reconfigurations for CY 2018 included 
in the proposed rule are related to changes in costs of services that 
were observed in the CY 2016 claims data newly available for CY 2018 
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 
2018. Addendum B to the CY 2018 OPPS/ASC proposed rule identified with 
the 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 July 1, 2017 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). 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 2018 changes compared to the HCPCS codes' status as reflected 
in the October 2017 Addendum B update.
3. APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we proposed for CY 2018, 
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 2016 claims data available for the CY 2018 proposed 
rule, we found 12 APCs with violations of the 2 times rule. We applied 
the criteria as described above to identify the APCs for which we 
proposed to make exceptions under the 2 times rule for CY 2018, and 
found that all of the 12 APCs we identified met the criteria for an 
exception to the 2 times rule based on the CY 2016 claims data 
available for the proposed rule. We did not include in that 
determination those APCs where a 2 times rule violation was not a 
relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS 
codes assigned to it that have similar geometric mean costs and do not 
create a 2 times rule violation. Therefore, we have only identified 
those APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with 2 times rule violations.
    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 may 
accept the HOP Panel's recommendation because those recommendations are 
based on explicit consideration (that is, a review of the latest OPPS 
claims data and group discussion of the issue) of resource use, 
clinical homogeneity, site of service, and the quality of the claims 
data used to determine the APC payment rates.
    Table 16 of the proposed rule listed the 12 APCs for which we 
proposed to make exceptions under the 2 times rule for CY 2018 based on 
the criteria cited above and claims data submitted between January 1, 
2016, and December 31, 2016, that were processed on or before December 
31, 2016. We indicated that, for the final rule with comment period, we 
intended to use claims data for dates of service between January 1, 
2016, and December 31, 2016, that were processed on or before June 30, 
2017, and updated CCRs, if available.
    Based on the updated final rule CY 2016 claims data used for this 
CY 2018 final rule with comment period, we were able to remedy 6 APC 
violations out of the 12 APCs that appeared in Table 16 of the CY 2018 
OPPS/ASC proposed rule. Specifically, we found that the following 6 
APCs no longer met the criteria for exception to the 2 times rule in 
this final rule with comment period:
     APC 5161 (Level 1 ENT Procedures);
     APC 5311 (Level 1 Lower GI Procedures);
     APC 5461 (Level 1 Neurostimulator and Related Procedures);
     APC 5573 (Level 3 Imaging with Contrast);
     APC 5611 (Level 1 Therapeutic Radiation Treatment 
Preparation); and
     APC 5735 (Level 5 Minor Procedures).
    Secondly, based on our analysis of the final rule claims data, we 
found a total of 11 APCs with violations of the 2 times rule. Of these 
11 total APCs, 6 were identified in the proposed rule and 5 are newly 
identified APCs. Specifically, we found the following 6 APCs from the 
proposed rule continued to have violations of the 2 times rule for this 
final rule with comment period:
     APC 5112 (Level 2 Musculoskeletal Procedures);
     APC 5521 (Level 1 Imaging without Contrast);
     APC 5691 (Level 1 Drug Administration);
     APC 5731 (Level 1 Minor Procedures);
     APC 5771 (Cardiac Rehabilitation); and
     APC 5823 (Level 3 Health and Behavior Services).
    In addition, we found that the following 5 additional APCs violated 
the 2 times rule using the final rule with comment period claims data:
     APC 5522 (Level 2 Imaging without Contrast);
     APC 5524 (Level 4 Imaging without Contrast);
     APC 5571 (Level 1 Imaging with Contrast);
     APC 5721 (Level 1 Diagnostic Tests and Related Services); 
and
     APC 5732 (Level 2 Minor Procedures).
    Comment: Some commenters requested that CMS not adopt the exception 
to C-APCs, including C-APC 5112 (Level 2 Musculoskeletal Procedures), 
because they believed it would result in lowering the payments for the 
procedures assigned to C-APCs. According to the commenters, because C-
APCs involve complex combinations of items and services where 
appropriate valuation is critical, CMS should not adopt exceptions that 
have the result of lowering the overall payment rate for associated 
procedures. Instead, as one commenter suggested, CMS should establish 
additional APC levels to avoid any exceptions to the 2 times rule.
    Response: We do not agree that we should establish a new APC for 
every group that violates the 2 times rule. We believe that excepting 
certain APCs from the 2 times rule is necessary, especially for 
procedures assigned to the same APC based on clinical homogeneity. As 
we have seen throughout the years since the implementation of the OPPS 
on August 1, 2000, APCs excepted in one year are usually resolved the 
following year based on our analysis of the latest claims data used for 
ratesetting. For example, we listed C-APC 5165 (Level 5 ENT Procedures) 
in Table 19 of the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70374) as one of the APCs that violated the 2 times rule for CY 
2016. However, this same APC no longer appeared in Table 9 of the CY 
2017 OPPS/ASC final rule with comment period (81 FR 79614) as excepted 
from the 2 times rule. We

[[Page 59277]]

believe that the anomalies seen in one year but not the next year for a 
given APC are the result of more accurate coding and charge master 
identification by HOPDs.
    After considering the public comments we received on APC 
assignments and our analysis of the CY 2016 costs from hospital claims 
and cost report data available for this CY 2018 final rule with comment 
period, we are finalizing our proposals with some modifications. 
Specifically, we are finalizing our proposal to except 6 of the 12 
proposed APCs from the 2 times rule for CY 2018 (APCs 5112, 5521, 5691, 
5731, 5771, and 5823), and also excepting 5 additional APCs (APCs 5522, 
5524, 5571, 5721, and 5732). As noted above, we were able to remedy the 
other 6 of the proposed rule 2 time violations in this final rule with 
comment period.
    Table 14 below lists the 11 APCs that we are excepting from the 2 
times rule for CY 2018 based on the criteria described earlier and a 
review of updated claims data for dates of service between January 1, 
2016 and December 31, 2016, that were processed on or before June 30, 
2017, and updated CCRs, if available. 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 HOP 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.

        Table 14--APC Exceptions to the 2 Times Rule for CY 2018
------------------------------------------------------------------------
              APC                           CY 2018 APC title
------------------------------------------------------------------------
5112...........................  Level 2 Musculoskeletal Procedures.
5521...........................  Level 1 Imaging without Contrast.
5522...........................  Level 2 Imaging without Contrast.
5524...........................  Level 4 Imaging without Contrast.
5571...........................  Level 1 Imaging with Contrast.
5691...........................  Level 1 Drug Administration.
5721...........................  Level 1 Diagnostic Tests and Related.
                                  Services
5731...........................  Level 1 Minor Procedures.
5732...........................  Level 2 Minor Procedures.
5771...........................  Cardiac Rehabilitation.
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 in which a service can be 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 2017, there are 51 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 1906 (New 
Technology--Level 51 ($140,001-$160,000)). 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 and 1901 through 1906, vary with 
increments ranging from $10 to $19,999. 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. As we did in 
the CY 2018 OPPS/ASC proposed rule, 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. Furthermore, 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

[[Page 59278]]

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. Revised and Additional New Technology APC Groups
    As stated earlier, for CY 2017, there are currently 51 levels of 
New Technology APCs. To improve our ability to have payments for 
services over $100,000 more closely match the cost of the service, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33606), for CY 2018, we 
proposed to narrow the increments for New Technology APCs 1901-1906 
from $19,999 cost bands to $14,999 cost bands. We also proposed to add 
New Technology APCs 1907 and 1908 (New Technology Level 52 ($145,001-
$160,000), which would allow for an appropriate payment of retinal 
prosthesis implantation procedures, which is discussed later in this 
section. Table 17 of the proposed rule included the complete list of 
the proposed modified and additional New Technology APC groups for CY 
2018.
    We did not receive any public comments on our proposal. Therefore, 
we are finalizing the proposal, without modification. Table 15 below 
includes the complete list of the final modified and additional New 
Technology APC groups for CY 2018.

                             Table 15--CY 2018 Additional New Technology APC Groups
----------------------------------------------------------------------------------------------------------------
          CY 2018 APC                    CY 2018 APC title             CY 2018 SI         Updated or new APC
----------------------------------------------------------------------------------------------------------------
1901...........................  New Technology--Level 49                        S   Updated.
                                  ($100,001-$115,000).
1902...........................  New Technology--Level 49                        T   Updated.
                                  ($100,001-$115,000).
1903...........................  New Technology--Level 50                        S   Updated.
                                  ($115,001-$130,000).
1904...........................  New Technology--Level 50                        T   Updated.
                                  ($115,001-$130,000).
1905...........................  New Technology--Level 51                        S   Updated.
                                  ($130,001-$145,000).
1906...........................  New Technology--Level 51                        T   Updated.
                                  ($130,001-$145,000).
1907...........................  New Technology--Level 52                        S   New.
                                  ($145,001-$160,000).
1908...........................  New Technology--Level 52                        T   New.
                                  ($145,001-$160,000).
----------------------------------------------------------------------------------------------------------------

    The final payment rates for New Technology APCs 1901 through 1908 
are included in Addendum A to this final rule with comment period 
(which is available via the Internet on the CMS Web site).
3. Procedures Assigned to New Technology APC Groups for CY 2018
    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.
    In addition, 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), where 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 2018, in the CY 2018 
OPPS/ASC proposed rule (82 FR 33606), 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).
a. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 
1537, 5114, and 5414)
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607), 
currently, there are four CPT/HCPCS codes that describe magnetic 
resonance image guided high intensity focused ultrasound (MRgFUS) 
procedures, three of which we proposed to continue to assign to 
standard APCs and one of which we proposed to continue to assign to a 
New Technology APC for CY 2018. 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 18 of the proposed rule, and as listed in 
Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to 
continue to assign CPT codes 0071T and 0072T to APC 5414 (Level 4 
Gynecologic Procedures), with a proposed payment rate of approximately 
$2,189 for CY 2018. We also proposed to continue to assign the APC to 
status indicator ``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 continue to assign 
HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention, 
other than uterine leiomyomata, with magnetic resonance (mr) guidance) 
to APC 5114 (Level 4 Musculoskeletal Procedures), with a proposed 
payment rate of approximately $5,385 for CY 2018. We also proposed to 
continue to assign HCPCS code C9734 to status indicator ``J1''.
    Further, we proposed to continue to assign CPT code 0398T to APC 
1537 (New Technology--Level 37 ($9,501-

[[Page 59279]]

$10,000)), with a proposed payment rate of $9,750.50 for CY 2018. At 
the time the proposed rule was developed, there was only one claim for 
CPT code 0398T with a geometric mean cost of $27,516. We referred 
readers to Addendum B to the proposed rule for the proposed payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the Internet on the CMS Web site.
    Comment: Several commenters stated that the proposed payment rate 
for CPT code 0398T is too low and recommended that CPT code 0398T be 
assigned to either New Technology APC 1578 (New Technology--Level 41 
($25,001-$30,000)) or APC 5464 (Level 4 Neurostimulator and Related 
Procedures), which have payment rates closer to the reported cost of 
the procedure of $27,500 based on the one claim available at the time 
of the development of the proposed rule. Commenters also noted that the 
resources required for the procedure described by CPT code 0398T are 
substantially more than the resources required for the procedure 
described by CPT code C9734, which had been used by CMS to attempt to 
model the cost of the procedure described by CPT code 0398T.
    Response: We appreciate the concerns of the commenters and, for the 
reasons set forth below, agree that the proposed payment rate for CPT 
code 0398T may be too low and the procedure should be reassigned to a 
different APC. The proposed payment rate for CPT code 0398T was based 
on the payment rate for HCPCS code C9734 because 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 made by the 
same manufacturer (81 FR 79642). However, based on information from the 
manufacturer, resources involved for the procedure described by CPT 
code 0398T appear to be higher than those involved for the procedure 
described by HCPCS code C9734. In addition, we still have concerns that 
the costs reported from the one claim for the procedure described by 
CPT code 0398T may not accurately reflect the geometric mean costs of 
the procedure. However, the geometric mean cost of $29,254 for the one 
claim means the cost of CPT code 0398T is substantially higher than the 
proposed payment rate of $9,750.50. We note that, for CY 2017, the 
manufacturer indicated that an appropriate payment for the procedure 
described by CPT code 0398T would be approximately $18,000 and that 
either a New Technology APC paying that amount or assignment to 
clinical APC 5463 (Level 3 Neurostimulator and Related Procedures) 
would be appropriate. Based on the presence of only one claim along 
with the reported costs associated with the procedure described by CPT 
code 0398T presented to us last year by the manufacturer, we believe 
that it is appropriate to assign the procedure described by CPT code 
0398T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with a 
payment rate of $17,500.50 for CY 2018. The continued New Technology 
APC assignment will allow time to collect more claims data before 
assigning CPT code 0398T to a clinical APC.
    Comment: One commenter supported the proposal to assign CPT code 
C9734 to APC 5114.
    Response: We appreciate the commenter's support.
    In summary, after consideration of the public comments we received, 
we are modifying our proposal for the APC assignment of CPT code 0398T. 
Instead of continuing to assign this code to New Technology APC 1537 
(New Technology--Level 37 ($9,501-$10,000)), with a payment rate of 
$9,750.50, for CY 2018, we are reassigning CPT code 0398T to New 
Technology APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with 
a payment rate of $17,500.50. In addition, we are finalizing our 
proposal, without modification, to reassign HCPCS code C9734 to APC 
5114. We did not receive any public comments related to our proposal 
for CPT codes 0071T and 0072T. Therefore, we are finalizing our 
proposal to continue to assign these CPT codes to APC 5414 without 
modification. Table 16 below lists the final CY 2018 status indicator 
and APC assignments for the magnetic resonance image guided high 
intensity focused ultrasound (MRgFUS) procedures. We refer readers to 
Addendum B of this final rule with comment period for the final payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the Internet on the CMS Web site.

Table 16--CY 2018 Status Indicator (SI) and APC Assignment for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       CY 2017
                                                          CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
      CPT/HCPCS code               Long descriptor             SI         OPPS APC     payment         SI         OPPS APC    CY 2018 OPPS payment rate
                                                                                         rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0071T.....................  Focused ultrasound ablation            J1          5414    $2,084.59           J1          5414  Refer to OPPS Addendum B.
                             of uterine leiomyomata,
                             including mr guidance;
                             total leiomyomata volume
                             less than 200 cc of tissue.
0072T.....................  Focused ultrasound ablation            J1          5414     2,084.59           J1          5414  Refer to OPPS Addendum B.
                             of uterine leiomyomata,
                             including mr guidance;
                             total leiomyomata volume
                             greater or equal to 200 cc
                             of tissue.
0398T.....................  Magnetic resonance image                S          1537     9,750.50            S          1576  Refer to OPPS Addendum B.
                             guided high intensity
                             focused ultrasound
                             (mrgfus), stereotactic
                             ablation lesion,
                             intracranial for movement
                             disorder including
                             stereotactic navigation and
                             frame placement when
                             performed.

[[Page 59280]]

 
C9734.....................  Focused ultrasound ablation/           J1          5114     5,219.36           J1          5114  Refer to OPPS Addendum B.
                             therapeutic intervention,
                             other than uterine
                             leiomyomata, with magnetic
                             resonance (mr) guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Retinal Prosthesis Implant Procedure
    CPT code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intra-ocular retinal 
electrode array, with vitrectomy) describes the implantation of a 
retinal prosthesis, specifically, a procedure involving the 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 this status 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 was assigned to New Technology APC 
1599 with a payment rate of $95,000, which was the highest paying New 
Technology APC for that year. 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) believed that the CY 2016 payment rate for 
the procedure involving the Argus[supreg] II System was insufficient to 
cover the hospital cost of performing the procedure, which includes the 
cost of the retinal prosthesis with a retail price of approximately 
$145,000.
    For CY 2017, analysis of the CY 2015 OPPS claims data used for the 
CY 2017 final rule with comment period showed 9 single claims (out of 
13 total claims) for CPT code 0100T, with a geometric mean cost of 
approximately $142,003 based on claims submitted between January 1, 
2015, through December 31, 2015, and processed through June 30, 2016. 
Based on the CY 2015 OPPS claims data available for the final rule with 
comment period and our understanding of the Argus[supreg] II procedure, 
we reassigned CPT code 0100T from New Technology APC 1599 to New 
Technology APC 1906, with a final payment rate of $150,000.50 for CY 
2017. We noted that this payment rate included the cost of both the 
surgical procedure (CPT code 0100T) and the retinal prosthesis device 
(HCPCS code C1841).
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607 
through 33608), for the CY 2018 update, analysis of the CY 2016 OPPS 
claims data used for the CY 2018 proposed rule showed 3 single claims 
(out of 3 total claims) for CPT code 0100T, with a geometric mean cost 
of approximately $116,239 based on the claims submitted between January 
1, 2016 through December 31, 2016, and processed through December 31, 
2016. We stated in the proposed rule that, for the CY 2018 OPPS/ASC 
final rule with comment period, the final payment rate would be based 
on claims submitted between January 1, 2016 and December 31, 2016, and 
processed through June 30, 2017.
    In the proposed rule, based on the CY 2016 OPPS claims data 
available, which showed a geometric mean cost of approximately 
$116,239, we proposed to reassign the Argus[supreg] II procedure to a 
New Technology APC with a payment band that covers the geometric mean 
cost of the procedure. Therefore, we proposed to reassign CPT code 
0100T to APC 1904 (New Technology--Level 50 ($115,001-$130,000)), with 
a proposed payment of $122,500.50 for CY 2018. We invited public 
comments on this proposal.
    Comment: One commenter, the manufacturer, opposed the proposal to 
reassign CPT code 0100T to APC 1904, with a proposed payment of 
$122,500.50 for CY 2018. Instead, the commenter requested that CMS 
reassign CPT code 0100T to a New Technology APC that would establish a 
payment rate near the CY 2017 payment rate of $150,000.50. The 
commenter stated that the estimated cost of the service generated from 
3 claims reported in CY 2016 is much lower than the actual cost of the 
procedure. The commenter believed the lower cost of the procedure 
described by CPT code 0100T is a result of CMS' decision to set the 
payment rate of the procedure at $95,000 for CY 2016 based on 2 claims, 
for which the submitting hospital stated the charges reported were 
mistakenly low. The commenter asserted that the lower payment rate 
forced the manufacturer of the Argus[supreg] II to provide a 
substantial discount for the device, which is reflected in the lower 
reported cost for the Argus[supreg] II procedure in CY 2016. This 
commenter and a second commenter were concerned with the high level of 
variation in payment for a low volume service like the Argus[supreg] II 
procedure from year to year. The commenters requested payment of 
approximately $150,000 for CPT code 0100T in CY 2018 to break the cycle 
of extremely volatile year-to-year shifts of the payment for the 
procedure described by this CPT code and noted its expectation that 
claims for CY 2017 (which would be used for the CY 2019 rulemaking) 
would reflect a significantly higher average cost than those for CY 
2016.
    Response: We understand the concerns of the commenters. The 
reported cost of the Argus[supreg] II procedure based on the updated CY 
2016 hospital outpatient claims data, which include additional claims 
received after issuance of the CY 2018 proposed rule and finalized as 
of June 30, 2017, is approximately $94,455, which is more than $55,000 
less than the payment rate for the procedure in CY 2017. We note that 
the costs of the Argus[supreg] II procedure are extraordinarily high 
compared to many other procedures paid under the OPPS. In addition, the 
number of claims

[[Page 59281]]

submitted has, to date, been very low and has not exceeded 10 claims. 
We believe it is important to mitigate significant payment differences, 
especially shifts of several tens of thousands of dollars, while also 
basing payment rates on available costs information and claims data. In 
CY 2016, the payment rate for the Argus[supreg] II procedure was 
$95,000.50. The payment rate increased to $150,000.50 in CY 2017. For 
CY 2018, we proposed a payment rate of $122,500.50 based on the most 
recent claims data available at the time of the development of the 
proposed rule. However, if we were to assign the payment rate based on 
updated final rule claims data, the payment rate would decrease, to 
$95,000.50 for CY 2018, a decrease of $55,000 relative to CY 2017. We 
are concerned that these large changes in payment could potentially 
create an access to care issue for the Argus[supreg] II procedure. 
While we believe that the proposed payment rate of $122,500.50 is a 
significant decrease, we believe that it would be appropriate to 
finalize the proposed rate to mitigate a much sharper decline in 
payment from one year to the next (as well as from the proposed rule to 
the final rule).
    In accordance with section 1833(t)(2)(B) of the Act, we must 
establish that services classified within each APC are comparable 
clinically and with respect to the use of resources. Accordingly, we 
are using our equitable adjustment authority under section 
1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to maintain the proposed 
rate for this procedure, despite the lower geometric mean costs 
available in the claims data used for this final rule with comment 
period. As stated earlier, we believe that this situation is unique, 
given the high cost and very limited number of claims for the 
procedure. Therefore, for CY 2018, we are reassigning the Argus[supreg] 
II procedure to APC 1904 (New Technology--Level 50 ($115,001-
$130,000)). This APC assignment will establish a payment rate for the 
Argus[supreg] II procedure of $122,500.50, which is the arithmetic mean 
of the payment rates for the service for CY 2016 and CY 2017. As we do 
each year, we acquire 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 like the Argus[supreg] II procedure as they transition into 
mainstream medical practice (77 FR 68314).
    After consideration of the public comments we received, we are 
finalizing our proposal to reassign CPT code 0100T to APC 1904 through 
use of our equitable adjustment authority. We are reassigning CPT code 
0100T from APC 1906 (New Technology--Level 51 ($140,001-$160,000)), 
which has a final payment rate of $150,000.50 for CY 2017, to APC 1904 
(New Technology--Level 50 $115,001-$130,000)), which has a final 
payment rate of $122,500.50 for CY 2018. 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. Pathogen Test for Platelets
    As stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), the 
CMS HCPCS Workgroup established HCPCS code Q9987 (Pathogen(s) test for 
platelets), effective July 1, 2017. HCPCS code Q9987 will be used to 
report any test used to identify bacterial or other pathogen 
contamination in blood platelets. Currently, there is one test approved 
by the FDA that is described by HCPCS code Q9987. The test is a rapid 
bacterial test, and the manufacturer estimates the cost of the test to 
be between $26 and $35. HCPCS code Q9987 was established after concerns 
from blood and blood product stakeholders that the previous CPT code 
used to describe pathogen tests for platelets, CPT code P9072 
(Platelets, pheresis, pathogen reduced or rapid bacterial tested, each 
unit), inappropriately described rapid bacterial testing by combining 
the test with the pathogen reduction of platelets. CPT code P9072 is 
inactive effective on July 1, 2017.
    In the CY 2018 OPPS/ASC proposed rule, we sought more information 
on the actual costs of pathogen tests for platelets before assigning 
HCPCS code Q9987 to a clinical APC. Effective July 1, 2017, HCPCS code 
Q9987 is assigned to New Technology APC 1493 (New Technology--Level 1C 
($21-$30)), with a payment rate of $25.50. We proposed to continue to 
assign HCPCS code Q9987 to New Technology APC 1493, with a proposed 
payment rate of $25.50, until such time as claims data are available to 
support the assignment to a clinical APC. We invited public comments on 
this proposal.
    Comment: Two commenters supported the proposal to continue to 
provide separate payment for HCPCS code Q9987.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue separate payment for HCPCS code 
Q9987 for CY 2018, with a modification that HCPCS code Q9987 will be 
replaced by HCPCS code P9100 (Pathogen(s) test for platelets). Table 17 
below contains more information on the coding change.

                      Table 17--Replacement Code for HCPCS Code Q9987 as of January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                CY 2018 long      Final CY 2018    Final CY 2018
        CY 2017 HCPCS code            CY 2018 HCPCS code         descriptor             SI              APC
----------------------------------------------------------------------------------------------------------------
Q9987............................  P9100..................  Pathogen(s) test                  S             1493
                                                             for platelets.
----------------------------------------------------------------------------------------------------------------

e. Fractional Flow Reserve Derived From Computed Tomography 
(FFRCT)
    For CY 2018, the AMA CPT Editorial Panel established four new CPT 
codes for fractional flow reserve derived from computed tomography 
(FFRCT). Table 18 below lists the new CPT codes along with 
their complete descriptors. These codes were listed in Addendum B and 
Addendum O to the CY 2018 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site). Addendum B included the proposed 
status indicator assignments for the new codes and their assignment 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). Addendum O included the proposed/placeholder CY 2018 
CPT codes and the long descriptors.
    We note that the CPT code descriptors that appeared in Addendum B 
were short descriptors and did not fully describe the complete 
procedure,

[[Page 59282]]

service, or item identified for the CPT codes. Therefore, we included 
the 5-digit placeholder codes and their long descriptors in Addendum O 
to the proposed rule, specifically under the column labeled ``CY 2018 
OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' so that the 
public could adequately comment on our proposed APC and status 
indicator assignments. We also indicated that the final CPT code 
numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 19 
below.
    As displayed in Table 18 and in Addendum B of the CY 2018 OPPS/ASC 
proposed rule, we proposed to assign CPT codes 0501T and 0504T to 
status indicator ``M'' (Not paid under OPPS; Items and Services Not 
Billable to the MAC) to indicate that these services are not paid under 
the OPPS, and to assign CPT codes 0502T and 0503T to status indicator 
``N'' (packaged) to indicate that the payment for these services is 
packaged into the primary service or procedure that is reported with 
the codes.

  Table 18--Proposed CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective January 1,
                                                      2018
----------------------------------------------------------------------------------------------------------------
                           CY 2018 OPPS/ASC                                             Proposed CY  Proposed CY
       CPT code              proposed rule           Long descriptor       Proposed CY   2018 OPPS    2018 OPPS
                           placeholder code                               2018 OPPS SI      APC        payment
----------------------------------------------------------------------------------------------------------------
0501T.................  02X4T.................  Non-invasive estimated              M           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease; data
                                                 preparation and
                                                 transmission, analysis
                                                 of fluid dynamics and
                                                 simulated maximal
                                                 coronary hyperemia,
                                                 generation of estimated
                                                 FFR model, with
                                                 anatomical data review
                                                 in comparison with
                                                 estimated FFR model to
                                                 reconcile discordant
                                                 data, interpretation
                                                 and report.
0502T.................  02X5T.................  Non-invasive estimated              N           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease; data
                                                 preparation and
                                                 transmission.
0503T.................  02X6T.................  Non-invasive estimated              N           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease;
                                                 analysis of fluid
                                                 dynamics and simulated
                                                 maximal coronary
                                                 hyperemia, and
                                                 generation of estimated
                                                 FFR model.
0504T.................  02X7T.................  Non-invasive estimated              M           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease;
                                                 anatomical data review
                                                 in comparison with
                                                 estimated FFR model to
                                                 reconcile discordant
                                                 data, interpretation
                                                 and report.
----------------------------------------------------------------------------------------------------------------

    According to the FDA, FFRCT uses post-processing 
software to create ``a mathematically derived quantity, computed from 
simulated pressure, velocity and blood flow information obtained from a 
3D computer model generated from static coronary CT images.'' \1\ 
FFRCT is performed outside the outpatient hospital setting 
by HeartFlow, which uses proprietary software to conduct the analysis. 
Hospital outpatient providers use industry-leading protocols and 
technologies at every step to ensure protection of patient data and 
that the CT images are securely transferred to HeartFlow.\2\ After 
FFRCT is performed, a report is generated that provides 
fractional flow reserve values throughout the coronary blood vessels, 
which allows providers to determine treatment strategies based on the 
findings of the report while considering the patient's medical history, 
symptoms, and results of other diagnostic tests.
---------------------------------------------------------------------------

    \1\ Available at: https://www.accessdata.fda.gov/cdrh_docs/reviews/DEN130045.pdf, page 1.
    \2\ Available at: http://www.heartflow.com/.
---------------------------------------------------------------------------

    The developer of FFRCT first submitted an application 
for the procedure to be given a temporary procedure code and assigned 
to a New Technology APC in March 2016. CMS denied the developer's 
application because we considered the FFRCT procedure to be 
an image guidance, processing, supervision, or interpretation service 
whose payment should be packaged into the payment for the related 
computed tomography service, in accordance with our regulations at 42 
CFR 419.2(b)(13). The developer then filed a New Technology APC 
reconsideration request in March 2017 asking that CMS reverse its 
denial of the developer's application to have the FFRCT 
assigned to a New Technology APC. We reviewed the reconsideration 
request and denied the request for the same reason as we did in March 
2016.
    In a New Technology APC application for HeartFlow for CY 2018, the 
developer of the FFRCT service proposed that the service be 
reported with CPT code 0503T (Non-invasive estimated coronary 
fractional flow reserve (FFR) derived from coronary computed tomography 
angiography data using computation fluid dynamics physiologic 
simulation software analysis of functional data to assess the severity 
of

[[Page 59283]]

coronary artery disease; analysis of fluid dynamics and simulated 
maximal coronary hyperemia, and generation of estimated FFR model) and 
requested that the service be assigned to APC 1517 (New Technology--
Level 17 ($1501-$1600)), with a payment rate of $1,550.50. Because both 
the initial New Technology APC application and the reconsideration 
request were denied, we did not describe the associated New Technology 
APC application for HeartFlow in the CY 2018 OPPS/ASC proposed rule.
    Comment: Several commenters, including the developer of HeartFlow 
and some clinicians who have experience with it, supported having a 
FFRCT service paid as a separate service and not packaged 
into the payment for the coronary computed tomography angiography. The 
commenters stated that FFRCT is performed separately from a 
coronary computed tomography angiography by an independent testing 
company that is not affiliated with any outpatient hospital provider 
and is performed at locations owned by the testing company. These 
commenters noted that the service may be performed several days or 
weeks after the original coronary computed tomography angiography is 
performed. Also, commenters noted that several physician societies 
involved in cardiac care recognize FFRCT as a separate 
service from a coronary computed tomography angiography and requested 
that new CPT codes 0501T, 0502T, 0503T, and 0504T be established for 
FFRCT services, effective January 1, 2018. The commenters 
stated that the physician societies and the AMA determined that a 
coronary computed tomography angiography and a FFRCT service 
are not connected services.
    Commenters asserted that a FFRCT service provides 
information that cannot be obtained from standard analysis of a 
coronary computed tomography angiography image. Several commenters 
stated that FFRCT services can improve the quality of 
screening for coronary artery disease (CAD) while reducing costs. That 
is, the commenters stated that, unlike a coronary computed tomography 
angiography service, which merely produces images, the FFRCT 
service is able to directly produce FFRCT values by creating 
a 3-D model of the patient's coronary arteries using the previously 
acquired image. Moreover, the commenters contended that, because the 
FFRCT service does not produce images, it is improper to 
package the costs of FFRCT into the payment for the 
associated coronary computed tomography angiography service.
    Commenters stated that, many times, a coronary computed tomography 
angiography indicates that a beneficiary may potentially have CAD and 
that without FFRCT, providers will often request an invasive 
coronary angiogram to verify the presence of CAD. In many cases, the 
invasive coronary angiogram finds no occurrence of CAD. 
FFRCT services can provide analytic services not otherwise 
available to determine fractional flow rates in coronary arteries using 
the original coronary computed tomography angiography image and show 
whether a beneficiary has CAD without performing a coronary procedure.
    The developer also stated that hospitals incur a cost charged by 
HeartFlow of $1,500 to perform the FFRCT analysis, and 
certain other modest costs (for example, overhead for interpretation 
and entering results into medical record). Therefore, the commenters 
stated that bundling the payment for FFRCT with the payment 
for the coronary computed tomography angiography imaging service would 
prevent hospitals from using FFRCT because the payment rate 
for the bundled coronary computed tomography angiography service would 
be less than $300. One commenter (the developer) requested that the 
service be assigned to APC 1517 (New Technology--Level 17 ($1501-
$1600)), with a payment rate of $1,550.50.
    Some commenters, including the developer, stated that CMS did not 
properly interpret the regulation at 42 CFR 419.2(b)(13) in its 
previous decisions to deny the FFRCT application and 
reconsideration request to receive separate payment in a New Technology 
APC. Specifically, the FFRCT developer and other commenters 
stated that the FFRCT service was not an image guidance 
service because CMS stated in prior preamble language that an image 
guidance service must produce images. The commenters stated that a 
FFRCT service does not produce images, but instead produces 
FFR values. They stated that the FFRCT service is also not 
an image processing service because such processing services help to 
compile diagnostic data to create an image, and noted that, although 
the FFRCT service analyzes image data, it is not used to 
construct an anatomic image. In addition, the commenters asserted that 
the FFRCT service is not an imaging supervision or 
interpretation service. The commenters believed that imaging 
supervision and interpretation services should be performed on the same 
day and at the provider location as the independent imaging service; 
whereas the FFRCT service can be performed days or weeks 
after the original coronary computed tomography angiography service is 
performed and is performed in a specialized location outside of 
hospital. In addition, the commenters stated that imaging supervision 
and interpretation services are for radiological services that are 
mostly billed with the CPT radiological code set (CPT codes 70000-
79999) and the FFRCT service is not a radiological service 
and does not involve supervision or interpretation.
    Response: We appreciate the comments we have received about the 
FFRCT service. We have reviewed our image packaging 
regulations under 42 CFR 419.2(b)(13). This regulation states, in 
relevant part, that in determining the packaged costs for hospital 
outpatient prospective payment rates, the prospective payment system 
establishes a national payment rate, standardized for geographic wage 
differences, that includes operating and capital-related costs that are 
integral, ancillary, supportive, dependent, or adjunctive to performing 
a procedure or furnishing a service on an outpatient basis. In general, 
these packaged costs may include, but are not limited to, among other 
items and services, image guidance, processing, supervision, and 
interpretation services, the payment for which are packaged or 
conditionally packaged into the payment for the related procedures or 
services.
    After reviewing the public comments, we agree with the commenters 
that the FFRCT service is not image guidance or supervision 
because FFRCT does not produce images, does not appear to be 
a supportive guidance service that aids in the performance of an 
independent procedure, and, unlike typical supervision services, is not 
generally reported when the initial image is acquired. However, we are 
concerned that it may be image processing and/or interpretation. We 
discuss these concerns below.
    With respect to image processing, in the CY 2008 OPPS/ASC interim 
and final rule with comment period, we stated that an ``image 
processing service processes and integrates diagnostic test data that 
were captured during another independent procedure, usually one that is 
separately payable under the OPPS. The image processing service is not 
necessarily provided on the same date of service as the independent 
procedure. In fact, several of the image processing services that we 
proposed to package for CY 2008 do not need to be provided face-to-face 
with the patient in the same encounter as the independent service'' (72 
FR 66625). In addition, we stated that we believed it was important

[[Page 59284]]

to package payment for supportive dependent services that accompany 
independent services but that may not need to be provided face-to-face 
with the patient in the same encounter because the supportive services 
utilize data that were collected during the preceding independent 
services and packaging their payment encourages the most efficient use 
of hospital resources. We noted that we were particularly concerned 
with any OPPS payment policies that could encourage certain inefficient 
and more costly service patterns. In addition, we stated that packaging 
encourages hospitals to establish protocols that ensure that services 
are furnished only when they are medically necessary and to carefully 
scrutinize the services ordered by practitioners to minimize 
unnecessary use of hospital resources (72 FR 66625).
    FFRCT services necessarily require the use of the prior 
coronary computed tomography angiography image; the fact that the 
FFRCT service is done on a different date, at a different 
site, and by nonhospital staff does not, in and of itself, mean that 
the service is separate and distinct, from the CCTA. This is especially 
true because it is using a prior image acquired by the hospital for the 
patient and is used for the same purpose to diagnose CAD.
    With respect to imaging interpretation, as stated in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66630), we define 
``imaging supervision and interpretation codes'' as HCPCS codes for 
services that are defined as ``radiological supervision and 
interpretation'' in the radiology series, codes 70000 through 79999 of 
the book of AMA CPT codes, with the addition of some services in other 
code ranges of CPT, Category III CPT tracking codes, or Level II HCPCS 
codes that are clinically similar or directly crosswalk to codes 
defined as radiological supervision and interpretation services in the 
CPT radiology range. The current CPT FFRCT codes are 
Category III codes, and we believe they may be clinically similar to 
codes in the 70000 through 79999 range of the AMA book of CPT codes.
    Nonetheless, we were persuaded by the commenters that the 
FFRCT service is a separate and distinct service from the 
original coronary computed tomography angiography service and should 
receive separate payment. Specifically, the commenters provided 
additional details since the denial of the new technology 
reconsideration request that FFRCT is not covered by the 
image packaging regulations under 42 CFR 419.2(b)(13). Most of the 
additional detail focuses on whether FFRCT is an image 
processing service. In particular, the FFRCT service 
generates data on FFR values that can only be obtained by performing 
the FFRCT service. Accordingly, we now believe that the 
FFRCT service should not be considered to be an image 
processing service because the diagnostic output of the 
FFRCT service yields functional values (that is, FFR 
values), which reflect the drop in pressure across a narrowing in a 
coronary artery as opposed to anatomic images. The CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66625) states that image 
processing covers ``supportive dependent services to process and 
integrate diagnostic test data in the development of images, indicating 
that an image processing service must help develop or otherwise 
visually enhance an image and the FFRCT service does 
neither. Further, we agree that the quantitative diagnostic information 
about the function of the coronary arteries produced by the 
FFRCT service is not possible to derive from examining 
anatomic images of the arteries. Additionally, we agree with the 
commenters that the FFRCT service does not support the 
diagnostic output of CCTA. Notably, CPT code 0503T does not mention 
processing, interpretation, or supervision. Further, the FDA clearance 
refers to the FFRCT service as ``post-processing image 
analysis software . . . using graphics and text [FFRCT] to 
aid the clinician in the assessment of coronary artery disease.''
    Therefore, we conclude, based on the information available to us at 
this time, that the costs of the FFRCT service, as described 
by CPT code 0503T, should not be a packaged service under the 
regulation at 42 CFR 419.2(b)(13). Accordingly, we are assigning CPT 
code 0503T to a New Technology APC for CY 2018. We remind hospitals 
that, according to the Medicare statute, this service should only be 
furnished when reasonable and medically necessary for the purposes of 
diagnosis of and treatment a Medicare beneficiary.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for CPT codes 0501T, 0502T, and 0504T 
without modification. However, for CPT code 0503T, we are finalizing 
our proposal with modification. Specifically, we are reassigning CPT 
code 0503T from packaged status (status indicator ``N'') to New 
Technology APC 1516 (New Technology--Level 16 ($1401-$1500)), with a 
payment rate of $1,450.50 for CY 2018. We note our belief that CPT code 
0503T covers payment for the majority of hospital resources involved in 
the HeartFlow service, and that CPT 0502T, which reflects data 
preparation and transmission, will be packaged under the OPPS.
    Table 19 lists the final status indicator assignments for CPT codes 
0501T, 0502T, 0503T, and 0504T. We refer readers to Addendum B to this 
final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and B are 
available via the Internet on the CMS Web site.

[[Page 59285]]



                             Table 19--Final CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective
                                                                     January 1, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               CY 2018 OPPS/ASC proposed                                                    CY 2018 OPPS
          CPT code               rule placeholder code            Long descriptor         CY 2018 OPPS SI        APC            CY 2018 OPPS payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
0501T.......................  02X4T......................  Non-invasive estimated                      M              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; data
                                                            preparation and
                                                            transmission, analysis of
                                                            fluid dynamics and simulated
                                                            maximal coronary hyperemia,
                                                            generation of estimated FFR
                                                            model, with anatomical data
                                                            review in comparison with
                                                            estimated FFR model to
                                                            reconcile discordant data,
                                                            interpretation and report.
0502T.......................  02X5T......................  Non-invasive estimated                      N              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; data
                                                            preparation and transmission.
0503T.......................  02X6T......................  Non-invasive estimated                      S             1516  Refer to OPPS Addendum B.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; analysis of
                                                            fluid dynamics and simulated
                                                            maximal coronary hyperemia,
                                                            and generation of estimated
                                                            FFR model.
0504T.......................  02X7T......................  Non-invasive estimated                      M              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; anatomical
                                                            data review in comparison
                                                            with estimated FFR model to
                                                            reconcile discordant data,
                                                            interpretation and report.
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. OPPS APC-Specific Policies

1. Blood-Derived Hematopoietic Cell Harvesting
    HCPCS code 38205 describes blood-derived hematopoietic progenitor 
cell harvesting for transplantation, per collection; allogeneic. This 
code represents a donor acquisition cost for an allogeneic 
hematopoietic stem cell transplant (HSCT). In the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60575), we assigned HCPCS code 
38205 to status indicator ``B'', which indicates that this code is not 
recognized by the OPPS when submitted on an outpatient hospital Part B 
bill (type 12x and 13x).
    In CY 2017, we finalized a C-APC for HSCT (81 FR 79586 through 
79587). Payment for donor acquisition services for HSCT is included in 
the C-APC payment for the allogeneic stem cell transplant when the 
transplant occurs in the hospital outpatient setting. All donor 
acquisition costs, including the costs for HCPCS code 38205, should be 
reported on the same date of service as the transplant procedure (HCPCS 
code 38240 (Hematopoietic progenitor (HPC); allogeneic transplantation 
per donor)) in order to be appropriately packaged for payment purposes. 
Hospitals are instructed to identify services required to acquire stem 
cells from a donor for allogeneic HSCT separately in Field 42 on Form 
CMS-1450 (or UB-04), with revenue code 0815 when an allogeneic stem 
cell transplant occurs. (We refer readers to the Medicare Claims 
Processing Manual (Pub. 100-04), Chapter 4, Section 231.11, and Chapter 
3, Section 90.3.1.)
    There are other donor acquisition costs, namely those costs for the 
procedure described by HCPCS code 38230 (Bone marrow harvesting for 
transplantation; allogeneic), that are assigned to status indicator 
``S''. For consistency and to ensure that the donor acquisition costs 
are captured accurately, in the CY 2018 OPPS/ASC proposed rule (82 FR 
33608), for CY 2018, we proposed to change the status indicator 
assignment for the procedure described by HCPCS code 38205 from ``B'' 
to ``S'', which indicates that the procedure is paid under the OPPS and 
receives separate payment.
    The CY 2016 claims data used for the proposed rule, which included 
claims submitted between January 1, 2016, and December 31, 2016, and 
processed on or before December 31, 2016, showed a geometric mean cost 
of approximately $580 for HCPCS code 38205 based on 2 single claims 
(out of 8 total claims). The procedure described by HCPCS code 38205 
has resource and clinical similarities to procedures assigned to APC 
5242 (Level 2 Blood Product Exchange and Related Services). Therefore, 
we proposed to assign HCPCS code 38205 to APC 5242. We invited public 
comments on these proposals.
    Comment: Several commenters opposed the proposal to change the 
status indicator assignment for the procedure described by HCPCS code 
38205 from ``B'' to ``S''. The commenters stated that this procedure 
represents a donor acquisition cost for allogeneic hematopoietic stem 
cell transplants for

[[Page 59286]]

which Medicare does not make separate payment because hospitals may 
bill and receive payment only for services provided to the Medicare 
beneficiary who is the recipient of the stem cell transplant and whose 
illness is being treated with the stem cell transplant. The commenters 
believed that a change from status indicator ``B'' to ``S'' may 
indicate to providers that they can bill donors for these services and 
lead to potential for erroneous separate payments if this code is 
billed with status indicator ``S''. In addition, the HOP Panel 
recommended that CMS retain status indicator ``B'' for HCPCS code 
38205. The commenters also encouraged CMS to look at the entire series 
of bone marrow and stem cell transplant-related CPT codes to ensure 
consistency in terms of coding, billing guidance, appropriate APC 
assignment, and payment.
    Response: We appreciate the commenters' responses. We believed that 
changing the status indicator assignment from ``B'' to ``S'' for HCPCS 
code 38205 would be consistent with other donor acquisition costs and 
ensure that the donor acquisition costs for allogeneic HSCT are 
captured accurately. However, we agree with the commenters that this 
change could result in erroneous billing or misinterpretations by 
providers.
    After consideration of the public comments we received, we are not 
finalizing our proposal to change the status indicator assignment for 
the procedure described by HCPCS code 38205 from ``B'' to ``S'' and to 
assign HCPCS code 38205 to APC 5242.
2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)
a. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related Procedures)
    For CY 2018, as displayed in Table 20 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 55920 to C-APC 5341 (Abdominal/Peritoneal/Biliary and Related 
Procedures), with a proposed payment rate of $2,788.26.

                          Table 20--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55920
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
55920................................  Placement of needles or catheters           J1          5341    $2,861.53           J1          5341    $2,788.26
                                        into pelvic organs and/or
                                        genitalia (except prostate) for
                                        subsequent interstitial
                                        radioelement application.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposed APC assignment for 
CPT code 55920 and recommended that this code be reassigned to an APC 
that includes gynecologic procedures, specifically C-APC 5415 (Level 5 
Gynecologic Procedures). The commenters noted that radiation therapy is 
an important adjuvant treatment for gynecological malignancies and the 
vignette for the procedure described by CPT 55920 describes a 
gynecological implant with a Syed-type intracavitary applicator 
insertion to the vagina, cervix, or female urethra. The commenters 
stated that the procedure described by CPT code 55920 was similar, from 
a clinical and resource perspective, to procedures assigned to C-APC 
5415.
    Response: Our analysis of the final rule updated claims data 
revealed a geometric mean cost of approximately $4,791 for CPT code 
55920 based on 134 single claims (out of 135 total claims), which is 
comparable to the geometric mean cost of approximately $4,109 for C-APC 
5415. The geometric mean cost for C-APC 5341 is approximately $2,909. 
After reviewing the procedures assigned to C-APC 5415, we agree with 
the commenters that CPT code 55920 would be more appropriately 
reassigned to C-APC 5415 based on its clinical homogeneity and resource 
costs.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 proposal with modification. Specifically, we are 
reassigning CPT code 55920 from C-APC 5341 to C-APC 5415 for CY 2018. 
We refer readers to Addendum B to this final rule with comment period 
for the final CY 2018 payment rates for all codes reported under the 
OPPS. In addition, we refer readers to Addendum A to this final rule 
with comment period for the status indicator meanings for all codes 
reported under the OPPS for CY 2018. Both Addendum A and Addendum B are 
available via the Internet on the CMS Web site.
b. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures)
    For CY 2018, as displayed in Table 21 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 19298 to C-APC 5092 (Level 2 Breast/Lymphatic Surgery and 
Related Procedures), with a proposed payment rate of $4,616.48.

[[Page 59287]]



                          Table 21--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 19298
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
             CPT code                          Long descriptor                 SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
19298.............................  Placement of radiotherapy                      J1          5092    $4,417.60           J1          5092    $4,616.48
                                     afterloading brachytherapy
                                     catheters (multiple tube and button
                                     type) into breast for interstitial;
                                     radioelement application following
                                     (at the time of or subsequent to)
                                     partial mastectomy, includes image
                                     guidance).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposed continued APC 
assignment for CPT code 19298 to C-APC 5092. These commenters stated 
that the CY 2018 proposed payment is inadequate and does not cover the 
costs associated with the surgical placement of the breast 
brachytherapy catheter or the brachytherapy treatment delivery and 
related planning and preparation codes included on the claim. The 
commenters also stated that, previously, both breast brachytherapy 
catheter placement codes 19296 (Breast interstitial radiation 
treatment, delayed (expandable) and 19298 have been assigned to the 
same APC as they are similar clinically and with regard to resource 
cost. The commenters requested that CPT code 19298 be assigned to the 
same C-APC as CPT code 19296 proposed for CY 2018; that is, C-APC 5093 
(Level 3 Breast/Lymphatic Surgery and Related Procedures).
    Response: Our analysis of the final rule updated claims data 
revealed a geometric mean cost of approximately $5,944 for CPT code 
19298 based on 68 single claims (out of 69 total claims). Based on our 
updated analysis, we believe that CPT code 19298 is appropriately 
assigned to C-APC 5092, which has a geometric mean cost of 
approximately $4,809, rather than to C-APC 5093, which has a geometric 
mean cost of approximately $7,383 as suggested by the commenters. In 
addition, our updated analysis showed that the geometric mean cost of 
approximately $5,944 for CPT code 19298 is within the range of the 
significant procedures assigned to C-APC 5092, which is between $4,276 
(for CPT code 19380) and $6,134 (for CPT code 19340).
    After consideration of the public comments we received and based on 
updated claims data, we are finalizing our proposal to continue to 
assign CPT code 19298 to C-APC 5092 for CY 2018.
3. Care Management Coding Changes Effective January 1, 2018 (APCs 5821 
and 5822)
    As noted in the CY 2018 MPFS proposed rule (82 FR 34079), we 
continue to be interested in the ongoing work of the medical community 
to refine the set of codes used to describe care management services, 
including chronic care management. In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33603 and 33604), we proposed to adopt CPT replacement 
codes for CY 2018 for several of the care management services finalized 
last year and sought public comment on ways we might further reduce the 
burden on reporting providers, including through stronger alignment 
between CMS requirements and CPT guidance for existing and potential 
new codes. Table 15 of the CY 2018 OPP/ASC proposed rule detailed the 
proposed care management coding changes. We referred readers to 
Addendum B to the proposed rule (which is available via the Internet on 
the CMS Web site) for the proposed CY 2018 payment rates for the 
replacement codes.
    Comment: Commenters supported CMS' proposed replacement codes for 
CY 2018 for several of the care management services finalized for CY 
2017. One commenter recommended that the new chronic care management 
codes be removed from the financial settlement of accountable care 
organizations (ACOs). This commenter also recommended that CMS develop 
documentation and billing workflow to reduce administrative burden on 
providers billing transitional care management and chronic care 
management codes.
    Response: We appreciate the commenters' support. We also appreciate 
the suggestion for reducing provider burden with respect to billing and 
documentation requirements for chronic care management and will 
consider these suggestions in future rulemaking. However, we note that 
ACOs are outside the scope of this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt CPT replacement codes for CY 2018 for 
several of the care management services finalized last year. Table 22 
below details the final care management coding changes. We refer 
readers to Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site) for the final CY 2018 
payment rates for the replacement codes.

                                           Table 22--Care Management Coding Changes Effective January 1, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        CY 2018
      CY 2017 HCPCS code        CY 2017 HCPCS code short   CY 2017 OPPS    CY 2017    replacement  CY 2018  replacement HCPCS  CY 2018 OPPS    CY 2018
                                       descriptor               SI         OPPS ASC     CPT code     code short descriptor *        SI         OPPS APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0502........................  Init psych care Manag,                S          5822        99492  1st Psyc collab care mgmt.            S          5822
                                70min.
G0503........................  Subseq psych care man,                S          5822        99493  Sbsg psyc collab care mgmt            S          5822
                                60mi.

[[Page 59288]]

 
G0504........................  Init/sub psych Care add 30            N           N/A        99494  1st/sbsq psyc collab care.            N           N/A
                                m.
G0505........................  Cog/func assessment outpt.            S          5822        99483  Assmt & care pln pt cog               S          5822
                                                                                                    imp.
G0507........................  Care manage serv minimum              S          5821        99484  Care mgmt. svc bhvl hlth              S          5821
                                20.                                                                 cond.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The long descriptors for the final CPT codes can be found in Addendum O (New Category I and Category III CPT Codes Effective January 1, 2018) to this
  final rule with comment period, which is available via the Internet on the CMS Web site.

4. Cardiac Telemetry (APC 5721)
    For CY 2018, as noted in Table 23 below and in Addendum B to the CY 
2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 93229 
from APC 5733 (Level 3 Minor Procedures) to APC 5734 (Level 4 Minor 
Procedures), with a proposed payment rate of $94.27.

                          Table 23--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 93229
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT Code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
93229................................  External mobile cardiovascular               S          5733       $54.55            S          5734       $94.27
                                        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.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We proposed to revise the APC assignment for CPT code 93229 based 
on claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data were based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. Our analysis of the claims data revealed a 
geometric mean cost of approximately $156 for CPT code 93229 based on 
1,518 single claims (out of 3,370 total claims). Our analysis further 
revealed a geometric mean cost of approximately $98 for APC 5734. Based 
on the geometric mean cost, we believed that it was necessary to revise 
the APC assignment for CPT code 93229 from APC 5733 to APC 5734 to pay 
appropriately for the service.
    Comment: Some commenters disagreed with the proposed reassignment 
of CPT code 93229 to APC 5734, and instead requested a reassignment to 
APC 5722 (Level 2 Diagnostic Tests and Related Services), which had a 
proposed payment rate of $242.21 and which is the same APC assignment 
for CPT code 93229 as in CY 2016. The commenters believed that the cost 
data used to set the payment rate for the CY 2017 OPPS update was based 
on miscoding of the service because mobile outpatient telemetry is a 
low-volume service in the HOPD setting that is performed by a small 
number of hospitals. The commenters indicated that since the 
publication of a 2016 coding guidance in the AHA Coding Clinic for 
HCPCS on the proper coding of remote cardiac monitoring services, they 
have noticed that the top billers of this service from prior years are 
no longer inappropriately reporting the service. In addition, the 
commenters believed that APC 5734 is an inappropriate assignment both 
from the clinical and resource cost perspectives. The commenters 
further indicated that the service is not a minor procedure, as 
described by the group description for APC 5734, and added that CPT 
code 93229 is the only code in APC 5734 with a status indicator 
assignment of ``S'' (Procedure or Service, Not Discounted When 
Multiple), while all the other codes in the APC are assigned to status 
indicator ``Q1'' (conditionally packaged).
    Response: Although CPT code 93229 was assigned to status indicator 
``S'' in APC 5734, it was not the only status indicator assigned to the 
codes in this APC. As indicated in OPPS Addendum B that was released 
with the CY 2018 OPPS/ASC proposed rule, three separate status 
indicators were assigned to the codes in APC 5734. Specifically, CPT 
code 93229 was assigned to status indicator ``S'', CPT codes 30903 and 
30905 were assigned to status indicator ``T'' (Procedure or Service, 
Discounted

[[Page 59289]]

When Multiple), and the remaining codes were assigned to status 
indicator ``Q1''. We note that a specific status indicator assignment 
does not preclude a code's assignment to a specific APC.
    In addition, as we have stated since the implementation of the OPPS 
in August 2000, section 1833(t)(9) of the Act requires that we annually 
review all the items and services within an APC group and revise the 
APC structures accordingly. Included in this review is the 
identification of any 2 times rule violations as provided under section 
1833(t)(2) of the Act and, to the extent possible, rectification of 
these violations. We review the most recently available OPPS claims 
data every year and determine whether changes to the current APC 
assignment are necessary. Although CPT code 93229 was assigned to APC 
5722 in CY 2016, we revised the APC assignment to APC 5733 for CY 2017 
based on the latest claims data available at that time. The discussion 
related to this APC revision can be found in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79616 through 79617).
    For this CY 2018 OPPS/ASC final rule with comment period, we again 
reviewed the claims data associated with CPT code 93229. We note that, 
for this final rule with comment period, we used claims data with dates 
of service between January 1, 2016, and December 31, 2016 that were 
processed on or before June 30, 2017. Our analysis revealed a geometric 
mean cost of approximately $160 for CPT code 93229 based on 1,750 
single claims (out of 3,869 total claims). Based on our review of the 
four levels of Diagnostic Tests and Related Services APCs, we believe 
that CPT code 93229 appropriately fits in APC 5721 (Level 1 Diagnostic 
Tests and Related Services), which has a geometric mean cost of 
approximately $136, rather than in APC 5722, which has a geometric mean 
cost of approximately $249. In addition, our review shows that the 
geometric mean cost of approximately $160 for CPT code 93229 is within 
the range of the significant procedures in APC 5721, which is between 
$60 (for CPT code 93702) and $181 (for CPT code 94727). Consequently, 
we believe that a reassignment of CPT code 93229 to APC 5721 is more 
appropriate.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal with modification. Specifically, 
we are revising the assignment for CPT code 93229 to APC 5721 for CY 
2018 rather than the proposed APC 5734. Consistent with our policy of 
reviewing APC assignments annually, we will reevaluate the cost of CPT 
code 93229 and its APC assignment for the CY 2019 rulemaking. Table 24 
below lists the final status indicator and APC assignment for CPT code 
93229 for CY 2018. We refer readers to Addendum B of this final rule 
with comment period for the payment rates for all codes reported under 
the OPPS. In addition, we refer readers to Addendum A to this final 
rule with comment period for the status indicator meanings for all 
codes reported under the OPPS. Both Addenda A and B are available via 
the Internet on the CMS Web site.

                                   Table 24--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 93229
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
93229.......................  External mobile                     S          5733       $54.55            S          5721  Refer to OPPS Addendum B.
                               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.
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Collagen Cross-Linking of Cornea (C-APC 5503)
    For CY 2018, as noted in Addendum B to the CY 2018 OPPS/ASC 
proposed rule, we proposed to continue to assign CPT code 0402T 
(Collagen cross-linking of cornea (including removal of the corneal 
epithelium and intraoperative pachymetry when performed)) to APC 5502 
(Level 2 Extraocular, Repair, and Plastic Eye Procedures) for CY 2018.
    Comment: One commenter requested that CMS reassign CPT code 0402T 
from APC 5502 to APC 5504 (Level 4 Extraocular, Repair, and Plastic Eye 
Procedures). The commenter recommended reassignment to APC 5504 because 
it believed that assignment to that APC would more accurately reflect 
the level of resource utilization (particularly labor time and capital 
equipment) involved in the corneal collagen cross-linking procedure. In 
addition, the commenter provided resource information on the supplies, 
equipment, and labor required to perform the procedure described by CPT 
code 0402T. According to the commenter, the capital equipment required 
for the procedure costs approximately $90,000, and disposable supplies 
and at least one technician or registered nurse are also required. In 
addition, the commenter stated that the average procedure time can last 
from 1.25 to 2 hours. The commenter acknowledged that there are no 
Medicare claims data for CPT code

[[Page 59290]]

0402T because it was established on January 1, 2016.
    Response: We reviewed the updated CY 2016 claims data used for this 
final rule with comment period. Based on our review, and with 
consideration of the resource information provided by the commenter, in 
the absence of data and based on the resources and operating expenses 
to perform the procedure as described by the commenter, we disagree 
with the commenter's recommendation that CPT code 0402T should be 
reassigned to APC 5504, which has a geometric mean cost of 
approximately $3,000 in CY 2018. In the absence of claims data, we may 
use other data, such as invoices, to assign a new procedure to a 
clinical APC. In this case, the commenter did not provide invoices, but 
did supply some cost information in its comment. We note that the 
payment rate is not designed to pay for capital equipment costs on a 
per claim basis. However, taking into account the disposable costs as 
well as information from the commenter about the time to perform the 
procedure and the hospital staff involved, we are persuaded to modify 
our proposal. Given the resource cost and clinical congruence of CPT 
code 0402T with other procedures assigned to APC 5503 (approximate 
geometric mean cost of $1,800), such as CPT code 65436 (Removal of 
corneal epithelium; with application of chelating agent, eg., EDTA), we 
believe that the reassignment to APC 5503 is more appropriate for CY 
2018. Therefore, we are modifying our proposal, and reassigning CPT 
code 0402T to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye 
Procedures) for CY 2018. We will consider reassignment of CPT code 
0402T to APC 5504 in the CY 2019 rulemaking.
6. Cryoablation Procedure for Lung Tumors (C-APC 5361)
    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0340T and 
replaced the code with CPT code 32994, effective January 1, 2018. We 
note that CPT code 0340T was effective January 1, 2014, and deleted on 
December 31, 2017. Table 25 below lists the complete descriptors for 
the deleted and replacement code. We note that the deleted and 
replacement code were both listed in Addendum B and Addendum O to the 
CY 2018 OPPS/ASC proposed rule (which are available via the Internet on 
the CMS Web site). Addendum B listed the proposed status indicator 
assignment for the replacement code and assigned it 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 proposed/placeholder CY 2018 CPT 
codes and the long descriptors.

               Table 25--Coding Changes for CPT Code 32994
------------------------------------------------------------------------
                           CY 2018  OPPS/ASC
       CPT Code              proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
0340T.................  ......................  Ablation, pulmonary
                                                 tumor(s), including
                                                 pleura or chest wall
                                                 when involved by tumor
                                                 extension,
                                                 percutaneous,
                                                 cryoablation,
                                                 unilateral, includes
                                                 imaging guidance.
32994.................  32X99.................  Ablation therapy for
                                                 reduction or
                                                 eradication of 1 or
                                                 more pulmonary tumor(s)
                                                 including pleura or
                                                 chest wall when
                                                 involved by tumor
                                                 extension,
                                                 percutaneous, including
                                                 imaging guidance when
                                                 performed, unilateral;
                                                 cryoablation.
------------------------------------------------------------------------

    As noted in Table 26 below and in Addendum B to the CY 2018 OPPS/
ASC proposed rule, we proposed to delete CPT code 0340T (status 
indicator ``D'') and assign its replacement code, CPT code 32994 
(placeholder code 32X99), to C-APC 5361 (Level 1 Laparoscopy and 
Related Services), with a proposed payment rate of $4,340.65. As noted 
in Table 26, for CY 2017, CPT code 0340T was assigned to C-APC 5361, 
which is the same APC assignment for CPT code 32994.

                          Table 26--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 32994
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Proposed CY
                              CY 2018 OPPS/ASC                           CY 2017 OPPS    CY 2017    CY 2017 OPPS   Proposed CY  Proposed CY   2018 OPPS
        CPT code               proposed rule         Short descriptor         SI         OPPS APC   payment rate  2018 OPPS SI   2018 OPPS     payment
                              placeholder code                                                                                      APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0340T...................  .......................  Ablate pulm tumors +           J1          5361    $4,199.13             D           N/A          N/A
                                                    extnsn.
32994...................  32X99..................  Ablate pulm tumor             N/A           N/A          N/A            J1          5361    $4,340.65
                                                    perq crybl.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters presented opposing recommendations on the 
proposed APC assignment for CPT code 32994. Some commenters supported 
the proposed APC assignment to C-APC 5361. One commenter stated that 
the APC assignment maintains clinical homogeneity for services within 
the APC and addresses resource cost fluctuation and volatility, and 
suggested that CMS finalize the proposal. However, other commenters 
disagreed with the proposed APC assignment and recommended that CPT 
code 32994 be assigned to C-APC 5362 (Level 2 Laparoscopy and Related 
Services), which had a proposed payment rate of $7,213.53. One 
commenter understood why CMS proposed to assign CPT code 32994 to C-APC 
5361, which is the same APC to which its predecessor code was assigned. 
However, the commenter believed that the cost of the procedure will 
only increase as hospitals gain

[[Page 59291]]

experience with it. Consequently, the commenter suggested that CMS 
assign the CPT code to C-APC 5362. Another commenter recommended that 
CMS assign CPT code 32994 to C-APC 5362 and further noted the 
importance of new codes to be priced correctly before they are subject 
to APC placement based on their actual cost data.
    Response: Because CPT code 0340T is a predecessor code to CPT code 
32994, we have historical claims data on which to base the payment rate 
for CPT code 32994. Review of our claims data for this final rule with 
comment period shows a geometric mean cost of approximately $5,471 for 
CPT code 0340T based on 27 single claims (out of 27 total claims), 
which is more comparable to the geometric mean cost of approximately 
$4,486 for C-APC 5361 than to the geometric mean cost of approximately 
$7,591 for C-APC 5362. We do not agree that we should assign CPT code 
32994 to C-APC 5362 because the geometric mean cost for this APC is 
significantly greater than that of CPT code 32994 (cross-walked from 
CPT code 0340T) as indicated in our claims data available for this 
final rule with comment period. In addition, if the cost of the 
procedure increases, this will be identified through our annual review 
of the claims data. Consistent with our policy of reviewing APC 
assignments annually, we will reevaluate the geometric mean cost of CPT 
code 32994 and its APC assignment in next year's rulemaking for the CY 
2019 OPPS update.
    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 finalizing our CY 2018 proposal without 
modification, and assigning CPT code 32994 to C-APC 5361. The final CY 
2018 geometric mean cost for C-APC 5361 is approximately $4,486. Table 
27 below lists the final status indicator and APC assignment for CPT 
code 32994 for CY 2018. We refer readers to Addendum B to this final 
rule with comment period for the payment rates for all codes reported 
under the OPPS. In addition, we refer readers to Addendum A to this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Both Addenda A and B are available 
via the Internet on the CMS Web site.

                                   Table 27--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 32994
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            CY 2017
                        CY 2018 OPPS/ASC                       CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018     CY 2018 OPPS payment
      CPT code            proposed rule      Short descriptor       SI         OPPS APC     payment         SI         OPPS APC            rate
                        placeholder code                                                      rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0340T...............  N/A.................  Ablate pulm                 J1          5361    $4,199.13            D           N/A  N/A.
                                             tumors + extnsn.
32994...............  32X99...............  Ablate pulm tumor          N/A           N/A          N/A           J1          5361  Refer to OPPS Addendum
                                             perq crybl.                                                                           B.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)
    For CY 2018, the AMA CPT Editorial Panel revised the bone marrow 
and aspiration CPT codes. Specifically, the descriptors for CPT codes 
38220 and 38221 were revised and new CPT codes 20939 (placeholder code 
2093X) and 38222 (placeholder code 382X3) were established, effective 
January 1, 2018. In addition, add-on HCPCS code G0364, which was 
effective January 1, 2005, will be deleted on December 31, 2017 and 
replaced with CPT codes 38220, 38221, and 38222, effective January 1, 
2018. The deleted and replacement codes were listed in Addendum B and 
Addendum O to the CY 2018 OPPS/ASC proposed rule. Addendum B listed the 
proposed status indicator assignment for revised CPT codes 38220 and 
38221 and new CPT code 38222, which was 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 proposed/placeholder CY 2018 CPT codes and 
the long descriptors.
    Table 28 below lists the complete descriptors for the bone marrow 
aspiration and biopsy codes.

Table 28--Coding Changes for the Bone Marrow Aspiration and Biopsy Codes
------------------------------------------------------------------------
                           CY 2018 OPPS/ASC
      HCPCS code             proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
20939.................  2093X.................  Bone marrow aspiration
                                                 for bone grafting,
                                                 spine surgery only,
                                                 through separate skin
                                                 or fascial incision
                                                 (List separately in
                                                 addition to code for
                                                 primary procedure).
38220.................  N/A...................  Diagnostic bone marrow;
                                                 aspiration.
38221.................  N/A...................  Diagnostic bone marrow;
                                                 biopsy(ies).
38222.................  382X3.................  Diagnostic bone marrow;
                                                 biopsy(ies) and
                                                 aspiration(s).
G0364.................  N/A...................  Bone marrow aspiration
                                                 performed with bone
                                                 marrow biopsy through
                                                 the same incision on
                                                 the same date of
                                                 service.
------------------------------------------------------------------------

    As noted in Table 29 below and in Addendum B of the CY 2018 OPPS/
ASC proposed rule, we proposed to delete HCPCS code G0364 (status 
indicator ``D'') and assign revised CPT codes 38220 and 38221, as well 
as new CPT code 38222 (placeholder code 382X3) to C-APC 5072 (Level 2 
Excision/Biopsy/Incision and Drainage), with a proposed payment rate of 
$1,268.53. We note that, under the OPPS, we packaged the payment for 
HCPCS code G0364 (status

[[Page 59292]]

indicator ``N'') into the primary service or procedure that is reported 
with the code because we considered the service to be an add-on 
furnished as part of a comprehensive service. In addition, we proposed 
to assign CPT code 20939 (placeholder 2093X) to status indicator ``N'' 
(Packaged status) because it is an add-on code. Under Medicare 
regulations at 42 CFR 419.2(b)(18), add-on codes are packaged under the 
OPPS. Further, we proposed to continue to assign revised CPT codes 
38220 and 38221 to C-APC 5072 for CY 2018.

           Table 29--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the Bone Marrow Aspiration and Biopsy Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                           CY 2017   Proposed CY   Proposed     CY 2018
        HCPCS Code         CY 2018 OPPS/ASC proposed      Short descriptor        CY 2017      CY 2017      OPPS      2018 OPPS     CY 2018      OPPS
                             rule placeholder code                                OPPS SI     OPPS APC     payment        SI       OPPS APC     payment
                                                                                                            rate                                 rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20939....................  2093X....................  Bone marrow aspir bone           N/A          N/A         N/A           N          N/A         N/A
                                                       grfg.
38220....................  N/A......................  Dx bone marrow                    J1         5072   $1,236.62          J1         5072   $1,268.53
                                                       aspirations.
38221....................  N/A......................  Dx bone marrow biopsies.          J1         5072   $1,236.62          J1         5072   $1,268.53
38222....................  382X3....................  Dx bone marrow bx &              N/A          N/A         N/A          J1         5072   $1,268.53
                                                       aspir.
G0364....................  N/A......................  Bone marrow aspirate               N          N/A         N/A           D          N/A         N/A
                                                       &biopsy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter disagreed with the proposed APC assignment 
of new CPT code 38222 to C-APC 5072 and recommended that the code be 
assigned to C-APC 5073 (Level 3 Excision/Biopsy/Incision and Drainage), 
which had a proposed payment rate of $2,222.47. This commenter further 
noted the importance of new codes being priced correctly before they 
are subject to APC assignment based on their actual cost data.
    Response: As displayed in Table 29, we proposed to make no change 
to the APC assignments for CPT codes 38220 and 38221. Specifically, we 
proposed to continue to assign both codes to C-APC 5072 for CY 2018 
based on claims data used for the CY 2018 OPPS/ASC proposed rule. We 
note that the proposed rule data was based on claims data submitted 
between January 1, 2016, and December 31, 2016, that were processed on 
or before December 31, 2016. For CPT code 38220, our examination of the 
claims data revealed a geometric mean cost of approximately $1,645 
based on 5,361 single claims (out of 5,431 total claims). For CPT code 
38221, our claims data showed a geometric mean cost of approximately 
$1,615 based on 53,789 single claims (out of 54,335 total claims). We 
believe that the geometric mean costs of approximately $1,645 for CPT 
code 38220 and $1,615 for CPT code 38221 are comparable to the 
geometric mean cost of approximately $1,319 for C-APC 5072. 
Consequently, we proposed to maintain both codes in C-APC 5072 for CY 
2018. We note that we had no claims data for HCPCS code G0364 because 
this is an add-on code whose payment is packaged into the primary 
service that is reported with the code.
    For this final rule with comment period, we again analyzed updated 
claims data associated with the four codes. We note that, for this 
final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our review of the final rule 
claims data revealed a similar pattern for both codes. For CPT code 
38220, we found a geometric mean cost of approximately $1,787 based on 
5,908 single claims (out of 5,993 total claims), and for CPT code 
38221, our claims data revealed a geometric mean cost of approximately 
$1,799 based on 59,892 single claims (out of 60,467 total claims). 
Because the geometric mean costs of approximately $1,787 for CPT code 
38220 and $1,799 for CPT code 38221 are similar to the geometric mean 
cost of approximately $1,347 for C-APC 5072, we continue to believe 
that C-APC 5072 is the most appropriate APC assignment for both codes 
for CY 2018.
    In addition, based on input from our medical advisors, we believe 
that C-APC 5072 is the most appropriate APC assignment for new CPT code 
38222, consistent with the APC assignment for similar diagnostic bone 
marrow aspiration and biopsy procedures. As noted in Table 29, CPT 
codes 38220 and 38221 are assigned to C-APC 5072, and we believe that 
the service described by new CPT code 38222 is similar to the existing 
bone marrow aspiration and biopsy codes. Consistent with the statutory 
requirement under section 1833(t)(9)(A) of the Act, we will reevaluate 
the APC groupings during the next rulemaking cycle.
    After consideration of the public comment we received, we are 
finalizing our CY 2018 proposals, without modification, for the bone 
marrow aspiration and biopsy codes, specifically, CPT codes 20939, 
38220, 38221, and 38222. Table 30 below lists the final APC and status 
indicator assignments for CPT codes 20939, 38220, 38221, and 38222 for 
CY 2018. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

                    Table 30--Final CY 2018 Status Indicator (SI) and APC Assignment for the Bone Marrow Aspiration and Biopsy Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 CY 2017
                           CY 2018 OPPS/ASC                             CY 2017      CY 2017      OPPS       CY 2018      CY 2018   CY 2018 OPPS payment
      HCPCS code             proposed rule        Short descriptor      OPPS SI     OPPS APC     payment     OPPS SI     OPPS APC           rate
                           placeholder code                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20939.................  2093X.................  Bone marrow aspir            N/A          N/A         N/A           N          N/A  N/A.
                                                 bone grfg.
38220.................  N/A...................  Dx bone marrow                J1         5072   $1,236.62          J1         5072  Refer to OPPS
                                                 aspirations.                                                                        Addendum B.

[[Page 59293]]

 
38221.................  N/A...................  Dx bone marrow                J1         5072   $1,236.62          J1         5072  Refer to OPPS
                                                 biopsies.                                                                           Addendum B.
38222.................  382X3.................  Dx bone marrow bx &          N/A          N/A         N/A          J1         5072  Refer to OPPS
                                                 aspir.                                                                              Addendum B.
G0364.................  ......................  Bone marrow aspirate           N          N/A         N/A           D          N/A  N/A.
                                                 &biopsy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Discussion of Comment Solicitation in the Proposed Rule on 
Intraocular Procedure APCs
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609 
through 33610), as part of our CY 2018 comprehensive review of the 
structure of the APCs and procedure code assignments, we evaluated the 
intraocular procedure APCs with a particular focus on C-APC 5491 (Level 
1 Intraocular Procedures) that contains cataract surgery procedures. We 
strive to maintain APCs that contain procedures that are relatively 
homogenous in resource costs and clinical characteristics. While it is 
impracticable and contrary to the principles of a prospective payment 
system to assign each procedure to its own APC, thus resulting in a 
cost-based, fee schedule payment system, we seek to ensure our clinical 
groupings appropriately group like items and services while maintaining 
the integrity of a prospective payment system under which bundled, 
encounter-based payments are essential.
    For CY 2018, we considered proposing a new intraocular procedure 
APC that would further distinguish the resource costs and clinical 
characteristics between cataract surgery and complex cataract surgery. 
As listed in Addendum B of the CY 2018 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 66984 (Cataract surgery with 
IOL 1 stage procedure) and CPT code 66982 (Cataract surgery complex) to 
C-APC 5491. However, because the 2017 AMA CPT Code manual describes a 
complex cataract surgery case as ``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),'' we stated that we believe it may be more appropriate 
to assign CPT code 66982 to a C-APC that is separate from the C-APC 
assignment for CPT code 66984. However, because this potential APC 
grouping would assign CPT code 66982 to a higher paying C-APC than CPT 
code 66984, we indicated that we would monitor claims data for changes 
in the distribution of coding complex cataract surgery and routine 
cataract surgery if we were to adopt this change. In the proposed rule, 
we sought public comments from stakeholders, including 
ophthalmologists, organizations representing ophthalmologists, 
beneficiaries, hospitals, and all other interested parties on whether 
we should create a new C-APC that includes complex cataract surgeries 
identified by CPT code 66982 (along with other intraocular procedures 
that are similar in resources) in a newly created C-APC that is 
separate from those identified by CPT code 66984. That is, we are 
considering whether to establish a new Level 2 Intraocular Procedures 
C-APC in between existing C-APCs 5491 and 5492.
    Comment: Commenters, including several ophthalmologists and 
organizations representing ophthalmologists, did not support separation 
of complex cataract surgery identified by CPT code 66982 and simple 
cataract surgery identified by CPT code 66984 into separate APCs. 
Commenters recommended that CMS maintain the current assignment of CPT 
code 66982 and 66984 in the same APC (APC 5491) because the procedures 
are similar clinically and the modest variation in cost between the two 
procedures does not warrant reassignment of CPT code 66982 into a 
higher payment APC. However, commenters supported CMS' intent to 
monitor the data for these procedures and make future changes, if 
needed. In addition, one commenter indicated that variations in payment 
between simple and complex cataract surgery should be reflected in the 
physician payment rather than the facility fee.
    Response: We thank the commenters for providing detailed responses 
to the comment solicitation on whether to separate simple and complex 
cataract surgery into separate APCs. Based on the points raised in 
response to the comment solicitation with respect to the facility 
resource costs and clinical similarity between simple and complex 
cataract surgery, it does not appear necessary to separate these 
procedures into separate APCs.
    After consideration of the public comments we received, we are 
continuing the assignment of simple and complex cataract surgery 
procedures (described by CPT codes 66984 and 66982, respectively) to 
the same APC for CY 2018. We appreciate the commenters' support of CMS' 
continuing efforts to monitor both the cost and utilization of simple 
and complex cataract surgery to determine if an APC reassignment or 
other change may be needed in the future.
9. Endovascular APCs (C-APCs 5191 through 5194)
    For CY 2018, we proposed to continue the existing four levels of 
Endovascular C-APCs (C-APCs 5191 through 5194) as displayed in Table 31 
below and in Addendum B to the CY 2018 OPPS/ASC proposed rule.

     Table 31--Proposed CY 2018 Geometric Mean Cost and Payment for
                           Endovascular C-APCs
------------------------------------------------------------------------
                                              CY 2018       Proposed CY
                  C-APC                   geometric mean     2018 OPPS
                                               cost           payment
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...       $2,958.89          $2,844

[[Page 59294]]

 
5192--Level 2 Endovascular Procedures...        5,199.87           4,999
5193--Level 3 Endovascular Procedures...       10,627.86          10,218
5194--Level 4 Endovascular Procedures...       16,197.55          15,572
------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposal to continue the 
four levels of the endovascular C-APCs and requested that CMS create 
more levels within the endovascular C-APCs to improve resource 
homogeneity within these C-APCs. Specifically, the commenters requested 
that CMS create a six-level endovascular C-APC family by reassigning 
endovascular procedures with costs greater than approximately $7,000 up 
one level, from the current C-APC 5192 (Level 2 Endovascular 
Procedures) to a new Level 3 Endovascular Procedures C-APC (519X), and 
reassigning procedures with costs less than approximately $9,000 down 
one level, from the current C-APC 5193 (Level 3 Endovascular 
Procedures) to the new requested Level 3 Endovascular Procedures C-APC. 
Commenters also requested that procedures with costs greater than 
approximately $12,000 in the current C-APC 5193 be moved up one level 
to a new Level 5 Endovascular Procedures C-APC (519Y), and those 
procedures with costs greater than approximately $13,000 to be moved 
down one level from current C-APC 5194 (Level 4 Endovascular 
Procedures) to the new requested Level 5 C-APC (519Y). The commenters' 
requested the C-APC structure and estimated payment amount for each C-
APC as listed in Table 32 below.

    Table 32--CY 2018 Structure for Endovascular C-APCs Requested by
                               Commenters
------------------------------------------------------------------------
                                                           Estimated CY
                          C-APC                              2018 OPPS
                                                              payment
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...................          $2,845
5192--Level 2 Endovascular Procedures...................           4,875
519X--New Level 3 Endovascular Procedures...............           8,042
5193--Current Level 3 Endovascular Procedures/New Level           10,084
 4 Endovascular Procedures..............................
519Y--New Level 5 Endovascular Procedures...............          12,149
5194--Current Level 4 Endovascular Procedures/New Level           15,713
 6 Endovascular Procedures..............................
------------------------------------------------------------------------

    At the annual meeting for the HOP Panel held on August 21, 2017, 
the HOP Panel recommended that, for CY 2018, CMS examine the number of 
APCs for endovascular procedures. The HOP Panel also recommended that 
the appropriate Panel subcommittee review the APCs for endovascular 
procedures to determine whether more granularity (that is, more APCs) 
is warranted.
    Other commenters opposed a reorganization of the endovascular C-
APCs for CY 2018 and expressed concerns regarding changing the number 
of C-APCs in this family without a chance for the public to comment. 
These commenters encouraged CMS to consider the impact that adding APCs 
for the endovascular procedures may have on other procedures in 
existing APCs and recommended that, if CMS plans to make a change to 
the endovascular APCs, it include a proposal in the CY 2019 OPPS/ASC 
proposed rule to allow the opportunity for the public to comment.
    Response: We thank the commenters for their input. At this time, we 
continue to believe that the current C-APC levels for the endovascular 
C-APC family provide an appropriate distinction between the resource 
costs at each level and provide clinical homogeneity. We will continue 
to review this C-APC structure, including consultation with the 
appropriate HOP Panel subcommittee, to determine if additional 
granularity is necessary for this C-APC family.
10. Esophagogastroduodenoscopy (EGD) (C-APC 5362)
    For CY 2018, as displayed in Table 33 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 43210 to APC 5331 (Complex GI Procedures), with a proposed 
payment rate of $4,119.27.

[[Page 59295]]



                          Table 33--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 43210
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
43210................................  Esophagogastroduo-denoscopy,                J1          5331    $3,940.61           J1          5331    $4,119.27
                                        flexible, transoral; with
                                        esophagogastric fundoplasty,
                                        partial or complete, includes
                                        duodenoscopy when performed.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter disagreed with the proposed APC assignment 
for CPT code 43210 and stated that that the proposed payment is 
inadequate to cover the cost of the procedure. The commenter stated 
that the device associated with the procedure costs approximately 
$4,100. The commenter elaborated that because of the inadequate payment 
for the procedure, providers are reluctant to perform the procedure, 
and instead are opting to perform the higher paying procedures for the 
treatment of gastroesophageal reflux disease (GERD). The commenter also 
stated that, based on the geometric mean cost of $7,013 for CPT code 
43210, the code is inappropriately assigned to APC 5331, which has a 
geometric mean cost of approximately $4,284. To correct the inadequate 
payment for the procedure, the commenter suggested that CMS either 
reassign CPT code 43210 to C-APC 5362 (Level 2 Laparoscopy and Related 
Services), which had a proposed payment rate of $7,214, or establish a 
new Level 2 Complex GI Procedures APC that contains only the surgical 
procedures described by the following CPT codes:
     43210 (Esophagogastroduodenoscopy, flexible, transoral; 
with esophagogastric fundoplasty, partial or complete, includes 
duodenoscopy when performed);
     43257 (Esophagogastroduodenoscopy, flexible, transoral; 
with delivery of thermal energy to the muscle of lower esophageal 
sphincter and/or gastric cardia, for treatment of gastroesophageal 
reflux disease);
     43280 (Laparoscopy, surgical, esophagogastric fundoplasty 
(e.g., nissen, toupet procedures));
     43281 (Laparoscopy, surgical, repair of paraesophageal 
hernia, includes fundoplasty, when performed; without implantation of 
mesh);
     43284 (Laparoscopy, surgical, esophageal sphincter 
augmentation procedure, placement of sphincter augmentation device 
(i.e., magnetic band), including cruroplasty when performed);
     43770 (Laparoscopy, surgical, gastric restrictive 
procedure; placement of adjustable gastric restrictive device (e.g., 
gastric band and subcutaneous port components)); and
     46762 (Sphincteroplasty, anal, for incontinence, adult; 
implantation artificial sphincter).
    Response: For the second suggestion, we believe the grouping of 
procedures in the suggested APC may be inappropriate based on lack of 
clinical homogeneity. Specifically, CPT code 46762 describes a 
sphincteroplasty procedure, which is unlike that of the other GERD-
related procedures in the suggested APC. However, for the first 
suggestion, based on our analysis of the final rule claims data, we 
believe that it would be appropriate to reassign CPT code 43210 to C-
APC 5362. We note that, for this final rule with comment period, we 
used claims data with dates of service between January 1, 2016, and 
December 31, 2016, that were processed on or before June 30, 2017. Our 
analysis of the final rule claims data revealed a geometric mean cost 
of approximately $6,759 for CPT code 43210 based on 91 single claims 
(out of 92 total claims), which is comparable to the geometric mean 
cost of approximately $7,591 for C-APC 5362. Compared to the geometric 
mean cost of approximately $4,291 for C-APC 5331, we agree with the 
commenter that C-APC 5362 is the more appropriate C-APC assignment for 
CPT code 43210 based on its clinical homogeneity and resource costs.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal with modification. Specifically, 
we are reassigning CPT code 43210 from C-APC 5331 to C-APC 5362 for CY 
2018. As we do every year under the OPPS, we will reevaluate the cost 
of the procedure and its APC assignment for next year's OPPS 
rulemaking. Table 34 below lists the final status indicator and APC 
assignments for CPT code 43210. We refer readers to Addendum B of this 
final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A of 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

                                   Table 34--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 43210
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
43210.......................  Esophagogastroduo-                 J1          5331    $3,940.61           J1          5362  Refer to OPPS Addendum B.
                               denoscopy, flexible,
                               transoral; with
                               esophagogastric
                               fundoplasty, partial or
                               complete, includes
                               duodenoscopy when
                               performed.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59296]]

11. Hemorrhoid Treatment by Thermal Energy (APC 5312)
    For CY 2018, as displayed in Table 35 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 46930 to APC 5311 (Level 1 Lower GI Procedures), with a 
proposed payment rate of $690.37.

                          Table 35--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 46930
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
              HCPCS code                        Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
46930................................  Destruction of internal                      T          5311      $667.67            T          5311      $690.37
                                        hemorrhoid(s) by thermal energy
                                        (e.g., infrared coagulation,
                                        cautery, radiofrequency).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter requested a reassignment of CPT code 46930 
to APC 5312 (Level 2 Lower GI Procedures), which had a CY 2018 proposed 
payment rate of $907.04. The commenter indicated that review of the 
geometric mean cost of approximately $879 for CPT code 46930 from the 
CY 2018 proposed rule claims data is more in line with the geometric 
mean cost for APC 5312. Specifically, the commenter noted that the 
geometric mean cost for APC 5312 is approximately $943, which is 
comparable to the geometric cost of $879 for CPT code 46930, rather 
than the geometric mean cost of approximately $718 for APC 5311.
    Response: For this final rule with comment period, we reviewed the 
claims data associated with CPT codes 46930. We used claims data for 
this final rule with comment period with dates of service between 
January 1, 2016, and December 31, 2016 that were processed on or before 
June 30, 2017. Our analysis of the final rule claims data revealed that 
a change in the APC assignment to APC 5312 for CPT code 46930 is 
appropriate. Specifically, we found a geometric mean cost of 
approximately $858 for CPT code 46930 based on 363 single claims (out 
of 970 total claims), which is similar to the geometric mean cost of 
approximately $936 for APC 5312 rather than the geometric mean cost of 
approximately $710 for APC 5311. In addition, our analysis of the range 
of geometric mean costs for the significant procedures within APCs 5311 
and 5312 shows that the geometric mean cost for CPT code 46930 is 
comparable to the costs of procedures assigned to APC 5312. 
Specifically, the geometric mean costs of the significant procedures 
assigned to APC 5311 range between approximately $382 (for CPT code 
46221) and $750 (for CPT code 45378), while the range for procedures 
assigned to APC 5312 is between approximately $824 (for CPT code 45341) 
and $1,579 (for CPT 45390). Consequently, we agree that a reassignment 
of CPT code 46930 to APC 5312 is more appropriate.
    Therefore, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal with modification to the APC 
assignment for CPT code 46930. Specifically, we are reassigning CPT 
code 46930 from C-APC 5311 to C-APC 5312 for CY 2018. Table 36 below 
lists the final status indicator and APC assignments for CPT code 
49630. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

                                   Table 36--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 46930
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
46930.......................  Destruction of internal             T          5311      $667.67            T          5312  Refer to OPPS Addendum B.
                               hemorrhoid(s) by
                               thermal energy (e.g.,
                               infrared coagulation,
                               cautery,
                               radiofrequency).
--------------------------------------------------------------------------------------------------------------------------------------------------------

12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)
    For CY 2018, as displayed in Table 37 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 44384 to C-APC 5303 (Level 3 Upper GI Procedures).

[[Page 59297]]



                          Table 37--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 44384
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
44384................................  Ileoscopy, through stoma; with              J1          5303    $2,510.70           J1          5303    $2,630.93
                                        placement of endoscopic stent
                                        (includes pre- and post-dilation
                                        and guide wire passage, when
                                        performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters opposed the proposed continued 
assignment of CPT code 44384 to C-APC 5303. The commenters stated that 
the procedure includes the use of a stent that costs approximately 
$1,500, and that the resources required to perform the procedure are 
similar to those other small and large bowel procedures that require 
stent placement in C-APC 5331 (Complex GI Procedures), which had a CY 
2018 proposed payment rate of $4,119.27. The commenters further added 
that because C-APC 5303 is not a device-dependent designated APC, the 
continued assignment of CPT code 44384 to C-APC 5303 results in an ASC 
payment that is below the cost of performing the procedure. 
Consequently, the commenters urged CMS to revise the APC assignment for 
CPT code 44384 back to its CY 2016 APC assignment, specifically, C-APC 
5331.
    Response: We proposed to continue the APC assignment for CPT code 
44384 based on claims data used for the CY 2018 OPPS/ASC proposed rule. 
We note that the proposed rule data was based on claims data submitted 
between January 1, 2016, and December 31, 2016, that were processed on 
or before December 31, 2016. For CPT code 44384, our analysis of the 
claims data revealed a geometric mean cost of approximately $2,404 for 
the CPT code based on 25 single claims (out of 26 total claims), which 
is similar to the geometric mean cost of approximately $2,736 for C-APC 
5303 rather than the geometric mean cost of approximately $4,284 for C-
APC 5331. Consequently, we proposed to continue the APC assignment for 
CPT code 44384 to C-APC 5303 for CY 2018.
    For this final rule with comment period, we again examined updated 
claims data associated with CPT code 44384. We note that for this final 
rule with comment period we used claims data with dates of service 
between January 1, 2016, and December 31, 2016, that were processed on 
or before June 30, 2017. Our examination of the final rule claims data 
revealed a similar pattern for CPT code 44384. Specifically, we found a 
geometric mean cost of approximately $2,492 for CPT code 44384 based on 
32 single claims (out of 33 total claims), which is similar to the 
geometric mean cost of approximately $2,742 for C-APC 5303 rather than 
the geometric mean cost of approximately $4,291 for C-APC 5331. 
Assigning CPT code 43384 to C-APC 5331 would result in an overpayment 
for the procedure. C-APC 5303 contains several GI-related procedures, 
which are similar to those procedures described by CPT code 44384, 
based on clinical homogeneity and resource costs.
    In response to the comment related to device-dependent APCs, we 
note that device-dependent APCs are no longer recognized under the OPPS 
as of CY 2015 and that, effective January 1, 2017, device-intensive 
status is assigned at the HCPCS code level, not at the APC level. We 
note that when we implemented the C-APC policy in CY 2015, we 
eliminated the device-dependent APC policy and replaced it with the 
device-intensive policy, effective January 1, 2015. For more 
information on this change, we refer readers to the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66793 through 66795), the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70421 through 70422), 
and the CY 2017 OPPS/ASC final rule with comment period (81 FR 79657 
through 79659). In addition, we refer readers to section IV.B. of this 
final rule with comment period for the discussion related to the 
device-intensive policy under the OPPS. For a discussion of ASC 
procedures designated as device-intensive, we refer readers to section 
XII.C.1.c. of this final rule with comment period.
    Finally, we remind readers that, as we have stated since the 
implementation of the OPPS in August 2000, section 1833(t)(9) of the 
Act requires that we annually review all the items and services within 
an APC group and revise the APC structures accordingly. Included in 
this review is the identification of any 2 times rule violations as 
provided under section 1833(t)(2) of the Act and, to the extent 
possible, rectification of these violations. We review our claims data 
every year and determine whether we need to make changes to the current 
APC assignment for the following year. Although CPT code 44384 was 
assigned to C-APC 5331 in CY 2016, we revised the assignment to C-APC 
5303 for CY 2017 based on the latest claims data.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal without modification to continue 
the assignment of CPT code 44384 to C-APC 5303. Table 38 below lists 
the final status indicator and APC assignments for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59298]]



                                   Table 38--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 44384
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
44384.......................  Ileoscopy, through                 J1          5303    $2,510.70           J1          5303  Refer to OPPS Addendum B.
                               stoma; with placement
                               of endoscopic stent
                               (includes pre- and post-
                               dilation and guide wire
                               passage, when
                               performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

13. Laparoscopic Nephrectomy (C-APC 5362)
    For CY 2018, as displayed in Table 39 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 
50543 from C-APC 5377 (Level 7 Urology and Related Services), which had 
a proposed payment rate of $15,220.83 to C-APC 5362 (Level 2 
Laparoscopy and Related Services), which had a proposed payment rate of 
$7,213.53.

                          Table 39--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 50543
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                  Proposed CY  Proposed CY
               CPT code                         Long descriptor           CY 2017 OPPS    CY 2017        OPPS      Proposed CY   2018 OPPS    2018 OPPS
                                                                               SI         OPPS APC     payment    2018 OPPS SI      APC        payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
50543................................  Laparoscopy, surgical; partial              J1          5377   $14,363.61           J1          5362    $7,213.53
                                        nephrectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter applauded CMS' proposal to remove CPT code 
50543 from C-APC 5377. The commenter indicated that the code was 
inappropriately placed in C-APC 5377 because the procedure involves no 
implantable device, which is in contrast to the device-related 
procedures in C-APC 5377. The commenter believed that the addition of 
this CPT code to C-APC 5377 for CY 2017 was an error that disrupted the 
clinical homogeneity of the APC. The commenter suggested that CMS 
finalize the proposal to reassign CPT code 50543 from C-APC 5377 to APC 
5362.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we again reviewed the updated claims data 
associated with CPT code 50543 and continue to believe that C-APC 5362 
is the more appropriate assignment for the CPT code based on its 
clinical coherence and resource similarity to the other procedures in 
the APC. Although our analysis showed a geometric mean cost of 
approximately $7,591 for C-APC 5362, which is lower than the geometric 
mean cost of approximately $10,247 for CPT code 50543 based on 1,008 
single claims (out of 1,016 total claims), we found that the geometric 
mean cost for the CPT code falls within the range of costs for 
significant procedures assigned to C-APC 5362. Specifically, the cost 
range for procedures assigned to C-APC 5362 is between approximately 
$5,997 (for CPT code 50593) and $10,247 (for CPT code 50543). Based on 
the final rule claims data, we believe that CPT code 50543 is more 
appropriately assigned to C-APC 5362 based on its clinical coherence 
and resource similarity to the other procedures assigned to C-APC 5362.
    Therefore, after consideration of the public comment we received, 
we are finalizing our proposal, without modification, to reassign CPT 
code 50543 to C-APC 5362 for CY 2018. As we do every year, we will 
review our claims data for the procedure for the CY 2019 OPPS 
rulemaking. Table 40 below lists the final CY 2018 status indicator and 
APC assignments for CPT code 50543. We refer readers to Addendum B to 
this final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

                                   Table 40--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 50543
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
50543.......................  Laparoscopy, surgical;             J1          5377   $14,363.61           J1          5362  Refer to OPPS Addendum B.
                               partial nephrectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

14. Multianalyte Assays With Algorithmic Analyses (MAAA)
    For CY 2018, as displayed in Table 41 below and as listed in 
Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to 
continue to assign CPT codes 81490, 81503, 81535, 81536, 81538, and 
81539, to status indicator ``Q4'' to indicate that the codes are 
conditionally packaged. Specifically, as defined in Addendum D1 to the 
CY 2018 OPPS/ASC proposed rule, an

[[Page 59299]]

assignment to status indicator ``Q4'' indicates that payment for the 
laboratory test is either packaged if billed on the same claim as a 
HCPCS code assigned to status indicator ``J1'', ``J2'', ``S'', ``T'', 
``V'', ``Q1'', ``Q2'', or ``Q3'', or in other circumstances, is paid 
through the CLFS.

  Table 41--Proposed CY 2018 Status Indicator (SI) for CPT Codes 81490,
                  81503, 81535, 81536, 81538, and 81539
------------------------------------------------------------------------
                                              CY 2017 OPPS   Proposed CY
        CPT code           Long descriptor         SI       2018 OPPS SI
------------------------------------------------------------------------
81490..................  Autoimmune                    Q4            Q4
                          (rheumatoid
                          arthritis),
                          analysis of 12
                          biomarkers using
                          immunoassays,
                          utilizing serum,
                          prognostic
                          algorithm reported
                          as a disease
                          activity score.
81503..................  Oncology (ovarian),           Q4            Q4
                          biochemical assays
                          of five proteins
                          (ca-125,
                          apolipoprotein a1,
                          beta-2
                          microglobulin,
                          transferrin, and
                          pre-albumin),
                          utilizing serum,
                          algorithm reported
                          as a risk score.
81535..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; first
                          single drug or
                          drug combination.
81536..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; each
                          additional single
                          drug or drug
                          combination (list
                          separately in
                          addition to code
                          for primary
                          procedure).
81538..................  Oncology (lung),              Q4            Q4
                          mass spectrometric
                          8-protein
                          signature,
                          including amyloid
                          a, utilizing
                          serum, prognostic
                          and predictive
                          algorithm reported
                          as good versus
                          poor overall
                          survival.
81539..................  Oncology (high-               Q4            Q4
                          grade prostate
                          cancer),
                          biochemical assay
                          of four proteins
                          (total psa, free
                          psa, intact psa,
                          and human
                          kallikrein-2
                          [hk2]), utilizing
                          plasma or serum,
                          prognostic
                          algorithm reported
                          as a probability
                          score.
------------------------------------------------------------------------

    Comment: Some commenters requested a revision to the status 
indicator assignment for the six MAAA codes (CPT codes 81490, 81503, 
81535, 81536, 81538, and 81539) from ``Q4'' to ``A'' (Not paid under 
the OPPS but may be paid under a different Medicare payment system), 
consistent with the status indicator assignment for the DNA and RNA-
based MAAA tests. The commenters stated that these tests are generally 
not performed in the HOPD setting. Also, the commenters indicated that 
all of the Category I CPT MAAA codes are already assigned to status 
indicator ``A'' except for CPT codes 81490, 81503, 81535, 81536, 81538, 
and 81539, which are protein-based MAAA codes. The commenters asserted 
that, based on the June 23, 2016 CLFS final rule entitled ``Medicare 
Program; Medicare Clinical Diagnostic Laboratory Tests Payment 
System,'' CMS defined an ADLT under section 1834A(d)(5)(A) of the Act 
to include DNA, RNA, and protein-based tests, and, as such, the six 
protein-based MAAA codes should be reassigned to status indicator 
``A''.
    Response: As we stated in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79594), we will assign status indicator ``A'' 
(Separate payment under the CLFS) to ADLTs once a laboratory test is 
designated as an ADLT under the CLFS. Before a test can be designated 
as an ADLT, applicants must submit an application for successful 
designation as an ADLT by CMS. These 6 codes (CPT codes 81490, 81503, 
81535, 81536, 81538, and 81539) have not been designated as ADLTs by 
CMS at this time, and therefore we do not believe they should be 
reassigned to status indicator ``A''. However, once a code has been 
designated under the CLFS as an ADLT that meets the criteria of section 
1834A(d)(5)(A) of the Act, we will update the OPPS payment file 
(Addendum B) on a quarterly basis to reflect the appropriate status 
indicator assignment.
    Therefore, after consideration of the public comments, we are 
finalizing our proposal, without modification, for CPT codes 81490, 
81503, 81535, 81536, 81538, and 81539. As stated earlier, we will 
update the OPPS payment file (Addendum B) to appropriately reflect the 
status indicator assignment once a CPT code has been designated under 
the CLFS as an ADLT that meets the criteria of section 1834A(d)(5)(A) 
of the Act. Table 42 below lists the final status indicator for the CPT 
codes. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

   Table 42--Final CY 2018 Status Indicator (SI) for CPT Codes 81490,
                  81503, 81535, 81536, 81538, and 81539
------------------------------------------------------------------------
                                              CY 2017 OPPS  CY 2018 OPPS
        CPT code           Long descriptor         SI            SI
------------------------------------------------------------------------
81490..................  Autoimmune                    Q4            Q4
                          (rheumatoid
                          arthritis),
                          analysis of 12
                          biomarkers using
                          immunoassays,
                          utilizing serum,
                          prognostic
                          algorithm reported
                          as a disease
                          activity score.
81503..................  Oncology (ovarian),           Q4            Q4
                          biochemical assays
                          of five proteins
                          (ca-125,
                          apolipoprotein a1,
                          beta-2
                          microglobulin,
                          transferrin, and
                          pre-albumin),
                          utilizing serum,
                          algorithm reported
                          as a risk score.
81535..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; first
                          single drug or
                          drug combination.
81536..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; each
                          additional single
                          drug or drug
                          combination (list
                          separately in
                          addition to code
                          for primary
                          procedure).
81538..................  Oncology (lung),              Q4            Q4
                          mass spectrometric
                          8-protein
                          signature,
                          including amyloid
                          a, utilizing
                          serum, prognostic
                          and predictive
                          algorithm reported
                          as good versus
                          poor overall
                          survival.

[[Page 59300]]

 
81539..................  Oncology (high-               Q4            Q4
                          grade prostate
                          cancer),
                          biochemical assay
                          of four proteins
                          (total psa, free
                          psa, intact psa,
                          and human
                          kallikrein-2
                          [hk2]), utilizing
                          plasma or serum,
                          prognostic
                          algorithm reported
                          as a probability
                          score.
------------------------------------------------------------------------

15. Musculoskeletal APCs (APC 5111 Through 5116)
    For CY 2018, we proposed to continue the existing C-APCs for the 
six levels of musculoskeletal procedures (C-APCs 5111 through 5116), as 
displayed in Table 43 below and in Addendum B to the CY 2018 OPPS/ASC 
proposed rule.

     Table 43--Proposed CY 2018 Geometric Mean Cost and Payment for
                         Musculoskeletal C-APCs
------------------------------------------------------------------------
                                              CY 2018       Proposed CY
                  C-APC                   geometric mean     2018 OPPS
                                               cost           payment
------------------------------------------------------------------------
5111--Level 1 Musculoskeletal Procedures         $222.10            $214
5112--Level 2 Musculoskeletal Procedures        1,311.47           1,261
5113--Level 3 Musculoskeletal Procedures        2,600.94           2,501
5114--Level 4 Musculoskeletal Procedures        5,602.87           5,385
5115--Level 5 Musculoskeletal Procedures       10,310.27           9,913
5116--Level 6 Musculoskeletal Procedures       15,783.57          15,175
------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposal for six levels of 
the musculoskeletal C-APCs and requested that CMS create two additional 
levels within the musculoskeletal C-APCs. The commenters stated 
concerns about the range of costs of procedures assigned to Level 4, 
Level 5, and Level 6. The commenters believed that the gap between the 
musculoskeletal procedure levels and payments is too large and results 
in APCs that include disparate procedures in terms of clinical 
complexity and resource use.
    Response: At this time, we continue to believe that the proposed C-
APC levels for the musculoskeletal procedures C-APC family provide an 
appropriate distinction between the resource costs at each level and 
provide clinical homogeneity. We will continue to review this C-APC 
structure to determine if additional granularity is necessary for this 
C-APC family.
16. Nasal/Sinus Endscopy Procedures (C-APC 5155)
    For CY 2018, the AMA CPT Editorial Panel established several new 
bundled nasal/sinus endoscopy CPT codes. Table 44 below lists the 
complete descriptors for the new CPT codes. These codes were listed in 
Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which 
is available via the Internet on the CMS Web site). Addendum B listed 
the proposed status indicator assignments for the new 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 
proposed/placeholder CY 2018 CPT codes and the long descriptors. We 
note that the CPT code descriptors that appeared in the OPPS Addendum B 
were short descriptors and did 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 in 
Addendum O to the proposed rule, specifically under the column labeled 
``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code'' so that 
the public could adequately comment on our proposed APC and status 
indicator assignments. We also indicated that the final CPT code 
numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 45 
below.
    As displayed in Table 44 below and in Addendum B of the CY 2018 
OPPS/ASC proposed rule, we proposed to assign CPT code 31241 to status 
indicator ``C'' to indicate that this is an inpatient only procedure, 
and to assign CPT codes 31253, 31257, 31259, and 31298 to C-APC 5155 
(Level 5 Airway Endoscopy), with a proposed payment rate of $4,628.89.

[[Page 59301]]



   Table 44--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the New Nasal/Sinus
                                  Endoscopy CPT Codes Effective January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed CY
                              CY 2018 OPPS/ASC                             Proposed CY  Proposed CY   2018 OPPS
        CPT code                proposed rule          Long descriptor    2018 OPPS SI   2018 OPPS     payment
                              placeholder code                                              APC          rate
----------------------------------------------------------------------------------------------------------------
31241...................  31XX1...................  Nasal/sinus                      C          N/A          N/A
                                                     endoscopy,
                                                     surgical; with
                                                     ligation of
                                                     sphenopalatine
                                                     artery.
31253...................  31XX2...................  Nasal/sinus                    J1          5155    $4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including frontal
                                                     sinus exploration,
                                                     with removal of
                                                     tissue from frontal
                                                     sinus, when
                                                     performed.
31257...................  31XX3...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including
                                                     sphenoidotomy.
31259...................  31XX4...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including
                                                     sphenoidotomy, with
                                                     removal of tissue
                                                     from the sphenoid
                                                     sinus.
31298...................  31XX5...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy,
                                                     surgical; with
                                                     dilation of frontal
                                                     and sphenoid sinus
                                                     ostia (e.g.,
                                                     balloon dilation).
----------------------------------------------------------------------------------------------------------------

    Comment: Several commenters expressed concern with the APC 
placement and indicated that assignment to C-APC 5155 in the OPPS would 
reduce the ASC payment for the procedures by 32 percent. The commenters 
requested that CMS assign the new bundled codes to a higher paying APC 
to provide appropriate payment in the ASC setting. Some commenters 
clarified that, in CY 2017, these bundled procedures were reported 
under two separate codes that were separately payable. Because of the 
effect on the ASC payment, the commenters recommended that CMS 
establish a new APC for multiple (five or more) sinus procedures, 
reconfigure the airway APCs to better recognize the complexity 
associated with performing multiple sinus procedures in a single 
surgery, or create a complexity adjustment for sinus procedures billed 
with a device or drug HCPCS C-code or J-code.
    Response: C-APC 5155 contains several endoscopic sinus procedures, 
including the single endoscopic sinus surgeries. Based on input from 
our medical advisors, we believe this APC is the most appropriate 
assignment for CPT codes 31253, 31257, 31259, and 31298. C-APC 5155, 
which has a final rule geometric mean cost of approximately $4,861, is 
currently the highest paying APC within the airway endoscopy APC 
series. Because CPT codes 31253, 31257, 31259, and 31298 are new codes 
for CY 2018, we believe that we should assign these codes to C-APC 5155 
where similar endoscopic sinus procedures are assigned.
    With regards to the comment recommending separate payment for the 
single endoscopic sinus procedures performed in 2017, because the codes 
describing single endoscopic sinus surgery are assigned to status 
indicator ``J1'', HOPDs receive one payment for the multiple surgeries, 
regardless of the number of endoscopic sinus procedures performed in a 
day. The status indicator assignment of ``J1'' to C-APC 5155 indicates 
that the APC is designated as a comprehensive APC (C-APC) under the 
OPPS. C-APCs provide a single payment for a primary service, and 
payment for all adjunctive services reported on the same claim is 
packaged into payment for the primary service. With few exceptions, all 
other services reported on a hospital outpatient claim in combination 
with the primary service are considered to be related to the delivery 
of the primary service and packaged into the single payment for the 
primary service and, therefore, separate payment is not available. We 
note that C-APCs do not apply to ASCs; consequently, the procedures 
would not be packaged. Instead, the procedures would be separately 
payable in the ASC setting. As we stated in the CY 2017 OPPS/ASC final 
rule with comment period, we did not implement C-APCs in the ASC 
payment system, and consequently, procedures paid separately through 
the ASC payment system are paid based on the standard ASC methodology 
(81 FR 79738). We refer readers to section II.A.2.b. (Comprehensive 
APCs) of this final rule with comment period for the discussion on the 
payment methodology for C-APCs and to section XII. (ASC Payment System) 
of this final rule with comment period for the discussion on the ASC 
Payment System. For the history on the establishment of C-APCs under 
the OPPS, we refer readers to the CY 2014 OPPS/ASC final rule (78 FR 
74861-4910).
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for CPT codes 31241, 31253, 31257, 
31259, and 31298 without modification. Consistent with the statutory 
requirement under section 1833(t)(9)(A) of the Act, we will reevaluate 
the APC assignment for these codes in the next rulemaking cycle. Table 
45 below lists the final status indicator and APC assignments for CPT 
codes 31241, 31253, 31257, 31259, and 31298 for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59302]]



  Table 45--Final CY 2018 Status Indicator (SI) and APC Assignment for the New Nasal/Sinus Endoscopy CPT Codes
                                            Effective January 1, 2018
----------------------------------------------------------------------------------------------------------------
                        CY 2018 OPPS/ASC
      CPT code            proposed rule      Long descriptor   CY 2018 OPPS    CY 2018     CY 2018 OPPS payment
                        placeholder code                            SI         OPPS APC            rate
----------------------------------------------------------------------------------------------------------------
31241...............  31XX1...............  Nasal/sinus                   C          N/A  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical; with
                                             ligation of
                                             sphenopalatine
                                             artery.
31253...............  31XX2...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             frontal sinus
                                             exploration,
                                             with removal of
                                             tissue from
                                             frontal sinus,
                                             when performed.
31257...............  31XX3...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             sphenoidotomy.
31259...............  31XX4...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             sphenoidotomy,
                                             with removal of
                                             tissue from the
                                             sphenoid sinus.
31298...............  31XX5...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical; with
                                             dilation of
                                             frontal and
                                             sphenoid sinus
                                             ostia (eg,
                                             balloon
                                             dilation).
----------------------------------------------------------------------------------------------------------------

17. Nuclear Medicine Services (APCs 5592 and 5593)
    For CY 2018, as illustrated in Table 46 below, we proposed to 
continue to assign CPT codes 78018 and 78121 to APC 5592 (Level 2 
Nuclear Medicine and Related Services) and to also continue to assign 
CPT codes 78110 and 78111 to APC 5593 (Level 3 Nuclear Medicine and 
Related Services).

             Table 46--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 78018, 78110, 78111, and 78121
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
78018................................  Thyroid carcinoma metastases                 S          5592      $429.13            S          5592      $439.56
                                        imaging; whole body.
78110................................  Plasma volume,                               S          5593     1,138.94            S          5593     1,163.30
                                        radiopharmaceutical volume-
                                        dilution technique (separate
                                        procedure); single sampling.
78111................................  Plasma volume,                               S          5593     1,138.94            S          5593     1,163.30
                                        radiopharmaceutical volume-
                                        dilution technique (separate
                                        procedure); multiple samplings.
78121................................  Red cell volume determination                S          5592       429.13            S          5592       439.56
                                        (separate procedure); multiple
                                        samplings.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter stated that CMS proposed to reassign CPT 
codes 78018, 78110, 78111 and 78121 to new APC groups, and recommended 
that CMS maintain the CPT codes in the ``new APC groups'' to ensure 
stability within the coding structure. The commenter added that CMS has 
moved these codes several times over the years and believed they are 
currently assigned to appropriate APC groups. This commenter noted that 
the codes are low volume with high costs, and recommended that CMS 
defer to the specialty societies for appropriate APC assignment.
    Response: For the CY 2017 update, as indicated in the OPPS Addendum 
B that was released with the CY 2017 OPPS/ASC final rule with comment 
period, we assigned CPT codes 78018, 78110, 78111 and 78121 to comment 
indicator ``CH'' to indicate that their APC assignments were revised. 
However, as displayed in Table 46, we proposed to make no change to the 
APC assignments for all four codes for the CY 2018 OPPS update. 
Specifically, we proposed to continue to assign CPT codes 78018, 78110, 
78111, and 78121 to the same CY 2017 APCs for CY 2018 based on claims 
data used for the CY 2018 OPPS/ASC proposed rule. We note that the 
proposed rule data was based on claims data submitted between January 
1, 2016, and December 31, 2016, that were processed on or before 
December 31, 2016. For CPT code 78018, our examination of the claims 
data revealed a geometric mean cost of approximately $418 based on 
5,604 single claims (out of 6,327 total claims). Because the geometric 
mean cost of $418 is similar to the geometric mean cost of 
approximately $457 for APC 5592, we proposed to maintain the assignment 
of this code to APC 5592. For CPT code 78110, our claims data showed a 
geometric mean cost of approximately $1,046 based on 12 single claims 
(out of 14 total claims). We believe that the geometric mean cost of 
$1,046 for CPT code 78110 is comparable to the geometric mean cost of 
approximately $1,210 for APC 5593. Consequently, we proposed to 
maintain the assignment of this code to APC 5593. For CPT code 78111, 
we had no claims data. However, based on its clinical similarity to CPT 
code 78110, we proposed to continue to assign the CPT code to APC 5593. 
For CPT code 78121, our analysis revealed a geometric mean cost of 
approximately $807 based on 3 single claims (out of 3 total claims). 
Based on the low volume and because revising the assignment to

[[Page 59303]]

APC 5593, which had a proposed geometric mean cost of approximately 
$1,210 would result in an overpayment for the test, we proposed to 
continue to assign CPT code 78121 to APC 5592, and to review the claims 
data for the final rule to determine whether a revision to the APC 
assignment would be necessary.
    For this final rule with comment period, we again analyzed updated 
claims data associated with the four codes. We note that, for this 
final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our review of the final rule 
claims data revealed a similar pattern for all four codes. For CPT code 
78018, we found a geometric mean cost of approximately $418 based on 
6,113 single claims (out of 6,923 total claims), which is similar to 
the geometric mean cost of approximately $453 for APC 5592. 
Consequently, we believe that it continues to be appropriate to assign 
CPT code 78018 to APC 5592. For CPT code 78110, our claims data 
revealed a geometric mean cost of approximately $1,037 based on 12 
single claims (out of 14 total claims), which is similar to the 
geometric mean cost of approximately $1,202 for APC 5593.
    Consequently, we are maintaining CPT code 78110 in APC 5593. For 
CPT code 78111, we again had no claims data. However, because of its 
clinical similarity to CPT code 78110, we will maintain the assignment 
to APC 5593. For CPT code 78121, we found a geometric mean cost of 
approximately $808 based on 3 single claims (out of 3 total claims). 
Based on the comment received that the APC assignment is appropriate, 
we will retain CPT code 78121 in APC 5592, whose geometric mean cost is 
approximately $453, for CY 2018. In addition, given the low volume for 
the CPT code, we do not believe that we should reassign CPT code 78121 
to APC 5593, whose geometric mean cost is approximately $1,202 for CY 
2018. To reassign CPT code 78121 to APC 5593 would result in an 
overpayment for CPT code 78121.
    Further, we remind the commenter, that as we do every year, we 
review the latest OPPS claims data to set the payment rates for the 
following year. Section 1833(t)(9) of the Act requires that we annually 
review all the items and services within an APC group and revise the 
APC structures accordingly. Included in this review is the 
identification of any 2 times rule violations as provided under section 
1833(t)(2) of the Act and, to the extent possible, rectification of 
these violations.
    With regard to the comment of deferring to specialty societies for 
appropriate APC placement for designated codes, while we rely on our 
latest claims data to appropriately set payment rates under the OPPS, 
we welcome and appreciate comments from all stakeholders on our 
proposals. We note that every year we publish the OPPS/ASC proposed 
rules with requests for public comments on the OPPS and ASC payment 
assignments from interested parties, including hospitals, specialty 
societies, physicians, nurses, health care technicians, other health 
care professionals, interested individuals, patients, and any other 
stakeholders interested on commenting on our proposed payment 
assignments.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposals, without modification, for CPT 
codes 78018, 78110, 78111, and 78121. Table 47 below lists the final 
status indicator and APC assignments for the CPT codes. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

                      Table 47--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 78018, 78110, 78111, and 78121
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
78018.......................  Thyroid carcinoma                   S          5592      $429.13            S          5592  Refer to OPPS Addendum B.
                               metastases imaging;
                               whole body.
78110.......................  Plasma volume,                      S          5593     1,138.94            S          5593  Refer to OPPS Addendum B.
                               radiopharmaceutical
                               volume-dilution
                               technique (separate
                               procedure); single
                               sampling.
78111.......................  Plasma volume,                      S          5593     1,138.94            S          5593  Refer to OPPS Addendum B.
                               radiopharmaceutical
                               volume-dilution
                               technique (separate
                               procedure); multiple
                               samplings.
78121.......................  Red cell volume                     S          5592       429.13            S          5592  Refer to OPPS Addendum B.
                               determination (separate
                               procedure); multiple
                               samplings.
--------------------------------------------------------------------------------------------------------------------------------------------------------

18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 5192)
    For CY 2018, as noted in Table 48 below and in Addendum B to the CY 
2018 OPPS/ASC proposed rule, we proposed to revise the APC assignment 
for the percutaneous transluminal mechanical thrombectomy procedures, 
specifically, CPT codes 37184 and 37187. Specifically, we proposed to 
reassign CPT codes 37184 and 37187 from APC 5183 (Level 3 Vascular 
Procedures) to APC 5184 (Level 4 Vascular Procedures), with a proposed 
payment rate of $4,084.25.

[[Page 59304]]



                            Table 48--Proposed CY 2018 U (SI), APC Assignment, and Payment Rate for CPT Codes 37184 and 37187
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
37184................................  Primary percutaneous transluminal            T          5183    $3,924.28            T          5184    $4,084.25
                                        mechanical thrombectomy,
                                        noncoronary, non-intracranial,
                                        arterial or arterial bypass
                                        graft, including fluoroscopic
                                        guidance and intraprocedural
                                        pharmacological thrombolytic
                                        injection(s); initial vessel.
37187................................  Percutaneous transluminal                    T          5183     3,924.28            T          5184     4,084.25
                                        mechanical thrombectomy,
                                        vein(s), including
                                        intraprocedural pharmacological
                                        thrombolytic injections and
                                        fluoroscopic guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter requested that CMS revise the proposed APC 
assignment for CPT codes 37184 and 37187 from APC 5184 to C-APC 5192 
based on their clinical and resource homogeneity to the procedures 
assigned to C-APC 5192 (Level 2 Endovascular Procedures). The commenter 
indicated that both procedures are clinically similar to other 
percutaneous transluminal procedures assigned to C-APC 5192, including 
CPT code 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)), which CMS 
proposed to assign to C-APC 5192 for CY 2018, with a proposed payment 
of $4,999.36. This commenter added that the geometric mean costs 
associated with the procedures described by CPT codes 37184 and 37187 
are similar to the geometric mean costs of other procedures currently 
assigned to C-APC 5192.
    Response: For this final rule with comment period, we reviewed the 
updated CY 2016 claims data associated with CPT codes 37184 and 37187. 
We note that, for this final rule with comment period, we used claims 
data with dates of service between January 1, 2016, and December 31, 
2016, that were processed on or before June 30, 2017. Our analysis of 
the final rule claims data revealed that a change in the APC assignment 
for CPT codes 37184 and 37187 to C-APC 5192 (rather than proposed APC 
5184) is appropriate. Specifically, we found a geometric mean cost of 
approximately $8,459 for CPT code 37184 based on 149 single claims (out 
of 150 total claims), and a geometric mean cost of approximately $6,343 
for CPT code 37187 based on 188 single claims (out of 190 total 
claims). We believe that the geometric mean costs for CPT codes 37184 
and 37187 are more similar to the geometric mean costs of other 
procedures assigned to C-APC 5192, whose geometric mean cost is 
approximately $5,082, rather than the geometric mean costs of 
procedures assigned to APC 5184, whose geometric mean cost is 
approximately $4,262. We note that we also considered whether we should 
reassign CPT codes 37184 and 37187 to C-APC 5193 (Level 3 Endovascular 
Procedures), which has a geometric mean cost of approximately $10,504. 
However, based on our review, we believe that C-APC 5192 is more 
appropriate. Therefore, based on their clinical homogeneity and 
resource costs in relation to the other procedures assigned to C-APC 
5192, we agree with the commenter that C-APC 5192 is the most 
appropriate APC assignment for CPT codes 37184 and 37187.
    After consideration of the public comment we received, we are 
finalizing our CY 2018 proposal, with modification, for CPT codes 37184 
and 37187. Specifically, we are reassigning CPT codes 37184 and 37187 
from APC 5183 to C-APC 5192 for CY 2018. As we do every year under the 
OPPS, we will reevaluate the cost of CPT codes 37184, and 37187 and 
their APC assignment for next year's OPPS update. Table 49 below lists 
the final status indicator and APC assignments for both CPT codes. We 
refer readers to Addendum B to this final rule with comment period for 
the payment rates for all codes reported under the OPPS. In addition, 
we refer readers to Addendum A to this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Both Addendum A and Addendum B are available via the Internet on 
the CMS Web site.

[[Page 59305]]



                             Table 49--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 37184 and 37187
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
37184.......................  Primary percutaneous                T          5183    $3,924.28           J1          5192  Refer to OPPS Addendum B.
                               transluminal mechanical
                               thrombectomy,
                               noncoronary, non-
                               intracranial, arterial
                               or arterial bypass
                               graft, including
                               fluoroscopic guidance
                               and intraprocedural
                               pharmacological
                               thrombolytic
                               injection(s); initial
                               vessel.
37187.......................  Percutaneous                        T          5183     3,924.28           J1          5192  Refer to OPPS Addendum B.
                               transluminal mechanical
                               thrombectomy, vein(s),
                               including
                               intraprocedural
                               pharmacological
                               thrombolytic injections
                               and fluoroscopic
                               guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

19. Peripherally Inserted Central Venous Catheter (PICC) (APC 5182)
    For CY 2018, as noted in Table 50 below, we proposed to reassign 
CPT code 36569 from APC 5181 (Level 1 Vascular Procedures) to APC 5182 
(Level 2 Vascular Procedures), with a proposed payment rate of $945.33.

                          Table 50--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 36569
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36569................................  Insertion of peripherally                    T          5181      $684.13            T          5182      $945.33
                                        inserted central venous catheter
                                        (picc), without subcutaneous
                                        port or pump; age 5 years or
                                        older.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We proposed to revise the APC assignment for CPT code 36569 based 
on claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data was based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. Our analysis of the proposed rule claims data 
revealed a geometric mean cost of approximately $934 for CPT code 36569 
based on 29,514 single claims (out of 52,035 total claims). Our 
analysis further revealed a geometric mean cost of approximately $983 
for APC 5182 and $610 for APC 5181. Based on the geometric mean costs 
of APCs 5181 and 5182, we believed it was necessary to revise the APC 
assignment for CPT code 36569 from APC 5181 to APC 5182 to pay 
appropriately for the procedure. Consequently, we proposed to revise 
the APC assignment for CPT code 36569, whose geometric mean cost of 
approximately $934 is comparable to the geometric mean cost of 
approximately $983 for APC 5182.
    For this final rule with comment period, we again reviewed the 
updated claims data associated with CPT code 36569. We note that, for 
this final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our analysis of the final rule 
claims data revealed a similar pattern for CPT code 36569. 
Specifically, we found a geometric mean cost of approximately $929 for 
CPT code 36569 based on 31,559 single claims (out of 56,891 total 
claims). We also found the geometric mean cost of approximately $982 
for APC 5182 to be similar to the geometric mean cost of CPT code 36569 
compared to the geometric mean cost of approximately $612 for APC 5181.
    Comment: One commenter supported the proposed APC reassignment for 
CPT code 36569 and stated that APC 5182 more appropriately reflects the 
resources to perform the procedure.
    Response: We appreciate the commenter's support. Based on our 
latest analysis of the final rule claims data, we are finalizing our 
proposal to reassign CPT code 36569 from APC 5181 to APC 5182.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal, without modification, to 
reassign CPT code 36569 to APC 5182. Table 51 below lists the final 
status indicator and APC assignments for CPT code 36569 for CY 2018. We 
refer readers to Addendum B to this final rule with comment period for 
the payment rates for all codes reported under the OPPS. In addition, 
we refer readers to Addendum A to this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Both Addendum A and Addendum B are available via the Internet on 
the CMS Web site.

[[Page 59306]]



                                   Table 51--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 36569
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36569.......................  Insertion of                        T          5181      $684.13            T          5182  Refer to OPPS Addendum B.
                               peripherally inserted
                               central venous catheter
                               (picc), without
                               subcutaneous port or
                               pump; age 5 years or
                               older.
--------------------------------------------------------------------------------------------------------------------------------------------------------

20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and Cardiac 
Rehabilitation Services (APC 5771)
    For CY 2018, as displayed in Table 52 below, and as listed in 
Addendum B of the CY 2018 OPPS/ASC proposed rule, we did not propose to 
make any change to the APC assignments for the pulmonary rehabilitation 
services and cardiac rehabilitation services codes. Currently, there 
are four HCPCS codes that describe pulmonary rehabilitation services, 
specifically, HCPCS codes G0237, G0238, G0239, and G0424. For CY 2018, 
we proposed to continue to assign HCPCS codes G0237, G0238, and G0239 
to APC 5732 (Level 2 Minor Procedures) and to continue to assign HCPCS 
code G0424 to APC 5733 (Level 3 Minor Procedures) for CY 2018. In 
addition, there are currently four HCPCS codes that describe the 
cardiac rehabilitation services, specifically, HCPCS codes 93797, 
93798, G0422, and G0423. For CY 2018, we proposed to continue to assign 
the cardiac rehabilitation services codes to APC 5771 (Cardiac 
Rehabilitation) for CY 2018.

 Table 52--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation
                                                                  Services HCPCS Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
              HCPCS code                        Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237................................  Therapeutic procedures to                    S          5732       $28.38            S          5732       $29.65
                                        increase strength or endurance
                                        of respiratory muscles, face to
                                        face, one on one, each 15
                                        minutes (includes monitoring).
G0238................................  Therapeutic procedures to improve            S          5732        28.38            S          5732        29.65
                                        respiratory function, other than
                                        described by g0237, one on one,
                                        face to face, per 15 minutes
                                        (includes monitoring).
G0239................................  Therapeutic procedures to improve            S          5732        28.38            S          5732        29.65
                                        respiratory function or increase
                                        strength or endurance of
                                        respiratory muscles, two or more
                                        individuals (includes
                                        monitoring).
G0424................................  Pulmonary rehabilitation,                    S          5733        54.55            S          5733        53.22
                                        including exercise (includes
                                        monitoring), one hour, per
                                        session, up to two sessions per
                                        day.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797................................  Physician or other qualified                 S          5771      $110.22            S          5771      $113.71
                                        health care professional
                                        services for outpatient cardiac
                                        rehabilitation; without
                                        continuous ecg monitoring (per
                                        session).
93798................................  Physician or other qualified                 S          5771       110.22            S          5771       113.71
                                        health care professional
                                        services for outpatient cardiac
                                        rehabilitation; with continuous
                                        ecg monitoring (per session).
G0422................................  Intensive cardiac rehabilitation;            S          5771       110.22            S          5771       113.71
                                        with or without continuous ecg
                                        monitoring with exercise, per
                                        session.
G0423................................  Intensive cardiac rehabilitation;            S          5771       110.22            S          5771       113.71
                                        with or without continuous ecg
                                        monitoring; without exercise,
                                        per session.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59307]]

    Comment: Several commenters expressed concern that the payment 
rates for the pulmonary rehabilitation services are significantly less 
than those for the cardiac rehabilitation services. The commenters 
stated that, despite the legislative and clinical similarity between 
both services, CMS has taken different approaches to implementing the 
services, with pulmonary rehabilitation services paid less than cardiac 
rehabilitation services. One commenter indicated that, since 2010, the 
code describing pulmonary rehabilitation services has had three 
different status indicator assignments and payment volatility. This 
commenter recommended that CMS reassign the pulmonary rehabilitation 
HCPCS code G0464 from APC 5733 to the cardiac rehabilitation APC group, 
specifically, APC 5771. Another commenter recommended that CMS revisit 
its approach to payment for pulmonary rehabilitation services to 
improve access to care. One commenter recommended that both types of 
services be placed in one composite APC under the OPPS.
    Response: The payment rates for both the pulmonary and cardiac 
rehabilitation services are based on claims data that are analyzed each 
year. As we do every year, we review the latest OPPS claims data to set 
the payment rates for the following year. We note that section 
1833(t)(9) of the Act requires that we annually review all the items 
and services within an APC group and revise the APC structures 
accordingly. Included in this review is the identification of any 2 
times rule violations as provided under section 1833(t)(2) of the Act 
and, to the extent possible, rectification of these violations.
    For the proposed rule, we based the proposed payment rates on 
claims data submitted between January 1, 2016, and December 31, 2016, 
that were processed on or before December 31, 2016. Based on our 
analysis, we found the costs for both types of services to be 
significantly different.
    For the pulmonary rehabilitation services, our analysis revealed a 
geometric mean cost of approximately $26 for HCPCS code G0237 (based on 
19,925 single claims), $22 for HCPCS code G0238 (based on 17,361 single 
claims), and $33 for HCPCS code G0239 (based on 168,295 single claims). 
We note that the range of costs (between $26 and $33) for HCPCS codes 
G0237, G0238, and G0239 are similar to the geometric mean cost of 
approximately $31 for APC 5732. Consequently, we proposed to continue 
to assign all three pulmonary rehabilitation services HCPCS codes to 
APC 5732 for CY 2018. In addition, we found a geometric mean cost of 
approximately $45 for HCPCS code G0424 (based on 468,571 single claims) 
that is comparable to the geometric mean cost of approximately $55 for 
APC 5733. Therefore, we proposed to continue to assign HCPCS code G0424 
to APC 5733.
    For the cardiac rehabilitation services, our analysis revealed a 
geometric mean cost of approximately $101 for HCPCS code 93797 (based 
on 129,124 single claims), $118 for HCPCS code 93798 (based on 
2,698,534 single claims), $212 for HCPCS code G0422 (based on 38,094 
single claims), and $174 for HCPCS code G0423 (based on 18,001 single 
claims). Because the range of costs (between $101 and $212) for the 
cardiac rehabilitation services are comparable to the geometric mean 
cost of approximately $118 for APC 5771, we proposed to continue to 
assign the cardiac rehabilitation HCPCS codes to APC 5771 for CY 2018.
    For this final rule with comment period, we again analyzed the 
updated claims data associated with the pulmonary and cardiac 
rehabilitation services. We note that, for this final rule with comment 
period, we used claims data with dates of service between January 1, 
2016, and December 31, 2016, that were processed on or before June 30, 
2017. Similar to our proposed rule findings, we found the costs to be 
different for both services.
    For the pulmonary rehabilitation services, our final rule claims 
data revealed a geometric mean cost of approximately $25 for HCPCS code 
G0237 (based on 22,097 single claims), $22 for HCPCS code G0238 (based 
on 18,900 single claims), and $33 for HCPCS code G0239 (based on 
187,134 single claims). Based on the range of costs (between $22 and 
$33), we believe that HCPCS codes G0237, G0238, and G0239 are 
appropriately assigned to APC 5732, whose geometric mean cost is 
approximately $32. Similarly, we believe that the geometric mean cost 
of approximately $44 (based on 514,478 single claims) for HCPCS code 
G0424 is comparable to the geometric mean costs of those services 
assigned to APC 5733, whose geometric mean cost is approximately $56 
for CY 2018.
    For the cardiac rehabilitation services, our final rule claims data 
revealed a geometric mean cost of approximately $224 for HCPCS code 
G0422 (based on 44,754 single claims), $186 for HCPCS code G0423 (based 
on 22,188 single claims), $101 for HCPCS code 93797 (based on 143,507 
single claims), and $116 for HCPCS code 93798 (based on 2,991,759 
single claims). Based on the costs for the cardiac rehabilitation HCPCS 
codes (between $101 to $224), we believe that the geometric mean cost 
of approximately $117 for APC 5771 appropriately reflects the resources 
in providing cardiac rehabilitation services.
    In addition, while the commenters believed that pulmonary and 
cardiac rehabilitation services are similar, our analysis of the 
available OPPS data reveals that their costs are significantly 
different. Consequently, we do not agree that we should assign both 
services to one APC, or even assign the pulmonary rehabilitation HCPCS 
code G0424 to the cardiac rehabilitation services group (APC 5771). We 
note that the commenters did not provide data to suggest that the 
hospital reported costs in our data are incorrect or that the resources 
(costs) incurred to furnish these two types of services are equal. 
Accordingly, we have no reason to believe that the data reported to us 
by hospitals are incorrect.
    Moreover, we do not agree that we should create a composite APC for 
the pulmonary and cardiac rehabilitation services. Composite APCs 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter 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. Establishing a composite APC for these services would not 
be appropriate because pulmonary and cardiac rehabilitation services 
are generally not performed on the same day. We refer readers to the CY 
2008 OPPS/ASC final rule with comment period for a full discussion of 
the development of the composite APC methodology (72 FR 66611 through 
66614 and 66650 through 66652) and the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74163) for more recent background.
    Comment: Some commenters stated that, despite evidence that 
pulmonary rehabilitation is a valuable service, few patients with 
chronic obstructive pulmonary disease (COPD) are able to access this 
treatment. The commenters further indicated that a study of Medicare 
beneficiaries revealed that only 3.7 percent of COPD patients received 
pulmonary rehabilitation in 2012, and believe this number may be higher 
for non-Medicare beneficiaries. The commenters noted that payment for 
pulmonary rehabilitation is lower than cardiac rehabilitation (a 
similar service) in the Medicare program, and believed

[[Page 59308]]

this difference is based on idiosyncratic hospital billing and OPPS 
rules, not based on rational policy or evidence. Specifically, the 
commenter indicated that, for CY 2017, payment for 1 hour of pulmonary 
rehabilitation is $54.55 under the OPPS. These commenters suggested 
that the payment discrepancy between cardiac services and pulmonary 
rehabilitation services may be a contributing factor to inadequate 
access of the pulmonary rehabilitation services.
    Response: As stated in section III.B. of this final rule with 
comment period, payments for OPPS services and procedures are based on 
our analysis of the latest claims data. Under the OPPS, we 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. Under the Medicare program, we pay 
separately for both cardiac and pulmonary rehabilitation services. We 
have not found evidence that there is an access to care issue for 
pulmonary rehabilitation services compared to cardiac rehabilitation 
services. We note that there are a variety of treatment options for 
patients with COPD and pulmonary rehabilitation remains a covered 
service for those beneficiaries for whom physicians order this service. 
We note that, under the Medicare program, when the service is provided 
in the hospital outpatient setting, we make two payments, one to the 
hospital outpatient department under the OPPS and another for the 
professional services under the MPFS.
    In addition, as illustrated in Table 52-1 below, the number of 
services paid by Medicare for both cardiac rehabilitation and pulmonary 
rehabilitation has grown in the last several years. For the CY 2018 
OPPS update, our claims data reveal over 514,000 single claims for 
pulmonary rehabilitation services as described by HCPCS code G0424 
alone. Accordingly, we do not believe that beneficiary access to 
pulmonary rehabilitation services is inadequate. Details pertaining to 
the volume of these services furnished in the physician office setting 
can be derived from the CY 2018 MPFS final rule and associated public 
use files.

Table 52-1--OPPS Claims Data for the Pulmonary and Cardiac (Including Intensive Cardiac) Rehabilitation HCPCS Codes for the CY 2014 Through CY 2018 OPPS
                                                                         Updates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             2014 OPPS       2015 OPPS       2016 OPPS       2017 OPPS       2018 OPPS
            HCPCS code                        Short descriptor             single claims   single claims   single claims   single claims   single claims
                                                                               data            data            data            data            data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797.............................  Cardiac rehab.......................          87,689          94,769         109,420         120,821         143,507
93798.............................  Cardiac rehab/monitor...............       2,428,984       2,481,175       2,581,446       2,761,806       2,991,759
G0422.............................  Intens cardiac rehab w/exerc........          12,060          12,043          17,646          30,165          44,754
G0423.............................  Intens cardiac rehab no exer........             703           1,325           6,654          11,979          22,188
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237.............................  Therapeutic procd strg endur........          15,337          43,591          47,046          19,098          22,097
G0238.............................  Oth resp proc, indiv................          14,437          22,736          23,960          18,482          18,900
G0239.............................  Oth resp proc, group................         132,475         111,755         127,425         165,799         187,134
G0424.............................  Pulmonary rehab w exer..............         457,226         459,572         454,121         443,777         514,478
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In summary, after consideration of the public comments we received 
and after our analysis of the updated claims data for this final rule 
with comment period, we believe that the current APC assignments for 
the pulmonary and cardiac rehabilitation services appropriately 
reflects their clinical coherence and resource costs. Consequently, we 
are finalizing our proposal to continue the current APC assignment of 
the pulmonary and cardiac rehabilitation HCPCS codes, without 
modification, for CY 2018. As we do every year, we will review our 
claims data for these services for the CY 2019 OPPS rulemaking. Table 
53 below lists the final status indicator and APC assignments for the 
codes for pulmonary and cardiac rehabilitation services. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

     Table 53--Final CY 2018 Status Indicator (SI) and APC Assignment for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237.......................  Therapeutic procedures              S          5732       $28.38            S          5732  Refer to OPPS Addendum B.
                               to increase strength or
                               endurance of
                               respiratory muscles,
                               face to face, one on
                               one, each 15 minutes
                               (includes monitoring).

[[Page 59309]]

 
G0238.......................  Therapeutic procedures              S          5732        28.38            S          5732  Refer to OPPS Addendum B.
                               to improve respiratory
                               function, other than
                               described by g0237, one
                               on one, face to face,
                               per 15 minutes
                               (includes monitoring).
G0239.......................  Therapeutic procedures              S          5732        28.38            S          5732  Refer to OPPS Addendum B.
                               to improve respiratory
                               function or increase
                               strength or endurance
                               of respiratory muscles,
                               two or more individuals
                               (includes monitoring).
G0424.......................  Pulmonary                           S          5733        54.55            S          5733  Refer to OPPS Addendum B.
                               rehabilitation,
                               including exercise
                               (includes monitoring),
                               one hour, per session,
                               up to two sessions per
                               day.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797.......................  Physician or other                  S          5771      $110.22            S          5771  Refer to OPPS Addendum B.
                               qualified health care
                               professional services
                               for outpatient cardiac
                               rehabilitation; without
                               continuous ecg
                               monitoring (per
                               session).
93798.......................  Physician or other                  S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               qualified health care
                               professional services
                               for outpatient cardiac
                               rehabilitation; with
                               continuous ecg
                               monitoring (per
                               session).
G0422.......................  Intensive cardiac                   S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               rehabilitation; with or
                               without continuous ecg
                               monitoring with
                               exercise, per session.
G0423.......................  Intensive cardiac                   S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               rehabilitation; with or
                               without continuous ecg
                               monitoring; without
                               exercise, per session.
--------------------------------------------------------------------------------------------------------------------------------------------------------

21. Radiology and Imaging Procedures and Services
a. Imaging APCs
    Section 1833(t)(9)(A) of the Act requires the Secretary to review 
not less often than annually, and revise the APC group assignments, 
relative payment weights, and the wage and other adjustments 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. In addition, section 1833(t)(2)(G) of the Act requires the 
Secretary to create additional groups of covered OPD services that 
classify separately those procedures that utilize contrast agents from 
those procedures that do not utilize contrast agents.
    In CY 2016, as a part of our 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 was to more appropriately reflect the resource costs and 
clinical characteristics of the services classified within the imaging 
APCs. The restructuring of the imaging APCs resulted in broader 
groupings that removed the excessive granularity of grouping imaging 
services according to organ or physiologic system, which did not 
necessarily reflect either significant differences in resources or how 
these services are delivered in the hospital outpatient setting. In CY 
2017, in response to public comments on the CY 2017 OPPS/ASC proposed 
rule, we further consolidated the imaging APCs from 17 APCs in CY 2016 
to 7 APCs in CY 2017 (81 FR 79633). These included four imaging APCs 
without contrast and three imaging APCs with contrast.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), 
for CY 2018, we reviewed the services assigned to the imaging without 
contrast APCs and imaging with contrast APCs. Specifically, we 
evaluated the resource costs and clinical coherence of the procedures 
associated with the four levels of imaging without contrast APCs and 
the three levels of imaging with contrast APCs, as well as identified 
and corrected any 2 times rule violations as discussed in section 
III.B.2. of the CY 2018 OPPS/ASC proposed rule. In addition, we 
reviewed and considered stakeholder recommendations to make additional 
refinements to the structure of the APC groupings of the imaging 
procedures classified within the imaging APCs that would maintain 
clinical homogeneity while more appropriately addressing resource cost 
fluctuation and volatility. As a result of our analysis and review of 
the claims data used for CY 2018 ratesetting, we stated in the proposed 
rule that we believed a Level 5 Imaging without Contrast APC was needed 
to more appropriately group certain imaging services with higher 
resource costs. Specifically, we stated our belief that

[[Page 59310]]

the data supported splitting the current (CY 2017) Level 4 Imaging 
without Contrast APC into two APCs such that the Level 4 Imaging 
without Contrast APC would include high frequency, low-cost services 
and the proposed Level 5 Imaging without Contrast APC would include low 
frequency high-cost services. Therefore, for CY 2018, we proposed to 
add a fifth level within the Imaging without Contrast APCs. In Table 19 
of the proposed rule, we listed the CY 2017 imaging APCs, and in Table 
20 of the proposed rule, we listed the proposed CY 2018 imaging APCs 
with the addition of a fifth level within the Imaging without Contrast 
APCs. 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 stated that this proposal would 
increase the imaging APCs from 7 APCs in CY 2017 to 8 in CY 2018. The 
specific APC assignments for each imaging service HCPCS code were 
listed in Addendum B to the proposed rule, which is available via the 
Internet on the CMS Web site. We noted that some of the imaging 
procedures are assigned to APCs that are not listed in the tables (for 
example, the vascular procedures APCs). Also, the nuclear medicine 
services APCs were not included in this proposal. These imaging 
services were not included in this proposal because we did not propose 
changes to their APC structure.
    We invited public comments on our proposal to add a Level 5 Imaging 
without Contrast APC in CY 2018.
    Comment: Commenters generally disagreed with CMS' proposal to add a 
fifth level within the Imaging without Contrast APC series. These 
commenters represented various imaging specialty societies and 
individual practitioners who utilize various imaging modalities. Many 
of the commenters opposed adding a fifth level because of the proposed 
resultant reduction in payment to several vascular ultrasound 
procedures. The commenters urged CMS to not finalize the proposal 
because it would destabilize and drastically decrease payments for 
certain imaging services compared to CY 2017 rates. The commenters 
noted that the proposed rate for certain imaging services would cause 
certain providers to no longer be able to furnish these services, 
thereby impeding access to these important services for Medicare 
beneficiaries. However, some commenters recommended various alternative 
HCPCS code placements within the Imaging without Contrast APC series if 
CMS finalized its proposal to add a fifth level. Some of these same 
commenters suggested that maintaining the CY 2017 APC groupings and 
payment rates, to the extent possible, would address their concerns.
    Response: We appreciate these comments and recommendations on how 
to structure and assign HCPCS codes to the Imaging without Contrast APC 
series. We analyzed the various alternative suggestions for the various 
recommended HCPCS code placements, including maintaining the CY 2017 
APC groupings. After consideration of the public comments and 
suggestions we received, we are not finalizing our proposal to add a 
fifth level to the Imaging without Contrast APC series. Instead, we are 
maintaining the CY 2017 APC structure of four levels of Imaging Without 
Contrast APCs and making minor reassignments to the HCPCS codes within 
this series to resolve or mitigate any violations of the 2 times rule 
or both. We understand the importance of payment stability for 
providers and believe that continuation of the four levels of Imaging 
without Contrast APCs would minimize fluctuation in payment rates from 
CY 2017 to CY 2018. As displayed in the ``2 Times Rule'' for this final 
rule with comment period, which is available via the Internet on the 
CMS Web site, the APC geometric mean costs for APCs 5521 through 5524 
are consistent with the CY 2017 APC geometric mean costs for the same 
APCs, indicating the cost-based relative weights that are used to 
calculate payment are stable.
    Comment: A few commenters objected to the proposed exception to the 
violation of the 2 times rule for APC 5573 (Level 3 Imaging With 
Contrast) and recommended alternative approaches to resolving the 
violation, such as the creation of a Level 4 Imaging With Contrast or 
maintaining the CY 2017 APC groupings. Commenters stated that the 
proposed reassignment of nine high-volume contrast magnetic resonance 
imaging (MRI) procedures from Level 2 (CY 2017 placement) to Level 3 
(proposed CY 2018 placement) would result in a significant reduction 
and underpayment for contrast echocardiography procedures and would 
significantly lower the payment rate for contrast echocardiography 
procedures, which has been relatively stable for the past several 
years, consistent with the procedure costs. These nine high-volume 
contrast MRI procedures are described by the following CPT codes:
     CPT code 70543 (Magnetic resonance imaging, orbit, face, 
and/or neck; without contrast material(s) and further sequences);
     CPT code 70553 (Magnetic resonance imaging, brain 
(including brain stem); without contrast material, followed by contrast 
material(s) and further sequences);
     CPT code 71552 (Magnetic resonance imaging, chest; without 
contrast material(s), followed by contrast material(s) and further 
sequences);
     CPT code 72156 (Magnetic resonance imaging, spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; cervical);
     CPT code 72157 (Magnetic resonance imaging spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; thoracic);
     CPT code 72158 (Magnetic resonance imaging spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; lumbar);
     CPT code 72197 (Magnetic resonance imaging pelvis; without 
contrast material(s), followed by contrast material(s) and further 
sequences);
     CPT code 73223 (Magnetic resonance imaging, any joint of 
upper extremity; without contrast material(s), followed by contrast 
material(s) and further sequences); and
     CPT code 74183 (Magnetic resonance imaging abdomen; 
without contrast material(s), followed by with contrast material(s) and 
further sequences).
    Response: We were persuaded by the points raised by the commenters 
and agree that continuation of the CY 2017 groupings is appropriate to 
maintain payment stability for imaging services assigned to APC 5572 
and APC 5573. Although the proposed grouping for APC 5573 achieved 
clinical similarity, based on analysis of the claims data used for this 
final rule with comment period, we believe we should take a deliberate 
approach to maintain consistency in payment assignment by not adopting 
the proposals to reassign the nine high-volume contrast MRI procedures 
from APC 5572 to APC 5573 and to allow for an exception for APC 5573 
from the 2 times rule. Therefore, we are modifying our proposed 
grouping for APC 5573 by moving the nine high-volume contrast MRI 
procedures from Level 3 (Imaging with Contrast) to Level 2 (Imaging 
with Contrast), which is consistent with their CY 2017 APC assignment. 
In addition, we are making a few other code reassignments to resolve 
the 2 times rule violation in APC 5573.

[[Page 59311]]

    In summary, after consideration of the public comments we received 
and for the reasons discussed above, we are not finalizing the proposal 
to create a Level 5 (Imaging without Contrast) APC or the proposal to 
assign nine high-volume contrast MRI procedures to Level 3 (Imaging 
with Contrast) for CY 2018. Table 54 below compares the CY 2017 and 
2018 APC geometric mean costs for the imaging APCs.

Table 54--Comparison of CY 2017 and CY 2018 Geometric Mean Costs for the
                              Imaging APCs
------------------------------------------------------------------------
                                            CY 2017 APC     CY 2018 APC
         APC            APC group title      geometric       geometric
                                             mean cost       mean cost
------------------------------------------------------------------------
5521.................  Level 1 Imaging            $61.53          $62.08
                        without Contrast.
5522.................  Level 2 Imaging            115.88          118.68
                        without Contrast.
5523.................  Level 3 Imaging            232.21          245.08
                        without Contrast.
5524.................  Level 4 Imaging            462.23          486.38
                        without Contrast.
5571.................  Level 1 Imaging            272.40          252.58
                        with Contrast.
5572.................  Level 2 Imaging            438.42          456.08
                        with Contrast.
5573.................  Level 3 Imaging            675.23          681.45
                        with Contrast.
------------------------------------------------------------------------

    The specific APC assignments for each imaging procedure grouping 
are listed in Addendum B to this final rule with comment period, which 
is available via the Internet on the CMS Web site.
b. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609), 
for the CY 2018 OPPS update, we proposed to reassign HCPCS code C9733 
(Non-ophthalmic fluorescent vascular angiography) from APC 5523 (Level 
3 Imaging without Contrast) to APC 5524 (Level 4 Imaging without 
Contrast) based on the latest claims data available for the proposed 
rule. We proposed to maintain the status indicator assignment of ``Q2'' 
(T-packaged) to indicate that the service is conditionally packaged 
when performed in conjunction with other procedures on the same day but 
paid separately when performed as a stand-alone service.
    Our claims data used for the proposed rule, which included claims 
submitted between January 1, 2016, and December 31, 2016, and processed 
on or before December 31, 2016, showed a geometric mean cost of 
approximately $236 for HCPCS code C9733 based on 216 single claims (out 
of 953 total claims), which is closely aligned with the geometric mean 
cost of approximately $275 for APC 5524. Because HCPCS code C9733 is an 
imaging service which is similar to the codes assigned to APC 5524, we 
proposed to reassign HCPCS code C9733 from APC 5523 to APC 5524. We 
stated that we believe this proposed reassignment would improve the 
clinical homogeneity of APC 5524 and appropriately align the resource 
costs of HCPCS code C9733 to the resource costs of those procedures 
assigned to APC 5524.
    As we have stated in previous OPPS/ASC final rules, specifically, 
in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68345 
through 68346), the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74976 through 74977), and the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79632), the service described by HCPCS code C9733 
is primarily an intraoperative imaging service that is performed in 
combination with a number of primary procedures, including facial 
reconstruction and reanimation, muscle flaps, trauma reconstruction, 
digital and limb reattachment, and breast reconstruction. Therefore, 
payment for the service described by HCPCS code C9733 is conditionally 
packaged under 42 CFR 419.2(b)(14), which contains the policies 
governing packaging of intraoperative items and services. Consequently, 
we proposed to maintain the status indicator assignment of ``Q2'' to 
indicate that the payment for the service will be packaged in the APC 
payment if billed on the same date of service as a HCPCS code assigned 
to status indicator ``T'', but in all other circumstances, a separate 
APC payment for the service will be made. We believe that the OPPS 
payments, separate or packaged, for surgical procedures with which this 
service is performed 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: Several commenters supported the proposed APC reassignment 
for HCPCS code C9733 to APC 5524. A few commenters also suggested 
assignment of HCPCS code C9733 in a higher payment APC (compared to the 
CY 2017 payment rate) that would cover the cost of the service, but did 
not recommend a specific APC. In addition, commenters requested that 
CMS change the status indicator assignment from ``Q2'' to a separately 
payable 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: Regarding the status indicator assignment of HCPCS code 
C9733, we have addressed this comment in prior rules (81 FR 79632). The 
service described by HCPCS code C9733 is primarily an intraoperative 
imaging service. Therefore, payment for the service 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, the service is paid 
separately. We believe that the OPPS payments, separate or packaged, 
for surgical procedures with which this test is performed (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. With respect to the APC reassignment for APC 
5524, because we are maintaining the CY 2017 APC group assignments for 
imaging services, we are not finalizing our proposal to reassign HCPCS 
code C9733 from APC 5523 to APC 5524. Rather, we are maintaining the 
assignment of the procedure described by HCPCS code C9733 to APC 5523 
for CY 2018. Based on our review of the CY 2018 final rule claims data, 
the procedure described by HCPCS code C9733 has a geometric mean unit 
cost of approximately $237 and the geometric mean cost of APC 5523 is 
approximately $245 for CY 2018. Therefore, it is not necessary to 
reassign the procedure described by HCPCS code C9733 to APC 5524, which 
has a geometric mean unit cost of about $486. It is more appropriate to 
maintain the assignment

[[Page 59312]]

of the procedure described by HCPCS code C9733 to APC 5523 because of 
the similarity in clinical characteristics and resource use for this 
procedure and other imaging procedures assigned to APC 5523.
    After consideration of the public comments we received, we are not 
finalizing our proposal to reassign HCPCS code C9733 from APC 5523 to 
APC 5524 for CY 2018. Instead, for CY 2018, we are continuing to assign 
HCPCS code C9733 to APC 5523 and continuing to assign the code to 
status indicator ``Q2'' to indicate that the service is conditionally 
packaged. The final CY 2018 OPPS payment rate for HCPCS code C9733 can 
be found in OPPS Addendum B to this final rule with comment period, 
which is available via the Internet on the CMS Web site.
22. Sclerotherapy (APC 5054)
    For CY 2018, the AMA CPT Editorial Panel established two new codes 
to describe the injection of a noncompounded foam sclerosant for 
treatment of incompetent veins. Table 55 below lists the complete 
descriptors for the new CPT codes. These codes were listed in Addendum 
B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which are 
available via the Internet on the CMS Web site). Addendum B listed the 
proposed status indicator assignments for the new 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 proposed/
placeholder CY 2018 CPT codes and the long descriptors. We note that 
the CPT code descriptors that appeared in Addendum B to the CY 2018 
proposed rule were short descriptors and did 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, specifically under the 
column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder 
Code'' so that the public could adequately comment on our proposed APC 
and status indicator assignments. We also indicated that the final CPT 
code numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 55 
below.
    As displayed in Table 55 below and in Addendum B of the CY 2018 
OPPS/ASC proposed rule, we proposed to assign CPT codes 36465 and 36466 
to APC 5053 (Level 3 Skin Procedures), with a proposed payment rate of 
$468.82.

   Table 55--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for CPT Codes 36465 and
                                                      36466
----------------------------------------------------------------------------------------------------------------
                                                                                                       Proposed
                              CY 2018 OPPS/ASC                                            Proposed     CY 2018
        CPT code                proposed rule          Long descriptor     Proposed CY    CY 2018        OPPS
                              placeholder code                            2018 OPPS SI    OPPS APC     payment
                                                                                                         rate
----------------------------------------------------------------------------------------------------------------
36465...................  364X5...................  Injection of non-               T          5053      $468.82
                                                     compounded foam
                                                     sclerosant with
                                                     ultrasound
                                                     compression
                                                     maneuvers to guide
                                                     dispersion of the
                                                     injectate,
                                                     inclusive of all
                                                     imaging guidance
                                                     and monitoring;
                                                     single incompetent
                                                     extremity truncal
                                                     vein (e.g., great
                                                     saphenous vein,
                                                     accessory saphenous
                                                     vein).
36466...................  364X6...................  Injection of non-               T          5053       468.82
                                                     compounded foam
                                                     sclerosant with
                                                     ultrasound
                                                     compression
                                                     maneuvers to guide
                                                     dispersion of the
                                                     injectate,
                                                     inclusive of all
                                                     imaging guidance
                                                     and monitoring;
                                                     multiple
                                                     incompetent truncal
                                                     veins (e.g., great
                                                     saphenous vein,
                                                     accessory saphenous
                                                     vein), same leg.
----------------------------------------------------------------------------------------------------------------

    Comment: Several commenters opposed the proposed assignment of new 
CPT codes 36465 and 36466 to APC 5053 and requested the assignment to 
APC 5183 (Level 3 Vascular Procedures), which had a proposed payment 
rate of $2,409.72. The commenters stated that CMS inappropriately 
proposed to assign these codes to APC 5053 based on a comparison to CPT 
codes 36470 (Injection of sclerosing solution; single vein) and 36471 
(Injection of sclerosing solution; multiple veins, same leg). However, 
the commenters indicated that CPT codes 36465 and 36466 are dissimilar 
to the procedures assigned to APC 5053, which describe simple skin 
procedures (for example, debridement, Moh's surgery, and skin lesion 
destruction). They stated that the procedures assigned to APC 5053 are 
not comparable to the procedures described by new CPT codes 36465 and 
36466 based on complexity, staff type, staff time, and use of 
ultrasound guidance. The commenters further added that the two 
procedures are most similar to the endovenous ablative procedures that 
treat incompetent veins in APC 5183, specifically, the procedures 
described by the following CPT codes:
     CPT code 36473 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, mechanochemical; first vein treated);
     CPT code 36474 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, mechanochemical; subsequent vein(s) treated in a single 
extremity, each through separate access sites (list separately in 
addition to code for primary procedure));
     CPT code 36475 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, radiofrequency; first vein treated);
     CPT code 36476 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, radiofrequency; subsequent vein(s) treated in a single 
extremity, each through separate access sites (list separately in 
addition to code for primary procedure))
     CPT code 36478 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, laser; first vein treated); and

[[Page 59313]]

     CPT code 36479 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, laser; subsequent vein(s) treated in a single extremity, 
each through separate access sites (list separately in addition to code 
for primary procedure)).
    One commenter stated that the procedures described by CPT codes 
36465 and 36466 share similar characteristics and comparable 
anticipated costs as the procedures assigned to APC 5183, and 
consequently, requested an assignment to APC 5183 for the two new CPT 
codes. Another commenter noted that CPT codes 36473, 36475, and 36478 
are currently assigned to APC 5183, and requested that CMS also assign 
new CPT codes 36465 and 36466 to APC 5183. One commenter reported that, 
in the CY 2018 MPFS proposed rule, CMS proposed a nonfacility payment 
of $1,605.17 for new CPT code 36465 and $1,678.23 for new CPT code 
36466 for CY 2018. This commenter also listed a practice expense input 
price of $1,054 for the Varithena (foam) used in the procedures.
    Response: Because CPT codes 36465 and 36466 are new codes for CY 
2018, we have no claims data on which to base our payment rate. 
However, in the absence of claims data, we reviewed the clinical 
characteristics of the procedures to determine whether they are similar 
to existing procedures. After reviewing information from the public 
commenters and input from our clinical advisors, we believe that new 
CPT codes 36465 and 36466 are clinically similar to those procedures 
assigned to APC 5053. However, in light of the commenter's reported 
supply expense of $1,054 for the Varithena (foam), we believe that an 
assignment to APC 5054 is necessary. We note that the final CY 2018 
geometric mean cost for APC 5054 is approximately $1,567. Therefore, we 
believe that APC 5054 is a more appropriate APC assignment for the new 
CPT codes. Consistent with the statutory requirement under section 
1833(t)(9)(A) of the Act, we will reevaluate the APC assignment for CPT 
codes 36465 and 36466 in the next rulemaking cycle.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for the APC assignment of the procedures 
described by new CPT codes 36465 and 36466, with modification. 
Specifically, we are assigning both codes to APC 5054, instead of 
proposed APC 5053, for CY 2018. Table 56 below lists the final status 
indicator and APC assignments for CPT codes 36465 and 36466 for CY 
2018. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

         Table 56--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 36465 and 36466
----------------------------------------------------------------------------------------------------------------
                        CY 2018 OPPS/ASC                                     Proposed CY
      CPT code            proposed rule      Long descriptor    Proposed CY   2018 OPPS    CY 2018 OPPS payment
                        placeholder code                       2018 OPPS SI      APC               rate
----------------------------------------------------------------------------------------------------------------
36465...............  364X5...............  Injection of non-            T          5054  Refer to OPPS Addendum
                                             compounded foam                               B.
                                             sclerosant with
                                             ultrasound
                                             compression
                                             maneuvers to
                                             guide dispersion
                                             of the
                                             injectate,
                                             inclusive of all
                                             imaging guidance
                                             and monitoring;
                                             single
                                             incompetent
                                             extremity
                                             truncal vein
                                             (e.g., great
                                             saphenous vein,
                                             accessory
                                             saphenous vein).
36466...............  364X6...............  Injection of non-            T          5054  Refer to OPPS Addendum
                                             compounded foam                               B.
                                             sclerosant with
                                             ultrasound
                                             compression
                                             maneuvers to
                                             guide dispersion
                                             of the
                                             injectate,
                                             inclusive of all
                                             imaging guidance
                                             and monitoring;
                                             multiple
                                             incompetent
                                             truncal veins
                                             (e.g., great
                                             saphenous vein,
                                             accessory
                                             saphenous vein),
                                             same leg.
----------------------------------------------------------------------------------------------------------------

23. Skin Substitutes (APCs 5053, 5054, and 5055)
    For CY 2018, 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 requested that CPT codes for large wounds be 
assigned to higher paying APCs. One commenter asked that 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 
sq cm; first 100 sq cm wound surface area, or 1% of body area of 
infants and children) be moved from APC 5053 (Level 3 Skin Procedures) 
to APC 5054 (Level 4 Skin Procedures) and that 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 sq cm; first 100 
sq cm wound surface area, or 1% of body area of infants and children) 
be moved from APC 5054 (Level 4 Skin Procedures) to APC 5055 (Level 5 
Skin Procedures). Another commenter focused on the payment for large 
venous leg ulcers that are over 100 cm\2\. This commenter requested 
that the skin substitute procedures used to treat large venous leg 
ulcers and other large wounds be moved to a higher paying APC.
    Response: We reviewed the procedures assigned to both APC 5053 and 
APC 5054 and continue to believe that the procedures described by HCPCS 
code C5277 and CPT code 15277 are appropriately assigned to APCs 5053 
and 5054, respectively. While the geometric mean cost of the procedure 
described by HCPCS code C5277 ($2,187) is higher than the geometric 
mean cost of other procedures assigned to APC 5053 ($488), there are 
fewer than 25 single claims billed for the procedure described by HCPCS 
code C5277. Therefore, HCPCS code C5277 is not a significant procedure 
code and does not create a 2 times rule violation in APC 5053. 
Likewise, while the geometric mean cost of the procedure described by 
CPT code 15277 ($2,464) is higher than the geometric mean cost for all 
procedures assigned to APC 5054 ($1,567), there are fewer than 80 
single claims billed for the procedure described by CPT code 15277.

[[Page 59314]]

Therefore, CPT code 15277 is not a significant procedure and does not 
create a 2 times violation in APC 5054. Accordingly, we continue to 
believe that both HCPCS code C5277 and CPT code 15277 are appropriately 
assigned to APCs 5053 and 5054, respectively. As we do every year, we 
will evaluate the costs and APC assignment of both of these codes in 
the next annual rulemaking cycle.
    After consideration of the public comments we received, we are 
finalizing our proposal for CY 2018 for assignment of skin substitute 
procedures to APCs 5053 through 5055, including the assignment of HCPCS 
code C5277 to APC 5053 and CPT code 15277 to APC 5054.
24. Subdermal Drug Implants for the Treatment of Opioid Addiction (APC 
5735)
    In the CY 2018 MPFS proposed rule (82 FR 34011 through 34012), CMS 
proposed to establish three G-codes to appropriately report the 
insertion and removal of buprenorphine hydrochloride, formulated as a 
4-rod, 80 mg, long-acting subdermal drug implant for the treatment of 
opioid addiction (82 FR 34011 through 34012). Specifically, we proposed 
to establish the following HCPCS G-codes:
     Placeholder HCPCS Code GDDD1 (Insertion, non-biodegradable 
drug delivery implants, 4 or more);
     Placeholder HCPCS Code GDDD2 (Removal, non-biodegradable 
drug delivery implants, 4 or more); and
     Placeholder HCPCS code GDDD3 (Removal with reinsertion, 
non-biodegradable drug delivery implants, 4 or more).
    We did not make any proposal related to HCPCS codes GDDD1 through 
GDDD3 in the CY 2018 OPPS/ASC proposed rule because there are existing 
codes that can be used to report the insertion and removal of 
buprenorphine hydrochloride, as well as a HCPCS J-code to report use of 
the buprenorphine hydrochloride drug. Listed below in Table 57 are the 
specific CPT and HCPCS codes for the buprenorphine hydrochloride 
subdermal drug and its administration, and the proposed OPPS payment 
rates for CY 2018.

      Table 57--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 11981, 11982, and 11983 and HCPCS Code J0570
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2017                    Proposed     CY 2018
              HCPCS code                        Long descriptor           CY 2017 OPPS    CY 2017        OPPS      Proposed CY    CY 2018        OPPS
                                                                               SI         OPPS APC     payment    2018 OPPS SI    OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
11981................................  Insertion, non-biodegradable drug           Q1          5734      $100.02           Q1          5734       $94.27
                                        delivery implant.
11982................................  Removal, non-biodegradable drug             Q1          5735       263.61           Q1          5735       265.20
                                        delivery implant.
11983................................  Removal with reinsertion, non-              Q1          5735       263.61           Q1          5735       265.20
                                        biodegradable drug delivery
                                        implant.
J0570................................  Buprenorphine implant, 74.2 mg...            G          9058   * 1,260.59            G          9058  ** 1,261.31
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The proposed payment rate of $1,260.59 was based on the April 1, 2017 OPPS update.
** The payment rate of $1,261.31 was based on the October 1, 2017 OPPS update. Payments for the HCPCS drug codes are updated on a quarterly basis, and
  this payment rate will be updated for the January 2018 OPPS update. Refer to the January 2018 OPPS Addendum B payment file for the payment rate.

    Comment: Some commenters requested that the MPFS proposal for 
establishment of HCPCS G-codes for insertion and removal of 
buprenorphine hydrochloride also apply to the OPPS and ASC payment 
systems. In addition, the commenters recommended that CMS assign the 
HCPCS G-codes to APC 5735 (Level 5 Minor Procedures), which had a 
proposed payment rate of $265.20, for CY 2018.
    Response: We agree with the commenters that the HCPCS G-codes GDDD1 
through GDDD3 (now HCPCS codes G0516, G0517, and G0518 in this final 
rule with comment period) should also be recognized under the OPPS 
because the service associated with the insertion and removal of 
buprenorphine hydrochloride can be performed in the hospital outpatient 
department. However, because these services are conditionally packaged 
under the OPPS, they will be packaged when performed in the ASC and, 
therefore, not separately paid. Accordingly, to adequately track and 
improve data collection and analysis associated with subdermal 
buprenorphine implants, we are recognizing these HCPCS G-codes in the 
OPPS.
    In summary, after consideration of the public comments we received, 
we are establishing HCPCS G-codes G0516, G0517, and G0518 under the 
OPPS, effective January 1, 2018. Table 58 below lists the final status 
indicator and APC assignments for HCPCS G-codes G0516, G0517, G0518, 
and HCPCS code J0570 for CY 2018. We remind hospitals that the HCPCS 
drug code for buprenorphine hydrochloride (HCPCS code J0570) should 
also be reported when billing for the subdermal administration of the 
drug. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

[[Page 59315]]



 Table 58--Final CY 2018 Status Indicator (SI) and APC Assignment for HCPCS Codes G0516, G0517, G0518 and HCPCS
                                                   Code J0570
----------------------------------------------------------------------------------------------------------------
                          CY 2018 MPFS
     HCPCS code           proposed rule      Long descriptor   CY 2018 OPPS    CY 2018     CY 2018 OPPS  payment
                        placeholder code                            SI         OPPS APC            rate
----------------------------------------------------------------------------------------------------------------
G0516...............  GDDD1...............  Insertion of non-           Q1          5735  Refer to OPPS Addendum
                                             biodegradable                                 B.
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
G0517...............  GDDD2...............  Removal of non-             Q1          5735  Refer to OPPS Addendum
                                             biodegradable                                 B.
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
G0518...............  GDDD3...............  Removal with                Q1          5735  Refer to OPPS Addendum
                                             reinsertion, non-                             B.
                                             biodegradable
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
J0570...............  N/A.................  Buprenorphine                G          9058  Refer to OPPS Addendum
                                             implant, 74.2 mg.                             B.
----------------------------------------------------------------------------------------------------------------

25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)
    For CY 2018, as noted in Table 59 below, we proposed to continue to 
assign CPT codes 67028 and 0465T to APC 5694 (Level 4 Drug 
Administration), with a proposed payment rate of $286.62. We also 
proposed to continue to assign CPT code 67028 to status indicator ``S'' 
(Procedure or Service, Not Discounted When Multiple) and to continue to 
assign CPT code 0465T to status indicator ``T'' (Procedure or Service, 
Multiple Procedure Reduction Applies).

                    Table 59--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 67028 and 0465T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
67028................................  Intravitreal injection of a                  S          5694      $279.45            S          5694      $286.62
                                        pharmacologic agent (separate
                                        procedure).
0465T................................  Suprachoroidal injection of a                T          5694       279.45            T          5694       286.62
                                        pharmacologic agent (does not
                                        include supply of medication).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Some commenters stated that the different status indicator 
assignment for both CPT codes 67028 and 0465T appears to be an error 
and contradicts CMS' decision in the CY 2017 OPPS/ASC final rule with 
comment period where CMS indicated that both procedures are similar 
from a clinical and resource consideration (81 FR 79617). The 
commenters reported that the different status indicators suggest that 
the procedures are not similar. Consequently, the commenters requested 
the reassignment of CPT code 0465T from status indicator ``T'' to 
``S''.
    Response: We note that while many HCPCS codes within a given APC 
may have the same status indicator, having an identical status 
indicator is not a prerequisite for APC assignment. That is, assignment 
of a HCPCS code to an APC is based on the resource and clinical 
similarity of the service described by the HCPCS code, while assignment 
of a status indicator is based on service-specific characteristics. 
Status indicator ``T'' is used to denote that the procedure is subject 
to the multiple procedure reduction under the OPPS, while status 
indicator ``S'' describes a procedure or service that is not 
discounted. Within APC 5694, there are four CPT codes that are assigned 
to status indicator ``T''. These include the following procedures:
     CPT code 0465T (Suprachoroidal injection of a 
pharmacologic agent (does not include supply of medication));
     CPT code 36593 (Declotting by thrombolytic agent of 
implanted vascular access device or catheter);
     CPT code 37195 (Thrombolysis, cerebral, by intravenous 
infusion); and
     CPT code 92977 (Thrombolysis, coronary; by intravenous 
infusion).
    As stated earlier, status indicator ``T'' indicates that the 
service will be reduced by 50 percent if it is the lower priced service 
on the same claim with another procedure that is also assigned to a 
status indicator ``T''. For CPT code 0465T, we expect this reduction to 
occur when there is a separate procedure performed on the same day as 
the suprachoroidal injection due to significant efficiencies in 
administering the pharmacologic agent. If the suprachoroidal injection 
is performed by itself or with a visit, or with a service or procedure 
assigned to status indicator ``S'', the multiple procedure reduction 
will not apply. We remind hospitals that, when reporting CPT code 
0465T, the appropriate HCPCS drug code should also be reported on the 
claim.
    Therefore, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal, without modification, to 
continue to assign CPT codes 67028 and 0465T to status indicator ``S'' 
and ``T'' respectively, and to continue to assign the CPT codes to APC 
5694. Table 60 below lists the final status indicator and APC 
assignments for both codes for CY 2018. We refer readers to Addendum B 
to this final rule with comment period for the payment rates for all 
codes reported under the OPPS. In addition, we refer readers to 
Addendum A to this final rule with comment period for the status 
indicator meanings for all codes reported under the OPPS. Both Addendum 
A and Addendum B are available via the Internet on the CMS Web site.

[[Page 59316]]



                             Table 60--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 67028 and 0465T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
67028.......................  Intravitreal injection              S          5694      $279.45            S          5694  Refer to OPPS Addendum B.
                               of a pharmacologic
                               agent (separate
                               procedure).
0465T.......................  Suprachoroidal injection            T          5694       279.45            T          5694  Refer to OPPS Addendum B.
                               of a pharmacologic
                               agent (does not include
                               supply of medication).
--------------------------------------------------------------------------------------------------------------------------------------------------------

26. Transperineal Placement of Biodegradeable Material (C-APC 5375)
    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0438T and 
replaced the code with CPT code 55874, effective January 1, 2018. CPT 
code 0438T was effective July 1, 2016 and will be deleted on December 
31, 2017. Prior to July 2016, the transperineal placement of 
biodegradable material procedure was described by 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)), which was effective October 1, 2015 and was deleted on June 
30, 2016, when it was replaced with CPT code 0438T, effective July 1, 
2016.
    Table 61 below lists the complete descriptors for the deleted and 
replacement CPT codes. We note that the deleted and replacement CPT 
codes were both listed in Addendum B and Addendum O to the CY 2018 
OPPS/ASC proposed rule (which are available via the Internet on the CMs 
Web site). Addendum B listed the proposed status indicator assignment 
for the replacement code and assigned it 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 proposed/placeholder CY 2018 CPT codes and the 
long descriptors.

               Table 61--Coding Changes for CPT Code 55874
------------------------------------------------------------------------
                           CY 2018 OPPS/ASC
       CPT code              proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
0438T.................  N/A...................  Transperineal placement
                                                 of biodegradable
                                                 material, peri-
                                                 prostatic (via needle),
                                                 single or multiple,
                                                 includes image
                                                 guidance.
55874.................  55X87.................  Transperineal placement
                                                 of biodegradable
                                                 material, peri-
                                                 prostatic, single or
                                                 multiple injection(s),
                                                 including image
                                                 guidance, when
                                                 performed.
------------------------------------------------------------------------

    As listed in Table 63 below and in Addendum B of the CY 2018 OPPS/
ASC proposed rule, we proposed to delete CPT code 0438T (status 
indicator ``D'') and assign its replacement code, CPT code 55874 
(placeholder code 55X87), to C-APC 5375 (Level 5 Urology and Related 
Services) with a proposed payment rate of $3,597.65. As noted in Table 
62, the predecessor code 0438T was assigned to C-APC 5374 (Level 4 
Urology and Related Services), while this replacement code is proposed 
to be reassigned to C-APC 5375. We proposed to revise the APC 
assignment for CPT code 55874 based on claims data used for the CY 2018 
OPPS/ASC proposed rule. We note that the proposed rule claims data was 
based on claims data submitted between January 1, 2016, and December 
31, 2016, that were processed on or before December 31, 2016. For the 
predecessor codes HCPCS codes C9743 and 0438T that were in effect 
during CY 2016, our analysis of the proposed rule claims data revealed 
a geometric mean cost of approximately $4,504 based on 157 single 
claims (out of 159 total claims), which is similar to the geometric 
mean cost of approximately $3,742 for C-APC 5375 rather than the 
geometric mean cost of approximately $2,714 for C-APC 5374 or the 
geometric mean cost of approximately $7,747 for C-APC 5376 (Level 6 
Urology and Related Services). Based on its clinical homogeneity and 
resource similarity to the other procedures assigned to C-APC 5375, we 
proposed to reassign replacement CPT code 55874 from C-APC 5374 to C-
APC 5375 for CY 2018.

                          Table 62--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55874
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                           CY 2017   Proposed CY   Proposed     CY 2018
         CPT code          CY 2018 OPPS/ASC proposed      Short descriptor        CY 2017      CY 2017      OPPS      2018 OPPS     CY 2018      OPPS
                             rule placeholder code                                OPPS SI     OPPS APC     payment        SI       OPPS APC     payment
                                                                                                            rate                                 rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0438T....................  .........................  Tprnl plmt biodegrdabl             T         5374   $2,542.56           D          N/A         N/A
                                                       matrl.
55874....................  55X87....................  Tprnl plmt biodegrdabl           N/A          N/A         N/A           T         5375   $3,597.65
                                                       matrl.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59317]]

    Comment: One commenter supported the reassignment to C-APC 5375 for 
CPT code 55874 and urged CMS to finalize the proposal. The commenter 
further indicated that C-APC 5375 is the appropriate APC assignment for 
CPT code 55874 based on its clinical and resource coherence to the 
other procedures assigned to C-APC 5375. While supportive of the 
assignment to C-APC 5375, this same commenter expressed concern with 
the payment for the procedure under the ASC payment system. The 
commenter suggested that CPT code 55874 should be designated as a 
device-intensive procedure.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we again reviewed the updated claims data 
associated with predecessor HCPCS codes C9743 and 0438T. We note that, 
for this final rule with comment period, we used claims data with dates 
of service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our analysis of the final rule 
claims data shows a similar pattern for the predecessor codes. 
Specifically, we found a geometric mean cost of approximately $4,452 
for the predecessor codes based on 157 single claims (out of 160 total 
claims), which is similar to the geometric mean cost of approximately 
$3,704 for C-APC 5375. In addition, our analysis of the significant 
procedures within C-APC 5375 shows that the geometric mean cost of 
$4,452 for the predecessor codes are similar to the costs of the 
procedures assigned to C-APC 5375. Specifically, our analysis revealed 
the range of the significant procedures assigned to C-APC 5375 is 
between $3,134 (for CPT code 52320) and $5,004 (for CPT code 55875). 
Consequently, we believe that C-APC 5375 is the most appropriate APC 
assignment for CPT code 55874.
    With regards to the device-intensive designation for CPT code 
55874, based on our analysis of the predecessor HCPCS code C9743, this 
code is not eligible for device-intensive status because it does not 
meet the criteria of a device offset that is greater than 40 percent. 
For more information on how codes are designated as device-intensive 
status, we refer readers to section IV.B. of this final rule with 
comment period.
    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 finalizing our CY 2018 proposal, without 
modification, and assigning CPT code 55874 to C-APC 5375. Table 63 
below lists the final status indicator and APC assignments for CPT code 
55874 for CY 2018. We refer readers to Addendum B to this final rule 
with comment period for the payment rates for all codes reported under 
the OPPS. In addition, we refer readers to Addendum A to this final 
rule with comment period for the status indicator meanings for all 
codes reported under the OPPS. Both Addendum A and Addendum B are 
available via the Internet on the CMS Web site.

                                   Table 63--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 55874
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             CY 2017
                         CY 2018 OPPS/ASC                           CY 2017      CY 2017      OPPS       CY 2018      CY 2018     CY 2018 OPPS payment
       CPT code            proposed rule       Short descriptor     OPPS SI     OPPS APC     payment     OPPS SI     OPPS APC             rate
                         placeholder code                                                     rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0438T................  ....................  Tprnl plmt                    T         5374   $2,542.56           D          N/A  N/A.
                                              biodegrdabl matrl.
55874................  55X87...............  Tprnl plmt                  N/A          N/A         N/A           T         5375  Refer to OPPS Addendum
                                              biodegrdabl matrl.                                                                 B.
--------------------------------------------------------------------------------------------------------------------------------------------------------

27. Transcranial Magnetic Stimulation (TMS) Therapy (APCs 5721 and 
5722)
    For CY 2018, as listed in Table 64 below, we proposed to continue 
to assign CPT code 90867 to APC 5722 (Level 2 Diagnostic Tests and 
Related Services) and to also continue to assign CPT code 90869 to APC 
5721 (Level 1 Diagnostic Tests and Related Services). However, we 
proposed to reassign CPT code 90868 from APC 5722 to APC 5721.

  Table 64--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
                CPT code                         Long descriptor               SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867..................................  Therapeutic repetitive                     S          5722      $232.31            S          5722      $242.21
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          initial, including cortical
                                          mapping, motor threshold
                                          determination, delivery and
                                          management.
90868..................................  Therapeutic repetitive                     S          5722       232.31            S          5721       129.59
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          subsequent delivery and
                                          management, per session.
90869..................................  Therapeutic repetitive                     S          5721       127.10            S          5721       129.59
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          subsequent motor threshold re-
                                          determination with delivery
                                          and management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters disagreed with CMS' proposal to 
reassign CPT code 90868 to APC 5721 and stated that the proposed 
payment rate does not cover the cost of providing the service. One 
commenter stated that

[[Page 59318]]

transcranial magnetic stimulation (TMS) therapy requires the use of an 
expensive machine, technicians to assist with the service, staff to 
work on insurance approvals, and significant time with physicians. 
Another commenter stated that the proposed payment rate for CPT codes 
90868 and 90869 is insufficient, and that the cost of providing the 
service exceeds the payment rate. Several commenters requested that CMS 
reconsider and increase the payment rates for CPT codes 90868 and 
90869.
    Response: We proposed to revise the APC assignment for CPT code 
90868 and to continue the APC assignment for CPT code 90869 based on CY 
2016 claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data was based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. For CPT code 90868, our analysis of the 
claims data showed a geometric mean cost of approximately $152 for the 
code based on 6,433 single claims (out of 6,493 total claims), which is 
similar to the geometric mean cost of approximately $135 for APC 5721 
rather than the geometric mean cost of approximately $252 for APC 5722. 
Consequently, we proposed to revise the APC assignment for CPT code 
90868 to APC 5721 rather than continue to assign it to APC 5722. For 
CPT code 90869, our claims data showed a geometric mean cost of 
approximately $119 for CPT code 90869 based on 95 single claims (out of 
96 total claims), which is similar to the geometric mean cost of 
approximately $135 for APC 5721. Consequently, we proposed to continue 
to assign CPT code 90869 to APC 5721.
    For this final rule with comment period, we again reviewed the 
updated claims data associated with CPT codes 90868 and 90869. We note 
that, for this final rule with comment period, we used claims data with 
dates of service between January 1, 2016, and December 31, 2016, that 
were processed on or before June 30, 2017. Our analysis of the final 
rule claims data revealed a similar pattern for both codes. 
Specifically, we found a geometric mean cost of approximately $148 for 
CPT code 90868 based on 7,258 single claims (out of 7,312 total 
claims), which is similar to the geometric mean cost of approximately 
$136 for APC 5721, rather than the geometric mean cost of approximately 
$249 for APC 5722. Our analysis also revealed a geometric mean cost of 
approximately $125 for CPT code 90869 based on 105 single claims (out 
of 106 total claims), which is comparable to the geometric mean cost of 
$136 for APC 5721. Based on our analysis of the final rule claims data, 
we believe that APC 5721 is the appropriate APC assignment for both CPT 
codes 90868 and 90869 based on their clinical homogeneity and resource 
costs to the other procedures in APC 5721.
    With regards to the comment that TMS therapy requires significant 
time with physicians, we remind readers that payments under the OPPS 
are for services provided by hospital outpatient facilities, not 
physician services. We note that physician services are paid under the 
MPFS. Medicare payment rates for physician services can be found on the 
CMS Physician Fee Schedule Web site, specifically at: https://www.cms.gov/apps/physician-fee-schedule/overview.aspx.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal, without modification, for CPT 
codes 90867, 90868, and 90869. Table 65 below lists the final status 
indicator and APC assignments for all three CPT codes. We refer readers 
to Addendum B to this final rule with comment period for the payment 
rates for all codes reported under the OPPS. In addition, we refer 
readers to Addendum A to this final rule with comment period for the 
status indicator meanings for all codes reported under the OPPS. Both 
Addendum A and Addendum B are available via the Internet on the CMS Web 
site.

           Table 65--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867.......................  Therapeutic repetitive              S          5722      $232.31            S          5722  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; initial,
                               including cortical
                               mapping, motor
                               threshold
                               determination, delivery
                               and management.
90868.......................  Therapeutic repetitive              S          5722       232.31            S          5721  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; subsequent
                               delivery and
                               management, per session.
90869.......................  Therapeutic repetitive              S          5721       127.10            S          5721  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; subsequent
                               motor threshold re-
                               determination with
                               delivery and management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

28. Transurethral Waterjet Ablation of the Prostate (C-APC 5375)
    On June 5, 2017, the Category B Investigational Device Exemption 
(IDE) study associated with the ``Waterjet Ablation Therapy for 
Endoscopic Resection of Prostate Tissue II (WATER)'' met CMS' standards 
for coverage. According to the National Institutes of Health (NIH) 
clinicaltrials.gov Web site, the estimated completion date of this 
study is August 2020. Under Medicare, studies with Category A 
designation are approved for coverage of routine services only, while 
studies with the Category B designation are approved for coverage of 
the Category B device and related services, and routine services. We 
note that the procedure associated with this study is currently 
described by CPT code 0421T. Based on the recent Medicare coverage of 
the IDE study, we revised the OPPS status indicator assignment for CPT

[[Page 59319]]

code 0421T from ``E1'' (Not paid by Medicare when submitted on 
outpatient claims (any outpatient bill type)) to ``J1'' (Hospital Part 
B services paid through a comprehensive APC) and assigned the code to 
C-APC 5374 (Level 4 Urology and Related Services) to indicate that the 
procedure would be paid separately under the OPPS. We announced this 
change through the October 2017 OPPS quarterly update CR (Transmittal 
3864, Change Request 10236, dated September 15, 2017), and further 
stated in this same CR that the payment would be effective on June 5, 
2017, which is the date of Medicare's approval for coverage.
    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments 
on the proposed APC and status indicator assignments for the code. 
Specifically, as listed in Table 66 below, we proposed to continue to 
assign CPT code 0421T to C-APC 5374 for CY 2018.

                            Table 66--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment for CPT Code 0421T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0421T................................  Transurethral waterjet ablation             J1          5374    $2,542.56           J1          5374    $2,609.60
                                        of prostate, including control
                                        of post-operative bleeding,
                                        including ultrasound guidance,
                                        complete (vasectomy, meatotomy,
                                        cystourethroscopy, urethral
                                        calibration and/or dilation, and
                                        internal urethrotomy are
                                        included when performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters expressed concern over the proposed 
payment rate for CPT code 0421T and requested a reassignment to either 
C-APC 5375 (Level 5 Urology and Related Services), which had a proposed 
payment rate of $3,597.65, or C-APC 5376 (Level 6 Urology and Related 
Services), which had a proposed payment rate of $7,448.11 for the 
Aquablation procedure. The commenters stated that the proposed payment 
rate for C-APC 5374 does not take into account the cost of the device, 
the overhead costs, and the personnel costs associated with providing 
the Aquablation procedure. One commenter stated that the Aquablation 
procedure is dissimilar to the other procedures assigned to C-APC 5374, 
some of which require the use of reusable equipment. This same 
commenter reported that the level of complexity in the performing the 
Aquablation procedure is comparable to those procedures in C-APC 5375 
and C-APC 5376. Specifically, as indicated by the commenter, the 
Aquablation procedure is similar to implanting brachytherapy seeds into 
the prostate (CPT code 55875, proposed for assignment to C-APC 5375), 
cryoablation of the prostate (CPT code 55873, proposed for assignment 
to C-APC 5376), and high intensity focused ultrasound (HIFU) of the 
prostate (HCPCS code C9747, proposed for assignment to C-APC 5376). 
Another commenter believed the Aquablation procedure requires more 
effort than the traditional transurethral resection of the prostate 
(TURP) procedure (CPT code 52601, proposed for assignment to C-APC 
5375) or the laser ablation of the prostate procedure (GreenLight Laser 
Therapy described by CPT code 52648, proposed for assignment to C-APC 
5375), and added that the TURP and Aquablation each require general 
anesthesia and take approximately 1 hour to perform. Several commenters 
stated that the complexity of performing the Aquablation procedure is 
similar to the cryoablation of the prostate and HIFU procedures, of 
which both were proposed to be assigned to C-APC 5376. Consequently, 
these same commenters requested that CMS revisit the APC assignment for 
CPT code 0421T and consider a reassignment to C-APC 5376.
    Response: Based on our review of the procedure and input from our 
clinical advisors, we believe that a reassignment from C-APC 5374 to C-
APC 5375 for the Aquablation is appropriate. We note that this 
procedure is currently in clinical trial with an estimated study 
completion date of August 2020. We believe that the procedure is 
clinically similar to other procedures that are currently assigned to 
C-APC 5375. As we do every year under the OPPS, we will reevaluate the 
cost of the procedure described by CPT code 0421T and its APC 
assignment for next year's rulemaking update.
    In summary, after consideration of the public comments, we are 
finalizing our CY 2018 proposal with modification. Specifically, we are 
revising the APC assignment for CPT code 0421T from proposed C-APC 5374 
to C-APC 5375 for CY 2018. Table 67 below lists the final status 
indicator and APC assignments for CPT code 0421T for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59320]]



                                     Table 67--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT U0421T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0421T.......................  Transurethral waterjet             J1          5374    $2,542.56           J1          5375  Refer to OPPS Addendum B.
                               ablation of prostate,
                               including control of
                               post-operative
                               bleeding, including
                               ultrasound guidance,
                               complete (vasectomy,
                               meatotomy,
                               cystourethroscopy,
                               urethral calibration
                               and/or dilation, and
                               internal urethrotomy
                               are included when
                               performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

29. Transurethral Water Vapor Thermal Therapy of the Prostate (C-APC 
5373)
    For CY 2018, CMS received a New Technology APC application 
requesting a new HCPCS code for the Rez[umacr]m therapy. The 
Rez[umacr]m procedure is a new treatment, and the Rez[umacr]m System 
associated with this procedure received a 510(k) FDA clearance on 
August 27, 2015. The procedure utilizes water vapor for the treatment 
of benign prostatic hypertrophy (BPH). The applicant maintained that 
there was coding confusion about whether the procedure could be 
described by existing CPT code 53852 (Transurethral destruction of 
prostate tissue; by radiofrequency thermotherapy). We note that CPT 
code 53852 is assigned to C-APC 5375 (Level 5 Urology and Related 
Services), which has a geometric mean cost of approximately $3,704 for 
CY 2018.
    Based on our review of the application, the procedure, and input 
from our clinical advisors, we agree that CPT code 53852 does not 
appropriately describe the Rez[umacr]m procedure. Consequently, we are 
establishing HCPCS code C9748 to appropriately describe the procedure. 
Effective January 1, 2018, HOPDs should report HCPCS code C9748 to 
report the use of the Rez[umacr]m procedure for the treatment of BPH. 
In addition, based on cost information submitted to CMS in the 
application, we believe that the procedure should appropriately be 
assigned to C-APC 5373 (Level 3 Urology and Related Services), which 
has a geometric mean cost of approximately $1,695. We believe the 
Rez[umacr]m procedure shares similar resource and clinical homogeneity 
to the other procedures currently assigned to C-APC 5373.
    Table 68 below lists the final status indicator and APC assignments 
for HCPCS code C9748 for CY 2018. We refer readers to Addendum B to 
this final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

   Table 68--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transurethral Water Vapor Thermal
                                             Therapy of the Prostate
----------------------------------------------------------------------------------------------------------------
                                                        CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     CY 2018 OPPS payment rate
----------------------------------------------------------------------------------------------------------------
C9748.......................  Transurethral                      J1          5373  Refer to OPPS Addendum B.
                               destruction of prostate
                               tissue; by
                               radiofrequency water
                               vapor (steam) thermal
                               therapy.
----------------------------------------------------------------------------------------------------------------

    We note that HCPCS code C9748 is assigned to comment indicator 
``NI'' in Addendum B to this CY 2018 OPPS/ASC final rule with comment 
period to indicate that we have assigned the code an interim OPPS 
payment status for CY 2018. We are inviting public comments on the 
interim status indicator and APC assignments that will be finalized in 
the CY 2019 OPPS/ASC final rule with comment period.

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    Under section 1833(t)(6)(B)(iii) of the Act, the period for which a 
device category eligible for transitional pass-through payments under 
the OPPS can be in effect is at least 2 years but not more than 3 
years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided 
that this pass-through payment eligibility period began on the date CMS 
established a particular transitional pass-through category of devices, 
and we based the pass-through status expiration date for a device 
category on the date on which pass-through payment was effective for 
the category. In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the 
Act, we amended Sec.  419.66(g) to provide that the pass-through 
eligibility period for a device category begins on the first date on 
which pass-through payment is made under the OPPS for any medical 
device described by such category.
    In addition, prior to CY 2017, our policy was to propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update. This means that device 
pass-through status would expire

[[Page 59321]]

at the end of a calendar year when at least 2 years of pass-through 
payments have been made, regardless of the quarter in which the device 
was approved. In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79655), we changed our policy to allow for quarterly expiration 
of pass-through payment status for devices, beginning with pass-through 
devices approved 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. We refer readers to the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 
79661) for a full discussion of the changes to the device pass-through 
payment policy. 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. Expiration of Transitional Pass-Through Payments for Certain 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 three device categories eligible for 
pass-through payment: (1) HCPCS code C2623 (Catheter, transluminal 
angioplasty, drug-coated, non-laser), which was established effective 
April 1, 2015; (2) HCPCS code C2613 (Lung biopsy plug with delivery 
system), which was established effective July 1, 2015; and (3) 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 categories for HCPCS codes C2623, C2613, and C1822 will end on 
December 31, 2017. We note that our new policy adopted in the CY 2017 
OPPS/ASC final rule with comment period to allow for quarterly 
expiration of pass-through payment status for devices applies to 
devices approved in CY 2017 and subsequent years. As all the devices in 
these three device categories were approved prior to CY 2017, we are 
applying our policy to expire them at the end of the calendar year when 
at least 2 years of pass-through payments have been made. Therefore, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33610), we proposed, 
beginning in CY 2018, to package the costs of each of the devices 
described by HCPCS codes C2623, C2613, and C1822 into the costs related 
to the procedure with which each device is reported in the hospital 
claims data.
    Comment: Various stakeholders, including physicians, device 
manufacturers, and professional societies, opposed the proposal to 
package the costs of the device described by HCPCS code C2623 into the 
costs related to the procedure(s) with which the device is reported. 
The commenters specifically opposed packaging of the cost of the drug-
coated balloons into the procedure described by CPT code 37224 
(Revascularization, endovascular, open or percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal angioplasty). These 
commenters stated concerns that the proposed payment rate for this 
procedure did not adequately reflect the additional costs of drug-
coated balloons over non-drug-coated balloons, which could limit 
patient access to the technology. Several commenters described the 
clinical benefits provided by the drug-coated balloon in the treatment 
of peripheral arterial disease (PAD) and supported the continuation of 
the pass-through status of the device category for HCPCS code C2623 
beyond December 31, 2017. At the August 21, 2017 meeting of the HOP 
Panel, the HOP Panel made a recommendation that CMS continue to track 
CPT code 37224 (Revascularization, endovascular, open or percutaneous, 
femoral, popliteal artery(s), unilateral; with transluminal 
angioplasty) with HCPCS code C2623, and that the appropriate HOP Panel 
subcommittee review the APCs for endovascular procedures to determine 
whether more granularity (that is, more APCs) is warranted. One 
commenter supported the proposal to package the costs of the device 
described by HCPCS code C2623 into the costs related to the 
procedure(s) with which the device is reported. The commenter stated 
that the proposed payment rate provided under the OPPS for procedures 
using drug-coated balloons was appropriate. This commenter also stated 
concerns over a lack of scientific evidence of the effectiveness of 
these devices outside of clinical trials.
    Response: As mentioned earlier, under section 1833(t)(6)(B)(iii) of 
the Act, the period for which a device category eligible for 
transitional pass-through payments under the OPPS can be in effect is 
at least 2 years but not more than 3 years. Our policy for devices 
approved for pass-through payment status prior to CY 2017 is to propose 
and finalize the dates for expiration of pass-through payment status 
for device categories as part of the OPPS annual update. This means 
that device pass-through payment status would expire at the end of a 
calendar year when at least 2 years of pass-through payments had been 
made, regardless of the quarter in which the device was approved for 
pass-through payment status. According to our established policy (67 FR 
66763), after this eligibility period expires, payments for the costs 
of the device(s) are packaged into payment for the procedures with 
which they are billed. The device category for HCPCS code C2623 was 
established effective April 1, 2015, and will have been in effect for a 
period of at least 2 years, but not more than 3 years, when its 
eligibility expires on December 31, 2017. Therefore, this category is 
no longer eligible for pass-through payments. In accordance with our 
established policy, we are finalizing our proposal to package payment 
for the costs of the device(s) described by this category into payment 
for the costs of the procedures with which they are reported. In 
response to the recommendation of the HOP Panel from the August 21, 
2017 meeting, we will continue to track CPT code 37224 
(Revascularization, endovascular, open or percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal angioplasty) with 
HCPCS code C2623. We will share information on all items and services 
paid under the OPPS, including endovascular procedures, so that the 
appropriate HOP Panel subcommittee may review the APCs for endovascular 
procedures and advise on whether more granularity (that is, more APCs) 
is warranted.
    Comment: Some commenters, including device manufacturers and 
associations, stated that the geometric mean costs of the procedure 
described by CPT code 37224 involving a drug-coated balloon were higher 
than the geometric mean costs of the same angioplasty procedure when a 
drug-coated balloon was not used and a plain balloon angioplasty 
catheter was used instead. Specifically, these commenters presented 
their analysis of Medicare claims data which suggested that when CPT 
code 37224 is billed with HCPCS code C2623, the geometric mean cost of 
these claims is $8,483, while the geometric mean cost of claims 
including CPT code 37224 without HCPCS code C2623 is $6,396. The 
commenters also noted that the total geometric mean costs for CPT code 
37224, regardless of whether HCPCS code C2623 is billed with CPT code 
37224, is approximately $7,153. These commenters requested that CMS 
create a new procedural HCPCS C-code or G-code for hospitals to

[[Page 59322]]

use to differentiate procedures described by CPT code 37224 that use 
drug-coated balloons from procedures described by CPT code 37224 that 
use plain balloon angioplasty catheters, with a suggested descriptor of 
``Revascularization, endovascular, open percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal drug-coated balloon 
angioplasty''.
    One commenter also referenced the proposal in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33579 and 33580) to establish a HCPCS C-code to 
describe blue light cystoscopy (HCPCS code C9738 (Adjunctive blue light 
cystoscopy with fluorescent imaging agent (List separately in addition 
to code for primary procedure)) and to apply the C-APC complexity 
adjustment policy when this C-code is billed with specific white light 
cystoscopy codes. The commenter pointed out that, in the proposed rule, 
CMS stated that establishment of this C-code was appropriate because 
CMS believed that blue light cystoscopy is a distinguishable service in 
comparison to white light cystoscopy alone. CMS further stated that, 
with the C-APC complexity adjustment, qualifying combinations of the 
blue light cystoscopy C-code and white light cystoscopy codes are paid 
at the next higher paying C-APC when billed together on the same claim. 
The commenter requested that CMS take comparable steps to separately 
identify and pay for angioplasty procedures involving drug-coated 
balloons.
    Finally, several commenters referenced the HOP Panel's 
recommendation that CMS examine the number of APCs for endovascular 
procedures for CY 2018 and requested CMS create two new levels within 
the Endovascular C-APCs to provide higher payment for angioplasty 
procedures using a drug-coated balloon.
    Response: We believe that procedures with which the drug-coated 
balloons are used, specifically the procedure described by CPT code 
37224, are appropriately described by the existing procedure code and 
do not believe it is necessary at this time to establish a HCPCS C-code 
or G-code to distinguish an angioplasty procedure with a drug-coated 
balloon from an angioplasty procedure without a drug-coated balloon. 
The OPPS is a prospective payment system that relies on the principles 
of averaging, with some cases in an APC being more costly than others 
(and some cases being less costly). Although there is some evidence of 
higher geometric mean costs when a drug-coated balloon is used for 
certain angioplasty procedures versus a plain balloon angioplasty 
catheter, the higher costs of the procedures involving the drug-coated 
balloon are reflected in the claims data. Our analysis of the final 
rule claims data revealed a geometric mean cost of approximately $7,029 
for CPT code 37224 based on 11,346 single claims (out of 11,437 total 
claims). CPT code 37224 is assigned to C-APC 5192 (Level 2 Endovascular 
Procedures), which has a geometric mean cost of approximately $5,081. 
There is no 2 times violation in this C-APC. We also do not believe a 
C-APC complexity adjustment would be applicable, based on existing 
criteria used to assign a complexity adjustment. We do not believe that 
the example the commenter raised is entirely analogous because the 
HCPCS C-code that the commenter referenced necessarily involves an 
additional procedure (blue light cystoscopy) in addition to white light 
cystoscopy and the administration of the fluorescent imaging agent is 
required, which adds additional procedure time. In contrast, the use of 
a drug coated balloon does not involve a separate procedure.
    We note that stakeholders who are interested in the establishment 
of a CPT procedure code to describe angioplasty procedures involving 
the use of drug-coated balloons may request a new procedure code from 
the AMA CPT Editorial Panel.
    With regard to the request to create additional levels within the 
Vascular C-APC clinical family, this issue is discussed in greater 
detail in section III.D. of this final rule with comment period. As we 
do every year, we will review and evaluate the APC groupings based on 
the latest available data in the next rulemaking cycle.
    Comment: Several commenters requested that HCPCS code C1822 
(Generator, neurostimulator (implantable), high frequency, with 
rechargeable battery and charging system), otherwise known as the Senza 
SCS System, receive an additional year of pass-through payment status 
for CY 2018. Reasons stated by the commenters included: (1) A belief 
that CMS has the authority under current law to extend pass-through 
payment status for one more year, for a total of 3 years, and that, 
although CMS' policy to allow devices with transitional pass-through 
payment status as close to 3 years as possible was effective for device 
approvals on or after January 1, 2017, CMS has the authority to grant 
the third year of pass-through payment status on a case-by-case basis 
for devices that were granted pass-through payment status prior to CY 
2017 based on specific characteristics of the device and procedure with 
which it is used; (2) the reported costs for devices described by HCPCS 
code C1822 in CY 2016 were lower than actual cost for the device due to 
hospital CCR ratios used to calculate device cost instead of 
implantable device CCRs, which were used for many hospitals to 
calculate device costs starting in CY 2017; (3) the reported costs for 
devices described by HCPCS C1822 in CY 2016 were lower than actual 
costs due to hospital cost reporting errors, billing of HCPCS code 
C1822 by hospitals that, according to the device manufacturer, had not 
purchased the device, hospitals not reporting use of the device, and 
other claims reporting problems; and (4) ending pass-through payment 
status would reduce access to the Senza SCS System. The commenters 
stated that the Senza SCS System helps beneficiaries manage chronic 
pain and reduces opioid usage among beneficiaries with the device.
    Response: Historically, a device approved for pass-through payment 
status under the OPPS had an eligibility period of at least 2 years but 
no more than 3 years--with the pass-through payment period starting on 
the date when CMS established a particular transitional category of 
devices (80 FR 70415) and expiring at the end of a calendar year when 
at least 2 years but no more than 3 years have passed. Effective 
January 1, 2017, we revised our policy 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 (81 FR 79655). HCPCS code C1822 
was established as a pass-through payment category on January 1, 2016, 
and will have received 2 years of pass-through payment status on 
December 31, 2017, in accordance with the statutory requirement of 
receiving at least 2 years of pass-through payments, but not more than 
3 years, and consistent with the policy in effect at the time the 
device pass-through payment period began for HCPCS code C1822. 
Accordingly, the policy adopted in CY 2017 does not apply to devices 
approved for pass-through payment status prior to that date. Likewise, 
the change in CY 2017 from using the average hospital-wide CCR to the 
implantable device CCR also was a prospective policy change to use the 
best available data in a given year to determine device pass-through 
payment.
    With respect to comments expressing concerns that the reported 
costs for HCPCS code C1822 for CY 2016 were lower due to hospital cost 
reporting

[[Page 59323]]

errors, 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 
incentives 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.)
    Commenters writing in support of extending the pass-through payment 
period for HCPCS code C1822 also stated that access to the service 
covered by HCPCS code C1822 could be reduced if pass-through payment 
status for HCPCS code C1822 is removed. Because reported costs for CPT 
code 63685 appear to be consistent with or without being reported in 
combination with HCPCS code C1822, we do not anticipate a significant 
impact to the payment amount for CPT code 63685 once HCPCS code C1822 
is removed from pass-through payment status. We anticipate that 
hospitals will be able to adjust to any possible changes to the payment 
for the service.
    Comment: One commenter, another device manufacturer, agreed with 
CMS' proposal to end pass-through payment status of HCPCS code C1822 on 
December 31, 2017, stating that the decision to end pass-through 
payment status is consistent with CMS policy and there is no need to 
apply the policy established in CY 2017 retroactively.
    Response: We appreciate the commenter's support.
    We did not receive any public comments regarding the proposal to 
package the payment for the costs of the device described by HCPCS code 
C2623 into the payment for the costs related to the procedure with 
which the device is reported.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to package the payment 
for the costs of each of the devices described by HCPCS codes C2623, 
C2613, and C1822 into the payment for the costs related to the 
procedure with which each device is reported in the hospital claims 
data.
2. New Device Pass-Through Applications
a. Background
    Section 1833(t)(6) of the Act provides for 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 pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that it is important for hospitals to receive 
pass-through payments for devices that offer substantial clinical 
improvement in the treatment of Medicare beneficiaries to facilitate 
access by beneficiaries to the advantages of the new technology. 
Conversely, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations might be most 
likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 
70 FR 68629).
    As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), 
to be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria: (1) If required by FDA, the 
device must have received FDA approval or clearance (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by the FDA), or another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
approval or clearance, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA approval or 
clearance is granted, in which case CMS will consider the pass-through 
payment application if it is submitted within 3 years from the date of 
market availability; (2) the device is determined to be reasonable and 
necessary for the diagnosis or treatment of an illness or injury or to 
improve the functioning of a malformed body part, as required by 
section 1862(a)(1)(A) of the Act; and (3) the device is an integral 
part of the service furnished, is used for one patient only, comes in 
contact with human tissue, and is surgically implanted or inserted 
(either permanently or temporarily), or applied in or on a wound or 
other skin lesion. In addition, according to Sec.  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 payment 
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

[[Page 59324]]

requirements as specified 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 CMS 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 2018
    We received five applications by the March 1, 2017 quarterly 
deadline, which was the last quarterly deadline for applications to be 
received in time to be included for the CY 2018 OPPS/ASC proposed rule. 
All applications were received in the second quarter of 2016. None of 
the five applications were approved for device pass-through payment 
during the quarterly review process.
    Applications received for the later deadlines for the remaining 
2017 quarters (June 1, September 1, and December 1), if any, will be 
presented in the CY 2019 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 five applications received by the March 1, 2017 
deadline is presented below, as detailed in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33611 through 33618).
(1) Architect[supreg] Px
    Harbor MedTech, Inc. submitted an application for a new device 
category for transitional pass-through payment status for 
Architect[supreg] Px. Architect[supreg] Px is a collagen biomatrix 
comprised of a stabilized extracellular matrix derived from equine 
pericardium. The equine pericardium is stabilized to become a catalyst 
and scaffold for use by autologous tissue regeneration factors. 
Architect[supreg] Px is packaged as an individual unit in sizes ranging 
from 2 cm x 2 cm up to 10 cm x 15 cm and is approximately 0.75 mm 
thick. Architect[supreg] Px typically requires only one application. 
The applicant asserted that it is clinically superior to other skin 
substitutes that work by flooding the wound with nonautologous collagen 
and growth factors because Architect[supreg] Px attracts and 
concentrates the patient's own autologous collagen and growth factors 
to support healing.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for Architect[supreg] Px on September 
12, 2014, and its June 1, 2016 application was submitted within 3 years 
of FDA clearance. However, Unite BioMatrix, cleared by the FDA on June 
20, 2007, is claimed as a predicate of Architect[supreg] Px. The 
Architect[supreg] Px application states that ``. . . while packaged 
differently, Architect[supreg] Px and Unite BioMatrix are identical . . 
. they are both stabilized equine pericardium manufactured using the 
same processes . . . .'' If the date for FDA clearance for Unite 
BioMatrix is used to evaluate the newness criterion, Architect[supreg] 
Px may not meet the newness criterion. We invited public comments on 
this issue.
    Comment: One commenter, the manufacturer, stated that 
Architect[supreg] Px is substantially different than its predicate 
product, Unite Biomatrix, and should be considered to meet the newness 
criterion for device pass-through payment. The commenter pointed out 
the following: Architect[supreg] Px uses a different process from Unite 
Biomatrix to stabilize the equine pericardium. Architect[supreg] Px is 
de-hydrated, packaged dry in a foil pouch, and is sterilized by 
radiation. Unite Biomatrix is packaged wet in a jar and is not 
sterilized using radiation. The new process that is used to 
manufacturer Architect[supreg] Px was found by researchers in 2016 to 
add key properties to the device that promote the use of endogenous 
collagen and growth factors to support healing. The commenter implied 
that Unite Biomatrix does not contain these key properties.
    Response: The statements by the manufacturer about the differences 
in performance between Architect[supreg] Px and Unite Biomatrix appear 
to be different than what was stated in the device pass-through 
application. The application stated that, despite different packaging, 
the two products were identical. However, we acknowledge that the 
research cited by the manufacturer of substantial performance 
differences between Architect[supreg] Px and Unite Biomatrix is from 
2016, and the findings may not have been available when the device 
pass-through payment application was submitted. For purposes of the 
device pass-through payment process, we are persuaded by this 
additional information and have determined that Architect[supreg] Px 
does meet the newness criterion based on the additional performance 
information supplied by the manufacturer.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Architect[supreg] Px is a skin substitute 
product that is integral to the service provided, is used for one 
patient only, comes in contact with human skin, and is surgically 
inserted into the patient. The applicant also claims Architect[supreg] 
Px meets the device eligibility requirements of Sec.  419.66(b)(4) 
because Architect[supreg] Px is not an instrument, apparatus, 
implement, or item for which depreciation and financing expenses are 
recovered, and it is not a supply or material.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS

[[Page 59325]]

determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. We have not identified an 
existing pass-through category that describes Architect[supreg] Px. 
Harbor MedTech, Inc. suggested a new device category descriptor of 
``Stabilized Skin Substitute for Autologous Tissue Regeneration'' for 
Architect[supreg] Px. We invited public comments on this issue.
    We did not receive any public comments on this issue. We are 
confirming that there is no existing pass-through category that 
describes Architect[supreg] Px and have determined that 
Architect[supreg] Px meets this eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will 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. With regard to the substantial clinical 
improvement criterion, the applicant only identified two references, 
neither of which we believe provide evidence of substantial clinical 
improvement. One reference is a 2012 summary report \3\ of skin 
substitute products that can be used to treat chronic wounds that only 
describes characteristics of the predecessor product to 
Architect[supreg] Px with no efficacy or performance information. The 
second reference \4\ is a small observational study of 34 subjects with 
no comparison group. We invited public comments on whether 
Architect[supreg] Px meets the substantial clinical improvement 
criterion.
---------------------------------------------------------------------------

    \3\ Snyder, D.L. et al. Skin Substitutes for Treating Chronic 
Wounds. Technology Assessment Report. Project ID: HCPR0610. AHRQ. 
December 18, 2012.
    \4\ Alexander JH, Yeager DA, et al. Equine Pericardium as a 
Biological Covering for the Treatment of Diabetic Foot Wounds; a 
Prospective Study. J Am Podiatric Assoc., 2012 Sep-Oct.:102 (5): 
352-358.
---------------------------------------------------------------------------

    Comment: One commenter, the manufacturer, stated that the inclusion 
of stabilized equine pericardium is an extremely important property of 
Architect[supreg] Px and Unite Biomatrix, and that this property allows 
these products to stay on a chronic wound, resist degradation, and 
remain on the wound until it heals. The commenter stated that 
Architect[supreg] Px is a nondegrading skin substitute that constantly 
supports healing and does not need to be reapplied. The commmenter also 
stated that skin substitutes that degrade need to be reapplied multiple 
times and there is the risk that reapplying the skin substitute may 
interrupt the wound healing process which drives up the costs of 
medical care. The commenter believed that Architect[supreg] Px is the 
first skin substitute that totally aligned with the Quality and Value 
of Care objectives of the Medicare Access and CHIP Reauthorization Act 
of 2015 (MACRA). Lastly, the commenter stated that other skin 
substitute products have previously received pass-through payment 
approval by presenting similar data as have been presented for 
Architect[supreg] Px.
    Response: The commenter has provided additional information about 
the potential beneficial qualities of Architect[supreg] Px. However, 
the commenter has provided no additional studies that demonstrate that 
its use results in a substantial clinical improvement relative to other 
skin substitute and wound healing products available on the market. The 
commenter mentioned that skin substitutes had previously received pass-
through payment status based on the same type of information the 
manufacturer provided in its device pass-through payment application 
and in its comments on the proposed rule. However, the commenter is 
referring to a previous process to evaluate skin substitutes for pass-
through payment eligibility (the drugs and biological pass-through 
payment process), which did not require evidence of a substantial 
clinical improvement. Since CY 2015, skin substitutes have been 
evaluated using the medical device pass-through payment process (79 FR 
66885 through 66888), which includes the criterion for substantial 
clinical improvement. Applicants must demonstrate that the device under 
consideration for pass-through payment status will 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. The commenter has not provided additional 
information showing substantial clinical improvement. Therefore, we 
determine that Architect[supreg] Px does not meet the criterion for 
substantial clinical improvement.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements: Architect[supreg] Px would be reported with 
CPT codes 15271 through 15278, which cover the application of skin 
substitute grafts to different areas of the body for high-cost skin 
substitutes. To meet the cost criterion for device pass-through 
payment, a device must pass all three tests of the cost criteria for at 
least one APC. CPT codes 15271 through 15278 are assigned to either APC 
5054 (Level 4 Skin Procedures), with a CY 2016 payment rate of 
$1,411.21 and a device offset of $4.52, or APC 5055 (Level 5 Skin 
Procedures), with a CY 2016 payment rate of $2,137.49 and a device 
offset of $25.44. According to the applicant, the cost of the 
substitute graft procedures when performed with Architect[supreg] Px is 
$5,495.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $5,495 for Architect[supreg] Px exceeds the 
applicable APC amount for the service related to the category of 
devices of $1,411.21 by 389 percent ($5,495/$1,411.21 x 100 percent = 
389 percent). Therefore, it appears that Architect[supreg] Px meets the 
first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means 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). The estimated average reasonable cost of $5,495 for 
Architect[supreg] Px exceeds the device-related portion of the APC 
payment amount for the related service of $4.52 by 121,571 percent 
($5,495/$4.52 x 100 percent = 121,571 percent). Therefore, we stated in 
the proposed rule that it appears that Architect[supreg] Px meets the 
second cost significance test.
    Section 419.66(d)(3), the third cost significance test, requires 
that 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 must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $5,495 for Architect[supreg] Px and the portion of 
the APC payment amount for the device of

[[Page 59326]]

$4.52 exceeds 10 percent at 389 percent (($5,495-$4.52)/$1,411.21) x 
100 percent = 389 percent). Therefore, it appears that 
Architect[supreg] Px meets the third cost significance test. Based on 
the costs submitted by the applicant and the calculations noted 
earlier, we believe that Architect[supreg] Px meets the cost criterion 
at Sec.  419.66(c)(3) for new device categories.
    We invited public comments on whether Architect[supreg] Px meets 
the device pass-through payment criteria discussed in this section.
    We did not receive any public comments relating to whether 
Architect[supreg] Px meets the device pass-through payment cost 
criterion. As stated earlier, we believe that Architect[supreg] Px 
meets the cost criterion at Sec.  419.66(c)(3) for new device 
categories. However after consideration of the public comments we 
received, we are not approving device pass-through payment status for 
Architect[supreg] Px for CY 2018.
(2) Dermavest and Plurivest Human Placental Connective Tissue Matrix 
(HPCTM)
    Aedicell, Inc. submitted an application for a new device category 
for transitional pass-through payment status for Dermavest and 
Plurivest human placental connective tissue matrix (HPCTM). Dermavest 
and Plurivest HPCTM use tissue sourced from the placental disk, amnion/
chorion, and umbilical cord to replace or supplement damaged tissue. 
The applicant stated that Dermavest and Plurivest replace or supplement 
damaged or inadequate integumental tissue by providing a scaffold to 
entrap migrating cells for repopulation. The applicant stated that the 
products may be clinically indicated for the following conditions: 
Partial and full thickness wounds; pressure ulcers; venous ulcers; 
chronic vascular ulcers; diabetic ulcers; trauma wounds (abrasions, 
lacerations, second degree burns, and skin tears); drainage wounds; and 
surgical wounds (donor sites/grafts post mohs surgery, post laser 
surgery, and podiatric). Dermavest and Plurivest HPCTM are applied to 
the area of inadequate or damaged tissue, moistened if necessary and 
covered with a nonadherent secondary dressing. While the application 
does not distinguish between the Dermavest and Plurivest products, the 
AediCell Inc. Web site states that the two products differ by dosage. 
According to information on the Web site at www.aedicell.com, each 
product contains different tissue cell attachment proteins (CAP) and 
cytokine/growth factors (GF) profiles. There is a lower cytokine/GF 
concentration profile in Plurivest and a higher concentration of CAP 
and cytokine/GF in Dermavest.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that the product conforms to the requirements for 
Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) 
regulated solely under section 361 of the Public Health Service (PHS) 
Act and 21 CFR part 1271. For these products, FDA requires, among other 
things, that the manufacturer register and list its HCT/Ps with the 
Center for Biologics Evaluation and Research (CBER) within 5 days after 
beginning operations and update their registrations annually. AediCell, 
Inc. has an FDA field establishment identifier (FEI) under the HHS-FDA-
Establishment Registration and Listing for Human Cells, Tissues, and 
Cellular and Tissue-Based Products (HCT/Ps) and submitted with its 
application the annual registration/listing for Dermavest and Plurivest 
dated November 9, 2015. The applicant noted that the initial 
registration for the manufacture of Dermavest was submitted to the CBER 
on October 28, 2013, and the registration of Plurivest was submitted 
the following year on November 14, 2014. The registration forms 
including these dates were not included in the application. Therefore, 
it is unclear if the newness criterion is met.
    Comment: One commenter, the manufacturer, provided an FDA 
registration form for the product that indicated that there was change 
in information for the Dermavest product submitted on December 18, 
2013. The manufacturer also submitted a document indicating that a 
registration form was submitted to FDA on October 20, 2014 to change 
the name of the product to Dermavest/Plurivest.
    Response: Based on the information submitted by the manufacturer, 
we are unable to determine that Dermavest and Plurivest meet the 
newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Dermavest and Plurivest are skin substitute 
products that are integral to the service provided, are used for one 
patient only, come in contact with human skin, and are applied in or on 
a wound or other skin lesion. The applicant also claimed Dermavest and 
Plurivest meet the device eligibility requirements of Sec.  
419.66(b)(4) because they are not instruments, apparatuses, implements, 
or items for which depreciation and financing expenses are recovered, 
and they are not supplies or materials furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes 
Dermavest and Plurivest HPCTM. The applicant proposed a category 
descriptor for Dermavest and Plurivest of ``Human placental connective 
tissue matrix (HPCTM), comprised of tissue sourced from the placental 
disk, amnion/chorion, and umbilical cord for the intention of replacing 
or supplementing damaged or inadequate integumental issue.'' We invited 
public comments on this issue.
    Comment: One commenter, the manufacturer, supported CMS' statement 
that CMS had not identified an existing pass-through payment category 
that describes Dermavest and Plurivest HPTCM.
    Response: At this time, we still have not identified an existing 
pass-through payment category that describes Dermavest and Plurivest 
HPCTM.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will 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. With respect to this criterion, the applicant 
provided several background studies showing general evidence that 
placental tissue, umbilical cord, and amnion membrane products are 
effective in the treatment of various wounds and ulcers. However, these 
studies were not specific to Dermavest and Plurivest HPCTM. The 
applicant submitted two poster presentations describing case studies 
that evaluated the wound healing time and wound characteristics of 
patients with diabetic and venous ulcers treated with Dermavest and 
Plurivest HPCTM. Both studies were described as case series and, as 
such, lacked blinding, randomization, and control groups. The first 
poster,\5\ presented in 2015,

[[Page 59327]]

described a prospective, multi-center case series with a small number 
of participants (n=15). The study evaluated wound healing time and 
wound characteristics of patients with various etiologies. The patients 
were treated with up to two 6 cm\2\ pieces of Dermavest per application 
on wounds up to 44 cm\2\. Results were presented for diabetic and 
venous ulcer cases and showed a week 4 percent area reduction (PAR) of 
71 percent for diabetic ulcers and 50 percent for venous ulcers. Eighty 
percent of the diabetic ulcer cases and 50 percent of the venous ulcer 
cases had a week 4 PAR of greater than 40 percent.
---------------------------------------------------------------------------

    \5\ Connell et al., Human placental connective tissue matrix in 
the treatment of chronic wounds: A prospective multi-center case 
series. 2015 at Society of Advanced Wound Healing (SAWC) Spring 
meeting.
---------------------------------------------------------------------------

    The second poster,\6\ presented in 2016, also described a case 
series that evaluated wound healing time and wound characteristics of 
patients with various etiologies (n=8). The poster stated that the 
patients were treated with pieces of HPCTM according to manufacturer 
guidelines on wounds ranging in size up to 3.8 cm\2\. The methods 
presented in the poster do not specify whether the patients were 
treated with Dermavest or Plurivest, or both. The results presented in 
the poster compile Dermavest data from two case series presented at the 
Society for Advanced Wound Care (SAWC) annual meeting. It was unclear 
whether there was overlap between the patients used in the 2015 and 
2016 case series included in the application. The compiled Dermavest 
data were compared to the 4-week PAR results for diabetic and venous 
ulcers from two other noncontemporaneous studies evaluating different 
skin replacement products. The results showed, at week 4, approximately 
80 percent of the Dermavest-treated diabetic ulcer cases had a PAR of 
greater than 50 percent in comparison to approximately 60 percent of 
cases and approximately 30 percent of cases, respectively, in the 
comparison studies using other skin replacement products. The results 
also showed that, at week 4, approximately 60 percent of the Dermavest-
treated venous ulcer cases had a PAR of greater than 40 percent in 
comparison to approximately 50 percent of cases and approximately 30 
percent of cases in the comparison studies treated with other skin 
replacement products. There were multiple differences between the 
Dermavest studies included in the poster presentations and these two 
additional studies presented as comparators, including the number of 
patients included in the studies, the number of wounds treated, and the 
purpose of the study. Based on the results presented in the poster, the 
applicant concluded that HPCTM provides an effective alternative to 
other skin replacement products.
---------------------------------------------------------------------------

    \6\ McGuire and Sebag, The use of a new placental acellular 
tissue product in the management of chronic wounds: A case series. 
2016 at the Society of Advanced Wound Healing (SAWC) Spring meeting.
---------------------------------------------------------------------------

    In the CY 2018 OPPS/ASC proposed rule, we stated that we were 
concerned that the research provided did not clinically demonstrate the 
active ingredients of the product(s) that might distinguish the product 
from others, the correct dosing of the product(s), the amount of 
durable wound closure with the product(s) compared to standard of care 
in studies with rigorous trial design/implementation, and the amount of 
durable wound closure with the product(s) compared to other products in 
studies with rigorous trial design/implementation. We stated in the 
proposed rule that, based on the evidence submitted with the 
application, we were not yet convinced that the Dermavest and Plurivest 
HPCTM provide a substantial clinical improvement over other treatments 
for wound care. We invited public comments on whether the Dermavest and 
Plurivest HPCTM meet this criterion.
    Comment: One commenter, the manufacturer, provided information 
regarding the active ingredients and concentrations of active 
ingredients of the product as compared to other skin substitutes. The 
comment also included personal statements from physicians who used the 
product and attested to its clinical benefit over the current standard 
of care. The physicians' statements also noted that a randomized 
controlled trial that compares the product to the standard of care and 
to other advanced human tissue products, as well as registry studies, 
would be helpful in proving the substantial clinical improvement 
provided by Dermavest/Plurivest HPTCM. The manufacturer also stated 
that it was endeavoring to enter into a registry study and two 
randomized controlled trials using other high tiered skin substitutes 
as comparators.
    Response: We appreciate the commenters' responses on the Dermavest 
and Plurivest HPCTM application. However, the commenters did not 
provide new empirical evidence that addressed our concerns that the 
studies included with the application were described as case series 
and, as such, lacked blinding, randomization, and control groups. At 
this time, we have not been able to determine that Dermavest and 
Plurivest HPCTM represents a substantial clinical improvement relative 
to existing therapies currently available for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Dermavest and 
Plurivest HPCTM would be reported with CPT codes 15271, 15272, 15273, 
15274, 15275, 15276, 15277, and 15278. CPT codes 15272, 15274, 15276, 
and 15278 are add-on codes assigned status indicator ``N'', which means 
payment is packaged under the OPPS. CPT codes 15271 and 15275 are 
assigned to APC 5054 (Level 4 Skin Procedures), and CPT codes 15273 and 
15277 are assigned to APC 5055 (Level 5 Skin Procedures). To meet the 
cost criterion for device pass-through payment, a device must pass all 
three tests of the cost criterion for at least one APC. For our 
calculations, we used APC 5054 (Level 4 Skin Procedures), which had a 
CY 2016 payment rate of $1,411 and a device offset amount of $4.52 at 
the time the application was received. According to the applicant, the 
cost of a sheet of 2x3 cm Dermavest is $550, and the cost of a sheet of 
2x3 cm Plurivest is $500.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $550 for Dermavest and Plurivest exceeds 39 
percent of the applicable APC payment amount for the service related to 
the category of devices of $1,411 ($550/$1,411 x 100 = 39 percent). 
Therefore, we stated in the proposed rule that we believe Dermavest and 
Plurivest meet the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means 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). The estimated average reasonable cost of $550 for 
Dermavest and Plurivest exceeds the cost of the device-related portion 
of the APC payment amount for the related service of $4.52 by 12,168 
percent

[[Page 59328]]

($550/$4.52) x 100 = 12,168 percent). Therefore, we stated in the 
proposed rule that we believe that Dermavest and Plurivest meet the 
second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that 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 must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $550 for Dermavest and Plurivest and the portion of 
the APC payment amount for the device of $4.52 exceeds the APC payment 
amount for the related service of $1,411 by 38.6 percent (($550-$4.52)/
$1,411 x 100 = 38.6 percent). Therefore, we stated in the proposed rule 
that we believe that Dermavest and Plurivest meet the third cost 
significance test.
    We invited public comments on whether Dermavest and Plurivest meet 
the device pass-through payment cost criteria discussed in this 
section.
    We did not receive any public comments on this issue. We continue 
to believe that Dermavest and Plurivest meet the device pass-through 
payment cost criteria.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the Dermavest and 
Plurivest HPCTM for CY 2018.
(3) Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]
    Applied Biologics, LLC submitted an application for a new device 
category for transitional pass-through payment status for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]. 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] is an 
injectable, human placental amniotic fluid. It is an allograft derived 
from human birth tissue recovered from a live, healthy C-section birth. 
The allograft is used to augment tissue to bone and tissue to tissue 
repairs. The allograft is implanted at the surgical site at the end of 
the procedure using a needle and syringe under direct visualization. 
The applicant claimed that the product helps drive healing towards 
native tissue regeneration and away from scar formation. 
Fl[omacr]Graft[supreg] has a standardized potency of 2 million cells. 
Fl[omacr]Graft Neogenesis[supreg] has a standardized potency of 1.5 
million cells. The applicant indicated that the product may be used 
with several surgical procedures, including joint replacement 
procedures, traumatic bone and soft tissue injury, meniscal repairs, 
meniscal transplantation, articular cartilage restoration, foot and 
ankle repairs, and chronic wounds.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that Fl[omacr]Graft[supreg] and Fl[omacr]graft 
Neogenesis[supreg] conform to the requirements for Human Cells, 
Tissues, and Cellular and Tissue-Based Products (HCT/Ps) regulated 
solely under section 361 of the PHS Act and 21 CFR part 1271. For these 
products, FDA requires, among other things, that the manufacturer 
register and list their HCT/Ps with the Center for Biologics Evaluation 
and Research (CBER) within 5 days after beginning operations and update 
their registrations annually. Applied Biologics, LLC has two FDA field 
establishment identifiers (FEI) under the HHS-FDA-Establishment 
Registration and Listing for Human Cells, Tissues, and Cellular and 
Tissue-Based Products (HCT/Ps). Both registration forms list the 
product as ``Fl[omacr]Graft[supreg]''. The applicant submitted an 
initial registration/listing for one FEI dated June 8, 2015, as well as 
an annual registration/listing for a different FEI dated December 1, 
2014. The first date of U.S. sale for Fl[omacr]Graft[supreg] was May 
23, 2013. It is not clear when the initial CBER filing occurred for the 
Fl[omacr]Graft[supreg] product. Therefore, it is unclear if the newness 
criterion for the Fl[omacr]Graft[supreg] product is met.
    Comment: One commenter, the manufacturer, supplied information 
indicating that the initial registration forms for 
Fl[omacr]Graft[supreg] and Fl[omacr]Graft Neogenesis[supreg] were 
submitted on February 24, 2015 and were validated by FDA on June 8, 
2015.
    Response: Based on the information submitted by the manufacturer, 
we believe that the product meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Fl[omacr]Graft[supreg] and Fl[omacr]graft 
Neogenesis[supreg] are integral to the service provided, are used for 
one patient only, come in contact with human skin, and are applied in 
or on a wound or other skin lesion. The applicant also claimed 
Fl[omacr]Graft[supreg] and Fl[omacr]graft Neogenesis meet the device 
eligibility requirements of Sec.  419.66(b)(4) because they are not 
instruments, apparatuses, implements, or items for which depreciation 
and financing expenses are recovered, and they are not supplies or 
materials furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment device category that 
describes Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]. The 
application suggested a payment device category for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] with a 
category descriptor of ``Injectable Amniotic Fluid Allograft''. We 
invited public comments on this issue.
    We did not receive any public comments on this issue, and at this 
time, we have not identified an existing pass-through category that 
describes Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will 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. With respect to the substantial clinical 
improvement criterion, the applicant submitted several peer-reviewed 
publications that provided general evidence that amniotic fluid and 
amniotic membrane-based products significantly reduce recovery time. 
However, these studies did not include the use of the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product. The 
applicant did list several studies in the application that involved the 
use of the Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] 
product. Of these studies, five unpublished studies were available for 
review. The five studies submitted with the application were described 
as case studies, case series, or retrospective cohort studies. The 
studies lacked random allocation, blinding, and a comparison group. The 
first study \7\ described a retrospective cohort study of 30 patients. 
The studies showed that 93 percent of the patients (n=14) who received 
a Fl[omacr]Graft[supreg] injection, coupled with conservative, 
nonsurgical treatment plan to treat their Morton's Nerve entrapment 
condition, had their issue resolved compared to 20 percent of patients 
(n=3) who did not receive Fl[omacr]Graft[supreg] injection, coupled 
with conservative, nonsurgical treatment plan to treat their Morton's 
Nerve entrapment condition. A greater percentage of patients who did 
not receive a Fl[omacr]Graft[supreg] injection with their conservative 
treatment required surgery (80 percent versus 7 percent). Patients who 
required surgery had a 95-percent

[[Page 59329]]

success rate when surgery was coupled with a Fl[omacr]Graft[supreg] 
injection.
---------------------------------------------------------------------------

    \7\ Bregman, Peter. (2014). Addressing Morton's Nerve Entrapment 
Surgically and Non-surgically with FloGraft.
---------------------------------------------------------------------------

    The next study \8\ was a retrospective analysis that involved 27 
patients who were treated for stalled wounds. The patients had a broad 
spectrum of etiologies. Over a 12-month period, the applicant indicated 
that 96 percent of wounds that had stalled demonstrated rapid 
acceleration towards closure within a 21-day period when treated with 
Fl[omacr]Graft[supreg]. The article recommended a randomized controlled 
trial (RCT) to confirm the results. The applicant also submitted two 
case studies,9 10 each involving one patient, which 
described the use of Fl[omacr]Graft[supreg] to treat distal fibula 
fracture and tarsal tunnel compression neuropathy. Lastly, the 
application included a study \11\ which presented the results from a 
case study of one patient as well as a retrospective cohort of 34 
patients who received a Brostr[ouml]m-Evans procedure with the 
Fl[omacr]Graft[supreg] product. In general, the studies submitted 
lacked a clear description of the outcome variable and study 
population, and did not include statistical analysis.
---------------------------------------------------------------------------

    \8\ Gottleib, et al. FloGraft Rapidly Moves Stalled Wounds Into 
the Proliferative Phase.
    \9\ Jacoby, Richard. Case Study 221: Non-surgical Resolution of 
Distal Fibula Fracture with Flograft Implant; 82 YO Male.
    \10\ Jacoby, Richard. Tarsal Tunnel Compression Neuropathy Case 
Study Using Flograft.
    \11\ Maling, Scott. A Case Series: A retrospective analysis of 
34 patients receiving modified Bronstom-Evans procedure with 
Flograft reduce time to full mobility by 52%.
---------------------------------------------------------------------------

    Based on the evidence submitted, we stated in the proposed rule 
that we believe there is insufficient data to determine whether 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] offers a 
substantial clinical improvement over other treatments for wound care. 
We invited public comments on whether the Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the substantial clinical 
improvement criterion.
    Comment: Several commenters described the clinical benefits that 
they have observed using the Fl[omacr]Graft[supreg] product in the 
treatment of wounds, bone, and soft tissue repairs. Other commenters 
described their current, ongoing studies involving the impact of 
Fl[omacr]Graft[supreg] on rotator cuff healing after repair. One study 
described a randomized single blind study (n=20). One commenter was 
enthusiastic about the potential impact the product could have on 
improving healing for patients with rotator cuff injuries, while 
another commenter presented a more neutral position and stated that he 
could not confirm that the use of the product would impact the healing, 
but hoped that the study would guide the use of the product in the 
future. Other commenters submitted case studies of wound care patients 
treated with Fl[omacr]Graft[supreg]. One commenter submitted several 
studies related to amniotic fluid and amniotic membrane-based products; 
however, none of these studies were specific to the 
Fl[omacr]Graft[supreg] product.
    Response: We appreciate the commenters' responses on the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product. 
However, the commenters did not provide new empirical evidence that 
addressed our concerns regarding the evidence of substantial clinical 
improvement that was submitted with the application. These concerns 
included the lack of a clear description of the outcome variable and 
study population and the lack of statistical analysis. The comments 
also did not address our concerns that the studies submitted with the 
application were case studies, case series, or retrospective cohort 
studies that lacked random allocation, blinding, and a comparison 
group. The commenters also discussed studies that did not include the 
use of Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] and 
studies that were still in progress. At this time, we have not been 
able to determine that Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] represents a substantial clinical improvement 
relative to existing therapies currently available for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated several CPT codes would 
be used to report Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg], including CPT codes 29826, 29827, 29828, 23473, 
23420, 23412, 27605, 27650, 29891, 29888, 29889, 28008, 22551, 22856, 
27179, 29861, and 29862. To meet the cost criterion for device pass-
through payment, a device must pass all three tests of the cost 
criterion for at least one APC. These CPT codes are assigned to APCs 
5121 through 5125 (Level 1 through Level 5 Musculoskeletal Procedures). 
For our calculations, we used APC 5121 (Level 1 Musculoskeletal 
Procedures), which had a CY 2016 payment rate of $1,455 and a device 
offset of $15.86 at the time the application was received. According to 
the applicant, the Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] product is available in a variety of vial sizes, the 
largest size being 18 cc with a cost of $19,925.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. We used the highest 
priced product for this determination. The estimated average reasonable 
cost of $19,925 for Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] exceeds the applicable APC payment amount for the 
service related to the category of devices of $1,455 by 1,369 percent 
($19,925/$1,455 x 100 = 1,369 percent). Therefore, we stated in the 
proposed rule that we believe Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means 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). The average reasonable cost of $19,925 for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] exceeds the 
device-related portion of the APC payment amount of $15,86 by 125,360 
percent ($19,925/$15.86) x 100 = 125,630 percent). Therefore, in the 
proposed rule, we stated that we believe that Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the second cost significance 
test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that 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 must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$19,925 for Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] 
and the portion of the APC payment amount for the device of $15.86 
exceeds the APC payment amount for the related service of $1,455 by 
1,368 percent (($19,925-$15.86)/$1,455 x 100 = 1,368 percent). 
Therefore, in the proposed rule, we stated that we believe 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] meets the 
third cost significance test.
    We invited public comments on whether Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the device pass-through payment 
cost criteria discussed in this section.
    We did not receive any public comments on this issue. We continue 
to believe that Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] meets the device pass-through payment cost criteria.

[[Page 59330]]

    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product for CY 
2018.
(4) KerecisTM Omega3 Wound (Skin Substitute)
    Kerecis, LLC submitted an application for a new device category for 
transitional pass-through payment status for KerecisTM 
Omega3 Wound. KerecisTM Omega3 Wound is made from acellular 
fish skin from wild Atlantic cod (Gadus morhua) caught in the North 
Atlantic Ocean that is used to regenerate damaged human tissue in 
chronic wounds. The applicant claimed that there is no disease 
transmission risk and noted that the fish skin is not required to 
undergo the viral inactivation process that the FDA dictates for 
tissues from farm animals. The applicant noted that the Omega3 fatty 
acids offer multiple health benefits, including anti-inflammation. 
KerecisTM Omega3 Wound is supplied as a sterile, single-use 
sheet in peel-open pouches. KerecisTM Omega3 Wound does not 
elicit an immune response because the major antigenic components 
present within cell membranes are removed in a gentle manner during 
processing. Unlike mammalian and human sourced products, the fish skin 
possesses extremely low risk of disease transmission and offers no 
known cultural or religious constraints for usage. The fish skin 
product is both halal and kosher compatible and avoids potential 
conflicts with Sikhism and Hinduism (Vaishnavism).
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for KerecisTM Omega3 Wound 
through the premarket notification section 510(k) process on October 
23, 2013 and its June 1, 2016 application was within 3 years of FDA 
clearance.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, KerecisTM Omega3 Wound is a skin 
substitute product that is integral to the service provided, is used 
for one patient only, comes in contact with human skin, and is 
surgically inserted into the patient. The applicant also claimed 
KerecisTM Omega3 Wound meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, implement, or item for which depreciation and financing 
expenses are recovered, and it is not a supply or material.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes 
KerecisTM Omega3 Wound. The applicant proposed a pass-
through payment device category for KerecisTM Omega3 Wound 
with category descriptor of ``Piscine skin substitute.'' We invited 
public comments on this issue.
    We did not receive any public comments on this issue. As we stated 
earlier, we have not identified an existing pass-through category that 
describes KerecisTM Omega3 Wound. Therefore, for the reasons 
discussed earlier, we believe KerecisTM Omega3 Wound meets 
the eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will 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. With regard to the substantial clinical 
improvement criterion, the applicant stated that individuals who would 
normally refuse to use skin substitute products from animal sources, 
including pigs, cows, horses, and sheep, would use KerecisTM 
Omega3 Wound because it is a fish-based skin substitute. The applicant 
also asserted that KerecisTM Omega3 Wound provides several 
beneficial outcomes, including faster resolution of the disease process 
compared to similar products, decreased antibiotic use, decreased pain, 
and reduced amounts of device-related complications.
    The applicant cited three studies in support of the application. 
The first study \12\ was a parallel-group, double-blinded, randomized 
controlled trial undertaken to determine if healing time of whole 
thickness biopsy wounds treated with KerecisTM Omega3 Wound 
is noninferior to that of wounds treated with porcine SIS ECM (Oasis). 
The study was an intention-to-treat study. Participants had two 4-mm 
full thickness punch wounds made on the proximal anterolateral aspect 
of their nondominant arm. The study population was comprised of 
volunteers aged between 18 and 67 years with most volunteers between 
the ages of 18 and 30. There were 80 volunteers who received 
KerecisTM Omega3 Wound and 82 volunteers who received 
porcine SIS ECM (Oasis).
---------------------------------------------------------------------------

    \12\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and 
Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin 
Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A 
Noninferiority Study; The International Journal of Lower Extremity 
Wounds 2015, Vol. 14(1) 37-43.
---------------------------------------------------------------------------

    The results showed that, at 21 days, 58 (72.5 percent) of the fish 
skin ADM group were healed, compared with 46 (56 percent) of the 
porcine SIS ECM group. At 25 days, 62 (77.5 percent) of the fish skin 
ADM and 53 (65 percent) of the porcine SIS ECM group had healed. At the 
completion of the trial (28 days), 76 of the 80 wounds treated with 
fish skin ADM (95 percent) and 79 of the 82 wounds treated with porcine 
SIS ECM (96.3 percent) were healed. The odds ratio of a fish skin ADM-
treated wound being healed as compared with that treated with porcine 
SIS ECM at any given time point was estimated to be 4.75. The 
difference between the treatments was statistically significant (P = 
0.041). The immunological part of the study was designed to detect 
autoimmune reactions in those individuals treated with 
KerecisTM Omega3 Wound. There was no evidence of antibodies 
forming in the presence of KerecisTM Omega3 Wound.
    There were issues with this study that may limit its usefulness to 
determine substantial clinical improvement including the use of 
nonpatient volunteers; studying the healing of biopsy sites rather than 
actual wounds requiring treatment; and the use of a 1-month endpoint of 
care instead of a longer period, such as a 6-month endpoint of care.
    The second study \13\ was a case series study of 18 patients to 
assess the percentage of wound closure area from baseline after 5 
weekly fish-skin graft applications with at least one ``hard-to-heal'' 
criterion. Patients underwent application of the fish skin for 5 
sequential weeks, followed by 3 weeks of standard care. Wound area, 
skin assessments, and pain were analyzed weekly.
---------------------------------------------------------------------------

    \13\ Yang, CK et al. A Prospective, Postmarket, Compassionate 
Clinical Evaluation of a Novel Acellular Fish-skin Graft Which 
Contains Omega-3 Fatty Acids for the Closure of Hard-to-heal Lower 
Extremity Chronic Ulcers. Wounds 2016;28(4): 112-118.
---------------------------------------------------------------------------

    The study results showed a 40-percent decrease in wound surface 
area (P <0.05) and a 48-percent decrease in wound depth was seen with 5 
weekly applications of the fish-skin graft and secondary dressing (P 
<0.05). Complete closure was seen in 3 of 18 patients by

[[Page 59331]]

the end of the study phase. This study did not use a comparator group 
to measure whether there is substantial clinical improvement with 
KerecisTM Omega3 Wound compared to other skin substitute 
products.
    The third study \14\ was a case series study of five patients with 
diabetes mellitus and complicated wounds in the lower limbs with 
exposed bone segments. The five patients had a total of seven wounds. 
Initial debridement occurred in the operating room, followed by 
application of wound matrix and covered with silicone mesh. All seven 
wounds healed and the patients did not have to have planned amputations 
on the limbs with the wounds. The mean duration of treatment to achieve 
full closure of the wound was 25  10 weeks and ranged from 
13 to 41 weeks. This study did not have a comparator group to determine 
if there was substantial clinical improvement with KerecisTM 
Omega3 Wound compared to other skin substitute products.
---------------------------------------------------------------------------

    \14\ Trinh, TT, et al. Marine Omega3 wound matrix for: the 
treatment of complicated wounds; Phlebologie 2016; 45: 93-98.
---------------------------------------------------------------------------

    There are no clinical data provided by the applicant to suggest 
that KerecisTM Omega3 Wound provides a substantial clinical 
improvement over other similar skin substitute products. We invited 
public comments on whether KerecisTM Omega3 Wound meets the 
substantial clinical improvement criterion.
    Comment: One commenter, the manufacturer, stated that 
KerecisTM Omega3 Wound significantly improves acute wound 
healing, nearly eliminates risk from side effects and adverse events, 
and provides a skin substitute option for beneficiaries who have 
allergic reactions or personal objections to mammalian or human sourced 
skin substitutes. The commenter referred to a study, believed to be the 
first study reviewed in the proposed rule,\15\ and stated that it was 
the largest study performed in skin substitute research and that the 
study showed substantial clinical improvement from KerecisTM 
Omega3 Wound. The commenter believed it had submitted more comparative 
data than skin substitute products that had previously received pass-
through payment approval.
---------------------------------------------------------------------------

    \15\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and 
Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin 
Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A 
Noninferiority Study; The International Journal of Lower Extremity 
Wounds 2015, Vol. 14(1) 37-43.
---------------------------------------------------------------------------

    Lastly, the commenter believed that a skin substitute product that 
eliminates religious objections to its use, because 
KerecisTM Omega3 Wound is fish sourced and not a mammalian 
or human sourced skin substitute, provides a significant benefit to 
beneficiaries with those objections, as they now have access to skin 
substitute products when previously skin substitute products may not be 
available to them.
    Response: The commenter did not provide information to demonstrate 
that KerecisTM Omega3 Wound represents a substantial 
clinical improvement relative to other wound care products currently 
available on the market. The commenter did not provide additional 
studies to support its claims of improvement with acute wound healing 
and low risk of side effects and adverse events. The commenter also did 
not address the concerns of the first study reviewed for this 
criterion, including the use of nonpatient volunteers; studying the 
healing of biopsy sites rather than actual wounds requiring treatment; 
and the use of an unrealistic 1-month endpoint of care instead of a 6-
month endpoint of care. Instead, the manufacturer simply stated the 
study ``epitomizes'' substantial clinical improvement.
    The commenter stated that other skin substitute products that had 
presented less evidence of substantial clinical improvement had 
previously been approved for pass-through payment status. However, we 
believe that the commenter may have been referring to skin substitutes 
approved for transitional pass-through payments before these products 
were subject to the transitional pass-through payment approval for 
medical devices. Since CY 2015, skin substitutes have been evaluated 
using the medical device pass-through payment process (79 FR 66885 
through 66888), which includes the criterion for substantial clinical 
improvement. Applicants must demonstrate that the device under 
consideration for pass-through status will 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. The commenter did not provided additional 
information showing substantial clinical improvement.
    Finally, the commenter stated that KerecisTM Omega3 
Wound should meet the substantial clinical improvement criterion 
because it provides a skin substitute option for beneficiaries with 
allergies or personal objections to mammalian or human sourced 
products. However, the commenter did not provide any studies nor cite 
any data to show that this population would receive a substantial 
clinical improvement through the use of KerecisTM Omega3 
Wound, as compared to the wound care treatments available to this group 
of beneficiaries. Therefore, we determine that KerecisTM 
Omega3 Wound does not meet the criterion for substantial clinical 
improvement.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. With respect to the cost criterion, the 
applicant stated that KerecisTM Omega3 Wound would be 
reported with CPT codes 15271 through 15278, which cover the 
application of skin substitute grafts to different areas of the body 
for high-cost skin substitutes. To meet the cost criterion for device 
pass-through payment, a device must pass all three tests of the cost 
criterion for at least one APC. CPT codes 15271 through 15278 are 
assigned to either APC 5054 (Level 4 Skin Procedures), with a CY 2016 
payment rate of $1,411.21 and a device offset amount of $4.52, or APC 
5055 (Level 5 Skin Procedures), with a CY 2016 payment rate of 
$2,137.49 and a device offset amount of $25.44. According to the 
applicant, the cost of substitute graft procedures when performed with 
KerecisTM Omega3 Wound is $2,030.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,030 for KerecisTM Omega3 Wound 
exceeds the applicable APC payment amount for the service related to 
the category of devices of $1,411.21 by 144 percent ($2,030/$1,411.21 x 
100 percent = 144 percent). Therefore, we stated in the proposed rule 
that it appears that KerecisTM Omega3 Wound meets the first 
cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means 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). The average reasonable cost of $2,030 for 
KerecisTM

[[Page 59332]]

Omega3 Wound exceeds the device-related portion of the APC payment 
amount of $4.52 by 44,911 percent ($2,030/$4.52 x 100 percent = 44,911 
percent). Therefore, it appears that KerecisTM Omega3 Wound 
meets the second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that 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 must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$2,030 for KerecisTM Omega3 Wound and the portion of the APC 
payment amount for the device of $4.52 exceeds the APC payment amount 
for the related service of $1,411 by 144 percent (($2,030-$4.52)/
$1,411.21) x 100 percent = 144 percent). Therefore, we stated in the 
proposed rule that it appears that KerecisTM Omega3 Wound 
meets the third cost significance test. Based on the costs submitted by 
the applicant and the calculations noted earlier, it appears that 
KerecisTM Omega3 Wound meets the cost criterion.
    We invited public comments on whether KerecisTM Omega3 
Wound meets the device pass-through payment criteria discussed in this 
section.
    We did not receive any public comments for this section. We confirm 
that KerecisTM Omega3 Wound meets the cost criteria for new 
device categories.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for KerecisTM 
Omega3 Wound for CY 2018.
(5) X-WRAP[supreg]
    Applied Biologics, LLC submitted an application for a new device 
category for transitional pass-through payment status for X-
WRAP[supreg]. X-WRAP[supreg] is a chorion-free, amnion membrane 
allograft that can be used as a biological wrap or patch at any 
surgical site. It is used as a treatment for surgical or traumatic 
injury to bone or soft tissue. It is used to minimize adhesions, reduce 
inflammation, and promote soft tissue healing. The X-WRAP[supreg] is 
made from the intermediate amniotic epithelial layer of the placenta, 
recovered from a Cesarean delivery of pre-screened donors. It is 
available in a variety of sizes and is used as a biologic augmentation 
to a variety of orthopedic repairs.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that X-WRAP[supreg] conforms to the requirements 
for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/
Ps) regulated solely under section 361 of the PHS Act and 21 CFR part 
1271. For these products, FDA requires, among other things, that the 
manufacturers register and list their HCT/Ps with the Center for 
Biologics Evaluation and Research (CBER) within 5 days after beginning 
operations and update their registrations annually. Applied Biologics, 
LLC has a FDA field establishment identifier (FEI) under the HHS-FDA-
Establishment Registration and Listing for Human Cells, Tissues, and 
Cellular and Tissue-Based Products (HCT/Ps). The applicant submitted an 
annual registration/listing dated December 30, 2015. It is not clear 
when the initial CBER filing occurred for the X-WRAP[supreg] product, 
and therefore, it is unclear if the newness criterion for X-
WRAP[supreg] is met.
    Comment: One commenter, the manufacturer, supplied information 
indicating that the initial registration form for X-WRAP[supreg] was 
submitted on February 24, 2015 and validated by FDA on June 8, 2015.
    Response: Based on the information submitted by the manufacturer, 
we believe that the product meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, X-WRAP[supreg] is integral to the service 
provided, is used for one patient only, comes in contact with human 
skin, and is applied in or on a wound or other skin lesion. The 
applicant also claimed X-WRAP[supreg] meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, implement or item for which depreciation and financing 
expenses are recovered, and it is not a supply or material furnished 
incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment device category that 
describes X-WRAP[supreg]. The applicant proposed a pass-through device 
category for X-WRAP[supreg] with a category descriptor of ``Amniotic 
Membrane Soft Tissue Allografts''. We invited public comments on this 
issue.
    We did not receive any public comments on this issue, and at this 
time, we have not identified an existing pass-through category that 
describes X-WRAP[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will 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. With regard to the substantial clinical 
improvement criterion, the applicant submitted a list of studies in the 
application that showed general effectiveness of amniotic fluid and 
amniotic membrane-based products. However, these studies were not 
specific to the X-WRAP[supreg] product. The applicant also submitted 
one study \16\ that was a retrospective review with prospective follow-
up of patients (n=8) with recurrent surgical primary cubital tunnel 
syndrome (CuTS) who had undergone at least two previous ulnar nerve 
surgeries before having an ulnar neurolysis with X-WRAP[supreg] dry 
amniotic membrane barrier. The results showed that the participants 
experienced significant improvement in VAS pain scores, QuickDASH 
outcome scores, and grip strength in comparison to these scores prior 
to the surgery. Mean VAS improved by 3.5, from 7.3 to 3.8 (P <.0001). 
Mean QuickDASH improved by 30, from 80 to 50 (P <.0001). Grip strength 
improved by 25 pounds on average (P <.0001), a mean improvement of 38 
percent relative to the contralateral side compared with preoperative 
measurements. Also, none of the patients reported progression or 
worsening of their symptoms compared with preoperatively. The 
applicant's conclusions from the article were that using the X-
WRAP[supreg] amniotic membrane with revision neurolysis was a safe and 
effective treatment for primary cubital syndrome. The study lacked a 
comparison arm and did not include group assignment or blinding of 
patients.
---------------------------------------------------------------------------

    \16\ Gaspar, M.P., et al. (2016). Recurrent cubital tunnel 
syndrome treated with revision neurolysis and amniotic membrane 
nerve wrapping. Journal of Shoulder and Elbow surgery, 25, 2057-
2065.
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    Based on the evidence submitted, we believe there are insufficient 
data to determine whether X-WRAP[supreg] offers a substantial clinical 
improvement over other treatments for wound care. We invited public 
comments on whether the X-WRAP[supreg] meets the substantial clinical 
improvement criterion.
    Comment: Commenters described the clinical benefits that they have 
observed using the X-WRAP[supreg] product in the treatment of wounds, 
bone, and soft

[[Page 59333]]

tissue repairs. One commenter submitted several studies related to 
amniotic fluid and amniotic membrane-based products; however, none of 
these studies were specific to the X-WRAP[supreg] product.
    Response: We appreciate the commenters' responses on the X-
WRAP[supreg] product. However, the commenters did not provide new 
empirical evidence that addressed our concerns regarding the evidence 
of substantial clinical improvement that was submitted with the 
application, specifically that this evidence was limited to one 
retrospective study that lacked a comparison arm and did not include 
group assignment or blinding of patients. At this time, we have not 
been able to determine that X-WRAP[supreg] represents a substantial 
clinical improvement relative to existing therapies currently available 
for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that several CPT codes 
would be used to report X-WRAP[supreg], including: CPT codes 29826, 
29827, 29828, 23473, 23420, 23412, 27605, 27650, 29891, 29888, 29889, 
28008, 22551, 22856, 27179, 29861, 29862, 15271, 15272, 15273, and 
15277. 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. These CPT codes are assigned to APCs 5121 through 5125 (Level 1 
through Level 5 Musculoskeletal Procedures) and APCs 5054 and 5055 
(Level 4 and Level 5 Skin Procedures). For our calculations, we used 
APC 5121 (Level 1 Musculoskeletal Procedures), which had a CY 2016 
payment rate of $1,455 and a device offset amount of $15.86 at the time 
the application was received. According to the applicant, the X-
WRAP[supreg] product is available in several sizes, the largest being 
4x8 cm with a cost of $5,280.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $5,280 for X-WRAP[supreg] exceeds the 
applicable APC payment amount for the service related to the category 
of devices of $1,455 by 363 percent ($5,280/$1,455 x 100 = 363 
percent). Therefore, we stated in the proposed rule that it appears 
that X-WRAP[supreg] meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means 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). The average reasonable cost of $5,280 for X-WRAP[supreg] 
exceeds the device-related portion of the APC payment amount of $15.86 
by 33,291 percent ($5,280/$15.86) x 100 = 33,291 percent). Therefore, 
we stated in the proposed rule that it appears that X-WRAP[supreg] 
meets the second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that 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 must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$5,280 for X-WRAP[supreg] and the portion of the APC payment amount for 
the device of $15.86 exceeds the APC payment amount for the related 
service of $1,455 by 361 percent (($5280-$15.86)/$1455 x 100 = 361 
percent). Therefore, we stated in the proposed rule that it appears 
that X-WRAP[supreg] meets the third cost significance test.
    We invited public comments on whether X-WRAP[supreg] meets the 
device pass-through payment cost criteria discussed in this section.
    We did not receive any public comments on this issue. We continue 
to believe that X-WRAP[supreg] meets the device pass-through payment 
cost criteria.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the X-WRAP[supreg] 
product for CY 2018.

B. Device-Intensive Procedures

1. Background
    Under the OPPS, prior to CY 2017, device-intensive APCs were 
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 were calculated and the 
geometric mean device offset of all of the procedures had to 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 was 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, prior to CY 2017, the device-intensive methodology 
assigned device-intensive status to all procedures requiring the 
implantation of a device, which were assigned to an APC with a device 
offset greater than 40 percent. Historically, the device-intensive 
designation was at the APC level and applied to the applicable 
procedures within that given APC. In the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79658), we changed our methodology 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. Under this 
policy, all procedures with significant device costs (defined as a 
device offset of more than 40 percent) are assigned device-intensive 
status, regardless of their APC placement. Also, we believe that a 
HCPCS code-level device offset is, in most cases, 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 results in a more accurate 
representation of the cost attributable to implantation of a high-cost 
device, which ensures consistent device-intensive designation of 
procedures with a significant device cost. Further, we believe a HCPCS 
code-level device offset removes inappropriate device-intensive status 
to procedures without a significant device

[[Page 59334]]

cost but which are granted such status because of APC assignment.
    Under our CY 2017 finalized policy, procedures that have an 
individual HCPCS code-level device offset of greater than 40 percent 
are identified as device-intensive procedures and are subject to all 
the policies applicable to procedures assigned device-intensive status 
under our established methodology, including our policies on device 
edits and device credits. Therefore, all procedures requiring the 
implantation of a medical device and that have an individual HCPCS 
code-level device offset of greater than 40 percent are subject to the 
device edit and no cost/full credit and partial credit device policies, 
discussed in sections IV.B.3. and IV.B.4. of this final rule with 
comment period, respectively.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79658), we finalized a policy 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. This default device offset amount of 41 percent is not 
calculated from claims data; instead, it is 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 is 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 (81 FR 
79658). Once claims data are available for a new procedure requiring 
the implantation of a medical device, device-intensive status will be 
applied to the code if the HCPCS code-level device offset is greater 
than 40 percent, according to our finalized policy of determining 
device-intensive status by calculating the HCPCS code-level device 
offset.
    The full listing of proposed CY 2018 device-intensive procedures 
was included in Addendum P to the proposed rule (which is available via 
the Internet on the CMS Web site). The full listing of the final CY 
2018 device-intensive procedures is included in Addendum P to this 
final rule with comment period.
    In response to comments received in the CY 2017 OPPS/ASC final rule 
with comment period, we specified that 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.
    We did not propose any changes to this policy for CY 2018.
    Comment: Several commenters suggested that CMS use alternate device 
offset percentage thresholds for assigning device-intensive status. One 
of those commenters suggested that the device-intensive designation be 
given for any specified procedure with a HCPCS code level device offset 
percentage of greater than 30 percent. Another commenter suggested that 
CMS apply the device-intensive designation to any procedure for which 
the individual HCPCS code level device offset is greater than 40 
percent of the procedure's unadjusted ASC payment rate. In addition, 
one commenter requested that CMS provide clarification on the criteria 
for device-intensive procedures, specifically with respect to 
temporarily inserted devices.
    Response: We thank the commenters for their suggestions. However, 
we continue to believe that our current methodology 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 is appropriate. With respect to the request for 
clarification about the criteria for device-intensive procedures 
pertaining to temporarily inserted devices, we would like to clarify 
that device-intensive procedures require the implantation of a device 
and additionally are subject to the following criteria: (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 device offset amount must be significant, 
which is defined as exceeding 40 percent of the procedure's mean cost.
    Comment: One commenter supported the proposed designation of CPT 
code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) as 
a device-intensive procedure. A few commenters requested that the 
following HCPCS codes be assigned device-intensive status: HCPCS codes 
55874 (placeholder code 55X87) (Transperineal placement of 
biodegradable material, peri-prostatic, single or multiple 
injection(s), including image guidance, when performed); 0275T 
(Percutaneous laminotomy/laminectomy (interlaminar approach) for 
decompression of neural elements, (with or without ligamentous 
resection, discectomy, facetectomy and/or foraminotomy), any method, 
under indirect image guidance (e.g., fluoroscopic, ct), single or 
multiple levels, unilateral or bilateral; lumbar); and 28297 
(Correction, hallux valgus (bunionectomy), with sesamoidectomy, when 
performed; with first metatarsal and medial cuneiform joint 
arthrodesis, any method).
    Response: We thank the commenter for its support for our proposed 
designation of CPT code 28740. With respect to the commenters' request 
that we assign the device-intensive designation to HCPCS codes 55874, 
0275T, and 28297, we note that the device offset percentage for all 
three of these procedures (as identified by the above mentioned HCPCS 
codes or predecessor codes) is not above the 40 percent threshold, and 
therefore, these procedures are not eligible to be assigned device-
intensive status.
    Comment: Several commenters suggested that CMS develop a mechanism 
that prevents significant payment reductions for device-intensive 
procedures due to wage index adjustments.
    Response: In response to the commenters' suggestion that CMS 
develop a mechanism that prevents significant payment reductions for 
device-intensive procedures due to wage index adjustments, we note that 
we did not include such a proposal in the CY 2018 proposed rule. 
However, we will take this comment into consideration for future 
rulemaking.
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we

[[Page 59335]]

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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy 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 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created 
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.
    We did not propose any changes to this policy for CY 2018.
    Comment: One commenter requested that CMS restore the device-to-
procedure and procedure-to-device edits. Another commenter requested 
that CMS adopt an additional policy for device-intensive procedures 
that have a device offset percentage above 75 percent, that would 
implement device-to-procedure and procedure-to-device edits for all 
such procedures (having a device offset percentage above 75 percent) 
and would only utilize claims that passed those edits for establishing 
the geometric mean cost and the HCPCS-level device offset for those 
procedures. Also, as part of this commenter's suggested new policy, the 
commenter requested that CMS only allow clinically similar, device-
intensive procedures with a device offset above 75 percent to be 
grouped into an APC together and that all other procedures be excluded 
(both nondevice-intensive procedures and device-intensive procedures 
that have a device offset percentage below 75 percent).
    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. In addition, we remind commenters that, under our current 
policy, the APC assignment of a device-intensive procedure has no 
bearing on the procedure's device-intensive designation. With respect 
to the commenter's request for an additional policy specifically for 
device-intensive procedures that have a device offset percentage above 
75 percent, for the reasons stated above in this comment response, we 
do not believe that such a policy is needed.
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

[[Page 59336]]

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 No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized our 
policy to reduce OPPS payment for device-intensive procedures, by the 
full or partial credit a provider receives for a replaced device, when 
a hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals 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.
    In addition, for CY 2017 and subsequent years, we finalized our 
policy to use the following three criteria for determining the 
procedures to which our final policy applies: (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 did not propose any changes to this policy for CY 2018 and did 
not receive any public comments on this policy.
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 and finalized 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 the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 
79661), we established our current policy 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. 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) was approximately $21,302, and 
the median cost was approximately $19,521. The final CY 2017 payment 
rate (calculated using the median cost) is approximately $18,984.
    For CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33620), 
we proposed to continue with our current policy of establishing 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 based on calculations using the median cost instead of the 
geometric mean cost. For CY 2018, this policy would continue to apply 
only to a procedure described by CPT code 0308T in APC 5495 because 
this APC is the only clinical APC containing a device-intensive 
procedure with fewer than 100 total claims in the APC. As we have 
stated before (81 FR 79660), we believe that this approach will help to 
mitigate significant year-to-year payment rate fluctuations while 
preserving accurate claims data-based payment rates for low-volume 
device-intensive procedures. The CY 2018 proposed rule median cost for 
the procedure described by CPT code 0308T was approximately $17,643.75. 
The proposed CY 2018 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 $16,963.69.
    Comment: Some commenters supported CMS' 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. Other commenters requested that CMS limit the impact of 
geometric mean cost reductions on payment rates for low-volume 
procedures by a certain percentage to ensure payment stability for low-
volume procedures.
    Response: We thank commenters for their support. With respect to 
the commenters' request to limit the impact of the geometric mean cost 
reductions on payment rates for low volume procedures by a certain 
percentage, we disagree with commenters that such a percentage-based 
limitation is necessary. We continue to believe our current policy--
establishing 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 based on calculations using the median cost 
instead of the geometric mean cost--will help to mitigate significant 
year-to-year payment rate fluctuations while preserving accurate claims 
data-based payment rates for low-volume device-intensive procedures.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, that the payment rate 
for

[[Page 59337]]

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 2018 
final rule median cost for the procedure described by CPT code 0308T is 
$17,550.18. The final CY 2018 payment rate (calculated using updated 
median cost and the claims that reported the device consistent with our 
device edit policy for device-intensive procedures) is $17,560.07.

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. A ``biological'' as used in this final rule 
with comment period includes (but is not necessarily limited to) a 
``biological product'' or a ``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 those types of drugs or biologicals mentioned 
above that are hospital outpatient services under Medicare Part B for 
which transitional pass-through 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 2018 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 described on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. 3-Year Transitional Pass-Through Payment Period for All Pass-Through 
Drugs, Biologicals, and Radiopharmaceuticals and Quarterly Expiration 
of Pass-Through Status
    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 newly approved 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, prior to CY 2017, we expired pass-through status for drugs and 
biologicals on an annual basis through notice-and-comment rulemaking 
(74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79662), we finalized a policy change, 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 
payment period that is as close to a full 3 years as possible for all 
pass-through drugs, biologicals, and radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based on when a particular 
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a 
prospective basis, for the maximum pass-through payment period for each 
pass-through drug without exceeding the statutory limit of 3 years.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2017
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33621), we proposed 
that the pass-through payment status of 19 drugs and biologicals would 
expire on December 31, 2017, as listed in Table 21 of the proposed rule 
(82 FR 33622). 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, 2017. These drugs and biologicals were approved for 
pass-through payment status on or before January 1, 2016. In accordance 
with the policy finalized last year and described above, pass-through 
payment status for drugs and biologicals newly approved in CY 2017 and 
subsequent years will expire on a quarterly basis, with a pass-through 
payment period as close to 3 years as possible. 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

[[Page 59338]]

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 $120 for CY 2018), as discussed further in 
section V.B.2. of this final rule with comment period. In the CY 2018 
OPPS/ASC proposed rule (82 FR 33622), 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, we would package payment for 
the drug or biological into the payment for the associated procedure in 
the upcoming calendar year. If the estimated per day cost of the drug 
or biological is greater than the OPPS drug packaging threshold, we 
proposed to provide separate payment at the applicable relative ASP-
based payment amount (which was proposed at ASP+6 percent for CY 2018, 
and is finalized at ASP+6 percent for CY 2018, as discussed further in 
section V.B.3. of this final rule with comment period).
    Comment: Several commenters responded to the proposed expiration of 
pass-through status for HCPCS code A9586 (Florbetapir f18) on December 
31, 2017. (We note that the brand name for the radiopharmaceutical 
described by HCPCS code A9586 is Amyvid[supreg]. Amyvid is a FDA-
approved radioactive diagnostic agent for Positron Emission Tomography 
(PET) imaging of the brain to estimate beta-amyloid neuritic plaque 
density in adult patients with cognitive impairment who are being 
evaluated for Alzheimer's Disease and other causes of cognitive 
decline. Amyvid was approved for drug pass-through payment status 
effective January 1, 2015.)
    One commenter, the manufacturer of Amyvid, urged CMS to extend 
pass-through payment status for another year on the basis that CMS 
could not have paid a legitimately billed claim for Amyvid in CY 2015, 
given the manufacturer's assertion regarding CED trial sites' dates of 
approval and start dates for patient enrollment. In addition, while the 
commenter acknowledged that the period of drug and biological pass-
through payment status starts on the first date on which payment is 
made for the drug or biological as an outpatient hospital service (42 
CFR 419.64(c)(2)), the commenter believed that an erroneous payment by 
Medicare should not have triggered the start of pass-through payment 
for Amyvid in 2015. In addition, the commenter asserted that expiration 
of pass-through payment status for Amyvid prior to completion of the 
CED trial will adversely affect the trial results. The commenter 
requested that, if CMS finalized expiration of pass-through payment 
status as proposed, CMS create a new APC for PET procedures with Amyvid 
to avoid violating the 2 times rule--which provides that 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. The commenter stated that the median cost of Amyvid is 
approximately $2,756, over two times the median cost of the PET scan 
procedure.
    One commenter, a manufacturer of another radiopharmaceutical, 
recommended that CMS allow for those products whose pass-through 
payment status will expire after a period of at least 2 years and no 
more than 3 years to expire as proposed, as a matter of applying policy 
consistently.
    Several commenters recommended that CMS allow products covered by 
Medicare in the context of coverage with evidence development (CED) 
clinical trial to retain their pass-through status for the duration of 
the CED trial.
    Response: CMS issued a Medicare National Coverage Determination 
(NCD) on September 27, 2013, which allows conditional coverage of 
amyloid PET under CED. Currently, there are three Medicare-approved 
amyloid PET CED trials. The first CED trial was approved on April 2, 
2014. The second CED trial was approved on March 3, 2015. The third CED 
trial was approved January 5, 2016. Information on these clinical 
trials is available on the CMS amyloid PET Web page available via the 
Internet at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/Amyloid-PET.html. The effective date of Medicare 
billing for CED trial sites is the CMS approval date. CMS has provided 
billing instructions for providers and practitioner that specify proper 
coding for clinical trial claims. For example, providers and 
practitioner must report certain diagnosis codes, procedure codes, 
modifiers, and a national clinical trial number. Therefore, providers 
enrolled in one of these trials could have begun appropriate billing 
Medicare for the amyloid PET procedures and associated Amyloid PET 
tracers beginning April 2, 2014.
    Based on our claims analysis, we found that HCPCS code A9586 was 
billed by hospital providers 14 times in CY 2015, with 1 claim being 
paid. Based on our review of provider enrollment in the CED trials, it 
appears that this paid Medicare claim from CY 2015 was submitted from a 
CED clinical trial participant and not paid in error as the commenter 
suggests. According to section 1833(t)(6)(C)(i)(II) of the Act and the 
regulations at 42 CFR 419.66(g), the pass-through payment eligibility 
period begins on the first date on which pass-through payment is made. 
Because there is a paid claim from CY 2015, the pass-through payment 
period for HCPCS code A9586 began in CY 2015. Therefore, based on the 
CY 2015 paid claim for HCPCS code A9586 as a hospital outpatient 
service, which triggered the start of the pass-through payment period, 
we are expiring pass-through payment status on December 31, 2017. From 
the start of the pass-through payment period through December 31, 2017, 
Medicare will have provided an OPPS pass-through payment for at least 2 
years and no more than 3 years by December 31, 2017. Extending pass-
through payment status into CY 2018 would cause pass-through payments 
for HCPCS code A9586 to extend into a fourth year, thereby exceeding 
the pass-through payment period authorized by section 
1833(t)(6)(C)(i)(II) of the Act.
    In addition, regarding the commenters' concern that expiration of 
pass-through payment status for Amyvid, and subsequent packaging of it 
as a ``policy-packaged'' drug, will skew trial results (presumably 
because providers will not receive an ASP-based payment), we disagree, 
given that analysis of CY 2016 claims data across different sites of 
care shows that the vast majority of billings for HCPCS code A9586 is 
concentrated in the physician office and the independent diagnostic 
testing facility (IDTF) setting. Further, we note that hospitals are 
not precluded from billing for HCPCS code A9586 in the context of a CED 
trial once its pass-through payment status expires. We also note that 
the payment for HCPCS A9586 would be reflected in the payment rate for 
the associated procedure.
    With respect to the request that we create a new APC for PET 
procedures with Amyvid, we do not believe it is appropriate, prudent, 
or practicable to create unique APCs for specific drugs or biologicals 
or other individual items

[[Page 59339]]

that are furnished with a particular procedure or procedures. We 
disagree with the commenter's assertion that packaging of Amyvid with 
the associated PET procedure described by CPT code 78814 (Pet image w/
ct lmtd) creates a 2 times rule violation in APC 5594 (Level 4 Nuclear 
Medicine) (we refer readers to section III.B. of this final rule with 
comment period for discussion of 2 times rule) and believe that the 
commenter may have misunderstood the application of the 2 times rule. 
Specifically, we note that, in determining the APCs with a 2 times rule 
violation, we do not consider the cost of an individual packaged item 
that may be furnished with a procedure or service, but rather the 
geometric mean cost of the service (which includes aggregate cost of 
packaged items that may be furnished with a procedure). Moreover, we 
disagree with the commenter's statement that the median cost of Amyvid 
is approximately $2,756. While it is correct that the CY 2017 pass-
through payment for Amyvid is $2,756, the pass-through payment rate of 
ASP+6 percent is not indicative of the cost incurred by hospitals to 
acquire, store, handle, and dispense Amyvid. Our analysis of the 
updated CY 2016 claims data used for CY 2018 ratesetting for this CY 
2018 OPPS/ASC final rule with comment period shows that the median cost 
of Amyvid is $1,275.75, which when combined with the aggregate cost of 
packaged items that may be furnished with CPT code 78814, would not 
create a 2 times rule violation.
    With respect to the commenters' request that we allow drug or 
biological pass-through payment status for products covered by CED for 
the duration of the CED trial, we reiterate that the statute limits the 
period of pass-through payment eligibility to at least 2 years, but no 
more than 3 years, after the product's first payment as a hospital 
outpatient service under Medicare Part B. As such, we are unable to 
extend pass-through payment status beyond 3 years.
    Finally, with respect to the commenter's support of our proposal to 
finalize the expiration of pass-through payment status as proposed for 
consistent policy application, we agree with the commenter.
    In summary, we are finalizing our proposal to expire pass-through 
payment status for HCPCS code A9586 on December 31, 2017. Because pass-
through payment was effective in CY 2015, HCPCS code A9586 will have 
had pass-through payment status for at least 2 years but no more than 3 
years in accordance with section 1833(t)(6) of the Act.
    Comment: Several commenters requested that CMS not package payment 
for Omidria[supreg] (described by HCPCS code C9447) upon expiration of 
pass-through payment status on December 31, 2017, and continue to pay 
separately for the drug at ASP+6 percent. One commenter, the 
manufacturer of Omidria, reiterated many previous arguments (81 FR 
79667) for why CMS should dispense with classifying Omidria as drug 
that functions as a surgical supply when used in a surgical procedure. 
Specially, the commenter made the following arguments:
     The language used to construct the ``packaging as a 
surgical supply'' policy is overly broad and not consistent with 
Congressional intent that requires clinically comparable APC groups. 
CMS has not defined surgery or provided a rationale for applying 
different packaging policies to surgery than would be applied to other 
drugs with therapeutic indications;
     Mischaracterization of drugs used in surgery as 
``supplies'', given regulatory requirements that apply to drugs. The 
FDA-approved label indicates its specific use in intraocular 
procedures;
     Packaging Omidria and other drugs as surgical supplies 
creates barriers to access, especially in ASC settings, low-volume 
HOPDs, and hospitals with low percentage of insured patients 
(presumably because providers may choose lower cost alternatives 
because separate payment would no longer be made);
     Packaging Omidria and other drugs as surgical supplies may 
affect quality of care improvements and patient outcomes; and
     Packaging drugs as ``surgical supplies'' interferes with 
physician discretion and is inconsistent with the principles that guide 
packaging under the OPPS.
    A few commenters requested that CMS consider a narrow exception to 
the ``drug as a supply'' packaging policy to enable separate payment 
for Omidria.
    Response: We have addressed many of these comments in prior 
rulemaking. We refer readers to the CY 2017 OPPS/ASC final rule with 
comment period for a detailed discussion on why we believe Omidria is a 
drug that functions as a surgical supply (81 FR 79668). We did not 
propose any policy changes to the criteria applied to a drug that 
functions as a surgical supply when used in a surgical procedure in the 
CY 2018 OPPS/ASC proposed rule, nor do we believe the commenters 
provided any new information that would cause us to change our position 
that Omidria is a drug that functions as a surgical supply. Therefore, 
we are not addressing these comments in this final rule with comment 
period. However, in the proposed rule, we did solicit comments on 
packaging policies generally, including drugs that function as a 
surgical supply, and will take responses to the comment solicitation, 
along with these commenters' recommendations and suggestions, into 
consideration in future rulemaking.
    Comment: Commenters urged CMS to apply quarterly expiration of drug 
pass-through payment to drugs and biologicals first added to the pass-
through payment list in CYs 2015 and 2016 that would otherwise 
transition off pass-through payment in less than 3 years. Commenters 
suggested CMS could apply the quarterly expiration of pass-through 
payment policy to devices approved for pass-through payment status in 
CY 2015 or 2016 because it would not cause harm to providers or 
beneficiaries. As stated earlier in this section, one commenter 
suggested that CMS allow for those products whose pass-through payment 
status will expire after a period of at least 2 years and no more than 
3 years to expire as proposed, as a matter of applying policy 
consistently.
    Response: As finalized in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79662), the quarterly expiration of pass-through 
payment policy applies to drugs and biologicals newly approved for 
pass-through payment in CY 2017. We note that, even prior to the policy 
change adopted in CY 2017 rulemaking, the Agency's prior policy 
practice of making drug pass-through payments for a minimum of 2 years, 
but not more than 3 years, was consistent with statutory authority. 
Further, once a drug's pass-through payment status period expires, its 
costs are packaged into the associated procedure(s) with which it is 
billed, and accordingly, reversing past expirations of pass-through 
payment would potentially cause payment rates established for a prior 
year for certain services to be incorrect.
    We agree with the commenter who stated that we should expire the 
drug-pass-through payment status for drugs and biologicals as proposed, 
to allow for consistent application of our policy.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to expire the pass-
through payment status of the 19 drugs and biologicals listed in Table 
69 below on December 31, 2017.

[[Page 59340]]



         Table 69--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2017
----------------------------------------------------------------------------------------------------------------
                                                                  Final CY 2018                    Pass-through
       CY 2018 HCPCS code            CY 2018 long descriptor          status       Final CY 2018      payment
                                                                    indicator           APC       effective date
----------------------------------------------------------------------------------------------------------------
A9586...........................  Florbetapir f18, diagnostic,                N              N/A      01/01/2015
                                   per study dose, up to 10
                                   millicuries.
C9447...........................  Injection, phenylephrine and                N              N/A      01/01/2015
                                   ketorolac, 4 ml vial.
J0596...........................  Injection, c-1 esterase                     K             9445      04/01/2015
                                   inhibitor (human), Ruconest,
                                   10 units.
J0695...........................  Injection, ceftolozane 50 mg                K             9452      04/01/2015
                                   and tazobactam 25 mg.
J0875...........................  Injection, dalbavancin, 5 mg.               K             1823      01/01/2015
J1833...........................  Injection, isavuconazonium                  K             9456      10/01/2015
                                   sulfate, 1 mg.
J2407...........................  Injection, oritavancin, 10 mg               K             1660      01/01/2015
J2502...........................  Injection, pasireotide long                 K             9454      07/01/2015
                                   acting, 1 mg.
J2547...........................  Injection, peramivir, 1 mg...               K             9451      04/01/2015
J2860...........................  Injection, siltuximab, 10 mg.               K             9455      07/01/2015
J3090...........................  Injection, tedizolid                        K             1662      01/01/2015
                                   phosphate, 1 mg.
J7313...........................  Injection, fluocinolone                     K             9450      04/01/2015
                                   acetonide intravitreal
                                   implant, 0.01 mg.
J8655...........................  Netupitant (300 mg) and                     K             9448      04/01/2015
                                   palonosetron (0.5 mg).
J9032...........................  Injection, belinostat, 10 mg.               K             1658      01/01/2015
J9039...........................  Injection, blinatumomab, 1                  K             9449      04/01/2015
                                   mcg.
J9271...........................  Injection, pembrolizumab, 1                 K             1490      01/01/2015
                                   mg.
J9299...........................  Injection, nivolumab, 1 mg...               K             9453      07/01/2015
Q4172...........................  PuraPly, and PuraPly                        N              N/A      01/01/2015
                                   Antimicrobial, any type, per
                                   square centimeter.
Q9950...........................  Injection, sulfur                           N              N/A      10/01/2015
                                   hexafluoride lipid
                                   microsphere, per ml.
----------------------------------------------------------------------------------------------------------------

    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 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33622), we proposed to 
continue pass-through payment status in CY 2018 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, 2017. These drugs and biologicals, which were approved 
for pass-through payment status between January 1, 2016, and July 1, 
2017, were listed in Table 22 of the proposed rule (82 FR 33623). The 
APCs and HCPCS codes for these drugs and biologicals approved for pass-
through payment status through July 1, 2017 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 2018, 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 2018. We proposed that a $0 pass-
through payment amount would be paid for pass-through drugs and 
biologicals under the CY 2018 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 2018 because, if not for 
their pass-through payment 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 2018 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).
    For CY 2018, consistent with our CY 2017 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 2018, 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 payment 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: Commenters supported CMS' proposal to provide payment at 
ASP+6 percent for drugs, biologicals, contrast agents, and 
radiopharmaceuticals that are granted pass-through payment status.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to provide

[[Page 59341]]

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 2018, 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 payment drugs and biologicals without ASP information. If WAC 
information also is not available, we will provide payment for the 
pass-through payment radiopharmaceutical at 95 percent of its most 
recent AWP.
    The 50 drugs and biologicals that continue to have pass-through 
payment status for CY 2018 or have been granted pass-through payment 
status as of January 2018 are shown in Table 70 below.

                   Table 70--Drugs and Biologicals With Pass-Through Payment Status in CY 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                   Pass-through
 CY 2017 HCPCS code   CY 2018 HCPCS code       CY 2018 long       CY 2018 status    CY 2018 APC       payment
                                                descriptor          indicator                     effective date
----------------------------------------------------------------------------------------------------------------
A9515..............  A9515..............  Choline C 11,                       G             9461      04/01/2016
                                           diagnostic, per
                                           study dose.
A9587..............  A9587..............  Gallium ga-68,                      G             9056      01/01/2017
                                           dotatate,
                                           diagnostic, 0.1
                                           millicurie.
A9588..............  A9588..............  Fluciclovine f-18,                  G             9052      01/01/2017
                                           diagnostic, 1
                                           millicurie.
C9140..............  J7210..............  Injection, Factor                   G             9043      01/01/2017
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           (Afstyla), 1 I.U.
C9460..............  C9460..............  Injection, cangrelor,               G             9460      01/01/2016
                                           1 mg.
C9482..............  C9482..............  Injection, sotalol                  G             9482      10/01/2016
                                           hydrochloride, 1 mg.
C9483..............  J9022..............  Injection,                          G             9483      10/01/2016
                                           atezolizumab, 10 mg.
C9484..............  J1428..............  Injection,                          G             9484      04/01/2017
                                           eteplirsen, 10 mg.
C9485..............  J9285..............  Injection,                          G             9485      04/01/2017
                                           olaratumab, 10 mg.
C9486..............  J1627..............  Injection,                          G             9486      04/01/2017
                                           granisetron extended
                                           release, 0.1 mg.
C9488..............  C9488..............  Injection, conivaptan               G             9488      04/01/2017
                                           hydrochloride, 1 mg.
C9489..............  J2326..............  Injection,                          G             9489      07/01/2017
                                           nusinersen, 0.1 mg.
C9490..............  J0565..............  Injection,                          G             9490      07/01/2017
                                           bezlotoxumab, 10 mg.
C9491..............  J9023..............  Injection, avelumab,                G             9491      10/01/2017
                                           10 mg.
C9492..............  C9492..............  Injection,                          G             9492      10/01/2017
                                           durvalumab, 10 mg.
C9493..............  C9493..............  Injection, edaravone,               G             9493      10/01/2017
                                           1 mg.
C9494..............  J2350..............  Injection,                          G             9494      10/01/2017
                                           ocrelizumab, 1 mg.
J0570..............  J0570..............  Buprenorphine                       G             9058      01/01/2017
                                           implant, 74.2 mg.
J1942..............  J1942..............  Injection,                          G             9470      04/01/2016
                                           aripiprazole
                                           lauroxil, 1 mg.
J2182..............  J2182..............  Injection,                          G             9473      04/01/2016
                                           mepolizumab, 1 mg.
J2786..............  J2786..............  Injection,                          G             9481      10/01/2016
                                           reslizumab, 1 mg.
J2840..............  J2840..............  Injection, sebelipase               G             9478      07/01/2016
                                           alfa, 1 mg.
J7179..............  J7179..............  Injection, von                      G             9059      01/01/2017
                                           willebrand factor
                                           (recombinant),
                                           (Vonvendi), 1 i.u.
                                           vwf:rco.
J7202..............  J7202..............  Injection, Factor IX,               G             9171      10/01/2016
                                           albumin fusion
                                           protein
                                           (recombinant),
                                           Idelvion, 1 i.u.
J7207..............  J7207..............  Injection, Factor                   G             1844      04/01/2016
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           PEGylated, 1 I.U.
J7209..............  J7209..............  Injection, Factor                   G             1846      04/01/2016
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           (Nuwiq), per i.u.
J7322..............  J7322..............  Hyaluronan or                       G             9471      04/01/2016
                                           derivative, Hymovis,
                                           for intra-articular
                                           injection, 1 mg.
J7328..............  J7328..............  Hyaluronan or                       G             1862      04/01/2017
                                           derivative, Gelsyn-
                                           3, for intra-
                                           articular injection,
                                           0.1 mg.
J7342..............  J7342..............  Instillation,                       G             9479      07/01/2016
                                           ciprofloxacin otic
                                           suspension, 6 mg.
J7503..............  J7503..............  Tacrolimus, extended                G             1845      04/01/2016
                                           release, (envarsus
                                           xr), oral, 0.25 mg.
J9034..............  J9034..............  Injection,                          G             1861      01/01/2017
                                           bendamustine hcl
                                           (Bendeka), 1 mg.
J9145..............  J9145..............  Injection,                          G             9476      07/01/2016
                                           daratumumab, 10 mg.
J9176..............  J9176..............  Injection,                          G             9477      07/01/2016
                                           elotuzumab, 1 mg.
J9205..............  J9205..............  Injection, irinotecan               G             9474      04/01/2016
                                           liposome, 1 mg.
J9295..............  J9295..............  Injection,                          G             9475      04/01/2016
                                           necitumumab, 1 mg.
J9325..............  J9325..............  Injection, talimogene               G             9472      04/01/2016
                                           laherparepvec, 1
                                           million plaque
                                           forming units (PFU).
J9352..............  J9352..............  Injection,                          G             9480      07/01/2016
                                           trabectedin, 0.1 mg.
N/A................  J9203..............  Injection, gemtuzumab               G             9495      01/01/2018
                                           ozogamicin, 0.1 mg.
Q5101..............  Q5101..............  Injection, Filgrastim               G             1822      01/01/2016
                                           (G-CSF), Biosimilar,
                                           1 microgram.
Q5102..............  Q5102..............  Injection,                          G             1847      04/01/2017
                                           Infliximab,
                                           Biosimilar, 10 mg.
Q9982..............  Q9982..............  Flutemetamol F18,                   G             9459      01/01/2016
                                           diagnostic, per
                                           study dose, up to 5
                                           millicuries.
Q9983..............  Q9983..............  Florbetaben F18,                    G             9458      01/01/2016
                                           diagnostic, per
                                           study dose, up to
                                           8.1 millicuries.
Q9989..............  J3358..............  Ustekinumab, for                    G             9487      04/01/2017
                                           Intravenous
                                           Injection, 1 mg.
N/A................  C9014..............  Injection,                          G             9014      01/01/2018
                                           cerliponase alfa, 1
                                           mg.
N/A................  C9015..............  Injection, c-1                      G             9015      01/01/2018
                                           esterase inhibitor
                                           (human), Haegarda,
                                           10 units.

[[Page 59342]]

 
N/A................  C9016..............  Injection,                          G             9016      01/01/2018
                                           triptorelin extended
                                           release, 3.75 mg.
N/A................  C9024..............  Injection, liposomal,               G             9302      01/01/2018
                                           1 mg daunorubicin
                                           and 2.27 mg
                                           cytarabine.
N/A................  C9028..............  Injection, inotuzumab               G             9028      01/01/2018
                                           ozogamicin, 0.1 mg.
N/A................  C9029..............  Injection,                          G             9029      01/01/2018
                                           guselkumab, 1 mg.
N/A................  J7345..............  Aminolevulinic acid                 G             9301      01/01/2018
                                           hcl for topical
                                           administration, 10%
                                           gel, 10 mg.
----------------------------------------------------------------------------------------------------------------

5. Provisions for Reducing Transitional Pass-Through Payments for 
Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset 
Costs Packaged Into APC Groups
    Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure are packaged in the OPPS. This 
category includes diagnostic radiopharmaceuticals, contrast agents, 
stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), 
nonpass-through drugs and biologicals that function as supplies in a 
surgical procedure are packaged in the OPPS. This category includes 
skin substitutes and other surgical-supply drugs and biologicals. As 
described earlier, section 1833(t)(6)(D)(i) of the Act specifies that 
the transitional pass-through payment amount for pass-through drugs and 
biologicals is the difference between the amount paid under section 
1842(o) of the Act and the otherwise applicable OPD fee schedule 
amount. Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we deduct from the pass-
through payment for policy packaged drugs, biologicals, and 
radiopharmaceuticals an amount reflecting the portion of the APC 
payment associated with predecessor products in order to ensure no 
duplicate payment is made. This amount reflecting the portion of the 
APC payment associated with predecessor products is called the payment 
offset.
    The payment offset policy applies to all policy packaged drugs, 
biologicals, and radiopharmaceuticals. For a full description of the 
payment offset policy as applied to diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and skin substitutes, we refer readers 
to the discussion in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70430 through 70432). In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33624), for CY 2018, as we did in CY 2017, 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 payment offset may be applicable for pass-
through diagnostic radiopharmaceuticals, pass-through contrast agents, 
pass-through stress agents, and pass-through skin substitutes were 
identified in Table 23 of the proposed rule.
    Comment: A few commenters requested that CMS separate the costs of 
diagnostic radiopharmaceuticals and stress agents from the ``packaged 
drug cost'' in the APC offset file published with the yearly proposed 
and final rules.
    Response: We thank the commenter for this recommendation. However, 
we do not believe that the suggested change is necessary at this time. 
The offset amount is the portion of each APC payment rate that could 
reasonably be attributed to the cost of a predecessor contrast agent, 
diagnostic radiopharmaceutical, or stress agent when considering a new 
contrast agent, diagnostic radiopharmaceutical, or stress agent for 
pass-through payment and has no bearing on APC assignment. The exact 
data used to calculate all of the proposed and final payment rates, 
including the associated offset amounts, for this CY 2018 OPPS final 
rule with comment are available for purchase under a CMS data use 
agreement through the CMS Web site available via the Internet at: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/IdentifiableDataFiles/index.html.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2018, 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 2017.

  Table 71--APCS to Which a Policy-Packaged Drug or Radiopharmaceutical
                    Offset Are Applicable in CY 2018
------------------------------------------------------------------------
           CY 2018  APC                      CY 2018  APC title
------------------------------------------------------------------------
                     Diagnostic Radiopharmaceutical
------------------------------------------------------------------------
5591..............................  Level 1 Nuclear Medicine and Related
                                     Services.
5592..............................  Level 2 Nuclear Medicine and Related
                                     Services.
5593..............................  Level 3 Nuclear Medicine and Related
                                     Services.
5594..............................  Level 4 Nuclear Medicine and Related
                                     Services.
------------------------------------------------------------------------
                             Contrast Agent
------------------------------------------------------------------------
5571..............................  Level 1 Imaging with Contrast.
5572..............................  Level 2 Imaging with Contrast.
5573..............................  Level 3 Imaging with Contrast.
------------------------------------------------------------------------
                              Stress Agent
------------------------------------------------------------------------
5722..............................  Level 2 Diagnostic Tests and Related
                                     Services.
5593..............................  Level 3 Nuclear Medicine and Related
                                     Services.
------------------------------------------------------------------------
                             Skin Substitute
------------------------------------------------------------------------
5054..............................  Level 4 Skin Procedures.
5055..............................  Level 5 Skin Procedures.
------------------------------------------------------------------------

    We also are finalizing our proposal to continue to post annually on 
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.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 payment 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

[[Page 59343]]

packaged drugs and biologicals for every OPPS clinical APC.

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 $110 for CY 
2017 (81 FR 79665).
    Following the CY 2007 methodology, for this CY 2018 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 2018 and 
rounded the resulting dollar amount ($118.52) to the nearest $5 
increment, which yielded a figure of $120. 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.
    Therefore, for this CY 2018 OPPS/ASC final rule with comment 
period, using the CY 2007 OPPS methodology, we are finalizing a 
packaging threshold for CY 2018 of $120.
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 2018 OPPS/ASC proposed rule (82 FR 33625), to determine 
the proposed CY 2018 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 2016 and were paid (via 
packaged or separate payment) under the OPPS. We used data from CY 2016 
claims processed before January 1, 2017 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 2018: 
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 2018, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and 
finalized in the CY 2006 OPPS final rule with comment period (70 FR 
68636 through 68638). For each drug and biological HCPCS code, we used 
an estimated payment rate of ASP+6 percent (which is the payment rate 
we proposed for separately payable drugs and biologicals for CY 2018, 
as discussed in more detail in section V.B.2.b. of the proposed rule) 
to calculate the CY 2018 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2016 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2017) to determine the proposed rule per 
day cost.
    As is our standard methodology, for CY 2018, we proposed to use 
payment rates based on the ASP data from the first quarter of CY 2017 
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, 2017. 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 
2016 hospital claims data to determine their per day cost.
    We proposed to package items with a per day cost less than or equal 
to $120, and identify items with a per day cost greater than $120 as 
separately payable. Consistent with our past practice, we cross-walked 
historical OPPS claims data from the CY 2016 HCPCS codes that were 
reported to the CY 2017 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 2018.
    Comment: Many commenters requested that CMS eliminate the threshold 
packaging policy and pay separately for all drugs and biologicals 
described by a unique HCPCS code. Several commenters expressed concern 
with the annual increases in the drug packaging threshold, citing that 
yearly increases have outpaced conversion factor updates and place a 
financial burden on hospitals. A few commenters recommended that CMS 
delay the proposed increase in the packaging threshold for drugs or 
freeze the packaging threshold at the current level ($110).
    Response: We have received and addressed similar comments in prior 
rules and most recently in CY 2017 OPPS/ASC final rule with comment (81 
FR 79666). 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 2018, eliminate the packaging threshold, 
and delay updating the packaging threshold or freeze the packaging 
threshold at $110.
    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 
2018 packaging threshold of $120.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final

[[Page 59344]]

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 2018 OPPS/ASC final rule with comment period, we 
used ASP data from the first quarter of CY 2017, 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, 2017, along 
with updated hospital claims data from CY 2016. We note that we also 
used these data for budget neutrality estimates and impact analyses for 
this CY 2018 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 2017. 
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, 2017. These payment rates will be 
updated in the January 2018 OPPS update, based on the most recent ASP 
data to be used for physician's office and OPPS payment as of January 
1, 2018. 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 2016 claims data and updated cost report information available for 
this CY 2018 final rule with comment period to determine their final 
per day cost.
    Consequently, as stated in the CY 2018 OPPS/ASC proposed rule (82 
FR 33625), 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 this final rule with comment 
period. Under such circumstances, in the CY 2018 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 2018 OPPS drug packaging threshold and the drug's payment 
status (packaged or separately payable) in CY 2017. 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). 
Specifically, for CY 2018, consistent with our historical practice, we 
proposed to apply the following policies to these HCPCS codes for 
drugs, biologicals, and therapeutic radiopharmaceuticals whose 
relationship to the drug packaging threshold changes based on the 
updated drug packaging threshold and on the final updated data:
     HCPCS codes for drugs and biologicals that were paid 
separately in CY 2017 and that were proposed for separate payment in CY 
2018, and that then have per day costs equal to or less than the CY 
2018 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for this CY 2018 final rule, would continue 
to receive separate payment in CY 2018.
     HCPCS codes for drugs and biologicals that were packaged 
in CY 2017 and that were proposed for separate payment in CY 2018, and 
that then have per day costs equal to or less than the CY 2018 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for this CY 2018 final rule, would remain packaged in 
CY 2018.
     HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2018 but then have per day costs 
greater than the CY 2018 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for this CY 2018 final 
rule, would receive separate payment in CY 2018.
    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 2016 claims data and updated 
cost report information available for this CY 2018 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 2018, we are finalizing these two CY 2018 
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. These 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).
    We did not make any proposals to revise our policy-packaged drug 
policy. We solicited public comment on the general OPPS packaging 
policies as discussed in section II.A.3.d. of this final rule with 
comment period.
    Comment: Several commenters requested that CMS revise its packaging

[[Page 59345]]

policies to allow for separate payment for Cysview[supreg] 
(hexaminolevulinate HCl), which is described by HCPCS code C9275, 
according to the ASP methodology. The commenters also provided 
recommendations in response to the general comment solicitation on 
packaging under the OPPS.
    Response: We appreciate the comments in response to the packaging 
solicitation, including feedback on the ``packaging as a supply'' 
policy and will consider these recommendations in future rulemaking. 
However, because we did not propose to modify our policy-packaged drug 
policy for drugs that function as a supply when used in a diagnostic 
test or procedure, or receive information from commenters that caused 
us to believe that Cysview[supreg] is not a drug that functions as a 
supply when used in a diagnostic test or procedure and, accordingly, 
should be paid separately, payment for HCPCS code C9275 will continue 
to be packaged with the primary procedure in CY 2018.
    Comment: Numerous commenters requested that CMS pay separately for 
Exparel[supreg], an FDA approved post-surgical analgesia drug. Several 
commenters, including many commenters who received care from the same 
provider, shared their experience with receiving Exparel[supreg] after 
their knee replacement surgery and urged CMS to pay hospitals and/or 
physicians for the use of Exparel[supreg].
    Response: We refer readers to the CY 2015 OPPS/ASC final rule with 
comment (79 FR 66874 and 66875) for a detailed discussion on our 
decision to package Exparel[supreg] (bupivacaine liposome injectable 
suspension) described by HCPCS code C9290 (Injection, bupivicaine 
liposome, 1 mg) as a drug that functions as a supply in a surgical 
procedure. Because we did not propose to modify our packaged drug 
policy for drugs that function as a surgical supply when used in a 
surgical procedure, and believe payment for HCPCS code C9290 is 
appropriately packaged with the primary surgical procedure, payment for 
HCPCS code C9290 will remain packaged in CY 2018.
    Comment: A few commenters recommended that CMS continue to apply 
the nuclear medicine procedure to radiolabeled product edits to ensure 
that all packaged costs are included on nuclear medicine claims in 
order to establish appropriate payment rates in the future.
    Response: We do not agree with commenters that we should reinstate 
the nuclear medicine procedure to radiolabeled product edits, which 
required a diagnostic radiopharmaceutical to be present on the same 
claim as a nuclear medicine procedure for payment under the OPPS to be 
made. The edits were in place between CY 2008 and CY 2014 (78 FR 
75033). We believe the period of time in which the edits were in place 
was sufficient for hospitals to gain experience reporting procedures 
involving radiolabeled products and to grow accustomed to ensuring that 
they code and report charges so that their claims fully and 
appropriately reflect the costs of those radiolabeled products. 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.
    Comment: One commenter recommended that CMS use ASP information, 
when voluntarily reported by the manufacturer, as a better price input 
to account for the packaged costs of the diagnostic 
radiopharmaceuticals and more appropriately reflect hospitals' actual 
acquisition costs. This commenter also requested that CMS provide an 
additional payment for radiopharmaceuticals that are granted pass-
through payment status.
    Response: We disagree with commenter's recommendation that we use 
voluntarily-reported ASP information for nonpass-through payment for 
radiopharmaceuticals as an approximation of their acquisition cost. 
Packaging hospital costs based on hospital claims data is how all the 
costs of all packaged items are factored into payment rates for 
associated procedures under the OPPS, and we do not believe it is 
appropriate to depart from that policy for radiopharmaceuticals.
    Radiopharmaceuticals for which we have not established a separate 
APC will receive packaged payment under the OPPS. We provide payment 
for diagnostic radiopharmaceuticals based on a proxy for average 
acquisition cost. We continue to believe that the line-item estimated 
cost for a diagnostic radiopharmaceutical in our claims data is a 
reasonable approximation of average acquisition and preparation and 
handling costs for diagnostic radiopharmaceuticals.
    In addition, we note that not all manufacturers would be able to 
submit ASP data through the established ASP reporting methodology. 
Therefore, if we were to use ASP data to package the costs of some 
diagnostic radiopharmaceuticals, but use hospital claims data for 
others, our methodologies for packaging the costs of diagnostic 
radiopharmaceuticals into their associated nuclear medicine procedures 
would be inconsistent among nuclear medicine procedures. The foundation 
of a system of relative weights is the relativity of the costs of all 
services to one another, as derived from a standardized system that 
uses standardized inputs and a consistent methodology. Adoption of a 
ratesetting methodology for certain APCs containing nuclear medicine 
procedures that is different from the standard APC ratesetting 
methodology would undermine this relativity. For this reason, we do not 
believe it would be appropriate to use external pricing information in 
place of the costs derived from the claims and Medicare cost report 
data because to do so would distort the relativity that is fundamental 
to the integrity of the OPPS.
    With respect to the request to provide an additional payment for 
radiopharmaceuticals that are granted pass-through payment status, the 
commenter did not provide information on what expenses or costs 
incurred by providers would be covered by an additional payment. We 
continue to believe that a single payment is appropriate for 
radiopharmaceuticals with pass-through payment status in CY 2018 and 
that the payment rate of ASP+6 percent is appropriate to provide 
payment for both the radiopharmaceutical's acquisition cost and any 
associated nuclear medicine handling and compounding costs.
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).
    Skin substitutes assigned to the high cost group are described by 
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low 
cost group are described by HCPCS codes C5271 through C5278. Geometric 
mean costs for the various procedures are calculated using only claims 
for the skin substitutes that are assigned to each group. Specifically, 
claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to 
calculate the

[[Page 59346]]

geometric mean costs for procedures assigned to the high cost group, 
and claims billed with HCPCS code C5271, C5273, C5275, or C5277 are 
used to calculate the geometric mean costs for procedures assigned to 
the low cost group (78 FR 74935).
    Each of the HCPCS codes described above are assigned to one of the 
following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes 
C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS 
codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin 
Procedures) (HCPCS code 15273). In CY 2017, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $466, the payment rate for APC 5054 
(Level 4 Skin Procedures) was $1,468, and the payment rate for APC 5055 
(Level 5 Skin Procedures) was $2,575. This information also is 
available in Addenda A and B of the CY 2017 OPPS/ASC final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    We have continued the high cost/low cost categories policy since CY 
2014, and in the CY 2018 OPPS/ASC proposed rule (82 FR 33626 through 
33627), we proposed to continue it for CY 2018 with the modification 
discussed below. Under this current policy, skin substitutes in the 
high cost category are reported with the skin substitute application 
CPT codes, and skin substitutes in the low cost category are reported 
with the analogous skin substitute HCPCS C-codes. For a discussion of 
the CY 2014 and CY 2015 methodologies for assigning skin substitutes to 
either the high cost group or the low cost group, we refer readers to 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 74932 
through 74935) and the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66882 through 66885).
    For a discussion of the high cost/low cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). For CY 2018, as in CY 2016 and CY 2017, we proposed to 
continue 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 CY 2018, as for CY 2017, we proposed to assign each skin 
substitute that exceeds either the MUC threshold or the PDC threshold 
to the high cost group. In addition, as described in more detail later 
in this section, for CY 2018, as for CY 2017, we proposed to assign any 
skin substitute with an MUC or a PDC that does not exceed either the 
MUC threshold or the PDC threshold to the low cost group. For CY 2018, 
we proposed that any skin substitute product that was assigned to the 
high cost group in CY 2017 would be assigned to the high cost group for 
CY 2018, regardless of whether it exceeds or falls below the CY 2018 
MUC or PDC threshold.
    For this CY 2018 OPPS/ASC final rule with comment period, 
consistent with the methodology as established in the CY 2014 through 
CY 2017 final rules with comment period, we analyzed updated CY 2016 
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 2018 MUC threshold is $46 per 
cm\2\ (rounded to the nearest $1) (proposed at $47 per cm\2\) and the 
final CY 2018 PDC threshold is $861 (rounded to the nearest $1) 
(proposed at $755).
    For CY 2018, we proposed to continue to assign skin substitutes 
with pass-through payment status to the high cost category. However, 
there are no skin substitutes that are proposed to have pass-through 
payment status for CY 2018. We proposed 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 2018 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).
    Some skin substitute manufacturers have raised concerns about 
significant fluctuation in both the MUC threshold and the PDC threshold 
from year to year. The fluctuation in the thresholds may result in the 
reassignment of several skin substitutes from the high cost group to 
the low cost group which, under current payment rates, can be a 
difference of approximately $1,000 in the payment amount for the same 
procedure. In addition, these stakeholders were concerned that the 
inclusion of cost data from skin substitutes with pass-through payment 
status in the MUC and PDC calculations would artificially inflate the 
thresholds. Skin substitute stakeholders requested that CMS consider 
alternatives to the current methodology used to calculate the MUC and 
PDC thresholds and also requested that CMS consider whether it might be 
appropriate to establish a new cost group in between the low cost group 
and the high cost group to allow for assignment of moderately priced 
skin substitutes to a newly created middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year to year shifts for skin substitute products between the high cost 
and low cost groups through multiple initiatives implemented since CY 
2014, including: establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP+6 percent as the primary methodology to 
assign products to the high cost or low cost group (79 FR 66883); and 
establishing the PDC threshold as an alternate methodology to assign a 
skin substitute to the high cost group (80 FR 70434 through 70435).
    In order to allow additional time to evaluate concerns and 
suggestions from stakeholders about the volatility of the MUC and PDC 
thresholds, for CY 2018, we proposed that a skin substitute that was 
assigned to the high cost group for CY 2017 would be assigned to the 
high cost group for CY 2018, even if it does not exceed the CY 2018 MUC 
or PDC thresholds. Our analysis has found that seven skin substitute 
products that would have otherwise been assigned to the low cost group 
for CY 2018 would instead be assigned to the high cost group under this 
proposed policy. The skin substitute products affected by this proposed 
policy were identified with an ``*'' in Table 24 of the proposed rule 
(82 FR 33627 through 33628). For CY 2019 and subsequent years, we 
requested public comments on how we should calculate data for products 
in determining the MUC and PDC

[[Page 59347]]

thresholds that are included in the high cost group solely based on 
assignment to the high cost group in CY 2017.
    We stated in the proposed rule that the goal of our proposal to 
retain the same skin substitute cost group assignments in CY 2018 as in 
CY 2017 is to maintain similar levels of payment for skin substitute 
products for CY 2018 while we study our current skin substitute payment 
methodology to determine whether refinement to the existing policies is 
consistent with our policy goal of providing payment stability for skin 
substitutes. We requested public comments on the methodologies that are 
used to calculate pricing thresholds as well as the payment groupings 
that recognize a low cost group and a high cost group. We stated that 
we are especially interested in suggestions that are based on analysis 
of Medicare claims data from hospital outpatient departments that might 
better promote improved payment stability for skin substitute products 
under the OPPS. This proposal was intended to apply for CY 2018 to 
allow time for the public to submit other ideas that could be evaluated 
for the CY 2019 rulemaking.
    In summary, 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, unless the product was assigned to the high cost 
group in CY 2017, in which case we proposed to assign the product to 
the high cost group for CY 2018, regardless of whether it exceeds the 
CY 2018 MUC or PDC threshold. We also proposed to assign to the high 
cost group skin substitute products that exceed the CY 2018 MUC or PDC 
threshold and assign to the low cost group skin substitute products 
that did not exceed either the CY 2017 or CY 2018 MUC or PDC thresholds 
and were not assigned to the high cost group in CY 2017. We proposed to 
continue to use payment methodologies including ASP+6 percent, WAC+6 
percent, or 95 percent of AWP for skin substitute products that have 
pricing information but do not have claims data to determine if their 
costs exceed the CY 2018 MUC threshold. Finally, we proposed to 
continue to assign new skin substitute products without pricing 
information to the low cost group.
    Comment: Several commenters responded to CMS' request for public 
comments on the methodologies that are used to calculate pricing 
thresholds as well as the payment groupings that recognize a low cost 
group and a high cost group with the goal of improving payment 
stability for skin substitute products in the OPPS. The commenters 
covered such issues as: Improving the quality of claims data CMS uses 
to determine the MUC and PDC thresholds; using ASP pricing data for the 
skin substitutes either in addition to or in place of claims data to 
determine the MUC and PDC thresholds; limiting annual changes to the 
MUC and PDC thresholds to the change in the consumer price index; 
adding more cost groups where skin substitutes may be assigned; ending 
the packaging of skin substitute products in general and ending 
packaging costs for add-on codes into the primary service codes for 
skin substitute procedures; establishing device offsets when the cost 
of a skin substitute used in a procedure is more than 40 percent of 
total cost of the procedure; and reducing incentives that favor the use 
of more expensive skin substitutes or products that require an 
excessive number of applications.
    Response: We appreciate the feedback we received from the 
commenters. We will continue to study issues related to the payment of 
skin substitutes and take these comments into consideration for future 
rulemaking.
    Comment: One commenter requested that PuraPly and PuraPly antimic 
reported with HCPCS code Q4172 retain its pass-through status in CY 
2018. The commenter believed that giving PuraPly and PuraPly antimic an 
additional year of pass-through payment status would be consistent with 
CMS' policy proposal to assign all skin substitute products that were 
in the high cost skin substitute group in CY 2017 to the high cost skin 
substitute group in CY 2018. The commenter believed that, consistent 
with the spirit of this proposal, PuraPly and PuraPly antimic should 
receive the same payment treatment in CY 2017 as it did in CY 2018; 
that is, continued pass-through payment status.
    Response: PuraPly and PuraPly antimic (HCPCS code Q4172) became 
eligible for drug and biological pass-through payments effective 
January 1, 2015. Therefore, 2017 is the third year of pass-through 
payment status for these skin substitutes. Section 1833(t)(6)(B)(iii) 
provides for temporary pass-through payments for devices for a period 
of at least 2 years but not more than 3 years. Extending PuraPly and 
PuraPly antimic for a fourth year of pass-through payment status would 
be contrary to the statute. Therefore, PuraPly and PuraPly antimic will 
be assigned to the high-cost skin substitute group for CY 2018 and the 
product will receive payment in the same manner as other skin 
substitute products assigned to the high cost group.
    Comment: One commenter opposed CMS' proposal to assign all skin 
substitutes that qualified for the high cost group in CY 2017 to the 
high cost group in CY 2018, including those skin substitutes that would 
have not met either the MUC or PDC threshold in CY 2018 and would have 
instead been assigned to the low-cost group. The commenter stated that 
the products included in the high cost group that otherwise would have 
been assigned to the low cost group have generated enough payment data 
for CMS to estimate their costs. The commenter believed the proposal 
would encourage excessive use of the skin substitute products that 
should have been assigned to the low cost group.
    Response: We appreciate the concerns of the commenter. However, as 
we stated in the proposed rule, we aim to encourage the goal of payment 
stability for all skin substitute products to help hospitals anticipate 
future costs related to skin substitute procedures. The MUC has nearly 
doubled since CY 2016, with an increase from $25 per cm\2\ to the 
proposed CY 2018 threshold of $47 per cm\2\. Likewise, the PDC has 
fluctuated over $300, between $715 and $1,050, since it was established 
in CY 2016. We requested suggestions from the public to help address 
these stability issues in future rulemaking. We believe allowing all 
skin substitute products assigned to the high cost group in CY 2017 to 
remain in the high cost group for CY 2018 gives us time to consider 
revisions to the payment of skin substitute procedures and products 
while avoiding substantial payment reductions to hospitals during our 
review period.
    Comment: Several commenters supported the proposal to assign all 
skin substitutes that qualified for the high cost group in CY 2017 to 
the high cost group in CY 2018, including those skin substitutes that 
would have not met either the MUC or PDC threshold in CY 2018 and would 
have instead been assigned to the low cost group.
    Response: We appreciate the commenters' support.
    Comment: One commenter supported the proposed assignment of HCPCS 
code Q4150 (Allowrap DS or Dry 1 sq cm) to the high cost group.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposals without modification for CY 2018. Table 72 
below displays the CY 2018 cost category assignment for each skin 
substitute product.
    For this final rule with comment period, we have identified 10 skin

[[Page 59348]]

substitute products that would otherwise have been assigned to the low 
cost group for CY 2018, but will instead be assigned to the high cost 
group under our policy to include in the high cost group for CY 2018 
any skin substitute that was in the high cost group for CY 2017. The 
skin substitute products affected by this policy are identified with an 
asterisk ``*'' in Table 72 below.

               Table 72--Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2018
----------------------------------------------------------------------------------------------------------------
                                                                      CY 2017  high/low      CY 2018  high/low
  CY 2018 HCPCS code             CY 2018 short descriptor                 assignment             assignment
----------------------------------------------------------------------------------------------------------------
C9363................  Integra Meshed Bil Wound Mat...............  High.................  High.
Q4100................  Skin Substitute, NOS.......................  Low..................  Low.
Q4101................  Apligraf...................................  High.................  High.
Q4102................  Oasis Wound Matrix.........................  Low..................  Low.
Q4103................  Oasis Burn Matrix..........................  High.................  High.*
Q4104................  Integra BMWD...............................  High.................  High.
Q4105................  Integra DRT................................  High.................  High.*
Q4106................  Dermagraft.................................  High.................  High.
Q4107................  GraftJacket................................  High.................  High.
Q4108................  Integra Matrix.............................  High.................  High.*
Q4110................  Primatrix..................................  High.................  High.*
Q4111................  Gammagraft.................................  Low..................  Low.
Q4115................  Alloskin...................................  Low..................  Low.
Q4116................  Alloderm...................................  High.................  High.
Q4117................  Hyalomatrix................................  Low..................  Low.
Q4121................  Theraskin..................................  High.................  High.
Q4122................  Dermacell..................................  High.................  High.
Q4123................  Alloskin...................................  High.................  High.*
Q4124................  Oasis Tri-layer Wound Matrix...............  Low..................  Low.
Q4126................  Memoderm/derma/tranz/integup...............  High.................  High.
Q4127................  Talymed....................................  High.................  High.*
Q4128................  Flexhd/Allopatchhd/Matrixhd................  High.................  High.
Q4131................  Epifix.....................................  High.................  High
Q4132................  Grafix core and grafixpl core, per square    High.................  High.
                        centimeter.
Q4133................  Grafix prime and grafixpl prime, per square  High.................  High.
                        centimeter.
Q4134................  hMatrix....................................  Low..................  Low.
Q4135................  Mediskin...................................  Low..................  Low.
Q4136................  Ezderm.....................................  Low..................  Low.
Q4137................  Amnioexcel or Biodexcel, 1cm...............  High.................  High.
Q4138................  Biodfence DryFlex, 1cm.....................  High.................  High.
Q4140................  Biodfence 1cm..............................  High.................  High.
Q4141................  Alloskin ac, 1cm...........................  High.................  High.*
Q4143................  Repriza, 1cm...............................  High.................  High.
Q4146................  Tensix, 1CM................................  High.................  High.
Q4147................  Architect ecm, 1cm.........................  High.................  High.*
Q4148................  Neox cord 1k, neox cord rt, or clarix cord   High.................  High.
                        1k, per square centimeter.
Q4150................  Allowrap DS or Dry 1 sq cm.................  High.................  High.
Q4151................  AmnioBand, Guardian 1 sq cm................  High.................  High.
Q4152................  Dermapure 1 square cm......................  High.................  High.
Q4153................  Dermavest 1 square cm......................  High.................  High.
Q4154................  Biovance 1 square cm.......................  High.................  High.
Q4156................  Neox 100 or clarix 100, per square           High.................  High.
                        centimeter.
Q4157................  Revitalon 1 square cm......................  High.................  High.
Q4158................  Kerecis omega3, per square centimeter......  High.................  High.*
Q4159................  Affinity 1 square cm.......................  High.................  High.
Q4160................  NuShield 1 square cm.......................  High.................  High.
Q4161................  Bio-Connekt per square cm..................  High.................  High.*
Q4163................  Woundex, bioskin, per square centimeter....  High.................  High.
Q4164................  Helicoll, per square cm....................  High.................  High.
Q4165................  Keramatrix, per square cm..................  Low..................  Low.
Q4166................  Cytal, per square cm.......................  Low..................  Low.
Q4167................  Truskin, per square cm.....................  Low..................  Low.
Q4169................  Artacent wound, per square cm..............  High.................  High.
Q4170................  Cygnus, per square cm......................  Low..................  Low.
Q4172................  PuraPly, PuraPly antimic...................  High.................  High.
Q4173................  Palingen or palingen xplus, per sq cm......  High.................  High.
Q4175................  Miroderm, per square cm....................  High.................  High.
Q4176................  Neopatch, per square centimeter............  Low..................  Low.
Q4178................  Floweramniopatch, per square centimeter....  Low..................  Low.
Q4179................  Flowerderm, per square centimeter..........  Low..................  Low.
Q4180................  Revita, per square centimeter..............  Low..................  Low.
Q4181................  Amnio wound, per square centimeter.........  Low..................  Low.
Q4182................  Transcyte, per square centimeter...........  Low..................  Low.
----------------------------------------------------------------------------------------------------------------
* These products do not exceed either the MUC or PDC threshold for CY 2018, but are assigned to the high cost
  group because they were assigned to the high cost group in CY 2017.


[[Page 59349]]

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 2018 
OPPS/ASC proposed rule (82 FR 33628), 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 2018.
    For CY 2018, 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 2016 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 2018 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 2016 claims data to make the proposed 
packaging determinations for these drugs: HCPCS code J7100 (infusion, 
dextran 40,500 ml) and HCPCS code J7110 (infusion, dextran 75,500 ml).
    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 2018 drug packaging threshold of 
$120 (so that all HCPCS codes for the same drug or biological would be 
packaged) or greater than the proposed CY 2018 drug packaging threshold 
of $120 (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 2018 
was displayed in Table 25 of the CY 2018 OPPS/ASC proposed rule (82 FR 
33629).
    We did not receive any public comments on this proposal. Therefore, 
for CY 2018, we are finalizing our CY 2018 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 73 below displays the final packaging status 
of each drug and biological HCPCS code to which the finalized 
methodology applies for CY 2018.

      Table 73--HCPCS Codes to Which the CY 2018 Drug-Specific Packaging Determination Methodology Applies
----------------------------------------------------------------------------------------------------------------
         CY 2018  HCPCS code                            CY 2018 long descriptor                     CY 2018 SI
----------------------------------------------------------------------------------------------------------------
C9257................................  Injection, bevacizumab, 0.25 mg.........................               K
J9035................................  Injection, bevacizumab, 10 mg...........................               K
J1020................................  Injection, methylprednisolone acetate, 20 mg............               N
J1030................................  Injection, methylprednisolone acetate, 40 mg............               N
J1040................................  Injection, methylprednisolone acetate, 80 mg............               N
J1460................................  Injection, gamma globulin, intramuscular, 1 cc..........               K
J1560................................  Injection, gamma globulin, intramuscular over 10 cc.....               K
J1642................................  Injection, heparin sodium, (heparin lock flush), per 10                N
                                        units.
J1644................................  Injection, heparin sodium, per 1000 units...............               N
J1840................................  Injection, kanamycin sulfate, up to 500 mg..............               N
J1850................................  Injection, kanamycin sulfate, up to 75 mg...............               N
J2788................................  Injection, rho d immune globulin, human, minidose, 50                  N
                                        micrograms (250 i.u.).
J2790................................  Injection, rho d immune globulin, human, full dose, 300                N
                                        micrograms (1500 i.u.).
J2920................................  Injection, methylprednisolone sodium succinate, up to 40               N
                                        mg.
J2930................................  Injection, methylprednisolone sodium succinate, up to                  N
                                        125 mg.
J3471................................  Injection, hyaluronidase, ovine, preservative free, per                N
                                        1 usp unit (up to 999 usp units).
J3472................................  Injection, hyaluronidase, ovine, preservative free, per                N
                                        1000 usp units.
J7030................................  Infusion, normal saline solution, 1000 cc...............               N
J7040................................  Infusion, normal saline solution, sterile (500 ml = 1                  N
                                        unit).
J7050................................  Infusion, normal saline solution, 250 cc................               N
J7100................................  Infusion, dextran 40, 500 ml............................               N
J7110................................  Infusion, dextran 75, 500 ml............................               N
J7515................................  Cyclosporine, oral, 25 mg...............................               N
J7502................................  Cyclosporine, oral, 100 mg..............................               N
J8520................................  Capecitabine, oral, 150 mg..............................               N
J8521................................  Capecitabine, oral, 500 mg..............................               N
J9250................................  Methotrexate sodium, 5 mg...............................               N
J9260................................  Methotrexate sodium, 50 mg..............................               N
----------------------------------------------------------------------------------------------------------------


[[Page 59350]]

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.\17\
---------------------------------------------------------------------------

    \17\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    It has been our policy since CY 2006 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 2018 OPPS/
ASC proposed rule (82 FR 33630), 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, CY 2016, and CY 2017 (81 FR 79673).
b. CY 2018 Payment Policy
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, 
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 scalar is 
not applied in determining payments for these separately paid drugs and 
biologicals.
    We note that we proposed, as specified below, to pay for separately 
payable, nonpass-through drugs acquired with a 340B discount at a rate 
of ASP minus 22.5 percent. We refer readers to the full discussion of 
this proposal in section V.B.7. of the proposed rule and this final 
rule with comment period.
    Comment: Numerous commenters supported CMS' proposal to continue to 
pay for separately payable drugs and biologicals based on the statutory 
default rate of ASP+6 percent.
    Response: We thank commenters for their support.
    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 2018. 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 scalar is not applied in 
determining payment of these separately paid drugs and biologicals. We 
refer readers to section V.B.7. of the final rule with comment period 
for the final payment policy for drugs acquired with a 340B discount.
    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 2018 payment of

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ASP+6 percent for separately payable nonpass-through drugs and 
biologicals and ASP+6 percent for pass-through drugs and biologicals, 
reflect either ASP information that is the basis for calculating 
payment rates for drugs and biologicals in the physician's office 
setting effective October 1, 2017, or WAC, AWP, or mean unit cost from 
CY 2016 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 2018 payment 
rates. This is because payment rates for drugs and biologicals with ASP 
information for January 2018 will be determined through the standard 
quarterly process where ASP data submitted by manufacturers for the 
third quarter of 2017 (July 1, 2017 through September 30, 2017) will be 
used to set the payment rates that are released for the quarter 
beginning in January 2018 near the end of December 2017. 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 2017 are based on mean unit cost in the available 
CY 2016 claims data. If ASP information becomes available for payment 
for the quarter beginning in January 2018, 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 2017 ASP data) that do not have ASP information 
available for the quarter beginning in January 2018. As stated in the 
CY 2018 OPPS/ASC proposed rule (82 FR 33630), these drugs and 
biologicals will then be paid based on mean unit cost data derived from 
CY 2016 hospital claims. Therefore, the payment rates listed in Addenda 
A and B to this final rule with comment period are not for January 2018 
payment purposes and are only illustrative of the CY 2018 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 and CY 2017, 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 (for CY 2016, 80 FR 70445 through 70446; and for CY 
2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 
33630), for CY 2018, we proposed to continue this same payment policy 
for biosimilar biological products.
    We noted in the proposed rule that public comments on the Medicare 
Part B biosimilar biological product payment policy should be submitted 
in response to the biosimilar biological product payment policy comment 
solicitation in the CY 2018 MPFS proposed rule.
    Comment: Several comments urged CMS to assign separate HCPCS codes 
for each biosimilar biological product rather than combining biosimilar 
biological products of the same reference product into one HCPCS code. 
Some commenters who addressed the biosimilar payment policy as it 
relates to the 340B proposal stated that current policy (adopted in the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70445)) for 
pass-through payment for biosimilar biological products is restricted 
to the first biosimilar biological product of a reference product. The 
commenters believed that, if the 340B proposal is finalized as 
proposed, the preclusion on pass-through payment eligibility for second 
and subsequent biosimilar biological products of the same reference 
product would be significantly disadvantaged by the reduced payment if 
purchased with a 340B discount. These commenters urged CMS to 
reevaluate pass-through payment eligibility for biosimilar biological 
products and their payment under the 340B payment proposal in the 
proposed rule.
    Response: Comments related to policy for coding for biosimilar 
biological products are outside of the scope of the CY 2018 OPPS/ASC 
proposed rule. As we indicated in the CY 2018 OPPS/ASC proposed rule, 
commenters should refer to the CY 2018 MPFS final rule for discussion 
of the biosimilar biological product coding policy. With respect to 
comments regarding OPPS payment for biosimilar biological products, in 
the CY 2018 MPFS final rule, CMS finalized a policy to implement 
separate HCPCS codes for biosimilar biological products. Therefore, 
consistent with our established OPPS drug, biological, and 
radiopharmaceutical payment policy, HCPCS coding for biosimilar 
biological products will be based on policy established under the CY 
2018 MPFS rule.
    Comments related to 340B and biosimilar biological products are 
discussed in section V.B.7. of this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposed payment policy for biosimilar biological 
products, with the following technical correction: All biosimilar 
biological products will be eligible for pass-through payment and not 
just the first biosimilar biological product for a reference product.
3. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, 
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 2018. Therefore, we proposed for CY 2018 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 2016 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 unavailable. 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 2018 payment rates for 
nonpass-through, separately payable therapeutic radiopharmaceuticals 
were in Addenda A and B to the proposed rule (which are

[[Page 59352]]

available via the Internet on the CMS Web site).
    Comment: Commenters supported continuation of the policy to pay 
ASP+6 percent for therapeutic radiopharmaceuticals, if available, and 
to base payment on the mean unit cost derived from hospital claims data 
when not available. Commenters also requested that CMS examine ways to 
compensate hospitals for their documented higher overhead and handling 
costs associated with radiopharmaceuticals.
    Response: We appreciate the commenters' support. However, as we 
stated earlier in section V.B.1.c. of this final rule with comment 
period in response to a similar request for additional 
radiopharmaceutical payment, we continue to believe that a single 
payment is appropriate for radiopharmaceuticals with pass-through 
payment status in CY 2018 and that the payment rate of ASP+6 percent is 
appropriate to provide payment for both the radiopharmaceutical's 
acquisition cost and any associated nuclear medicine handling and 
compounding costs incurred by the hospital pharmacy. Payment for the 
radiopharmaceutical and radiopharmaceutical processing services is made 
through the single ASP-based payment. We refer readers to the CMS 
guidance document available via the Internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Archives.html for details on submission of ASP data for therapeutic 
radiopharmaceuticals.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to pay all 
nonpass-through, separately payable therapeutic radiopharmaceuticals at 
ASP+6 percent. We also are finalizing our proposal to continue to rely 
on CY 2016 mean unit cost data derived from hospital claims data for 
payment rates for therapeutic radiopharmaceuticals for which ASP data 
are unavailable. The CY 2018 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 2018 and did not identify any new information that would 
cause us to modify payment. Therefore, in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33631), for CY 2018, we proposed to continue to provide an 
additional $10 payment for radioisotopes produced by non-HEU sources.
    Comment: Commenters supported CMS' proposal to provide an 
additional $10 payment for the marginal cost of radioisotopes produced 
by non-HEU sources and supported continuation of the policy. However, 
the commenters requested that CMS update the payment amount using the 
hospital market basket update or hospital cost data. The commenters 
also requested that CMS assess whether the collection of a beneficiary 
copayment could discourage hospital adoption.
    Response: We appreciate the commenters' support. As discussed in 
the CY 2013 OPPS/ASC final rule with comment period, we did not 
finalize a policy to use the usual OPPS methodologies to update the 
non-HEU add-on payment (77 FR 68317). The purpose for the additional 
payment is limited to mitigating any adverse impact of transitioning to 
non-HEU sources and is based on the authority set forth at section 
1833(t)(2)(E) of the Act. Accordingly, because we do not have authority 
to waive beneficiary copayment for this incentive payment, we believe 
it is unnecessary to assess whether a beneficiary copayment liability 
would deter a hospital from reporting HCPCS code Q9969. Furthermore, 
reporting of HCPCS code Q9969 is optional. Hospitals that are not 
experiencing high volumes of significantly increased costs are not 
obligated to request this additional payment (77 FR 68323).
    Comment: One commenter requested that CMS publish HCPCS code volume 
and cost data in the proposed and final rule ``Drug Blood Brachy Cost 
Statistics'' files yearly.
    Response: We appreciate the request and will consider revising the 
content of the ``Drug Blood Brachy Cost statistics'' file to include 
data on HCPCS code Q9969 for future rulemaking. In the interim, claims 
data on HCPCS code Q9969 are available for purchase in the claims data 
sets released with publication of this final rule with comment period.
    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 2018, which will be the sixth 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 68319).
5. Payment for Blood Clotting Factors
    For CY 2017, 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 (81 FR 79676). That is, for CY 2017, 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

[[Page 59353]]

physicians' offices under Medicare Part B and in other Medicare 
settings, a furnishing fee is also applied to the payment. The CY 2017 
updated furnishing fee was $0.209 per unit.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, 
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 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: Commenters' supported CMS' proposal to continue to pay for 
a blood clotting factor furnishing fee in the hospital outpatient 
department.
    Response: We appreciate the commenters' 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 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, 
we proposed to continue to use the same payment policy as in CY 2017 
for nonpass-through drugs, biologicals, and radiopharmaceuticals with 
HCPCS codes but without OPPS hospital claims data, which describes how 
we determine the payment rate for drugs, biologicals, or 
radiopharmaceuticals without an ASP. For a detailed discussion of the 
payment policy and methodology, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70442 through 70443). The 
proposed CY 2018 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.
    Comment: One commenter, the manufacturer of Mylotarg[supreg], 
requested that CMS change the dose descriptor for HCPCS code J9300 from 
``Injection, gemtuzumab ozogamicin, 5 mg'' to ``Injection, gemtuzumab 
ozogamicin, 0.1 mg,'' to accommodate the new 4.5 mg vial size for 
Mylotarg[supreg]. The commenter noted that HCPCS code J9300 was 
inactive for a period of time because the prior version of gemtuzumab 
ozogamicin was removed from the market. As such, HCPCS code J9300 is 
assigned status indicator ``E2 (items and services for which pricing 
information and claims data are not available).'' The commenter also 
requested that CMS change the status indicator from ``E2'' to a payable 
status indicator.
    Response: This comment is outside of the scope of the proposed 
rule. Requests for changes to Level II Alphanumeric HCPCS codes should 
be submitted to the CMS HCPCS Workgroup using CMS' standard procedures. 
Information on the Level II HCPCS code process is available via the 
Internet on the CMS Web site, which is publicly available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/HCPCSCODINGPROCESS.html.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 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 2018 if pricing 
information becomes available. The CY 2018 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.
7. Alternative Payment Methodology for Drugs Purchased Under the 340B 
Program
a. Background
    The 340B Program, which was established by section 340B of the 
Public Health Service Act by the Veterans Health Care Act of 1992, is 
administered by the Health Resources and Services Administration (HRSA) 
within HHS. The 340B Program allows participating hospitals and other 
health care providers to purchase certain ``covered outpatient drugs'' 
(as defined under section 1927(k) of the Act and interpreted by HRSA 
through various guidance documents) at discounted prices from drug 
manufacturers. The statutory intent of the 340B Program is to maximize 
scarce Federal resources as much as possible, reaching more eligible 
patients, and providing care that is more comprehensive.\18\
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    \18\ The House report that accompanied the authorizing 
legislation for the 340B Program stated: ``In giving these `covered 
entities' access to price reductions the Committee intends to enable 
these entities to stretch scarce Federal resources as far as 
possible, reaching more eligible patients and providing more 
comprehensive services.'' (H.R. Rept. No. 102-384(II), at 12 
(1992)).
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    The 340B statute defines which health care providers are eligible 
to participate in the program (``covered entities''). In addition to 
Federal health care grant recipients, covered entities include 
hospitals with a Medicare disproportionate share hospital (DSH) 
percentage above 11.75 percent. However, under Public Law 111-148, 
section 7101 expanded eligibility to critical access hospitals (CAHs), 
children's hospitals with a DSH adjustment greater than 11.75 percent, 
sole community hospitals (SCHs) with a DSH adjustment percentage of 8.0 
percent or higher, rural referral centers (RRCs) with a DSH adjustment 
percentage of 8.0 percent or higher, and freestanding cancer hospitals 
with a DSH adjustment percentage above 11.75 percent. In accordance 
with section 340B(a)(4)(L)(i) of the Public Health Service Act, all 
participating hospital types must also meet other criteria.
    HRSA calculates the ceiling price for each covered outpatient drug. 
The ceiling price is the drug's average manufacturer price (AMP) minus 
the unit rebate amount (URA), which is a statutory formula that varies 
depending on whether the drug is an innovator

[[Page 59354]]

single source drug (no generic available), an innovator multiple source 
drug (a brand drug with available generic(s)), or a non-innovator 
multiple source (generic) drug.\19\ The ceiling price represents the 
maximum price a participating drug manufacturer can charge a covered 
entity for the drug. However, covered entities also have the option to 
participate in HRSA's Prime Vendor Program (PVP), under which the prime 
vendor can negotiate even deeper discounts (known as ``subceiling 
prices'') on some covered outpatient drugs. By the end of FY 2015, the 
PVP had nearly 7,600 products available to participating entities below 
the 340B ceiling price, including 3,557 covered outpatient drugs with 
an estimated average savings of 10 percent below the 340B ceiling 
price.\20\
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    \19\ 42 U.S.C. 256b(a)(1-2). Occasionally, a drug's URA is equal 
to its AMP, resulting in a 340B ceiling price of $0. In these 
instances, HRSA has advised manufacturers to charge covered entities 
$0.01 per unit.
    \20\ Department of Health and Human Services. 2017. Fiscal Year 
2018 Health Resources and Services Administration justification of 
estimates for appropriations committees. Washington, DC: HHS. 
Available at: https://www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-justification-2018.pdf.
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    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33632 
and 33633), several recent studies and reports on Medicare Part B 
payments for 340B purchased drugs highlight a difference in Medicare 
Part B drug spending between 340B hospitals and non-340B hospitals as 
well as varying differences in the amount by which the Part B payment 
exceeds the drug acquisition cost.21 22 23 Links to the full 
reports referenced in this section can be found in the cited footnotes.
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    \21\ Office of Inspector General. ``Part B Payment for 340B 
Purchased Drugs. OEI-12-14-00030''. November 2015. Available at: 
https://oig.hhs.gov/oei/reports/oei-12-14-00030.pdf.
    \22\ Medicare Payment Advisory Commission. Report to the 
Congress: Overview of the 340B Drug Pricing Program. May 2015. 
Available at: http://www.medpac.gov/docs/default-source/reports/may-2015-report-to-the-congress-overview-of-the-340b-drug-pricing-program.pdf?sfvrsn=0.
    \23\ Government Accountability Office. ``Medicare Part B Drugs: 
Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs 
at Participating Hospitals GAO-15-442''. June 2015. Available at: 
https://www.gao.gov/assets/680/670676.pdf.
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    In its May 2015 Report to Congress, MedPAC analyzed Medicare 
hospital outpatient claims (excluding CAHs) along with information from 
HRSA on which hospitals participate in the 340B Program. MedPAC 
included data on all separately payable drugs under the OPPS except for 
vaccines and orphan drugs provided by freestanding cancer hospitals, 
RRCs, and SCHs. To estimate costs that 340B hospitals incur to acquire 
drugs covered under the OPPS, MedPAC generally used the formula for 
calculating the 340B ceiling price: (AMP)--unit rebate amount (URA) x 
drug package size. The URA is determined by law and depends upon 
whether a drug is classified as single source, innovator multiple 
source, non-innovator multiple source, a clotting factor drug, or an 
exclusively pediatric drug. CMS provides this URA information to States 
as a courtesy. However, drug manufacturers remain responsible for 
correctly calculating the URA for their covered outpatient drugs. More 
information on the URA calculation and the Medicaid Drug Rebate Program 
may be found on the Web site at: https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html.
    Because MedPAC did not have access to AMP data, it used each drug's 
ASP as a proxy for AMP. MedPAC noted that ASP is typically slightly 
lower than AMP. The AMP is defined under section 1927(k)(1) of the Act 
as the average price paid to the manufacturer by wholesalers in the 
United States for drugs distributed to the retail pharmacy class of 
trade, minus customary prompt pay discounts. Manufacturers 
participating in Medicaid are required to report AMP data quarterly to 
the Secretary, and these prices are confidential. As described under 
section 1847A of the Act, the ASP is a manufacturer's unit sales of a 
drug to all purchasers in the United States in a calendar quarter 
divided by the total number of units of the drug sold by the 
manufacturer in that same quarter. The ASP is net of any price 
concessions such as volume, prompt pay, and cash discounts. Certain 
sales are exempt from the calculation of ASP, including sales at a 
nominal charge and 340B discounts.
    In addition, MedPAC noted that, due to data limitations, its 
estimates of ceiling prices are conservative and likely higher 
(possibly much higher) than actual ceiling prices. Further details on 
the methodology used to calculate the average minimum discount for 
separately payable drugs can be found in Appendix A of MedPAC's May 
2015 Report to Congress. In this report, MedPAC estimated that, on 
average, hospitals in the 340B Program ``receive a minimum discount of 
22.5 percent of the [ASP] for drugs paid under the [OPPS].''
    In its March 2016 Report to Congress (page 79), MedPAC noted that 
another report, which MedPAC attributed to the Office of the Inspector 
General (OIG), recently estimated that discounts across all 340B 
providers (hospitals and certain clinics) average 33.6 percent of ASP, 
allowing these providers to generate significant profits when they 
administer Part B drugs. According to the U.S. Government 
Accountability Office (GAO) report, the amount of the 340B discount 
ranges from an estimated 20 to 50 percent discount, compared to what 
the entity would have otherwise paid to purchase the drug. In addition, 
participation in the PVP often results in a covered entity paying a 
subceiling price on some covered outpatient drugs (estimated to be 
approximately 10 percent below the ceiling price) (U.S. Department of 
Health and Human Services, HRSA FY 2018 Budget Justification). 
Participation in the PVP is voluntary and free.
    As noted in the CY 2018 OPPS/ASC proposed rule, with respect to 
chemotherapy drugs and drug administration services, MedPAC examined 
Medicare Part B spending for 340B and non-340B hospitals for a 5-year 
period from 2008 to 2012 and found that ``Medicare spending grew faster 
among hospitals that participated in the 340B Program for all five 
years than among hospitals that did not participate in the 340B Program 
at any time during [the study] period'' (MedPAC May 2015 Report to 
Congress, page 14). This is just one example of drug spending increases 
that are correlated with participation in the 340B Program and calls 
into question whether Medicare's current policy to pay for separately 
payable drugs at ASP+6 percent is appropriate in light of the 
discounted rates at which 340B hospitals acquire such drugs.
    Further, GAO found that ``in both 2008 and 2012, per beneficiary 
Medicare Part B drug spending, including oncology drug spending, was 
substantially higher at 340B DSH hospitals than at non-340B 
hospitals.'' According to the GAO report, this indicates that, on 
average, beneficiaries at 340B DSH hospitals were either prescribed 
more drugs or more expensive drugs than beneficiaries at the other non-
340B hospitals in GAO's analysis. For example, in 2012, average per 
beneficiary spending at 340B DSH hospitals was $144, compared to 
approximately $60 at non-340B hospitals. The differences did not appear 
to be explained by the hospital characteristics GAO examined or 
patients' health status (GAO Report 15-442, page 20).
    Under the OPPS, all hospitals (other than CAHs, which are paid 
based on 101 percent of reasonable costs as required by section 1834(g) 
of the Act) are currently paid the same rate for separately payable 
drugs (ASP+6 percent), regardless of whether the hospital purchased the 
drug at a

[[Page 59355]]

discount through the 340B Program. Medicare beneficiaries are liable 
for a copayment that is equal to 20 percent of the OPPS payment rate, 
which is currently ASP+6 percent (regardless of the 340B purchase price 
for the drug). Based on an analysis of almost 500 drugs billed in the 
hospital outpatient setting in 2013, the OIG found that, for 35 drugs, 
the ``difference between the Part B [payment] amount and the 340B 
ceiling price was so large that, in at least one quarter of 2013, the 
beneficiary's coinsurance alone . . . was greater than the amount a 
covered entity spent to acquire the drug'' (OIG November 2015, Report 
OEI-12-14-00030, page 9).
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68655), we requested comments regarding the drug costs of hospitals 
that participate in the 340B Program and whether we should consider an 
alternative drug payment methodology for participating 340B hospitals. 
As noted above, in the time since that comment solicitation, access to 
the 340B Program was expanded under section 7101 of Public Law 111-148, 
which amended section 340B(a)(4) of the Public Health Service Act to 
expand the types of covered entities eligible to participate in the 
340B Program. It is estimated that covered entities saved $3.8 billion 
on outpatient drugs purchased through the 340B Program in 2013.\24\ In 
addition, the number of hospitals participating in the program has 
grown from 583 in 2005 to 1,365 in 2010 and 2,140 in 2014 (MedPAC May 
2015 Report to Congress). In its November 2015 report entitled ``Part B 
Payments for 340B-Purchased Drugs,'' the OIG found that Part B payments 
were 58 percent more than 340B ceiling prices, which allowed covered 
entities to retain approximately $1.3 billion in 2013 (OEI-12-14-00030, 
page 8). Given the growth in the number of providers participating in 
the 340B Program and recent trends in high and growing prices of 
several separately payable drugs administered under Medicare Part B to 
hospital outpatients, we stated in the CY 2018 OPPS/ASC proposed rule 
that we believe it is timely to reexamine the appropriateness of 
continuing to apply the current OPPS methodology of ASP+6 percent to 
hospitals that have acquired those drugs under the 340B Program at 
significantly discounted rates.
---------------------------------------------------------------------------

    \24\ U.S. Department of Health and Human Services, HRSA FY 2015 
Budget Justification, p. 342.
---------------------------------------------------------------------------

    MedPAC and OIG have recommended alternative drug payment 
methodologies for hospitals that participate in the 340B Program. In 
its March 2016 Report to Congress, MedPAC recommended a legislative 
proposal related to payment for Part B drugs furnished by 340B 
hospitals under which Medicare would reduce payment rates for 340B 
hospitals' separately payable 340B drugs by 10 percent of the ASP and 
direct the program savings from reducing Part B drug payment rates to 
the Medicare funded uncompensated care pool.\25\ In its November 2015 
report, the OIG described three options under which both the Medicare 
program and Medicare beneficiaries would be able to share in the 
program savings realized by hospitals and other covered entities that 
participate in the 340B Program (OEI-12-14-00030, pages 11-12). These 
options included: (1) Paying ASP with no additional add-on percentage; 
(2) paying ASP minus 14.4 percent; and (3) making payment based on the 
340B ceiling price plus 6 percent of ASP for each 340B purchased drug 
(OEI-12-14-00030, page 11). Analysis in several of these reports notes 
limitations in estimating 340B-purchased drugs' acquisition costs; the 
inability to identify which drugs were purchased through the 340B 
Program within Medicare claims data was one of those limitations.
---------------------------------------------------------------------------

    \25\ Medicare Payment Advisory Commission. March 2016 Report to 
the Congress: Medicare Payment Policy. March 2016. Available at: 
http://www.medpac.gov/docs/default-source/reports/chapter-3-hospital-inpatient-and-outpatient-services-march-2016-report-.pdf?sfvrsn=0.
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b. OPPS Payment Rate for 340B Purchased Drugs
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33633 through 33634), 
we proposed changes to our current Medicare Part B drug payment 
methodology for 340B hospitals that we believe would better, and more 
appropriately, reflect the resources and acquisition costs that these 
hospitals incur. Such changes would allow the Medicare program and 
Medicare beneficiaries to pay less for drugs when hospitals 
participating in the 340B Program furnish drugs to Medicare 
beneficiaries that are purchased under the 340B Program.
    Our goal is to make Medicare payment for separately payable drugs 
more aligned with the resources expended by hospitals to acquire such 
drugs while recognizing the intent of the 340B Program to allow covered 
entities, including eligible hospitals, to stretch scarce resources in 
ways that enable hospitals to continue providing access to care for 
Medicare beneficiaries and other patients. Medicare expenditures on 
Part B drugs have been rising and are projected to continue to rise 
faster than overall health spending, thereby increasing this sector's 
share of health care spending due to a number of underlying factors 
such as new higher price drugs and price increases for existing 
drugs.26 27 While we recognize the intent of the 340B 
Program, we believe it is inappropriate for Medicare to subsidize other 
activities through Medicare payments for separately payable drugs. We 
believe that any payment changes we adopt should be limited to 
separately payable drugs under the OPPS, with some additional 
exclusions. As a point of further clarity, CAHs are not included in 
this 340B policy change because they are paid under section 1834(g) of 
the Act. As stated in the CY 2018 OPPS/ASC proposed rule, these 
exclusions are for: (1) Drugs on pass-through payment status, which are 
required to be paid based on the ASP methodology, and (2) vaccines, 
which are excluded from the 340B Program. In addition, we solicited 
public comments on whether other types of drugs, such as blood clotting 
factors, should also be excluded from the reduced payment.
---------------------------------------------------------------------------

    \26\ Department of Health and Human Services. Office of the 
Assistant Secretary for Planning and Evaluation. Issue Brief: 
Medicare Part B Drugs: Pricing and Incentives. 2016. Available at: 
https://aspe.hhs.gov/system/files/pdf/187581/PartBDrug.pdf.
    \27\ Department of Health and Human Services: Office of the 
Assistant Secretary for Planning and Evaluation. Issue Brief: 
Observations on Trends in Prescription Drug Spending. March 8, 2016. 
Available at: https://aspe.hhs.gov/system/files/pdf/187586/Drugspending.pdf.
---------------------------------------------------------------------------

    Data limitations inhibit our ability to identify which drugs were 
acquired under the 340B Program in the Medicare OPPS claims data. This 
lack of information within the claims data has limited researchers' and 
our ability to precisely analyze differences in acquisition cost of 
340B and non-340B acquired drugs with Medicare claims data. 
Accordingly, in the CY 2018 OPPS/ASC proposed rule (82 FR 33633), we 
stated our intent to establish a modifier, to be effective January 1, 
2018, for hospitals to report with separately payable drugs that were 
not acquired under the 340B Program. Because a significant portion of 
hospitals paid under the OPPS participate in the 340B Program, we 
stated our belief that it is appropriate to presume that a separately 
payable drug reported on an OPPS claim was purchased under the 340B 
Program, unless the hospital identifies that the drug was not purchased 
under the 340B Program. We stated in the proposed rule that we intended 
to provide further details about this modifier in this CY 2018 OPPS/ASC 
final rule with comment period and/or through

[[Page 59356]]

subregulatory guidance, including guidance related to billing for 
dually eligible beneficiaries (that is, beneficiaries covered under 
Medicare and Medicaid) for whom covered entities do not receive a 
discount under the 340B Program.
    A summary of public comments received and our responses pertaining 
to the modifier are included later in this section. As described in 
detail later in this section, we are implementing the modifier such 
that it is required for drugs that were acquired under the 340B Program 
instead of requiring its use on drugs that were not acquired under the 
340B Program. In addition, we are establishing an informational 
modifier for use by certain providers who will be excepted from the 
340B payment reduction.
    Further, we note that the confidentiality of ceiling and subceiling 
prices limits our ability to precisely calculate the price paid by 340B 
hospitals for a particular covered outpatient drug. We recognize that 
each separately payable OPPS drug will have a different ceiling price 
(or subceiling price when applicable). Accordingly, we stated in the 
proposed rule that we believe using an average discounted price was 
appropriate for our proposal. Therefore, for CY 2018, we proposed to 
apply an average discounted price of 22.5 percent of the ASP for 
nonpass-through separately payable drugs purchased under the 340B 
Program, as estimated by MedPAC (MedPAC's May 2015 Report to Congress, 
page 7).
    In the near-term, we believe that the estimated average minimum 
discount MedPAC calculated--22.5 percent of the ASP--adequately 
represents the average minimum discount that a 340B participating 
hospital receives for separately payable drugs under the OPPS. Given 
the limitations in calculating a precise discount for each OPPS 
separately payable drug, we did not attempt to do so for the proposed 
rule. Instead, we stated that we believed that using the analysis from 
the MedPAC report is appropriate and noted that the analysis is spelled 
out in detail and can be replicated by interested parties. As MedPAC 
noted, its estimate was conservative and the actual average discount 
experienced by 340B hospitals is likely much higher than 22.5 percent 
of the ASP. As GAO mentioned, discounts under the 340B Program range 
from 20 to 50 percent of the ASP (GAO-11-836, page 2). We believe that 
such reduced payment would meet the requirements under section 
1833(t)(14)(A)(iii)(II) of the Act, which states that if hospital 
acquisition cost data are not available, the payment for an applicable 
drug shall be the average price for the drug in the year established 
under section 1842(o), section 1847A, or section 1847B of the Act, as 
the case may be, as calculated and adjusted by the Secretary as 
necessary. We do not have hospital acquisition cost data for 340B drugs 
and, therefore, proposed to continue to pay for these drugs under our 
authority at section 1833(t)(14)(A)(iii)(II) of the Act at ASP, and 
then to adjust that amount by applying a reduction of 22.5 percent, 
which, as explained throughout this section, is the adjustment we 
believe is necessary for drugs acquired under the 340B Program.
    Specifically, in the CY 2018 OPPS/ASC proposed rule, we proposed to 
apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately 
payable drugs and biologicals, including SCODs. However, we proposed to 
exercise the Secretary's authority to adjust the applicable payment 
rate as necessary and, for separately payable drugs and biologicals 
(other than drugs with pass-through payment status and vaccines) 
acquired under the 340B Program, we proposed to adjust the rate to ASP 
minus 22.5 percent, which we believe better represents the average 
acquisition cost for these drugs and biologicals.
    As indicated earlier, because ceiling prices are confidential, we 
are unable to publicly disclose those prices or set payment rates in a 
way that would allow the public to determine the ceiling price for a 
particular drug. We believe that the MedPAC analysis that found the 
average minimum discount of 22.5 percent of ASP adequately reflects the 
average minimum discount that 340B hospitals paid under the OPPS 
receive. In addition, we believe that using an average discount to set 
payment rates for OPPS separately payable drugs would achieve the dual 
goals of (1) adjusting payments to better reflect resources expended to 
acquire such drugs, and (2) protecting the confidential nature of 
discounts applied to a specific drug. Moreover, we do not believe that 
Medicare beneficiaries should be liable for a copayment rate that is 
tied to the current methodology of ASP+6 percent when the actual cost 
to the hospital to purchase the drug under the 340B Program is much 
lower than the ASP for the drug.
    We note that MedPAC excluded vaccines from its analysis because 
vaccines are not covered under the 340B Program, but it did not exclude 
drugs with pass-through payment status. Further, because data used to 
calculate ceiling prices are not publicly available, MedPAC instead 
estimated ``the lower bound of the average discount received by 340B 
hospitals for drugs paid under the [OPPS]'' (MedPAC May 2015 Report to 
Congress, page 6). Accordingly, it is likely that the average discount 
is higher, potentially significantly higher, than the average minimum 
of 22.5 percent that MedPAC found through its analysis. In the proposed 
rule, we encouraged the public to analyze the analysis presented in 
Appendix A of MedPAC's May 2015 Report to Congress.
    As noted earlier, we believe that the discount amount of 22.5 
percent below the ASP reflects the average minimum discount that 340B 
participating hospitals receive for drugs acquired under the 340B 
Program, and in many cases, the average discount may be higher for some 
covered outpatient drugs due to hospital participation in the PVP, 
substitution of ASP (which includes additional rebates) for AMP, and 
that drugs with pass-through payment status were included rather than 
excluded from the MedPAC analysis. We believe that a payment rate of 
ASP+6 percent does not sufficiently recognize the significantly lower 
acquisition costs of such drugs incurred by a 340B-participating 
hospital. Accordingly, as noted earlier, we proposed to reduce payment 
for separately payable drugs, excluding drugs on pass-through payment 
status and vaccines, that were acquired under the 340B Program by 22.5 
percent of ASP for all drugs for which a hospital does not append on 
the claim the modifier mentioned in the proposed rule and discussed 
further in this final rule with comment period. (As detailed later in 
this section, we are instead requiring hospitals to append the 
applicable modifier on the claim line with any drugs that were acquired 
under the 340B Program.)
    Finally, as detailed in the impact analysis section (section 
XIX.A.5.a.2) of the proposed rule, we also proposed that the reduced 
payments for separately payable drugs and biologicals purchased under 
the 340B Program 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 scalar is not applied in determining payments 
for these separately paid drugs and biologicals purchased under the 
340B Program. In that section, we also solicited public comments on 
whether we should apply all or part of the savings generated by this 
payment reduction to increase payments for specific services paid under 
the OPPS, or under Part B generally, in CY 2018, rather than simply 
increasing the conversion factor. In particular, we

[[Page 59357]]

requested public comments on whether and how the offsetting increase 
could be targeted to hospitals that treat a large share of indigent 
patients, especially those patients who are uninsured. In addition, we 
requested public comments on whether savings associated with this 
proposal would result in unnecessary increases in the volume of covered 
services paid under the OPPS that should be adjusted in accordance with 
section 1833(t)(2)(F) of the Act. More information on the impact 
estimate associated with this proposal was included in section 
XIX.A.5.a.2. of the proposed rule. A summary of the public comments 
received on the impact estimate, along with our responses to those 
comments and our estimate of this provision for this final rule with 
comment period, are included in section XVIII.A.5. of this final rule 
with comment period.
c. Summaries of Public Comments Received and Our Responses
(1) Overall Comments
    Comment: Several commenters, including organizations representing 
physician oncology practices, pharmaceutical research and manufacturing 
companies, a large network of community-based oncology practices, and 
several individual Medicare beneficiaries, supported the proposal. Some 
of these commenters commended CMS for its proposal, which they believed 
would help address the growth of the 340B Program, stem physician 
practice consolidation with hospitals, and preserve patient access to 
community-based care.
    One of these commenters stated that the proposals would reduce drug 
costs for seniors by an estimated $180 million a year; help to stop 
hospital ``abuses'' of the 340B program; and help reverse the 
``perverse incentives'' that have driven the closure and consolidation 
of the nation's community cancer care system.
    Another commenter, representing a large network of community-based 
oncology practices, noted that since 2008, 609 community cancer 
practices have been acquired or become affiliated with hospitals, with 
75 percent of those community cancer practices acquired by 340B-
participating hospitals. The commenter stated that the consolidation in 
oncology care has resulted in a 30 percent shift in the site of service 
for chemotherapy administration from the physician office setting to 
the more costly hospital outpatient setting.
    One commenter, an organization representing community oncology 
practices, cited several issues that the proposal would help address, 
including that only a small minority of 340B participating hospitals 
are using the program to benefit patients in need; cancer patients in 
need are being denied care at 340B participating hospitals or placed on 
wait lists; and hospitals are making extreme profits on expensive 
cancer drugs and are consolidating the nation's cancer care system, 
reducing patient choice and access and shifting care away from the 
private, physician-owned community oncology clinics into the more 
expensive 340B hospital setting, which is increasing costs for Medicare 
and its beneficiaries. In addition, this commenter stated that the 
increasing scope and magnitude of required 340B discounts are 
increasing drug prices to record-breaking levels as manufacturers 
factor these discounts into pricing decisions. The commenter also cited 
a report that it recently released that suggests, and provides 
anecdotal evidence supporting, that some 340B hospitals offered little 
charity care and turned away some patients in need because those 
patients were uninsured.\28\
---------------------------------------------------------------------------

    \28\ Community Oncology Alliance. Report: ``How Abuse of the 
340B Program is Hurting Patients'' September 2017. Available at: 
https://www.communityoncology.org/wp-content/uploads/2017/09/COA_340B-PatientStories_FINAL.pdf.
---------------------------------------------------------------------------

    With respect to the magnitude of the proposed payment reduction of 
ASP minus 22.5 percent, one commenter noted that although the proposed 
decrease in payment may seem ``severe,'' ASP minus 22.5 percent is the 
minimum discount that hospitals in the 340B Program receive. The 
commenter further noted that, with 340B discounts on brand drugs 
approaching, and even exceeding, 50 percent, there is still substantial 
savings--on the order of 50 percent drug margins--for hospitals to use 
to provide direct and indirect patient benefits. The commenter also 
noted that this proposal would result in cost-sharing savings to 
Medicare beneficiaries, for whom drug cost is an important component of 
overall outpatient cancer care costs.
    Some commenters urged HHS, specifically CMS and HRSA, to work with 
Congress to reform the 340B Program. One commenter requested greater 
transparency and accountability on how 340B savings are being used, as 
well as a specific definition of the ``340B patient,'' which the 
commenter noted would require a legislative change.
    Response: We thank the commenters for their support. As mentioned 
in the proposed rule, we share the commenters' concern that current 
Medicare payments for drugs acquired under the 340B Program are well in 
excess of the overhead and acquisition costs for drugs purchased under 
the 340B Program. We continue to believe that our proposal would better 
align Medicare payment for separately payable drugs acquired under the 
340B Program with the actual resources expended to acquire such drugs. 
Importantly, we continue to believe that Medicare beneficiaries should 
be able to share in the savings on drugs acquired through the 340B 
Program at a significant discount. We also appreciate the comments 
supporting the proposed payment amount for drugs acquired under the 
340B Program of ASP minus 22.5 percent, which we believe, like several 
commenters, is an amount that allows hospitals to retain a profit on 
these drugs for use in the care of low-income and uninsured patients. 
As detailed later in this section, we are finalizing our proposal, with 
modifications, in response to public comments.
    As previously stated, CMS does not administer the 340B Program. 
Accordingly, feedback related to eligibility for the 340B Program as 
well as 340B Program policies are outside the scope of the proposed 
rule and are not addressed in this final rule with comment period.
    Comment: Several commenters expressed concern with the rising cost 
of drugs and the impact on beneficiaries and taxpayers. These 
commenters offered varied opinions on whether the proposal would 
achieve CMS' goal of lowering drug prices and reducing beneficiary out-
of-pocket costs. Some commenters stated that the proposal has the 
potential to alleviate the financial burden that high-cost drugs place 
on patients. Other commenters stated that, because the proposal does 
not address the issue of expansion of 340B entities, the volume of 340B 
discounted drugs, and the affordability of drugs, especially oncology 
drugs, CMS should not finalize the proposal.
    One commenter, an individual who supported the proposal, stated 
that although the majority of patients with Medicare Part B coverage 
have supplemental coverage to pay their coinsurance, significant 
numbers do not have this additional protection. The commenter noted 
that, for a drug that is paid at $10,000 per month, the price reduction 
would save a beneficiary approximately $500 a month, which may be the 
difference between getting treatment and foregoing treatment due to 
financial reasons.
    Another commenter, a large organization with many members who are 
Medicare beneficiaries, stated that the proposal would provide a 
measure

[[Page 59358]]

of price relief to the 16 percent of Medicare beneficiaries without 
supplemental coverage. The commenter also expressed concern that the 
proposal would have serious health implications for beneficiaries in 
safety-net hospitals. The commenter urged HHS to develop proposals that 
will lower underlying drug prices, but did not provide any specific 
examples of such proposals. Another commenter stated that the cost of 
drugs is becoming unsustainable and applying the proposed policy is a 
decent ``baby step'' in controlling a situation that is ``grossly'' 
unfair to American taxpayers, especially when the development of new 
drugs is frequently funded to a large extent by taxpayers through 
Federal grants.
    In addition, one commenter, a large organization representing its 
physician and medical student members, commented that it shares the 
Administration's interest in addressing the rising costs of drugs and 
biologicals. The commenter appreciated that the proposal would address 
a longstanding concern: That the current payment policy for Part B 
drugs creates strong incentives to move Medicare beneficiary care from 
lower cost sites of care (such as physician offices) to higher cost 
sites of care (such as hospital outpatient departments). The commenter 
noted that many smaller physician practices have had to refer cancer 
and other patients who need chemotherapy and other expensive drugs to 
the hospital outpatient setting because the ASP+6 percent payment does 
not always cover a physician's acquisition cost, thereby undermining 
continuity of care and creating burdens for frail and medically 
compromised patients.
    This commenter also stated that, given the 340B Program's focus on 
low-income patients, it is imperative to ensure that an across-the-
board reduction actually reflects the size of the 340B discount to 
avoid creating barriers to access, should both physician practices and 
the hospital outpatient departments be unable to cover actual 
acquisition costs. Further, the commenter noted that it is essential 
that ``a bright line policy does not inadvertently deleteriously impact 
patient access in all sites of care.'' Finally, the commenter stated 
that, while the proposed policy alters the relative disparity between 
payments for some hospital outpatient departments and physician 
practices, it still does not address the persistent challenges 
physician practices face in obtaining payment that covers acquisition 
costs.
    Response: We thank the commenters' for their feedback and share 
their concern about the high cost of drugs and their effect on Medicare 
beneficiaries. As discussed in detail later in this section, we are 
finalizing a change to the payment rate for certain Medicare Part B 
drugs purchased by hospitals through the 340B Program in order to lower 
the cost of drugs for seniors and ensure that they benefit from the 
discounts provided through the program. We look forward to working with 
Congress to provide HHS additional 340B programmatic flexibility, which 
could include tools to provide additional considerations for safety net 
hospitals, which play a critical role in serving our most vulnerable 
populations.
    As a general matter, we note that, even though many beneficiaries 
have supplemental coverage, beneficiaries often pay a premium for such 
supplemental coverage and those plans make coinsurance payments for the 
beneficiary. Thus, to the extent Medicare would be lessening the 
coinsurance amount such supplemental plans would have to make, we would 
expect the price of such plans to decrease or otherwise reflect these 
lower costs in the future, thereby lowering the amount that 
beneficiaries pay for supplemental plan coverage. Further, for those 
Medicare beneficiaries who do not have supplemental coverage at all or 
who have a supplemental plan that does not cover all of a beneficiary's 
cost-sharing obligation, the proposed policy would directly lower out-
of-pocket spending for 340B-acquired drugs for those beneficiaries.
    In addition, we note that in the hospital setting, not only are 
beneficiaries liable for cost-sharing for drugs they receive, but they 
also incur a ``facility fee'' solely because the drug was furnished in 
the hospital setting. As described in section II.A.3.b. of this final 
rule with comment period, for CY 2018, we are adopting a policy to 
conditionally package Level 1 and Level 2 Drug Administration services 
and believe that these steps, taken together, may help encourage site-
neutral care in that beneficiaries may receive the same drugs and drug 
administration services at the physician office setting without a 
significant difference in their financial liability between settings.
    As previously stated, we believe that ASP minus 22.5 percent is a 
lower bound estimate of the average discount given to hospitals 
participating in the 340B Program. Accordingly, we disagree that this 
proposal represents a ``bright-line'' policy that would hinder safety-
net hospitals' ability to treat patients.
    While the commenter's request that HHS develop proposals to lower 
underlying drug prices is outside the scope of the proposals made in 
the proposed rule, we note that lowering the price of pharmaceuticals 
is a top priority, and we are committed to finding ways for Medicare 
payment policy not to incentivize use of overpriced drugs. With respect 
to Medicare Part B drug payment under the OPPS, we believe that 
reducing payments on 340B purchased drugs to better align with hospital 
acquisition costs directly lowers drug costs for those beneficiaries 
who receive a covered outpatient drug from a 340B participating 
hospital by reducing their copayments. Further, to the extent that 
studies have found that 340B participating hospitals tend to use more 
high cost drugs, we believe that this proposal helps address the 
incentive for hospitals to utilize these drugs in this manner solely 
for financial reasons.
    The expansion of 340B entities, the volume of 340B discounted 
drugs, and the affordability of drugs are outside the authority 
conferred by section 1833(t) of the Act (and, thus, are outside the 
scope of the proposed rule), and we see no reason to withdraw the 
proposal solely on account of these issues not being addressed by the 
proposal. Likewise, we note that the public comments on Medicare Part B 
drug payment in the physician office setting are also outside the scope 
of the proposed rule, and, therefore, are not addressed in this final 
rule with comment period.
    Comment: Several commenters, including organizations representing 
340B-eligible safety-net hospitals in urban and rural areas and 
teaching hospitals, were generally opposed to the proposed changes and 
urged CMS to withdraw the proposal from consideration. As detailed 
further below, these commenters believed that the Secretary lacks 
statutory authority to impose such a large reduction in the payment 
rate for 340B drugs, and contended that such change would effectively 
eviscerate the 340B Program. The commenters further noted that Medicare 
payment cuts of this magnitude would greatly ``undermine 340B 
hospitals' ability to continue programs designed to improve access to 
services--the very goal of the 340B Program.''
    These commenters urged that, rather than ``punitively targeting'' 
340B safety-net hospitals serving vulnerable patients, including those 
in rural areas, CMS instead redirect its efforts to halt the 
``unchecked, unsustainable increases'' in the price of drugs.
    Response: We do not believe that our proposed policy ``punitively'' 
targets safety-net hospitals. The current OPPS payment rate of ASP+6 
percent significantly exceeds the discounts

[[Page 59359]]

received for covered outpatient drugs by hospitals enrolled in the 340B 
Program, which can be as much as 50 percent below ASP (or higher 
through the PVP). As stated throughout this section, ASP minus 22.5 
percent represents the average minimum discount that 340B enrolled 
hospitals paid under the OPPS receive. We also have noted that 340B 
participation does not appear to be well-aligned with the provision of 
uncompensated care, as some commenters suggested. As stated earlier in 
this section, while the commenter's request that HHS develop proposals 
to lower underlying drug prices is outside the scope of the proposals 
made in the proposed rule, we note that lowering the price of 
pharmaceuticals is a top priority.
(2) Comments on the Statutory Authority for the 340B Payment Proposal
    Many commenters challenged the statutory authority of various 
aspects of the proposal. These comments are summarized into the broad 
categories below. For the reasons stated below, we disagree with these 
comments and believe that our proposal is within our statutory 
authority to promulgate.
 Secretary's Authority to Calculate and Adjust 340B-Acquired 
Drug Payment Rates
    Comment: Commenters asserted that section 1833(t)(14)(A)(iii)(II) 
of the Act does not authorize CMS to ``calculate and adjust'' the 
payment rate in a manner that would ``eviscerate'' the 340B Program as 
it applies to 340B hospitals. Some commenters asserted that the plain 
and ordinary meaning of the terms ``calculate'' and ``adjust'' express 
a limited and circumscribed authority to set the payment rate. The 
commenters noted that the Oxford Dictionaries define ``calculate'' as 
``determine (the amount or number of something) mathematically;'' 
likewise, to ``adjust'' is to ``alter or move (something) slightly in 
order to achieve the desired fit, appearance, or result.'' 
Consequently, the commenters asserted that section 
1833(t)(14)(A)(iii)(II) of the Act restricts the agency to 
mathematically determining ``an appropriate, slight alteration.'' 
Further, they posited that the law does not convey the power to adopt 
what they referred to as a novel, sweeping change to the payment rate 
that is a significant numerical departure from the previous rate and 
that would result in a reduction in payment to 340B hospitals of at 
least $900 million, according to the agency's own estimates, or $1.65 
billion, according to the commenter's estimates.
    Another commenter stated that the Secretary's limited adjustment 
authority under section 1833(t)(14)(A)(iii)(II) of the Act does not 
``extend so far as to gut'' what it referred to as an ``explicit 
statutory directive''. For example, the commenter referred the agency 
to Pettibone Corp. v. United States, 34 F.3d 536, 541 (7th Cir. 1994) 
(an agency's authority to interpret a statute ``must not be confused 
with a power to rewrite'').
    Some commenters, including an organization representing over 1,300 
providers enrolled in the 340B Program, argued that the proposal would 
take away almost the entire 340B discount for many 340B drugs, 
especially brand name drugs (which they asserted were many of the drugs 
affected by the proposal). These commenters asserted that the Secretary 
does not have the authority to calculate and adjust 340B-acquired drug 
rates in this manner and noted that the standard 340B ceiling price for 
a brand name drug is AMP minus 23.1 percent, although the price can be 
lower if the drug's best price is lower or if the manufacturer 
increases the price of the drug more quickly than the rate of 
inflation. In addition, the commenters asserted that if a brand name 
drug's 340B ceiling price was based on the standard formula, the 
proposal would strip the hospital of nearly all its 340B savings 
because ``AMP has been found to be close to ASP.'' Thus, the commenters 
asserted, the proposed payment rate of ASP minus 22.5 percent is nearly 
identical to AMP minus 23.1 percent, leaving the hospital with 
``virtually no 340B savings.''
    Some commenters stated that the proposal mistakenly assumes that 
340B hospitals purchase most 340B drugs at subceiling prices negotiated 
by the PVP. These commenters noted that some hospitals estimate that 
less than 10 percent of the drugs affected by the proposal are 
available at a subceiling price.
    In addition, some commenters contended that subclause (I) of 
section 1833(t)(14)((A)(iii) establishes that the payment rate for 
subsequent years be set to the average acquisition cost of the drug 
taking into account hospital acquisition costs survey data collected 
through surveys meeting precise statutory requirements, and that such 
subclause does not provide adjustment authority for the agency. They 
stated that subclause (II) of section 1833(t)(14)((A)(iii) of the Act 
directs CMS, where acquisition cost data are not available, to set 
payment rates by reference to ASP provisions. Considered in context, 
the commenters stated that the statute reflects Congress's intent to 
limit CMS' authority to set payment rates and, consequently, is 
consistent with adjustment authority under subclause (II)--to convey 
only limited authority for any agency to adjust the payment rate. The 
commenters referred to Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 
101 (2012) (Statutory provisions ``. . . cannot be construed in a 
vacuum. It is a fundamental canon of statutory construction that the 
words of a statute must be read in their context and with a view to 
their place in the overall statutory scheme'') to support their 
conclusions, although the commenters did not elaborate on the 
particular relevance of this case.
    Finally, some commenters raised concern over the Secretary's use of 
the May 2015 MedPAC estimate as support for the 340B payment proposal. 
These commenters stated that the Secretary did not conduct his own 
independent analysis to support the payment proposal nor did he provide 
justification for use of MedPAC's analysis. One commenter stated that 
the Secretary cannot implement a payment cut of the magnitude proposed 
without providing a sufficient and replicable methodology that supports 
the proposal and that relying on a MedPAC analysis does not suffice for 
this ``important fiduciary, and legal, requirement.''
    Response: We believe our authority under section 
1833(t)(14)(A)(iii)(II) of the Act to ``calculate and adjust'' drug 
payments ``as necessary for purposes of this paragraph'' gives the 
Secretary broad discretion to adjust payments for drugs, which we 
believe includes an ability to adjust Medicare payment rates according 
to whether or not certain drugs are acquired at a significant discount. 
We disagree that this Medicare payment policy would effectively 
eviscerate the 340B Program and note that this proposal solely applies 
to applicable drug payments under the Medicare program; it does not 
change a hospital's eligibility for the 340B program. Further, under 
our proposal, we anticipate that the Medicare payment rate would 
continue to exceed the discounted 340B price the hospital received 
under the 340B program.
    As previously stated, MedPAC's estimate of ASP minus 22.5 percent 
represents a lower bound estimate of the average minimum discount and 
the actual discount is likely much higher--up to 50 percent higher, 
according to some estimates, for certain drugs. In some cases, 
beneficiary coinsurance alone exceeds the amount the hospital paid to 
acquire the drug under the 340B Program (OIG November 2015, Report OEI-
12-14-00030, page 9). We did not

[[Page 59360]]

receive public comments suggesting an alternative minimum discount off 
the ASP that would better reflect the hospital acquisition costs for 
340B-acquired drugs. We believe this is notable because hospitals have 
their own data regarding their own acquisition costs, as well as data 
regarding OPPS payment rates for drugs. The fact that hospitals did not 
submit comments suggesting an alternative minimum discount that would 
be a better, more accurate reflection of the discount at issue is 
instructive for two reasons. One, it gives us confidence that our 
suggested payment of ASP minus 22.5 percent is, in fact, the low bound 
of the estimate and keeps Medicare payment within the range where 
hospitals will not be underpaid for their acquisition costs of such 
drugs. Two, it gives us confidence that the affected hospital community 
does not believe there is some other number, such as ASP minus 24 
percent or ASP minus 17 percent, that would be a better, more accurate 
measure of what Medicare Part B should pay for drugs acquired at a 
discount through the 340B Program. Given the limitations in calculating 
a precise discount for each OPPS separately payable drug, we did not 
attempt to do so for the proposed rule. Instead, we stated that we 
believed that using the analysis from the MedPAC report is appropriate 
because MedPAC's estimate is based on all drugs separately paid under 
the OPPS except for vaccines, which are not eligible for 340B prices. 
Furthermore, the analysis is publicly available and can be replicated 
by interested parties.
    With respect to the comments about the PVP, as previously stated, 
by the end of FY 2015, the PVP had nearly 7,600 products available to 
participating entities below the 340B ceiling price, including 3,557 
covered outpatient drugs with an estimated average savings of 10 
percent below the 340B ceiling price. Participation in the PVP is 
voluntary and free, and we are aware of no reason that an eligible 
entity would not participate.
    Furthermore, we disagree that the Secretary's authority under 
section 1834(t)(14)(A)(iii)(II) of the Act to calculate and adjust 
drugs rates as necessary is limited to what some might consider minor 
changes and find no evidence in the statute to support that position. 
As previously stated, we believe that ASP minus 22.5 percent represents 
the average minimum discount that hospitals paid under the OPPS 
received for drugs acquired under the 340B Program and reiterate that, 
in many instances, the discount is much higher. Thus, we are using this 
authority to apply a downward adjustment that is necessary to better 
reflect acquisition costs of those drugs.
 Authority To Vary Payment by Hospital Group
    Comment: Some commenters asserted that only subparagraph (I), and 
not subparagraph (II), of section 1833(t)(14)(A)(iii) of the Act 
permits CMS to vary payment ``by hospital group.'' These commenters 
suggested that, by including ``by hospital group'' in subparagraph (I) 
and omitting it in subparagraph (II), Congress expressed its intent 
that CMS may not vary prices by hospital group under subparagraph (II). 
They further commented that the subparagraph (II) methodology must 
apply to ``the drug,'' and CMS may not vary payment for the same drug 
based upon the type of hospital.
    Response: We disagree with the commenters who argue that the 
proposed policy would exceed the Secretary's authority under the 
statute by inappropriately varying payments for drugs by ``hospital 
group'' because we rely on section 1833(t)(14)(A)(iii)(II) of the Act, 
even though the explicit authority to vary payment rates by hospital 
group is in subclause (I) of section 1833(t)(14)(A)(iii) of the Act, 
not subclause (II). As noted above, we believe our authority under 
section 1833(t)(14)(A)(iii)(II) of the Act to ``calculate and adjust'' 
drug payments ``as necessary for purposes of this paragraph'' gives the 
Secretary broad discretion to adjust payments for drugs, which we 
believe includes an ability to adjust payment rates according to 
whether or not certain drugs are acquired at a significant discount for 
Medicare beneficiaries. Although we acknowledge that hospitals are 
eligible to receive drugs at discounted rates under the 340B Program if 
they qualify as a ``covered entity'' for purposes of the 340B Program, 
not all drugs for which a covered entity submits a claim for payment 
under the OPPS are necessarily acquired under the 340B Program. The 
OPPS payment for those drugs not acquired under the 340B Program would 
continue to be paid at ASP+6 percent.
    We also note generally that the OPPS statute authorized the 
Secretary to establish appropriate Medicare OPPS payment rates for 
covered outpatient drugs. After specifically setting forth the payment 
methodology for 2004 and 2005, Congress provided that the Secretary 
could set OPPS drug prices in one of two ways: Using the average 
acquisition cost for the drug for that year, or using the average price 
for that drug in the year. However, in either case, prices set using 
either benchmark may be adjusted by the Secretary. Such adjustments may 
occur under section 1833(t)(14)(A)(iii)(II) of the Act if the Secretary 
determines they are ``necessary for purposes of'' section 1833(t)(14) 
of the Act, and this paragraph of the Medicare OPPS statute repeatedly 
discusses terms like ``hospital acquisition cost'' and ``variation in 
hospital acquisition costs'', and specifically notes in one section 
that it is within the Secretary's authority to determine that the 
payment rate for one drug ``may vary by hospital group.'' It would be 
odd for Congress to have a significant delegation of authority to the 
Secretary, use these specific terms and considerations throughout 
section 1833(t)(14) of the Act, and then assume the Secretary is 
foreclosed from taking into account those considerations in adjusting 
ASP ``as necessary for purposes'' of section 1833(t)(14) of the Act. 
The Secretary is generally empowered to adjust drug prices ``as 
necessary'' for the overall purposes of section 1833(t)(14) of the Act, 
and there is nothing in section 1833(t)(14) of the Act to indicate the 
Secretary is foreclosed from varying Medicare OPPS payment for a drug, 
depending on whether a 340B hospital acquired that drug at such a 
substantially lower acquisition cost.
 Authority To Establish Payment Rates in the Absence of 
Acquisition Cost Survey Data and Authority to Base Payment on an 
Average Discount
    Comment: Some commenters, including a commenter representing 
teaching hospitals, stated that the Secretary ignored the statutory 
directive in section 1833(t)(14) of the Act to set payment rates at the 
average acquisition cost for specific drugs and not to use averages for 
all drugs. In addition, the commenters stated that section 1833(t)(14) 
of the Act requires the Secretary to rely on an average of acquisition 
cost data and sales prices for a given drug, not an average discount 
that is applied to all drugs acquired under the 340B Program.
    One commenter stated that the Secretary impermissibly conflates the 
two alternative methods for setting payment rates, ``essentially 
discarding Congress' requirement that any survey data used in setting 
payment rates must be derived from statistically rigorous surveys.'' 
This commenter asserted that the Secretary is using MedPAC's estimate 
of average discounts as a proxy or replacement for the surveys required 
under subsection (iii)(I).
    Response: We disagree that section 1833(t)(14)(A)(iii)(II) of the 
Act requires use of survey data and note that, unlike

[[Page 59361]]

subclause (I) of this section, subclause (II) does not require taking 
survey data into account for determining average price for the drug in 
the year. We continue to believe that section 1833(t)(14)(A)(iii)(II) 
of the Act grants the Secretary the authority to calculate and adjust 
rates as necessary in the absence of acquisition cost. Moreover, under 
section 1833(t)(14)(A) of the Act, there still will be one starting, 
baseline price for an applicable drug, that is, the rate that applies 
under 1842(o), 1847A, or section 1847B, as the case may be, as 
calculated and adjusted by the Secretary. For drugs not acquired under 
the 340B Program, we will continue to utilize that price (ASP+6 
percent), which as we have explained ``requires no further adjustment'' 
because it ``represents the combined acquisition and pharmacy overhead 
payment for drugs and biologicals.'' However, for drugs acquired 
through the 340B Program, we are adjusting that price downward (ASP 
minus 22.5 percent) to more closely align with the hospital acquisition 
cost for a drug when purchased at a discounted price under the 340B 
Program. In the absence of acquisition costs from hospitals that 
purchase drugs through the 340B Program, we believe it is appropriate 
to exercise our authority to adjust the average price for 340B-acquired 
drugs, which are estimated to be acquired at an average minimum 
discount of ASP minus 22.5 percent. Importantly, because we are not 
using authority under section 1833(t)(14)(A)(iii)(I) of the Act (as the 
commenter suggested), we disagree with the commenter's suggestion that 
the Secretary is using the MedPAC analysis to stand in the place of the 
survey requirement under subclause (I).
 Current Agency View Contrasts With Longstanding Practice
    Comment: Some commenters contended that the proposal contrasts 
sharply with the agency's previous view and longstanding practice of 
applying the statutory scheme of section 1833(t)(14) of the Act. These 
commenters noted that since CMS began relying on subclause (II) in 2012 
to set the payment rate, the agency has never invoked the discretionary 
authority. The commenters stated that, instead, CMS stated that the 
statutory default of ASP+6 percent ``requires no further adjustment'' 
because it ``represents the combined acquisition and pharmacy overhead 
payment for drugs and biologicals.'' Moreover, the commenters added, 
CMS has applied the statutory default rate without further adjustment 
in each subsequent year. They asserted that the CY 2018 proposal, in 
contrast, departs dramatically from longstanding prior practice and 
adopts a substantially reduced payment rate of ASP minus 22.5 percent 
for drugs acquired under a 340B Program.
    Response: As discussed in the earlier background section, section 
1833(t)(14)(A)(iii)(II) of the Act grants the Secretary authority to 
adjust, as necessary for purposes of paragraph (14) of section 1833(t) 
of the Act, the applicable payment rate for separately payable covered 
outpatient drugs under the OPPS. Specifically, we believe that the 
proposed reduced payment for 340B-acquired drugs would meet the 
requirements under section 1833(t)(14)(A)(iii)(II) of the Act, which 
states that if hospital acquisition cost data are not available, the 
payment for an applicable drug shall be the average price for the drug 
in the year established under section 1842(o), section 1847A, or 
section 1847B of the Act, as the case may be, as calculated and 
adjusted by the Secretary as necessary for purposes of this paragraph 
(paragraph (14) of section 1833(t) of the Act) (emphasis added). We do 
not have hospital acquisition cost data for 340B drugs and, therefore, 
we proposed to continue to pay for these drugs under the methodology in 
our authority at section 1833(t)(14)(A)(iii)(II) of the Act which we 
determined to be ASP, and then to adjust that amount by applying a 
reduction of 22.5 percent to that payment methodology, which, as 
explained throughout this section, is the adjustment we believe is 
necessary to more closely align with the acquisition costs for drugs 
acquired under the 340B Program.
    As previously stated, we believe that using an average discount to 
set payment rates for separately payable 340B-acquired drugs will 
achieve the dual goals of (1) adjusting payments to better reflect 
resources expended to acquire such drugs and (2) protecting the 
confidential nature of discounts applied to a specific drug. 
Furthermore, our proposed and finalized policy will lower OPPS payment 
rates for Medicare beneficiaries who receive drugs at hospitals subject 
to the 340B payment reduction.
    In addition, we do not believe that the fact that we have not 
historically utilized our adjustment authority under section 
1833(t)(14)(A)(iii)(II) of the Act to adjust payment amounts for 
separately payable 340B-acquired drugs means we are permanently barred 
from adjusting these payments where, as here, we have provided a 
reasoned explanation for doing so. We continue to believe, as the 
commenter noted, that ASP+6 percent requires no further adjustment for 
drugs that are not acquired under the 340B Program because, at this 
time, we have not found similar evidence of the difference between the 
statutory benchmark (ASP+6 percent) and average hospital acquisition 
costs for such drugs. However, that is not the case for 340B-acquired 
drugs. As explained in detail throughout this section, we believe that 
a payment amount of ASP minus 22.5 percent for drugs acquired under the 
340B Program is better aligned to hospitals' acquisition costs and thus 
this adjustment, for drugs acquired under the 340B Program, is 
necessary for Medicare OPPS payment policy.
 Violation of Section 340B of the Public Health Service Act
    Comment: Some commenters stated that the proposed payment reduction 
would violate the 340B statute, which expressly defines the types of 
hospitals that may receive the benefits of 340B discounts. One 
commenter asserted that the payment proposal would ``hijack Congress' 
carefully crafted statutory scheme by seizing 340B discounts from 
hospitals and transferring the funds to providers that Congress 
excluded from the 340B Program,'' thereby violating section 340B of the 
Public Health Service Act. The commenter further noted that discounts 
under the 340B Program are only available to ``covered entities'' that 
are defined by law and that Congress thus intended the benefits of the 
program to accrue to these providers only. The commenter contended that 
Congress' reference to Medicare definitions when describing covered 
entities demonstrates that it considered the Medicare program when it 
adopted the 340B Program and decided not to grant discounts to all 
Medicare hospitals. Rather, the commenter believed that Congress made a 
deliberate decision to limit the benefits of the 340B Program only to 
Medicare hospitals that serve large numbers of low-income or other 
underprivileged patients. In addition, the commenter stated that when 
Congress has intended Federal health care programs to intrude upon the 
340B Program, it has been crystal clear.
    In contrast, commenters asserted that Congress has been wholly 
silent on the relationship between 340B and Medicare Part B, which 
indicates Congress's intent that Medicare should not ``encroach'' upon 
the 340B Program by ``redistributing [340B] discounts to non-340B 
providers.'' The commenters noted that the 340B statute and Medicare 
have coexisted for several years and that Congress has had ample

[[Page 59362]]

opportunity to amend the Medicare statute governing Part B payments 
and/or the 340B statute to expressly permit CMS to reduce Medicare 
payments to 340B hospitals, but has not done so. As an example, the 
commenters cited legislation enacted in 2010, in which Congress amended 
both the 340B and the Medicare statutes, but did not authorize CMS to 
redistribute 340B savings to non-340B hospitals or to Part B generally.
    Commenters further asserted that the proposed cut to 340B hospitals 
is also contrary to Congress's intent for the 340B Program to enable 
safety-net providers to reach more patients and furnish more 
comprehensive services and would undermine this purpose by preventing 
the operation of the 340B statute. These commenters suggested that, 
although manufacturers would still have to give 340B discounts, 340B 
participating hospitals would receive no benefit from those discounts; 
thus, the statutory purpose of 340B would be fatally undermined.
    Response: We do not believe that this proposal under section 
1833(t) of the Act is in conflict with section 340B of the Public 
Health Service Act. Section 1833(t) of the Act governs Medicare payment 
policies for covered hospital outpatient department services paid under 
the OPPS, while section 340B of the Public Health Service Act governs 
eligibility and program rules for participation in the 340B Program. 
There are no references in either section of law to each other. In 
fact, the failure of either statute to reference the other proves the 
opposite--that each statute stands on its own and neither is hindered 
or rendered null and void by the other. There is no requirement in the 
Public Health Service Act that the 340B Program ``guarantee'' or 
provide a certain profit from the Medicare program. Likewise, there is 
no requirement in section 1833(t) of the Act to pay a particular rate 
for a hospital enrolled in the 340B Program. We agree with the 
commenters that Congress was aware of both the 340B Program and the 
OPPS and of the programs' relationships to one another. However, we 
believe that the silence of each statute with respect to the other 
should not be viewed as a constraint on the broad authority conferred 
to the Secretary under section 1833(t) of the Act to establish payment 
rates under the OPPS.
    Furthermore, we are unaware of legislative history or other 
evidence to corroborate the commenters' belief that Congress' silence 
on the relationship between 340B and Medicare Part B OPPS payments 
should be viewed as constraining the Secretary's ability under section 
1833(t)(14) of the Act as to how to calculate payment rates for drugs 
acquired under the 340B Program under the OPPS. While legislative 
silence can be difficult to interpret, we note that Congress' silence 
regarding the 340B Program in enacting Medicare OPPS payment for 
certain drugs would create the opposite inference. The 340B Program 
existed well before Congress enacted the Medicare OPPS and payment for 
certain drugs. If Congress wanted to exempt 340B drugs or entities with 
a 340B agreement from Medicare OPPS payment for drugs generally, it 
easily could have done so. Instead, Congress provided for Medicare OPPS 
drug payments ``as calculated and adjusted by the Secretary as 
necessary,'' without any mention of, or restriction regarding, the 
already existent 340B Program.
    We also disagree with commenters who believe that implementing the 
OPPS payment methodology for 340B-acquired drugs as proposed will 
``eviscerate'' or ``gut'' the 340B Program. As discussed earlier in the 
background section, the findings from several 340B studies conducted by 
the GAO, OIG, and MedPAC show a wide range of discounts that are 
afforded to 340B hospitals, with some reports finding discounts of up 
to 50 percent. As stated in the proposed rule, we believe ASP minus 
22.5 percent is a conservative estimate of the discount for 340B-
acquired drugs and that even with the reduced payment, hospitals will 
continue to receive savings that can be directed at programs and 
services to carry out the intent of the 340B Program.
    With respect to the comment that the proposal would frustrate the 
intent of the 340B Program and redirect Medicare payments to other 
hospitals that do not participate in the 340B Program, we reiterate 
that we proposed to redistribute the savings in an equal and offsetting 
manner to all hospitals paid under the OPPS, including those in the 
340B Program, in accordance with the budget neutrality requirements 
under section 1833(t)(9)(B) of the Act. However, we remain interested 
in exploring ways to better target the offsetting amount to those 
hospitals that serve low-income and uninsured patients, as measured by 
uncompensated care. Details on the redistribution of funds are included 
in section XVIII. of this final rule with comment period.
 Proposal is Procedurally Defective and Inconsistent With 
Advisory Panel Recommendations
    Comment: Some commenters contended that the proposal is 
procedurally defective under the OPPS statute. The commenters asserted 
that the Secretary's justification for the proposed reduced rate rests, 
in part, on intertwined issues related to clinical use and hospital 
cost of drugs. The commenters objected to CMS' reference to studies 
suggesting that 340B hospitals may be unnecessarily prescribing more 
drugs and/or more expensive drugs relative to non-340B hospitals as 
support for proposing a payment rate that eliminates the differential 
between acquisition cost and Medicare payment. These commenters cited 
other studies in an effort to refute the evidence presented in the 
proposed rule.29 30 The commenters believed that CMS should 
have asked the HOP Panel to consider the intertwined issues of drug 
cost and clinical use prior to making a proposal to reduce payment for 
340B-acquired drugs, and the Secretary should have consulted with the 
HOP Panel in accordance with section 1833(t)(9)(A) of the Act, as part 
of the process of review and revision of the payment groups for covered 
outpatient department services and the relative payment weights for the 
groups. The commenters argued that, because the Secretary did not 
consult with the HOP Panel before publishing its 340B payment proposal, 
the Secretary acted contrary to the statute. The commenters noted that 
at the August 21, 2017 meeting of the HOP Panel that occurred after 
publication of the proposed rule, the Panel urged that CMS not finalize 
the proposed payment reduction.
---------------------------------------------------------------------------

    \29\ Dobson Davanzo & Associates, Update to a 2012 Analysis of 
340B Disproportionate Share Hospital Services Delivered to 
Vulnerable Patient Populations Eligibility Criteria for 340B DSH 
Hospitals Continue to Appropriately Target Safety Net Hospitals 
(Nov. 15, 2016). Available at: http://www.340bhealth.org/files/Update_Report_FINAL_11.15.16.pdf.
    \30\ Dobson DaVanzo, Analysis of the Proportion of 340B DSH 
Hospital Services Delivered to Low-Income Oncology Drug Recipients 
Compared to Non-340B Provider (2017). Available at: http://www.340bhealth.org/files/LowIncomeOncology.pdf;
---------------------------------------------------------------------------

    At the August 21, 2017 meeting of the HOP Panel, the Panel made the 
following recommendations with respect to the proposed policy for OPPS 
payment for drugs acquired under the 340B Program:
    The Panel recommended that CMS:
     Not finalize its proposal to revise the payment rate for 
drugs purchased under the 340B Program;
     Collect data from public comments and other sources, such 
as State

[[Page 59363]]

Medicaid programs in Texas and New York, on the potential impact of 
revising the payment rate, implementing a modifier code, and the 
effects of possible mechanisms for redistributing the savings that 
result from changing the payment rate; and
     Assess the regulatory burden of changing the payment rate 
and the potential impact on 340B hospitals of redistributing dollars 
saved.
    In addition, one commenter suggested that the proposal was 
``procedurally defective'' because the proposal was solely articulated 
through preamble and did not propose to amend the Code of Federal 
Regulations (CFR). The commenter asserted that the proposal cannot be 
implemented without a change to the Medicare regulations and stated 
that the Medicare statute requires CMS to issue regulations when 
altering the substantive standards for payment.\31\ The commenter 
stated that the proposal falls squarely within this requirement because 
it would change the substantive legal standard governing payments to 
340B hospitals for separately payable drugs.
---------------------------------------------------------------------------

    \31\ ``No rule, requirement, or other statement of policy (other 
than a national coverage determination) that establishes or changes 
a substantive legal standard governing the scope of benefits, the 
payment for services, or the eligibility of individuals, entities, 
or organizations to furnish or receive services or benefits under 
this subchapter shall take effect unless it is promulgated by the 
Secretary by regulation. . . .'' Section 1871 of the Social Security 
Act (42 U.S.C. 1395hh).
---------------------------------------------------------------------------

    Another commenter stated that CMS' proposal also violates section 
1833(t)(2)(E) of the Act because the agency is not authorized and did 
not offer a reasoned basis for applying savings achieved as a result of 
its proposal to reduce significantly payments to 340B hospitals to Part 
B services generally. Likewise, a few commenters stated that the 
Administrative Procedure Act (APA) requires the Secretary to offer a 
``reasoned basis'' for proposing to take an unprecedented action. The 
commenters suggested that, as a matter of longstanding policy and 
practice, the Secretary has never applied such a sweeping change to 
drug rates nor has it ever applied savings from OPPS outside of the 
OPPS.
    Response: We remind the commenters that our proposal was based on 
findings that ASP minus 22.5 percent reflects the minimum average 
discount that hospitals in the 340B Program receive. We are familiar 
with the reports the commenters referenced in their comments. However, 
we continue to believe, based on numerous studies and reports, that 
340B participation is not well correlated to the provision of 
uncompensated care and is associated with differences in prescribing 
patterns and drug costs. For example, as noted earlier in this section, 
GAO found that ``in both 2008 and 2012, per beneficiary Medicare Part B 
drug spending, including oncology drug spending, was substantially 
higher at 340B DSH hospitals than at non-340B hospitals,'' thus 
indicating that, on average, beneficiaries at 340B DSH hospitals were 
either prescribed more drugs or more expensive drugs than beneficiaries 
at the other non-340B hospitals in GAO's analysis.
    With respect to the HOP Panel, we believe that this comment 
reflects a misunderstanding of the Panel's role in advising the 
Secretary. Section 1833(t)(9)(A) of the Act provides that the Secretary 
shall 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 groups 
and weights. Such panel may use data collected or developed by entities 
and organizations (other than the Department of Health and Human 
Services) in conducting such review.
    The provisions described under section 1833(t)(9)(A) of the Act do 
not impose an obligation on the Secretary to consult with the HOP Panel 
prior to issuing a notice of proposed rulemaking nor do they require 
the Secretary to adopt the Panel's recommendation(s). Rather, the 
statute provides that the Secretary shall consult with the Panel on 
policies affecting the clinical integrity of the ambulatory payment 
classifications and their associated weights under the OPPS. The 
Secretary met the requirement of section 1833(t)(9)(A) of the Act at 
the HOP Panel August 21, 2017 meeting in which the Panel made 
recommendations on this very proposed policy. The HOP Panel's 
recommendations, along with public comments to the proposed rule, have 
all been taken into consideration in the development of this final rule 
with comment period.
    While we are not accepting the HOP Panel's recommendation not to 
finalize the payment reduction for drugs purchased under the 340B 
Program, as discussed later in this section, we are modifying our 
position on the modifier in an effort to ease administrative burden on 
providers, taking into account the way in which the modifier is used in 
several State Medicaid programs, as the Panel recommended. In addition, 
we have collected data from public comments on the potential impact of 
revising the payment rate, implementing a modifier, and the effects of 
possible mechanisms for redistributing the ``savings'' (or the dollars 
that result) from changing the payment rate and have assessed the 
regulatory burden of changing the payment rate and the potential impact 
on 340B hospitals of redistributing dollars saved, all of which were 
steps the HOP Panel recommended we take.
    Regarding the comments asserting that the Secretary is out of 
compliance with procedures used to promulgate regulations as described 
under section 1871 of the Act (42 U.S.C. 1395hh), we note that we have 
received public comments on our interpretation of the Medicare statute, 
and we respond to those comments above. We further note that we did not 
establish in the Code of Federal Regulations the rates for separately 
payable, nonpass-through drugs and biologicals in past rulemakings. 
Because we have not adopted regulation text that prescribes the 
specific payment amounts for separately payable, nonpass-through drugs 
and biologicals, there was no regulation text to amend to include our 
proposed payment methodology for drugs acquired under the 340B Program. 
However, this does not mean that payment rates for separately payable 
drugs were not available to the public. That information is available 
in Addendum B to this final rule with comment period, which lists the 
national payment rates for services paid under the OPPS, including the 
payment rates for separately payable drugs and biologicals based on 
ASP+6 percent. We note that we have not provided the reduced payment 
rates for separately payable drugs and biologicals acquired under the 
340B Program in Addendum B, but hospitals can arrive at those rates 
using the ASP+6 percent rate that is included in Addendum B. Finally, 
with respect to comments on redistribution of the dollars that result 
from the 340B payment policy, we are finalizing our proposal to achieve 
budget neutrality for the payment reduction for 340B-acquired drugs 
through an increase in the conversion factor. We disagree that our 
proposal to apply budget neutrality in accordance with section 
1833(t)(9)(B) of the Act violates the APA or statutory authority. 
Further, we note that if we decide to take a different approach with 
respect to the redistribution of funds for budget neutrality in the 
future, we will consider such approach in future rulemaking.
 Impact on Medicare Beneficiary Cost-Sharing
    Comment: Some commenters noted that Medicare beneficiaries, 
including dual-eligible Medicare beneficiaries,

[[Page 59364]]

would not directly benefit from a lowered drug copayment amount. The 
commenters noted that many beneficiaries have supplemental insurance 
that covers their out-of-pocket drug costs, in whole or in part. These 
commenters asserted that the proposal would actually increase their 
out-of-pocket costs for other Part B benefits.
    Response: The cost-sharing obligation for Medicare beneficiaries is 
generally 20 percent of the Medicare payment rate. While many Medicare 
beneficiaries may have supplemental coverage that covers some or all of 
their out-of-pocket expenses, not all beneficiaries have such coverage. 
This policy will lower both the amount that a beneficiary is 
responsible to pay as well as the amount that any supplemental 
insurance, including the Medicaid program, will pay on behalf of the 
beneficiary. While we are implementing this policy in a budget neutral 
manner equally across the OPPS for CY 2018 for non-drug items and 
services, we may revisit how any savings from the lowered drug payment 
rate for 340B drugs may be allocated in the future and continue to be 
interested in ways to better target the savings to hospitals that serve 
the uninsured and low-income populations or that provide a 
disproportionate share of uncompensated care.
    In addition, as noted earlier in this section, in the hospital 
setting, not only are beneficiaries liable for cost-sharing for drugs 
they receive, but they also incur a ``facility fee'' solely because the 
drug was furnished in the hospital setting. As described in section 
II.A.3.b. of this final rule with comment period, for CY 2018, we are 
adopting a policy to conditionally package Level 1 and Level 2 drug 
administration services and believe that these steps taken together may 
help encourage site-neutral care in that beneficiaries may receive the 
same drugs and drug administration services at the physician office 
setting without a significant difference in their financial liability 
between settings.
 Calculation of Savings
    Comment: Commenters disagreed with CMS' impact estimate and a few 
commenters provided their own analysis of the 340B drug payment 
proposal. One commenter believed that even if CMS implements the policy 
as proposed, in a budget neutral manner within the OPPS through an 
offsetting increase in the conversion factor, payments for non-drug 
APCs would increase across hospitals by approximately 3.7 percent (in 
contrast to CMS' estimate of 1.4 percent). According to the commenter, 
this redistribution would result in a net decrease in payments to 340B 
hospitals of approximately 2.6 percent, or approximately $800 million. 
The commenter asserted that CMS' proposal would remove $800 million 
intended to support what it referred to as the congressionally mandated 
mission of 340B hospitals from these already vulnerable facilities and 
redistribute these dollars to other hospitals that do not participate 
in the 340B Program. Likewise, the commenter challenged CMS' suggested 
alternative approaches to achieving budget neutrality, such as applying 
offsetting savings to specific services within the OPPS or outside of 
the OPPS to Part B generally (such as to physician services under the 
Medicare Physician Fee Schedule), which the commenter believed would 
similarly penalize these most vulnerable hospitals and inhibit their 
efforts to carry out the purpose of the 340B Program. Finally, other 
commenters noted that implementing the proposed policy in a non-budget 
neutral manner would effectively ``gut'' the 340B Program.
    Response: With respect to comments on the proposed distribution of 
savings, we refer readers to section XVIII. of this 2018 OPPS/ASC final 
rule with comment for discussion on the redistribution of savings that 
result from the estimated impact of the 340B policy as well as 
calculation of budget neutrality. Briefly, for CY 2018, we are 
implementing the alternative payment methodology for drugs purchased 
under the 340B Program in a budget neutral manner within the OPPS 
through an offsetting increase in the conversion factor for nondrug 
services. Therefore, the resulting savings from the 340B payment policy 
will be redistributed pro rata through an increase in rates for non-
drug items and services under the OPPS. We have already addressed 
comments relating to the assertion that our proposal would ``gut'' or 
``eviscerate'' the 340B Program. Likewise, we have addressed the 
interaction between our authority under section 1833(t)(14)(A) of the 
Act relative to section 340B of the Public Health Service Act in our 
responses above.
(3) Other Areas
    Comment: MedPAC commented reiterating its recommendations to 
Congress in its March 2016 Report to the Congress. Specifically, MedPAC 
commented that it recommended that payment rates for all separately 
payable drugs provided in a 340B hospital should be reduced to 10 
percent of the ASP rate (resulting in ASP minus 5.3 percent after 
taking application of the sequester into account). MedPAC noted that 
its March 2016 report also included a recommendation to the Congress 
that savings from the reduced payment rates be directed to the 
Medicare-funded uncompensated care pool, which would target hospitals 
providing the most care to the uninsured, and in that way benefit 
indigent patients, and that payments be distributed in proportion to 
the amount of uncompensated care that hospitals provide. MedPAC 
believed that legislation would be needed to direct drug payment 
savings to the uncompensated care pool and noted that current law 
requires the savings to be retained with the OPPS to make the payment 
system budget neutral. MedPAC encouraged the Secretary to work with 
Congress to enact legislation necessary to allow MedPAC's 
recommendation to be implemented, if such recommendation could not be 
implemented administratively. MedPAC further noted that legislation 
would also allow Medicare to apply the policy to all OPPS separately 
payable drugs, including those on pass-through payment status.
    Response: We thank MedPAC for its comments and for its 
clarification that its recommendation that ``[t]he Congress should 
direct the Secretary of the Department of Health and Human Services to 
reduce Medicare payment rates for 340B hospitals' separately payable 
340B drugs by 10 percent of the average sales price (ASP)'' was 
intended to be 10 percent lower than the current Medicare rate of ASP+6 
percent and would result in a final OPPS payment of ASP minus 5.3 
percent when taking the sequester into account. However, we do not 
believe that reducing the Medicare payment rate by only 10 percentage 
points below the current payment rate of ASP+6 percent (that is, ASP 
minus 4 percent) would better reflect the acquisition costs incurred by 
340B participating hospitals. In its May 2015 Report to the Congress, 
MedPAC estimated that the average minimum discount for a 340B hospital 
paid under the OPPS was ASP minus 22.5 percent, which it noted was a 
conservative, ``lower bound'' estimate. Further, in its March 2016 
Report to the Congress, MedPAC stated that, ``[i]n aggregate, the 
Office of Inspector General (OIG) estimates that discounts across all 
340B providers (hospitals and certain clinics) average 34 percent of 
ASP, allowing these providers to generate significant profits when they 
administer Part B drugs (MedPAC March 2016 Report to Congress, page 
76). MedPAC further noted the estimate of the aggregate discount was 
based on all covered

[[Page 59365]]

entities (hospitals and certain clinics). Because 340B hospitals 
accounted for 91 percent of Part B drug spending for all covered 
entities in 2013, it is reasonable to assume that 340B hospitals 
received a discount similar to 33.6 percent of ASP (MedPAC March 2016 
Report to Congress, page 79).
    Further, as we stated in the proposed rule, the GAO reported that 
the amount of the 340B discount ranges from an estimated 20 to 50 
percent discount, compared to what the entity would have otherwise paid 
to purchase the drug. In addition, voluntary participation in the PVP 
results in a covered entity paying a subceiling price on certain 
covered outpatient drugs (estimated to be approximately 10 percent 
below the ceiling price). (U.S. Department of Health and Human 
Services, HRSA FY 2018 Budget Justification)
    Accordingly, we continue to believe that ASP minus 22.5 percent 
represents a conservative estimate of the average minimum discount that 
340B-enrolled hospitals paid under the OPPS receive for drugs purchased 
with a 340B Program discount and that hospitals likely receive an even 
steeper discount on many drugs, especially brand name drugs. We also 
continue to believe that section 1833(t)(14)(A)(iii)(II) of the Act 
allows the Secretary to make adjustments, if hospital acquisition cost 
data is not available, as necessary, so that the Medicare payment rate 
better represents the acquisition cost for drugs and biologicals that 
have been acquired with a 340B discount.
    With respect to MedPAC's comment regarding targeting the savings to 
uncompensated care, we refer readers to section XVIII.A.5. of this 
final rule with comment period.
 Comments Regarding Rural Hospitals
    Comment: Commenters representing rural hospitals, particularly RRCs 
and SCHs, expressed opposition to the proposal, noting that it could be 
especially harmful to rural hospitals in light of the ``hospital 
closure crisis.'' One commenter cited a report from a health analytics 
company and noted that since 2010, 80 rural hospitals have closed and 
that one-third of remaining rural hospitals are vulnerable to closure, 
with 41 percent of rural hospitals operating at a financial loss.
    Commenters noted that rural hospitals enrolled in the 340B Program 
depend on the drug discounts to provide access to expensive, necessary 
care such as labor and delivery and oncology infusions. The commenters 
stated that rural Americans are more likely to be older, sicker, and 
poorer than their urban counterparts. The commenter gave examples of 
rural hospitals that have used profit margins on 340B-acquired drugs to 
offset uncompensated care and staff emergency departments. In addition, 
the commenters stated that a portion of rural hospitals are excluded 
from purchasing orphan drugs through the 340B Program. Therefore, the 
commenters stated, these hospitals often use their 340B savings to 
offset the expense of purchasing orphan drugs, which they note comprise 
a growing number of new drug approvals.
    In addition, a commenter representing several 340B-enrolled 
hospitals stated that multiple hospitals report that the 340B Program 
is the reason the hospital can provide oncology infusions in their 
local community and that the chemotherapy infusion centers tend to be 
small with variation in patients served based on the needs of the 
community. The commenter stated that, without the 340B Program, many 
rural hospitals would likely need to stop providing many of the 
outpatient infusions, thereby forcing patients to either travel 35 
miles (in the case of SCHs which must generally be located at least 35 
miles from the nearest like hospital) to another facility or receive 
care in a hospital inpatient setting, which is a more costly care 
setting. Another commenter, a member of Congress representing a 
district in the State of Ohio, commented that while the 340B Program is 
in need of reform, the program remains an important safety net for 
rural hospitals in Ohio and around the country. The commenter stated 
that 340B hospitals offer safety-net programs to their communities, 
including opioid treatment programs, behavioral health science 
programs, and others. The commenter further stated that the 340B drug 
payment proposal did not address broader structural issues with the 
340B Program itself, including lack of oversight and clear guidance and 
definitions, and that the proposal could harm the hospitals that the 
340B Program was intended to help. In addition, the commenter noted 
that ``arbitrary cuts'' to the 340B Program for safety-net hospitals 
could have detrimental impacts on the economic growth and opportunities 
in the communities those hospitals serve and that the proposal does not 
advance the larger goals of 340B Program reform.
    One commenter noted that SCHs face 47.5 percent higher levels of 
bad debt and 55 percent lower profit margins. Thus, even with 340B 
discounts, the commenter argued that rural hospitals like rural SCHs 
are financially threatened. Commenters also noted that rural hospitals 
are typically located in lower income economic areas and are not able 
to absorb the proposed reduction in drug payment for 340B purchased 
drugs. Moreover, commenters suggested that the proposal 
disproportionately impacts rural hospitals compared to its effect on 
urban hospitals.
    Finally, commenters requested that, if CMS finalizes the policy as 
proposed, CMS exempt hospitals with a RRC or SCH designation from the 
alternative 340B drug payment policy. The commenters asserted that RRCs 
and SCHs are rural safety-net hospitals that provide localized care for 
Medicare beneficiaries and also serve as ``economic engines'' for many 
rural communities.
    Response: We share commenters' concerns about access to care, 
especially in rural areas where access issues may be even more 
pronounced than in other areas of the country. We note our proposal 
would not alter covered entities' access to the 340B Program. The 
alternative 340B drug payment methodology solely changes Medicare 
payment for 340B-acquired drugs.
    Medicare has long recognized the particularly unique needs of rural 
communities and the financial challenges rural hospital providers face. 
Across the various Medicare payment systems, CMS has established a 
number of special payment provisions for rural providers to maintain 
access to care and to deliver high quality care to beneficiaries in 
rural areas. With respect to the OPPS, section 1833(t)(13) of the Act 
provided the Secretary the authority to make an adjustment to OPPS 
payments for rural hospitals, effective January 1, 2006, if justified 
by a study of the difference in costs by APC between hospitals in rural 
areas and hospitals in urban areas. Our analysis showed a difference in 
costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a 
payment adjustment for rural SCHs of 7.1 percent for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of 
the Act. We have continued this 7.1 percent payment adjustment since 
2006.
    In the CY 2018 OPPS/ASC proposed rule, we sought public comment for 
future policy refinements on whether, due to access to care issues, 
exceptions should be granted to certain groups of hospitals, such as 
those with special adjustments under the OPPS (for example, rural SCHs 
or PPS-exempt cancer hospitals) if a policy were adopted to adjust OPPS 
payments for drugs acquired under the 340B program.

[[Page 59366]]

Taking into consideration the comments regarding rural hospitals, we 
believe further study on the effect of the 340B drug payment policy is 
warranted for classes of hospitals that receive statutory payment 
adjustments under the OPPS. In particular, given challenges such as low 
patient volume, it is important that we take a closer look at the 
effect of an ASP minus 22.5 percent payment on rural SCHs.
    With respect to RRCs, we note that there is no special payment 
designation for RRCs under the OPPS. By definition, RRCs must have at 
least 275 beds and therefore are larger relative to rural SCHs. In 
addition, RRCs are not subject to a distance requirement from other 
hospitals. Accordingly, at this time, we are not exempting RRCs from 
the 340B payment adjustment.
    For CY 2018, we are excluding rural SCHs (as described under the 
regulations at 42 CFR 412.92 and designated as rural for Medicare 
purposes) from this policy. We may revisit our policy to exempt rural 
SCHs, as well as other hospital designations for exemption from the 
340B drug payment reduction, in the CY 2019 OPPS rulemaking.
 Children's and PPS-Exempt Cancer Hospitals
    Comment: Commenters representing children's hospitals 
(``children's'') raised objections to the proposal because of the 
potential impact on the approximate 8,000 children with end-stage renal 
disease (ESRD) who are eligible for Medicare. One commenter cited that 
currently 48 children's hospitals participate in the 340B Program and 
rely on the savings the program provides to enhance care for vulnerable 
children. According to the commenter, pediatric ESRD patients require 
high levels of care and rely on life-saving pharmaceuticals that often 
come at a high cost. Therefore, the commenters posited that it is 
because children's patients are more expensive to treat and not because 
of inappropriate drug use that 340B hospitals incur higher drug 
expenditures. In addition, the commenters expressed concern with the 
effect the 340B drug payment policy may have on State Medicaid 
programs, considering Medicaid is the predominant payer type for 
children's hospitals. The commenters requested that, unless CMS is able 
to examine the impact on pediatric Medicare beneficiaries, CMS should 
exempt children's hospitals from the alternative 340B drug payment 
methodology.
    An organization representing PPS-exempt cancer hospitals commented 
that CMS' proposal would severely harm the hospitals that treat the 
most vulnerable and underserved patients and communities, undermining 
these hospitals' ability to continue providing programs designed to 
improve access to services. The commenter believed that assumptions 
alluded to in the CY 2018 OPPS/ASC proposed rule, which suggested that 
providers are abusing the savings generated from the 340B Program or 
potentially creating incentives to over utilize drugs, are inaccurate 
and that clinicians provide the care that is necessary to treat a 
patient's disease. The commenter suggested that CMS work with, or defer 
to, HRSA to first conduct a complete analysis of how the 340B Program 
is utilized for the benefit of patients prior to proposing any changes 
to Medicare payment for drugs purchased through the program.
    Response: We share the commenters' views on protecting access to 
high quality care for all Medicare beneficiaries, including those 
treated in children's or PPS-exempt cancer hospitals. Further, because 
of how these classes of hospitals are paid under the OPPS, we recognize 
that the 340B drug payment proposal may not result in reduced payments 
for these hospitals in the aggregate.
    Specifically, in accordance with section 1833(t)(7)(D)(ii) of the 
Act, we make transitional outpatient payments (TOPs) to both children's 
and PPS-exempt cancer hospitals. That is, these hospitals are 
permanently held harmless to their ``pre-BBA amount,'' and they receive 
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. Accordingly, if 
we were to reduce drug payments to these hospitals on a per claim 
basis, it is very likely that the reduction in payment would be paid 
back to these hospitals at cost report settlement, given the TOPs 
structure.
    Accordingly, we believe it is appropriate to exempt children's and 
PPS-exempt cancer hospitals from the alternative 340B drug payment 
methodology for CY 2018. Therefore, for CY 2018, we are excluding 
children's and PPS-exempt cancer hospitals from the alternative 340B 
drug payment policy. As discussed in a later section in this final rule 
with comment period, because we are redistributing the dollars in a 
budget neutral manner within the OPPS through an offsetting increase to 
the conversion factor, children's hospitals and PPS-exempt cancer 
hospitals will receive a higher payment when providing a non-drug 
service.
    In summary, we are adopting for CY 2018 an exemption for rural 
SCHs, children's hospitals, and PPS-exempt cancer hospitals from the 
alternative 340B drug payment methodology. These three types of 
hospitals will not be subject to a reduced drug payment for drugs that 
are purchased under the 340B Program in CY 2018. We may revisit the 
specific types of hospitals excluded, if any, from the 340B payment 
policy in CY 2019 rulemaking. However, as discussed in more detail 
below, it remains important to collect information on which drugs being 
billed to Medicare were acquired under the 340B Program. Accordingly, 
these three types of hospitals will still be required to report an 
informational modifier ``TB'' for tracking and monitoring purposes. We 
may revisit this 340B drug payment policy, including whether these 
types of hospitals should continue to be excepted from the reduced 
Medicare payment rate, in future rulemaking.
 Biosimilar Biological Products
    Comment: Some commenters expressed opposing views about applying 
the proposed 340B payment methodology to biosimilar biological 
products. One pharmaceutical manufacturer recommended that the 
Secretary use his equitable adjustment authority at section 
1833(t)(2)(E) of the Act to apply a narrow equitable adjustment to 
biosimilar biological products with pass-through payment status to pay 
for these drugs at ASP minus 22.5 percent of the reference product 
rather than ASP+6 percent of the reference product. The commenter 
asserted that excluding biosimilar biological products from the 
alternative 340B payment methodology would result in a significant 
payment differential between biosimilar biological products and 
reference products which may cause providers to switch patients to 
different products for financial reasons, rather than clinical factors. 
The commenter stated that, if the policy is implemented as proposed, 
the competitive biosimilar marketplace would significantly change 
because Medicare would pay more for the biosimilar biological product 
with pass-through payment status and weaken market forces. The 
commenter estimated that if the 340B drug policy is implemented as 
proposed, up to $50 million of any savings could be lost due to 
hospitals switching to the biosimilar biological product on pass-
through payment status (that will be paid at ASP+6 percent of the 
reference product). Moreover, the commenter pointed out that CMS' 
policy to only

[[Page 59367]]

provide pass-through payments for the first eligible biosimilar 
biological product of any reference biological would also create a 
similar payment disadvantage for any subsequent biosimilar biological 
product, which would be ineligible for pass-through payment under CMS' 
policy.
    Another commenter, a different pharmaceutical manufacturer, 
requested that CMS exclude biosimilar biological products from the 
proposed payment adjustment until such time as the biosimilar 
biological product market is better established. The commenter 
indicated that while a biosimilar biological product is less expensive 
to the Medicare program, hospitals are incented by the 340B Program to 
purchase the originator product because of ``the spread'' or payment 
differential with respect to the originator product. Moreover, the 
commenter stated that applying the proposed adjustment to payment for 
biosimilar biological products in certain hospitals will retain market 
share for the more expensive reference product that is further 
compounded by market practices of volume-based rebates and exclusionary 
contracts for the reference product.
    Response: We understand the commenters' concerns. As discussed in 
section V.B.2. of this CY 2018 OPPS/ASC final rule with comment period, 
we are adopting the biosimilar biological products HCPCS coding 
established under the CY 2018 MPFS final rule. Briefly, we adopted a 
final policy to establish separate HCPCS codes for each biosimilar 
biological product for a particular reference product beginning January 
1, 2018. In addition, we also stated in section V.B.2. of this CY 2018 
OPPS/ASC final rule with comment period that we are making a conforming 
amendment to our pass-through payment policy for biosimilar biological 
products such that each FDA-approved biosimilar biological product will 
be eligible for transitional pass-through payment instead of only the 
first biosimilar for a particular reference product.
    Therefore, given the policy changes affecting coding and payment 
for biosimilar biological products that we are adopting in the CY 2018 
MPFS final rule and this CY 2018 OPPS/ASC final rule with comment 
period, we disagree with the commenters that we should exclude 
biosimilar biological products from the 340B payment policy or use our 
equitable adjustment authority under section 1833(t)(2)(E) of the Act 
to adjust payment to ASP minus 22.5 percent of the reference product 
for biosimilar biological products with pass-through payment status. We 
believe the statutory provision on transitional drug pass-through 
payment under section 1833(t)(6)(D)(i) of the Act provides for an 
explicit payment for drugs eligible for pass-through payment. 
Therefore, we are unable to accept the commenter's request to pay a 
biosimilar biological product on pass-through payment status the 
reduced 340B payment rate. We are adopting a policy that any biosimilar 
biological product with pass-through payment status will be exempt from 
the alternative payment methodology for 340B drugs and will continue to 
be paid at ASP+6 percent of the reference product. Biosimilar 
biological products that are not on pass-through payment status will be 
paid ASP minus 22.5 percent of the reference product. We believe it is 
appropriate to pay this amount for biosimilar biological products as it 
is consistent with the amount paid for non-340B-acquired biosimilar 
biological products, which is ASP+6 percent of the reference product. 
Currently, there are two biosimilar biological products available on 
the market and both are on pass-through payment status for the entirety 
of CY 2018. Therefore, no biosimilar biological products currently 
available will be affected by the alternative payment methodology for 
340B-acquired drugs for CY 2018. We recognize the concerns about paying 
different rates for similar drugs and biologicals and continue to 
assess the feasibility and practicality of an alternative 340B payment 
adjustment for biosimilar biological products in the future.
 Nonexcepted Off-Campus Hospital Outpatient Departments
    Comment: A few commenters noted that CMS' proposed alternative 
payment methodology for 340B purchased drugs would not apply to 
nonexcepted off-campus provider-based departments (PBDs) of a hospital 
and could result in behavioral changes that may undermine CMS' policy 
goals of reducing beneficiary cost-sharing liability and undercut the 
goals of section 603 of the Bipartisan Budget Act of 2015. Commenters 
recommended that, if CMS adopts a final policy to establish an 
alternative payment methodology for 340B drugs in CY 2018, CMS also 
apply the same adjustment to payment rates for drugs furnished in 
nonexcepted off-campus PBDs of a hospital if such drugs are acquired 
under the 340B Program. In addition, the commenters believed that 
because CMS did not propose to limit the expansion of services or 
volume increases at excepted off-campus PBDs, CMS will create financial 
incentives for hospitals to shift or reallocate services to the site of 
care that pays the highest rate for an item or service.
    Response: We appreciate the commenter's concerns about potential 
unintended consequences of our proposal. We will continue to monitor 
the billing patterns of claims submitted by nonexcepted off-campus 
outpatient PBDs as we continue to explore whether to pursue future 
rulemaking on the issues of clinical service line expansion or volume 
increases, and other related section 603 implementation policies.
    In the CY 2017 OPPS/ASC final rule with comment period, we 
discussed the provision of section 603 of the Bipartisan Budget Act of 
2015 (Pub. L. 144-74), 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, are not considered covered outpatient 
department services as defined under section 1833(t)(1)(B) of the Act 
for purposes of payment under the OPPS and are instead paid ``under the 
applicable payment system'' under Medicare Part B if the requirements 
for such payment are otherwise met (81 FR 79699). We issued an interim 
final rule with comment period along with the CY 2017 OPPS/ASC final 
rule with comment period to establish the MPFS as the ``applicable 
payment system,'' which will apply in most cases, and payment rates 
under the MPFS for non-excepted items and services furnished by 
nonexcepted off-campus outpatient provider based departments (PBDs) (81 
FR 79720). (Other payment systems, such as the Clinical Laboratory Fee 
Schedule, continue to apply in appropriate cases.) That is, items and 
services furnished by nonexcepted off-campus outpatient PBDs, are 
nonexcepted items and services that are not covered outpatient 
services, and thus, are not payable under the OPPS. Rather, these 
nonexcepted items and services are paid ``under the applicable payment 
system,'' which, in this case, is generally the MPFS.
    As we discussed in the CY 2017 OPPS/ASC interim final with comment 
period (81 FR 79718) and reiterated in the CY 2018 MPFS final rule, 
payment for Part B drugs that would be separately payable under the 
OPPS (assigned status indicator ``K'') but are not payable under the 
OPPS because they are furnished by nonexcepted off-campus outpatient 
PBDs will be paid in

[[Page 59368]]

accordance with section 1847A of the Act (generally, ASP+6 percent), 
consistent with Part B drug payment policy in the physician office. We 
did not propose to adjust payment for 340B-acquired drugs in 
nonexcepted off-campus PBDs in CY 2018 but may consider adopting such a 
policy in CY 2019 notice-and-comment rulemaking.
 Data Collection and Modifier
    Comment: The vast majority of commenters objected to CMS' intention 
to require hospitals that do not purchase a drug or biological through 
the 340B program to apply a modifier to avoid a reduced drug payment. A 
few commenters supported the modifier proposal. The commenters who 
disagreed with proposal stated that it would place an unnecessary 
administrative and financial burden on hospitals that do not 
participate or are not eligible to participate in the 340B Program. 
Similarly, the commenters stated that the modifier requirement as 
described in the proposed rule would put a financial and administrative 
strain on hospitals with fewer resources. In addition, the commenters 
contended that a requirement for hospitals to report a modifier for 
drugs that were not acquired under the 340B Program would place 
hospitals at significant risk for noncompliance if not implemented 
correctly, which many commenters believe is nearly impossible to do. As 
an alternative approach, numerous commenters recommended that CMS 
require hospitals that do purchase a drug under the 340B Program to 
report the modifier, rather than those that do not.
    Regarding a January 1, 2018, implementation date for the modifier, 
some commenters expressed concern and doubted their ability to 
implement the modifier as described in the proposed rule accurately. 
The commenters indicated that additional time would be needed to adapt 
billing systems, allow for testing of claims reported with the 
modifier, and educate staff. Based on discussion of how the modifier 
would work in the proposed rule, the commenters stated that hospitals 
would either have to append the modifier to the claim at the time the 
drug is furnished, or retroactively apply the modifier, thus delaying 
claims submission to Medicare.
    The commenters provided detailed descriptions on hospital pharmacy 
set up, including information on software tools to support inventory 
management of drugs dispensed to 340B and non-340B patients (based on 
HRSA definition of an eligible patient). One commenter indicated that 
the drug supply system used for purchasing covered outpatient drugs is 
completely separate from--and does not necessarily communicate with--
the hospital's pharmacy drug dispensing and patient billing systems. 
While these software tools enable split-billing to distinguish 340B and 
non-340B patients, the commenters noted that this patient determination 
is typically not done in real time when a drug is administered. 
Commenters noted that 340B hospitals that use split-billing software do 
not receive information on 340B patient status on a daily basis and the 
proposal could result in delayed billing. The commenters stated that 
hospitals typically make these determinations retrospectively and it 
may be 3 to 10 days post-dispensing before the hospital knows whether a 
drug was replenished under 340B or at regular pricing. The commenters 
noted that, under this ``replenishment model,'' hospitals track how 
many 340B-eligible drugs are used, and once enough drugs are dispensed 
to complete a package, they will replenish the drug at the 340B rate. 
As such, the commenters argued that hospitals do not know when the drug 
is dispensed whether it will cost them the 340B rate or the wholesale 
acquisition cost (WAC). Therefore, the commenters expressed concern 
that the modifier requirement as described in the proposed rule would 
result in billing delays and, for some hospitals, may cause a short-
term interruption in cash flow.
    In addition, the commenters requested that, while the payment 
reduction would apply to nonpass-through separately payable drugs 
purchased with a 340B discount, CMS accept the modifier when reported 
with drug HCPCS codes that are packaged (and for which no separate 
payment will be made) to reduce or prevent operational burden that may 
be caused if affected providers have to determine on a claim-by-claim 
basis whether a drug is eligible for separate payment.
    With respect to State Medicaid programs that also require a 
modifier to identify 340B-purchased drugs on outpatient claims, the 
commenters noted that CMS' proposal would be counter to Medicaid 
requirements and would create confusion and add complexity for 
providers who treat Medicaid recipients in multiple states. The 
commenters reported that many State Medicaid programs require a 
modifier to identify drugs that were purchased under 340B to administer 
their Medicaid drug rebate programs to prevent duplicate discounts on 
340B drugs. The commenters suggested that if CMS reversed its position 
on application of the modifier, it would ensure crossover claims 
(claims transferred from Medicare to Medicaid) are correctly 
interpreted by State Medicaid programs so that they can appropriately 
request manufacturer rebates on drugs not purchased under the 340B 
Program. Moreover, some commenters believed that if CMS required the 
modifier to be reported for 340B-purchased drugs, State Medicaid 
programs would also adopt the modifier, leading to national uniformity 
in reporting of 340B drugs.
    Finally, in the event that CMS required the modifier on claims for 
340B drugs, rather than non-340B drugs, commenters sought clarity on 
whether the modifier applies only to drugs purchased under the 340B 
Program which are subject to a ceiling price payment from the 
manufacturer or if the modifier would also apply to drugs purchased by 
a 340B-registered facility, but purchased under the Prime Vendor 
Program for which only 340B facilities are eligible. One commenter 
asked that CMS emphasize that 340B pricing is not available on drugs 
furnished to hospital inpatients.
    Response: We appreciate the detailed comments that were submitted. 
As noted in the proposed rule, we did not propose to establish the 
modifier but rather noted our intent to establish the modifier, 
regardless of whether we adopted the alternative payment methodology 
for drugs acquired through the 340B Program. However, we are responding 
to some of the comments submitted in this final rule with comment 
period with information on this modifier that we believe is important 
to communicate as soon as possible. We will consider whether additional 
details will need to be communicated through a subregulatory process, 
such as information posted to the CMS Web site.
    After considering the administrative and financial challenges 
associated with providers reporting the modifier as described in the CY 
2018 OPPS/ASC proposed rule, and in order to reduce regulatory burden, 
we are reversing our position on how the modifier will be used by 
providers to effectuate the payment adjustment for 340B-purchased 
drugs.
    Specifically, beginning January 1, 2018, providers who are not 
excepted from the 340B payment adjustment will report modifier ``JG'' 
(Drug or biological acquired with 340B Drug Pricing Program Discount) 
to identify if a drug was acquired under the 340B Program. This 
requirement is aligned with the modifier requirement already mandated 
in several States under their Medicaid

[[Page 59369]]

programs. Therefore, we believe that this option will pose less of an 
administrative burden. Further, having consistent application of the 
modifier being required for a drug that was purchased under the 340B 
Program instead of a drug not purchased under the 340B Program will 
help improve program integrity by helping ensure that hospitals are not 
receiving ``duplicate discounts'' through both the Medicaid rebate 
program and the 340B Program. The phrase ``acquired under the 340B 
Program'' is inclusive of all drugs acquired under the 340B Program or 
PVP, regardless of the level of discount applied to the drug. Drugs 
that were not acquired under the 340B Program should not be reported 
with the modifier ``JG''. For separately payable drugs (status 
indicator ``K''), application of modifier ``JG'' will trigger a payment 
adjustment such that the 340B-acquired drug is paid at ASP minus 22.5 
percent. In response to the commenters' request that we allow the 340B 
modifier to be reported with status indicator ``N'' drugs (that is, 
drugs that are always packaged), we will accept modifier ``JG'' or 
``TB'' to be reported with a packaged drug (although such modifier will 
not result in a payment adjustment).
    In addition, beginning January 1, 2018, providers that are excepted 
from the 340B drug payment policy for CY 2018, which include rural 
SCHs, children's hospitals, and PPS-exempt cancer hospitals, should not 
report modifier ''JG''. Instead, these excepted providers should report 
the informational modifier ``TB'' (Drug or Biological Acquired With 
340B Drug Pricing Program Discount, Reported for Informational 
Purposes) to identify OPPS separately payable drugs purchased with a 
340B discount. The informational modifier ``TB'' will facilitate the 
collection and tracking of 340B claims data for OPPS providers that are 
excepted from the payment adjustment in CY 2018. However, use of 
modifier ``TB'' will not trigger a payment adjustment and these 
providers will receive ASP+6 percent for separately payable drugs 
furnished in CY 2018, even if such drugs were acquired under the 340B 
Program.
    For drugs administered to dual-eligible beneficiaries (that is, 
beneficiaries covered under both Medicare and Medicaid) for whom 
covered entities do not receive a discount under the 340B Program, the 
State Medicaid programs should be aware of modifier ``JG'' to help 
further prevent inappropriate billing of manufacturer rebates.
    With respect to comments about timing to operationalize a modifier, 
we note that hospitals have been on notice since the proposed rule went 
on display at the Office of the Federal Register on July 13, 2017 that 
we intended to establish a modifier to implement the policy for payment 
of drugs acquired under the 340B Program, if finalized. In addition, 
the modifier will not be required until January 1, 2018, which after 
display of this final rule with comment period will give hospitals two 
additional months to operationalize the modifier. Under section 1835(a) 
of the Act, providers have 12 months after the date of service to 
timely file a claim for payment. Therefore, for those hospitals that 
may need more time to ensure that they are in compliance with the 
modifier requirements, they have 12 months from the date of service to 
do so.
    Further, to the extent many hospitals already report a modifier 
through their State Medicaid program, we believe that also requiring 
the modifier on outpatient claims for 340B-acquired drugs paid for 
under the OPPS would not be a significant administrative burden and 
would promote consistency between the two programs. With respect to 
providers in States that are not currently required to report a 
modifier under the Medicaid program, we note that providers are 
nonetheless responsible for ensuring that drugs are furnished to 
``covered patients'' under the 340B Program and, therefore, should 
already have a tracking mechanism in place to ensure that they are in 
compliance with this requirement. Furthermore, modifiers are commonly 
used for payment purposes; in this case, the presence of the modifier 
will enable us to pay the applicable 340B drug rate of ASP minus 22.5 
percent and track these claims in the Medicare data (in the case of 
``JG'' modifier) and will allow us to track other drugs billed on 
claims that are not subject to the payment reduction (modifier ``TB''). 
In addition, the presence of the both modifiers will enable Medicare 
and other entities to conduct research on 340B-acquired drugs in the 
future.
    We remind readers that our 340B payment policy applies to only OPPS 
separately payable drugs (status indicator ``K'') and does not apply to 
vaccines (status indicator ``L'' or ``M''), or drugs with transitional 
pass-through payment status (status indicator ``G'').
    Finally, Federal law permits Medicare to recover its erroneous 
payments. Medicare requires the return of any payment it erroneously 
paid as the primary payer. Medicare can also fine providers for 
knowingly, willfully, and repeatedly billing incorrectly coded claims. 
Providers are required to submit accurate claims, maintain current 
knowledge of Medicare billing policies, and ensure all documentation 
required to support the validity of the services reported on the claim 
is available upon request.
d. Summary of Final Policies for CY 2018
    In summary, for CY 2018, in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act, separately payable Part B drugs 
(assigned status indicator ``K''), other than vaccines and drugs on 
pass-through payment status, that meet the definition of ``covered 
outpatient drug'' as defined in the section 1927(k) of the Act, that 
are acquired through the 340B Program or through the 340B PVP at or 
below the 340B ceiling price will be paid at the ASP minus 22.5 percent 
when billed by a hospital paid under the OPPS that is not excepted from 
the payment adjustment. Part B drugs or biologicals excluded from the 
340B payment adjustment include vaccines (assigned status indicator 
``L'' or ``M'') and drugs with OPPS transitional pass-through payment 
status (assigned status indicator ``G''). Medicare will continue to pay 
drugs that were not purchased with a 340B discount at ASP+6 percent.
    Effective January 1, 2018, biosimilar biological products not on 
pass-through payment status that are purchased through the 340B program 
or through the 340B PVP will be paid at ASP minus 22.5 percent of the 
reference product's ASP, while biosimilar biological products on drug 
pass-through payment status will continue to be paid ASP+6 percent of 
the reference product.
    To effectuate the payment adjustment for 340B-acquired drugs, CMS 
is implementing modifier ``JG'', effective January 1, 2018. Hospitals 
paid under the OPPS, other than a type of hospital excluded from the 
OPPS (such as CAHs or those hospitals paid under the Maryland waiver) 
or excepted from the 340B drug payment policy for CY 2018, are required 
to report modifier ``JG'' on the same claim line as the drug HCPCS code 
to identify a 340B-acquired drug. For CY 2018, rural SCHs, children's 
hospitals and PPS-exempt cancer hospitals will be excepted from the 
340B payment adjustment. These hospitals will be required to report 
informational modifier ``TB'' for 340B-acquired drugs, and will 
continue to be paid ASP+6 percent.
    To maintain budget neutrality within the OPPS, the estimated $1.6 
billion in reduced drug payments from adoption of this final 
alternative 340B drug payment methodology will be redistributed in an 
equal offsetting amount to all hospitals paid under the

[[Page 59370]]

OPPS through increased payment rates for non-drug items and services 
furnished by all hospitals paid under the OPPS for CY 2018. 
Specifically, the redistributed dollars will increase the conversion 
factor across non-drug rates by 3.2 percent for CY 2018.
    We may revisit the alternative 340B drug payment methodology in CY 
2019 rulemaking.
e. Comment Solicitation on Additional 340B Considerations
    As discussed above, we recognize there are data limitations in 
estimating the average discount for 340B drugs. In the CY 2018 OPPS/ASC 
proposed rule (82 FR 33634 through 33635), we welcomed stakeholder 
input with regard to MedPAC's May 2015 analysis and the resulting 
estimate of ASP minus 22.5 percent as the proposed payment rate for 
separately payable, nonpass-through OPPS drugs purchased under the 340B 
Program in CY 2018. We also requested comment on whether we should 
adopt a different payment rate to account for the average minimum 
discount of OPPS drugs purchased under the 340B Program. Also, we 
sought comment on whether the proposal to pay ASP minus 22.5 percent 
for 340B-acquired drugs should be phased in over time (such as over a 
period of 2 to 3 years).
    In addition, we recognize that the acquisition costs for drugs may 
vary among hospitals, depending on a number of factors such as size, 
patient volume, labor market area and case-mix. Accordingly, in the 
longer term, we are interested in exploring ways to more closely align 
the actual acquisition costs that hospitals incur rather than using an 
average minimum discounted rate that would apply uniformly across all 
340B hospitals. In the proposed rule, we requested public comment on 
whether, as a longer term option, Medicare should require 340B 
hospitals to report their acquisition costs in addition to charges for 
each drug on the Medicare claim. Having the acquisition cost on a drug-
specific basis would enable us to pay a rate under the OPPS that is 
directly tied to the acquisition costs for each separately payable 
drug. To the extent that the acquisition costs for some drugs may equal 
the ceiling price for a drug, we recognize that there may be challenges 
with keeping the ceiling price confidential as required by section 
1927(b)(3)(D) of the Act and we sought comment on this point.
    Lastly, for consideration for future policy refinements, we 
requested public comment on (1) whether, due to access to care issues, 
exceptions should be granted to certain groups of hospitals, such as 
those with special adjustments under the OPPS (for example, rural SCHs 
or PPS-exempt cancer hospitals) if a policy were adopted to adjust OPPS 
payments to 340B participating hospitals (if so, describe how adjusted 
rates for drugs purchased under the 340B Program would 
disproportionately affect access in these provider settings); (2) 
whether other types of drugs, such as blood clotting factors, should 
also be excluded from the reduced payment; and (3) whether hospital-
owned or affiliated ASCs have access to 340B discounted drugs.
    We received feedback on a variety of issues in response to the 
comment solicitation on additional future considerations. These 
comments are summarized below.
    Comment: One commenter recommended that CMS establish an exemption 
mechanism for use by stakeholders to request exemptions for certain 
groups of hospitals. The commenters urged CMS to propose and seek 
comment on specific guidelines that outline procedures for stakeholders 
to request an exemption and the criteria CMS would use to determine 
whether to grant an exception.
    Response: We appreciate the comment. As we stated in the summary of 
final policies, we may revisit the 340B drug payment policy in the CY 
2019 rulemaking. For CY 2018, as stated earlier in this section, rural 
SCHs, children's hospitals and PPS-exempt cancer hospitals will be 
excepted from the alternative 340B drug payment methodology being 
adopted in this final rule with comment period. However, each of these 
excepted providers will report informational modifier ``TB'' on the 
same claim line as the HCPCS code for their 340B-acquired drugs.
    Comment: In response to the solicitation of comments on whether CMS 
should exclude certain types of drugs from the proposed alternative 
340B drug payment methodology, manufacturers of blood clotting factors 
and radiopharmaceuticals recommended that CMS continue to pay these 
drug types at ASP+6 percent. With respect to blood clotting factors, 
the commenters stated that individuals with bleeding disorders have 
unique needs and are expensive to treat such that the proposed reduced 
payment could threaten access and/or create unnecessary treatment 
delays for these patients. With respect to radiopharmaceuticals, the 
commenters stated that they do not believe that these products are 
covered outpatient drugs (because it is not possible for the 
manufacturer to accurately report final dose and pricing information), 
and therefore these drugs should be excluded as a category of drugs 
included in the covered drug definition for the 340B Program.
    In addition, one commenter recommended that CMS develop a process 
for stakeholders to request exemptions from the alternative 340B 
payment methodology that CMS would evaluate using objective patient 
guidelines designed to ensure patient access.
    Response: We appreciate the comments. To the extent that blood 
clotting factors and radiopharmaceuticals are covered outpatient drugs 
purchased under the 340B Program, we believe that the OPPS payment rate 
for these drugs should account for the discounted rate under which they 
were purchased. Therefore, for CY 2018, OPPS payment for separately 
payable, nonpass-through drugs, biologicals, and radiopharmaceuticals, 
including blood clotting factors and radiopharmaceuticals, if purchased 
through the 340B Program, will be paid at ASP minus 22.5 percent. As we 
stated in the summary of final policies, we may revisit the 340B drug 
payment policy in the CY 2019 rulemaking. We will consider these 
requests for exceptions for certain drug classes in development of the 
CY 2019 OPPS/ASC proposed rule.
    It is unclear to us whether the commenter meant that 
radiopharmaceuticals are not considered covered outpatient drugs under 
the OPPS or not considered a covered outpatient drug for purposes of 
the 340B Program. We assume the commenter was referring to the 
definition of covered outpatient drug for purposes of the 340B Program 
and, as such, these comments are outside the scope of the CY 2018 OPPS/
ASC proposed rule. We refer commenters to HRSA with questions related 
to the 340B Program.
    Comment: One commenter representing community oncology practices 
urged CMS not to ``reduce the size of the reimbursement reduction'' or 
to phase in the adjustment over 2 to 3 years because the commenter 
believed that hospitals would use that time to ``aggressively strong-
arm independent community oncology practices to sell out to them.''
    Response: As stated earlier in this section, we are finalizing our 
proposal to pay ASP minus 22.5 percent for separately payable nonpass-
through drugs (other than vaccines). In addition, we agree that it is 
not necessary to phase in the payment reduction and are implementing 
the full adjustment for CY 2018.

[[Page 59371]]

    Comment: Commenters expressed concern about the challenges and 
costs of implementing acquisition cost billing. The commenters reported 
that hospital charge masters are not designed to bill drugs to one 
payer at a different rate than other payers. The commenters cited a 
survey response from hospitals that revealed acquisition cost billing 
would require investment in expensive software upgrades, obtaining a 
second charge master, or devising burdensome manual workarounds. One 
commenter stated that hospital cost reports already reflect the 340B 
acquisition cost based on expenses reported in the pharmacy cost 
center. The commenter further stated that these lower costs are already 
reflected in the drug CCR, which will likely be lower because the cost 
to acquire these drugs is lower. Thus, the commenter asserted, the OPPS 
ratesetting process already reflects a blend of discounting/lower 
expenses with respect to 340B drug acquisition in the annual 
application of CCRs to pharmacy charges.
    Response: We thank the commenters for their feedback and will take 
these comments into consideration for future policymaking. We note that 
several State Medicaid programs require reporting of actual acquisition 
cost (AAC) for 340B drugs so the magnitude of the challenges to 
implement may be less than the commenter suggests.

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 
2018 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 2018. 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 2017 or beginning in CY 2018. 
The sum of the CY 2018 pass-through spending estimates for these two 
groups of device categories equals the total CY 2018 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 2018 OPPS/ASC proposed rule (82 
FR 33635), 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 2018, 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 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 2018 OPPS at 
ASP+6 percent, and because we proposed to pay for CY 2018 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 2018 for this group of items was $0, as discussed below. 
In the proposed rule, we noted that our estimate did not reflect the 
proposed payment policy for drugs purchased through the 340B program, 
as we discussed in section V.A. of the proposed rule.
    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 2018 OPPS/ASC proposed rule (82 FR 33635 through 33636), 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 2018. Therefore, our 
estimate of pass-through payment for policy-packaged drugs and 
biologicals with pass-through payment status approved prior to CY 2018 
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

[[Page 59372]]

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 spending 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 2018. The second group contains drugs and 
biologicals that we know are newly eligible, or project will be newly 
eligible in the remaining quarter of CY 2017 or beginning in CY 2018. 
The sum of the CY 2018 pass-through spending estimates for these two 
groups of drugs and biologicals equals the total CY 2018 pass-through 
spending estimate for drugs and biologicals with pass-through payment 
status.

B. Estimate of Pass-Through Spending

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33636), we proposed to 
set the applicable pass-through payment percentage limit at 2.0 percent 
of the total projected OPPS payments for CY 2018, consistent with 
section 1833(t)(6)(E)(ii)(II) of the Act and our OPPS policy from CY 
2004 through CY 2017 (81 FR 79676 through 79678).
    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 2018, there are no active 
categories for CY 2018. Because there are no active device categories 
for CY 2018, we proposed an estimate for the first group of devices of 
$0.
    We did not receive any public comments on our proposed estimate for 
the first group of devices. For this final rule with comment period, 
using the latest available data, we calculated a CY 2018 spending 
estimate for this first group of devices of $0.
    In estimating our proposed CY 2018 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 2018; 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, 2018; and contingent projections for new device categories 
established in the second through fourth quarters of CY 2018. In the CY 
2018 OPPS/ASC proposed rule (82 FR 33636), 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 2018 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. For this final rule with comment period, 
using the latest available data, we calculated a CY 2018 spending 
estimate for this second group of devices of $10 million.
    To estimate proposed CY 2018 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 2018, we proposed to 
use the most recent Medicare hospital outpatient 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 2018 OPPS utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2018, 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 2018 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 2018 proposed spending estimate for this first group of 
drugs and biologicals of approximately $7.7 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, using the latest available data, we 
calculated a CY 2018 spending estimate for this first group of drugs 
and biologicals of approximately $9.83 million. We note that this 
estimate does not reflect drugs purchased with a 340B discount and 
therefore subject to a payment reduction based on final policy for CY 
2018.
    To estimate proposed CY 2018 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 2018, 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, 2017, and projections for new drugs and biologicals that could be 
initially eligible for pass-through payment in the second through 
fourth quarters of CY 2018), 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 2018 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 2018 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 $8.5 million.

[[Page 59373]]

    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 2018, we are continuing to use the general 
methodology described earlier. For this final rule with comment period, 
based on the latest available data, we calculated a CY 2018 spending 
estimate for this second group of drugs and biologicals of 
approximately $8.23 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 
2018 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2018 is 
approximately $28.06 million (approximately $10 million for device 
categories and approximately $18.06 million for drugs and biologicals) 
compared to the proposed $26.2 million (approximately $10 million for 
device categories and approximately $16.2 million for drugs and 
biologicals)), which represents 0.04 percent of total projected OPPS 
payments for CY 2018 (approximately $70 billion). Therefore, we 
estimate that pass-through spending in CY 2018 will not amount to 2.0 
percent of total projected OPPS CY 2018 program spending.

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

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33637), for CY 2018, 
we proposed to continue with 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 not 
propose any change to our payment policy for critical care services for 
CY 2018. 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 continued to encourage those 
parties who comment to provide the data and analysis necessary to 
justify any suggested changes.
    We did not receive any public comments on our proposals for CY 
2018. Therefore, we are finalizing our proposal, without modification, 
to continue our current clinic and ED hospital outpatient visits and 
critical care services payment policies. We also did not receive any 
public comments on any changes to these codes that we should consider 
for future rulemaking cycles.

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, 
which includes, but is not limited to, conditions such as depression, 
schizophrenia, and substance use disorders. 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 a distinct and organized intensive ambulatory 
treatment service, offering less than 24-hour-daily care, in a location 
other than an individual's home or 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, at 42 
CFR 419.21, that payments under the OPPS will be made for partial 
hospitalization services furnished by CMHCs as well as Medicare Part B 
services furnished to hospital outpatients designated by the Secretary, 
which include partial hospitalization services (65 FR 18444 through 
18445).
    Section 1833(t)(2)(C) of the Act requires the Secretary, in part, 
to establish relative payment weights for covered outpatient department 
(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, along with 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 with comment period, 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-tier payment approach for partial 
hospitalization services under which we paid one

[[Page 59374]]

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-tier 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. 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.
    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 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 refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75047 through 75050).
    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 described our extensive analysis of the claims and 
cost data and ratesetting methodology. We found aberrant data from some 
hospital-based PHP providers that were not captured using the existing 
OPPS 3 standard deviation trims for extreme CCRs and 
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. Consequently, we implemented a 
trim to remove hospital-based PHP service days that use a CCR that was 
greater than 5 (CCR5) to calculate costs for at least one of their 
component services, and a trim on CMHCs with a geometric mean cost per 
day that is above or below 2 (2) standard deviations from 
the mean. 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.
    In addition, in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70459 through 70460), we corrected a cost inversion that 
occurred in the final rule data with respect to hospital-based PHP 
providers. 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.
    Finally, we 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

[[Page 59375]]

the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462 
through 70467).
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 
through 79691), we continued 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, we finalized a policy 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 believed 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, for 
example by avoiding the cost inversions for hospital-based PHPs 
addressed in the CY 2016 and CY 2017 OPPS/ASC final rules with comment 
period (80 FR 70459 and 81 FR 79682). We implemented an 8-percent 
outlier cap for CMHCs to mitigate potential outlier billing 
vulnerabilities by limiting the impact of inflated CMHC charges on 
outlier payments. We will continue to monitor the trends in outlier 
payments and consider policy adjustments as necessary.
    For a comprehensive description on the background of the PHP 
payment policy, we refer readers to the CY 2016 and CY 2017 OPPS/ASC 
final rules with comment period (80 FR 70453 through 70455 and 81 FR 
79678 through 79680).

B. PHP APC Update for CY 2018

1. PHP APC Geometric Mean Per Diem Costs
    For CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33639), 
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. Specifically, we proposed to continue to use CMHC APC 5853 
(Partial Hospitalization (3 or More Services Per Day)) and hospital-
based PHP APC 5863 (Partial Hospitalization (3 or More Services Per 
Day)). We proposed to continue to calculate the geometric mean per diem 
costs for CY 2018 for APC 5853 for CMHCs using only CY 2016 CMHC claims 
data and the most recent CMHC cost data, and the CY 2018 geometric mean 
per diem costs for APC 5863 for hospital-based PHPs using only CY 2016 
hospital-based PHP claims data and the most recent hospital cost data.
2. Development of the PHP APC Geometric Mean Per Diem Costs
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33639), for CY 2018 
and subsequent years, we proposed to follow the 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 APCs 5853 and 5863, incorporating the modifications 
made in our CY 2017 OPPS/ASC final rule with comment period. As 
discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79680 through 79687), we finalized our proposal 
that, for CY 2017 and subsequent years, the geometric mean per diem 
cost for 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 finalized our proposal that, for CY 2017 
and subsequent years, the geometric mean per diem cost for CMHC APC 
5853 would be based upon actual CMHC claims and costs for CMHC service 
days providing 3 or more services.
    The CMHC or hospital-based PHP APC per diem costs are the provider-
type 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 CY 2018 geometric mean per diem costs and payment rates, 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 the 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 CY 2018 proposed rule, prior to calculating the proposed 
geometric mean per diem cost for 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. For this CY 2018 OPPS/ASC final rule with comment 
period, we followed the same data preparation steps. Before any trims 
or exclusions, there were 50 CMHCs in the final PHP claims data file 
(compared to 47 CMHCs in the CY 2018 OPPS/ASC proposed rule). 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 was more than 2 standard deviations from the geometric 
mean cost per day for all CMHCs. By applying this trim for CY 2018 
ratesetting, in this final rule with comment period, we excluded 3 
CMHCs with geometric mean per diem costs per day below the trim's lower 
limit of $47.44 and 1 CMHC above the trim's upper limit of $427.72 from 
the final ratesetting for CY 2018. This standard deviation trim removed 
4 providers from ratesetting whose data would have skewed the 
calculated final geometric mean per diem cost.
    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 this CY 2018 final rule ratesetting, no CMHCs were missing 
wage index data for all of their service days. Therefore, we did not 
exclude any CMHCs due to lack of wage index data.
    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 
this CY 2018 final rule ratesetting, we identified one CMHC that had a 
CCR>1. This CMHC's CCR was 1.002, and it was defaulted to its 
appropriate statewide hospital ancillary CCR for CY 2018 ratesetting 
purposes.
    In summary, these data preparation steps adjusted the CCR for 1 
CMHC and excluded 4 CMHCs, resulting in the inclusion of a total of 46 
CMHCs in our CY 2018 final rule ratesetting modeling (compared to 39 
CMHCs in our proposed rule ratesetting modeling in the CY 2018 OPPS/ASC 
proposed rule). The trims removed 864 CMHC claims from the 16,242 total 
CMHC claims, resulting in 15,378 CMHC claims used in ratesetting. We 
believe that excluding providers with extremely low or high geometric 
mean costs per day or extremely low or high CCRs protects CMHCs from 
having that data inappropriately skew the calculation of

[[Page 59376]]

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.
    After applying all of the above trims, exclusions, or adjustments, 
the final CY 2018 geometric mean per diem cost for all CMHCs for 
providing 3 or more services per day (APC 5853) is $143.22 (compared to 
the proposed geometric mean per diem cost of $128.81).
b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
    For the CY 2018 proposed rule and for this CY 2018 final rule with 
comment period, 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, there were 424 hospital-based PHP providers in 
the CY 2016 final PHP claims data used in this CY 2018 OPPS/ASC final 
rule with comment period (compared to 420 hospital-based PHPs in the CY 
2018 OPPS/ASC proposed rule).
    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 were associated with a CCR>5. Applying this trim 
removed from our final rule ratesetting service days from 8 hospital-
based PHP providers with CCRs ranging from 5.2024 to 17.5702. 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 our final rule ratesetting. In addition, 16 
hospital-based PHPs reported zero daily costs, and therefore were 
removed for having no days with PHP payment; 1 hospital-based PHP was 
removed for missing wage index data; and 1 hospital-based PHP was 
removed by the OPPS 3 standard deviation trim on costs per 
day.
    Therefore, we excluded 26 hospital-based PHP providers, resulting 
in 398 hospital-based PHP providers in the data used for final rule 
ratesetting (compared to 393 hospital-based PHPs in the CY 2018 OPPS/
ASC proposed rule). In addition, 2 hospital-based PHP providers were 
defaulted to using their overall hospital ancillary CCR due to outlier 
cost center CCR values (72.7362 and 117.1943). After completing these 
data preparation steps, we calculated the final geometric mean per diem 
cost for 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 (hospital-based PHP APC 
5863) is $208.09 (compared to $213.60 from the CY 2018 OPPS/ASC 
proposed rule).
    We received a few public comments relating to our proposal to use 
our established methodology and policies in developing the PHP 
geometric mean per diem costs.
    Comment: One commenter opposed CMS continuing to use the single-
tier payment system implemented in CY 2017 OPPS/ASC rulemaking because 
the commenter believed this system punished CMHCs for the cost 
inversion in the hospital-based PHP data. The commenter suggested that 
CMS return to the two-tier payment system. Another commenter was 
concerned that the single-tier payment system could have unintended 
consequences, including reducing the number of PHPs or the number of 
services provided per day, and urged CMS to monitor the data.
    One commenter disagreed with CMS paying CMHCs and hospital-based 
PHPs differently for providing the exact same services and believed 
that the APCs distinguished by provider type hurts rather than rewards 
CMHCs for being more cost effective than hospital-based PHPs. The 
commenter referred to a 2011 bill introduced in the Congress to address 
the ``inequity'' of the current payment system and stated that CMHCs 
should be paid the same rate as hospital-based PHPs. This commenter 
also stated that setting CMHCs' payment rates based on a small number 
of CMHCs does not reflect the actual cost of providing these services 
and expressed concern that basing payments at the mean or median level 
would result in half of CMHCs receiving payments less than their costs, 
which would guarantee that more CMHCs would close, further limiting 
access to care.
    Response: We thank the commenters for their input. We reiterate our 
single-tier payment policy and rationale. In the CY 2017 OPPS/ASC final 
rule with comment period, we combined the Level 1 and Level 2 PHP APCs 
into a single tier PHP APC for CMHCs, and we did the same for hospital-
based PHPs. We cited several reasons for implementing the single-tier 
payment system (81 FR 79682 through 79686) and noted that one primary 
reason for combining the two-tier system into a single tier, by 
provider type, was the decrease in the number of CMHCs (81 FR 79683). 
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 would have a more pronounced effect on the PHP APCs 
geometric mean per diem costs, skewing costs up or down. The effect 
would be magnified by continuing to split the geometric mean per diem 
costs further by distinguishing between Level 1 and Level 2 PHP 
services. We believed that creating a single PHP APC for each provider 
type for providing 3 or more PHP services per day would reduce these 
cost fluctuations and provide more stability in the PHP APC geometric 
mean per diem costs.
    We do not believe that the single-tier payment system will lead to 
a reduction in the number of PHPs, but rather that the increased 
stability in CMHC and hospital-based PHP payment rates will provide 
more stability for the PHP APCs. In addition, the calculated rates for 
APCs 5853 and 5863 continue to be based upon the actual costs of CMHCs 
and hospital-based PHPs, respectively. Therefore, we believe that the 
payment rates for the single-tier PHP APCs should be an appropriate 
approximation of provider costs, and should not result in reduced 
access to care.
    Because the single-tier PHP APCs 5853 and 5863 became effective 
January 1, 2017, we will have to wait until our CY 2017 claims data are 
available to determine any effect of the payment rates for these APCs 
on the provision of services per day. We will continue to monitor PHP 
data for any unintended consequences resulting from the single-tier APC 
policy.
    The OPPS pays for hospital 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 2018 reflect these actual provider costs.

[[Page 59377]]

    Regarding the 2011 bill introduced in the Congress that would have 
required CMHCs and hospital-based PHPs to be paid at the same rate, we 
note that this bill was not enacted.
    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 generally required that this payment system group clinically 
similar covered services with respect to resource use (section 
1833(t)(2) of the Act). Because the resource uses of CMHCs and 
hospital-based PHPs 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 
APC 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 the 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, 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 are an improvement over the payment rates under the two-tier 
methodology calculated based on median costs using only hospital-based 
data.
    Comment: One commenter was concerned that the PHP trim 
methodologies could cause changes to the payment rates which could lead 
to a reduction in the number of PHPs. The commenter urged CMS to 
monitor the data to ensure that there are no unintended consequences, 
such as a reduction in the number of PHPs.
    Response: We thank the commenter for sharing these concerns. We are 
continuing to monitor PHP data, including the number of PHPs that 
provide care to Medicare beneficiaries. Our trim methodologies should 
protect PHP ratesetting from skewing by aberrant data, such as 
extremely low or extremely high costs per day. We do not believe that 
our PHP trim methodologies will lead to a reduction in PHPs, but rather 
that the trims we apply will provide stability to PHPs by reducing 
fluctuations in their payment rates due to aberrant data.
    Comment: One commenter suggested that CMS consider paying PHPs 
using a quality-based payment system, and that CMS use a value-based 
purchasing program for PHPs.
    Response: Currently, there is no statutory language explicitly 
authorizing a value-based purchasing program for PHPs. 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 Readmissions; (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 
66959) for a 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.
    Comment: One commenter presented a number of suggestions for a more 
holistic approach to the way Medicare (or Medicaid) pays for and covers 
PHP services, including coverage for case management, and assistance 
with medication compliance, proper housing, and work and training 
facilities.
    Response: We appreciate these suggestions. As we noted in the 
preceding comment response, the payment methodology for PHP services is 
governed by sections 1833(t)(2) and 1833(t)(9) of the Act. PHP services 
are defined in section 1861(ff) of the Act and do not include those 
services described by the commenter. We do not have the authority to 
cover and pay for services beyond those described in the Act, or to pay 
outside of the statutory methodology.
    Comment: One commenter stated that the CMHC PHP payment rate is too 
low, which can affect access to care by some of the most disadvantaged 
Medicare beneficiaries. This commenter expressed concern about the 
closure of CMHCs, which the commenter attributed to low CMHC PHP 
payment rates. The commenter noted that declining payment rates are 
occurring at a time when CMHCs have experienced higher costs due to the 
establishment of CMHC conditions of participation (CoPs) and higher bad 
debt expenses. The commenter believed that CMS is only concerned about 
protecting access to hospital-based PHPs, and not to CMHCs PHPs.
    Response: The final CY 2018 CMHC geometric mean per diem costs are 
11 percent higher than the proposed geometric mean per diem costs, and 
are approximately 15 percent higher than those costs finalized in the 
CY 2017 rulemaking. These final CY 2018 CMHC geometric mean per diem 
costs are based upon the most recent CMHC claims and cost data reported 
by providers. Therefore, we believe the payment rate derived from these 
geometric mean per diem costs represents an appropriate payment to 
CMHCs and should not result in provider closures or affect beneficiary 
access to care.
    Most (if not all) of the costs associated with adhering to CoPs 
should be captured in the cost report data used in ratesetting and, 
therefore, are accounted for when computing the geometric mean per diem 
costs. 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 (Pub. L. 112-96). The reduction to bad debt 
reimbursement impacted all providers eligible to receive bad debt 
reimbursement, as discussed in the CY 2013 End-Stage Renal Disease 
final rule (77 FR 67518). Medicare currently reimburses bad debt for 
eligible providers at 65 percent.
    We appreciate the commenter's input regarding the effect any 
reduction in PHP payment rates would have on access to care, but we 
disagree with the commenter's assertion that CMS is only concerned 
about access to hospital-based PHPs. We are working to strengthen 
continued access to both CMHCs and hospital-based PHPs for eligible 
Medicare beneficiaries. For example, for the CY 2016 ratesetting, we 
conducted an extensive analysis of the ratesetting process, and 
discovered errors providers 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 70466), we also included a detailed description of the 
ratesetting process to help all PHPs record costs correctly so that we 
can more fully capture PHP costs in ratesetting. In that same final 
rule with comment period, we also addressed

[[Page 59378]]

fluctuations in payments and protected ratesetting from aberrant data 
by implementing trims on all PHP data used in ratesetting (80 FR 70455 
through 70457). For example, the CMHC 2 standard deviation 
trim has protected CMHCs by removing from ratesetting those providers 
with aberrantly low costs per day, which would have lowered total CMHC 
geometric mean per diem costs, and thus lowered CMHC per diem payment 
rates. In this CY 2018 final rule with comment period ratesetting, that 
2 standard deviation trim resulted in our removing 4 CMHCs 
from the ratesetting data, 3 of which had costs per day that were 
extremely low.
    We agree that both CMHCs and hospital-based PHPs serve some of the 
most disadvantaged Medicare beneficiaries, and appreciate the care that 
these providers give. We remain concerned about access to all PHP 
services, and particularly about the small numbers of CMHCs. The CY 
2016 PHP data file of claims used for CY 2018 ratesetting showed only 
50 CMHCs before we applied our data trims. We want to ensure that CMHCs 
remain a viable option as providers of mental health care, and will 
continue to explore policy options for strengthening the PHP benefit 
and increasing access to the valuable services provided by CMHCs and 
hospital-based PHPs.
    We did not receive any public comments on the hospital-based PHP 
geometric mean per diem costs.
    After consideration of the public comments we received, we are 
finalizing our proposals 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. Specifically, we are finalizing our proposal to continue to pay 
CMHCs using APC 5853 (Partial Hospitalization (3 or More Services Per 
Day)) and to continue to pay hospital-based PHPs using APC 5863 
(Partial Hospitalization (3 or More Services Per Day)). We calculated 
the geometric mean per diem costs for CY 2018 for APC 5853 for CMHCs 
using only CY 2016 CMHC claims data and the most recent CMHC cost data, 
and the CY 2018 geometric mean per diem costs for APC 5863 for 
hospital-based PHPs using only CY 2016 hospital-based PHP claims data 
and the most recent hospital cost data. We also are finalizing our 
proposal to continue applying our established trim methodologies, 
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.
    The final CY 2018 PHP APC geometric mean per diem costs for CMHC 
PHP APC 5853 are $143.22 and for hospital-based PHP APC 5863 are 
$208.09, as shown in Table 74 below. The final PHP APC payment rates 
are included in Addendum A to this final rule with comment period 
(which is available via the Internet on the CMS Web site).

         Table 74--CY 2018 PHP APC Geometric Mean Per Diem Costs
------------------------------------------------------------------------
                                                          Final PHP APC
          CY 2018 APC                 Group title        geometric mean
                                                         per diem costs
------------------------------------------------------------------------
5853..........................  Partial                          $143.22
                                 Hospitalization (3 or
                                 more services per
                                 day) for CMHCs.
5863..........................  Partial                          $208.09
                                 Hospitalization (3 or
                                 more services per
                                 day) for hospital-
                                 based PHPs.
------------------------------------------------------------------------

3. PHP Service Utilization Updates
    In the CY 2016 OPPS/ASC final rule with comment period (81 FR 79684 
through 79685), we expressed concern over the low frequency of 
individual therapy provided to beneficiaries. The final CY 2016 claims 
data used for this CY 2018 final rule with comment period revealed some 
increases in the provision of individual therapy compared to CY 2015 
claims data. In the CY 2016 final claims data, hospital-based PHPs 
provided individual therapy on 4.7 percent of days with only 3 services 
and 5.8 percent of days with 4 or more services (compared to 4.0 
percent and 6.2 percent, respectively, in CY 2015). Similarly, in the 
CY 2016 final claims data, CMHCs provided individual therapy on 8.5 
percent of days with only 3 services provided and 5.0 percent of days 
with 4 or more services provided (compared to 7.9 percent and 4.4 
percent, respectively, in CY 2015 claims).
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33640), we stated that 
we are aware that our single-tier payment policy may influence a change 
in service provision because providers are able to obtain payment that 
is heavily weighted to the cost of providing 4 or more services when 
they provide only 3 services. We indicated that we are interested in 
ensuring that providers furnish an appropriate number of services to 
beneficiaries enrolled in PHPs. Therefore, with the CY 2017 
implementation of APC 5853 and APC 5863 for providing 3 or more PHP 
services per day, we are continuing to monitor utilization of days with 
only 3 PHP services.
    For this CY 2018 final rule with comment period, we used the final 
update of the CY 2016 claims data. The final CY 2016 claims data showed 
that PHPs maintained an appropriately low utilization of 3 service days 
compared to CY 2015. Hospital-based PHPs have increased their provision 
of services since CY 2015 by providing fewer days with 3 services only, 
and more days with 5 or more services. CMHCs have remained steady in 
providing an appropriately low level of 3 service days.

                           Table 75--Percentage of PHP Days by Service Unit Frequency
----------------------------------------------------------------------------------------------------------------
                                                                    CY 2015 (%)    CY 2016 * (%)    Change (%)
----------------------------------------------------------------------------------------------------------------
CMHCs:
    Percent of Days with 3 services.............................             4.7             4.8             2.1
    Percent of Days with 4 services.............................            62.9            70.3            11.8
    Percent of Days with 5 or more services.....................            32.4            24.9           -23.1
Hospital-based PHPs:
    Percent of Days with 3 services.............................            12.4            10.9           -12.1
    Percent of Days with 4 services.............................            69.8            64.9            -7.0

[[Page 59379]]

 
    Percent of Days with 5 or more services.....................            17.8            24.1            35.4
----------------------------------------------------------------------------------------------------------------
* May not sum to 100 percent by provider type due to rounding.

    As we noted in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79685), we will continue to monitor the provision of days with 
only 3 services, particularly now that the single-tier PHP APCs 5853 
and 5863 are in place for providing 3 or more services per day to CMHCs 
and hospital-based PHPs, respectively.
    It is important to reiterate our expectation that days with only 3 
services are meant to be an exception and not the typical PHP day. In 
the CY 2009 OPPS/ASC final rule with comment period, we clearly stated 
that we consider the acceptable minimum units of PHP services required 
in a PHP day to be 3 and explained that it was never our intention that 
3 units of service represent the number of services to be provided in a 
typical PHP day. PHP is furnished in lieu of inpatient psychiatric 
hospitalization and is intended to be more intensive than a half-day 
program. We further indicated that a typical PHP day should include 5 
to 6 hours of services (73 FR 68687 through 68694). We explained that 
days with only 3 units of services may be appropriate to bill in 
certain limited circumstances, such as when a patient might need to 
leave early for a medical appointment and, therefore, would be unable 
to complete a full day of PHP treatment. At that time, we noted that if 
a PHP were to only provide days with 3 services, it would be difficult 
for patients to meet the eligibility requirement in 42 CFR 410.43, that 
patients must require a minimum of 20 hours per week of therapeutic 
services as evidenced in their plan of care (73 FR 68689).
4. Minimum Service Requirement: 20 Hours Per Week
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68694), we codified patient eligibility criteria to reflect the 
intensive nature of a PHP. At that time, we noted that many of the 
patient eligibility criteria had been longstanding policy requirements 
that did not reflect a change in policy. The added regulatory text was 
intended to strengthen and enhance the integrity of the PHP benefit. We 
further stated that because PHP is provided in lieu of inpatient care, 
it should be a highly structured and clinically intensive program. Our 
goal was to improve the level of service furnished in a day of PHP, 
while also ensuring that the appropriate population utilizes the PHP 
benefit (73 FR 68695).
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33641 
through 33642), when we codified these eligibility criteria, we 
acknowledged commenters' concerns related to the eligibility 
requirement that a patient must require a minimum of 20 hours per week 
of therapeutic services as evidenced in their plan of care. For 
example, we recognized commenters' concerns that it may sometimes be 
difficult for patients to receive 20 hours per week of therapeutic 
services, such as when transitioning into or out of a PHP program (73 
FR 68695). Therefore, to permit flexibility in treating PHP patients, 
we require a minimum of 20 hours per week of therapeutic services, with 
the understanding that patients may not always meet this minimum, and 
qualified the requirement by adding ``as evidenced in their plan of 
care.'' This eligibility requirement only addresses the minimum amount 
of PHP services beneficiaries must require as evidenced in their plan 
of care. It does not address whether or not beneficiaries receive a 
particular number of therapeutic services per week. However, we have 
noted in multiple prior OPPS/ASC final rules with comment period that a 
typical PHP day would include 5 to 6 hours per day of PHP services (70 
FR 68548, 71 FR 67999, 72 FR 66671, and 73 FR 68687).
    Most recently, we discussed the 20 hours of services requirement in 
the CY 2017 rulemaking when we reminded providers that our regulations 
at Sec. Sec.  410.43(a)(3) and (c)(1) continue to require that PHP 
beneficiaries must require a minimum of 20 hours per week of 
therapeutic services as evidenced in their plan of care, and that PHP 
services must be furnished in accordance with a physician certification 
and the beneficiary's plan of care reflecting that need.
    We analyzed CY 2015 and CY 2016 PHP claims data to assess the 
intensity of PHP services provided, using PHP-allowable HCPCS codes and 
provider and service date information. To calculate the number of hours 
of PHP services provided to each beneficiary each day, we assumed each 
unit of service equaled 1 hour of time. Each service day was then 
mapped to its Sunday through Saturday calendar week, and the number of 
PHP hours per week was calculated for each beneficiary. Next, the 
service weeks for each beneficiary were sorted chronologically and 
assessed: The first service week in a continuous series of service 
weeks was flagged as an ``Admission'' week, and the last service week 
in a continuous series of service weeks was flagged as a ``Discharge'' 
week. We removed from the analysis the admission and discharge weeks 
for each beneficiary to permit us to assess the intensity of services 
provided to beneficiaries fully engaged in PHPs (that is, those in 
``nontransitional'' weeks). We then calculated the total number of 
service weeks and the number of service weeks with at least 20 PHP 
hours for each beneficiary. These two values were then used to 
determine the percentage of nontransitional service weeks that met the 
20-hour PHP threshold for each beneficiary.
    As stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33641), we 
found that a majority of PHP patients did not receive at least 20 hours 
of PHP services per week. Approximately half of Medicare beneficiaries 
receiving PHP services received 20 hours or more of services in 50 
percent or more of nontransitional weeks. In CY 2016 claims data, only 
16.4 percent of Medicare beneficiaries in CMHCs and 34.8 percent of 
Medicare beneficiaries in hospital-based PHPs received at least 20 
hours of PHP services in 100 percent of nontransitional weeks.

[[Page 59380]]



Table 76--Number and Percentage of Medicare Beneficiaries Receiving at Least 20 Hours of PHP Services per Week--
                                             CY 2015 Through CY 2016
----------------------------------------------------------------------------------------------------------------
                                           Beneficiaries               CY 2015                   CY 2016
                                       Receiving 20 or more  ---------------------------------------------------
                Type                   hours of PHP services
                                        per nontransitional      Number     Percentage     Number     Percentage
                                              week *
----------------------------------------------------------------------------------------------------------------
CMHC PHP Beneficiaries..............  In 50 percent or more         1,205         53.1        1,016         57.3
                                       of weeks.
                                      In 100 percent of               319         14.1          291         16.4
                                       weeks.
Hospital-Based PHP Beneficiaries....  In 50 percent or more         8,610         51.0        8,333         56.7
                                       of weeks.
                                      In 100 percent of             5,003         29.6        5,115         34.8
                                       weeks.
----------------------------------------------------------------------------------------------------------------
* Weeks are trimmed to exclude admission and discharge weeks based on a Sunday through Saturday week.
  Nontransitional weeks are weeks that are not admission or discharge weeks.

    Overall, the data suggest that some PHP beneficiaries may not be 
receiving the intensive services that eligible beneficiaries actually 
need. In the CY 2018 OPPS/ASC proposed rule, we stated that we were 
concerned about these findings, and encouraged PHPs to review their 
admission practices and ensure they are providing the services 
beneficiaries need.
    Given similar concerns, in the CY 2017 OPPS/ASC final rule with 
comment period, we solicited public comments on potential future 
editing of PHP claims for the 20 hours per week minimum eligibility 
requirement and on strengthening the tie between a beneficiary's 
receipt of 20 hours per week of PHP services and payment for those 
services (81 FR 79686). We received a number of public comments in 
response to our solicitation, which we addressed in the CY 2018 OPPS/
ASC proposed rule (82 FR 33641 through 33642).
    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments 
on the advisability of applying a payment requirement conditioned on a 
beneficiary's receipt of a minimum of 20 hours of therapeutic services 
per week. We also solicited public comments addressing the need for 
exceptions to such a policy. Specifically, we wanted to know and 
understand the type of occurrences or circumstances that would cause a 
PHP patient to not receive at least 20 hours of PHP services per week, 
particularly where payment would still be appropriate.
    Comment: Many commenters agreed it is critical that beneficiaries 
requiring PHP services receive the appropriate intensity of services, 
but suggested that CMS work with industry to define ``intensity'' more 
broadly than total hours of services received per week. A few 
commenters suggested that CMS check the Local Coverage Determinations 
(LCDs) when evaluating intensity. One commenter provided a history of 
the PHP benefit, and noted that, historically, day programs similar to 
PHPs were required to offer 20 hours per week in programming, but the 
patient and the treatment team determined the amount of time in 
treatment.
    A few commenters suggested that CMS forego editing, and instead 
implement a targeted medical review of those providers whose data are 
problematic. These and other commenters suggested that CMS educate the 
PHP provider community about a 20-hour per week minimum service 
requirement. A number of commenters suggested that CMS reissue the 
rescinded Special Edition 1607 MedLearn Matters article and its 
associated Change Request 9880, about messaging on the remittance 
advice to providers. One commenter suggested that CMS include 
beneficiaries in any communications about a 20-hour per week minimum 
service requirement.
    Several commenters believed that it would be premature to edit 
claims until CMS could determine the effect of the single-tier payment 
system on provision of services. These commenters urged a delay in 
editing until the CY 2019 rulemaking when CMS could analyze the CY 2017 
data (the first year that could show the effect of the single-tier 
payment system on provision of services) and monitor utilization in the 
meantime. A few commenters stated that CMS should not require weekly 
billing of claims in order to implement payment editing of the 20-hour 
requirement, as it would increase providers' administrative burden 
because it would increase the number of claims providers would be 
required to submit.
    Some commenters cited language from the CY 2009 OPPS/ASC final rule 
with comment period which implemented this eligibility requirement: 
That CMS stated it is to be documented in the plan of care and the 
language did not require PHP patients to receive 20 hours of care. One 
commenter believed that an edit limiting payment would be unduly 
burdensome, particularly given the PHP preamble language in the CY 2009 
final rule with comment period. One commenter suggested that allowing 
nurse practitioners to create the treatment plan, and supervise and 
direct patients in PHPs, would give providers more flexibility in 
providing services to meet the minimum requirements.
    One commenter was concerned that a 20-hour minimum service 
requirement, combined with limiting payment to essentially a 3-service 
encounter, would not fully serve the patients and would push patients 
out of PHPs and into ``Intensive Outpatient Programs (IOPs).'' One 
commenter stated that if there were editing for a 20-hour requirement, 
the PHP revenue for one provider, for example, would decline by 
$100,000 at a time when the provider is struggling to find nursing 
staff, and its psychiatry and nursing costs are rising.
    Multiple commenters described reasons why PHP patients are 
sometimes unable to attend the program for 20 hours per week. 
Commenters suggested exceptions for weather, acute illness or comorbid 
disease, family or childcare issues, holidays, transportation problems, 
other medical or social service appointments, court or legal 
appointments, and local emergencies or disasters. Several commenters 
discussed problems with medication compliance and medication 
adjustments, the cognitive effects of which could make attending for 20 
hours per week clinically suboptimal. Several commenters noted that an 
overly strict edit could result in inappropriate changes and reduce 
access to PHP services.
    Response: We thank the commenters for their insights and 
suggestions. We will consider these comments in future rulemaking and 
in developing subregulatory guidance.
    We wish to correct two erroneous assumptions included in the 
comments. First, we have not rescinded Change Request 9880 about 
messaging on the provider remittance advice. This Change Request is 
available online at: https://www.cms.gov/Regulations-and-Guidance/
Guidance/Transmittals/2017-

[[Page 59381]]

Transmittals-Items/
R1833OTN.html?DLPage=1&DLEntries=10&DLFilter=9880&DLSort=1&DLSortDir=asc
ending. However, we did rescind MLN Special Edition (SE) article 1607, 
partly because it referred to requiring weekly billing. We do not 
currently require PHPs to bill weekly, although PHPs may do so if they 
wish. Second, regarding the comment about limiting payment to a 3-
service encounter, it was unclear if the commenter believed that PHP 
per diem payment was limited to that for 3 services. We note that the 
single-tier APCs for CMHCs and for hospital-based PHPs are based upon 
the geometric mean per diem costs for providing 3 or more PHP services 
per day. PHP APCs 5853 and 5863 do not limit PHP services to 3 per day.
    Our goal is for PHP providers to continue to have flexibility in 
providing PHP services. However, we must ensure that Medicare 
beneficiaries enrolled in PHPs are legitimately eligible for PHP 
services and receive appropriately intensive treatment. As we seek to 
understand the usage of PHP services by Medicare beneficiaries, we also 
will continue to monitor the intensity of services provided on a weekly 
basis.

C. Outlier Policy for CMHCs

    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), after examining the costs, charges, and 
outlier payments for CMHCs, we concluded that establishing a separate 
OPPS outlier policy for CMHCs would be appropriate. Beginning in CY 
2004, we created a separate outlier policy specific to the estimated 
costs and OPPS payments provided to CMHCs. 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 CY 2017, we 
implemented a CMHC outlier payment cap to be applied at the provider 
level, such that in any given year, an individual CMHC will receive no 
more than a set percentage of its CMHC total per diem payments in 
outlier payments (81 FR 79692 through 79695). This outlier payment cap 
only affects CMHCs, and does not affect other provider types. This 
outlier payment cap is in addition to and separate from the current 
outlier policy and reconciliation policy in effect. We finalized the 
CMHC outlier payment cap to be set at 8 percent of the CMHC's total per 
diem payments (81 FR 79694 through 79695).
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33642), we proposed to 
continue to designate a portion of the estimated 1.0 percent hospital 
outpatient outlier threshold specifically for CMHCs, consistent with 
the percentage of projected payments to CMHCs under the OPPS in CY 
2018, 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. In the CY 2018 OPPS/ASC proposed rule, we also noted that 
CMHCs are projected to receive 0.02 percent of total hospital 
outpatient payments in CY 2018, excluding outlier payments. Therefore, 
we proposed to designate approximately 0.0027 percent of the estimated 
1.0 percent hospital outpatient 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 for this final rule with 
comment period.
    Based on our simulations of CMHC payments for CY 2018, in the 
proposed rule, we proposed to continue to set the cutoff point for 
outlier payments for CY 2018 at 3.4 times the highest CMHC APC payment 
rate implemented for that calendar year, which for CY 2018 is the 
payment rate for CMHC APC 5853. In addition, we proposed to continue to 
apply the same outlier payment percentage that applies to hospitals. 
Therefore, for CY 2018, we proposed to continue to pay 50 percent of 
CMHC APC geometric mean per diem costs over the cutoff point. For 
example, for CY 2018, if a CMHC's cost for partial hospitalization 
services paid under CMHC APC 5853 exceeds 3.4 times the proposed 
payment rate for 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 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 that 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, 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. 
Therefore, we are finalizing our proposals to continue to calculate 
CMHC outlier threshold and CMHC outlier payments according to our 
established policies. Using the updated data for this final rule with 
comment period, CMHCs are projected to receive 0.03 percent of total 
hospital outpatient payments in CY 2018, excluding outlier payments. 
Therefore, for CY 2018 we are designating approximately 0.02 percent of 
the estimated 1.0 percent hospital outpatient outlier threshold for 
CMHCs.

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 that will be paid by Medicare 
in CY 2018 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

1. Methodology for Identifying Appropriate Changes to IPO List
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33642 through 33645), 
for CY 2018, 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. We have established 
five criteria that are part of this methodology. As

[[Page 59382]]

noted in the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74353), we utilize these criteria when reviewing procedures to 
determine whether or not they should be removed from the IPO list and 
assigned to an APC group for payment under the OPPS when provided in 
the hospital outpatient setting. We note that a procedure is not 
required to meet all of the established criteria to be removed from the 
IPO list. The criteria include the following:
    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, in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33643 and 33644), we identified the procedures described by 
the following codes that we proposed to remove from the IPO list for CY 
2018: CPT code 27447 (Arthroplasty, knee, condyle and plateau; medical 
and lateral compartments with or without patella resurfacing (total 
knee arthroplasty)) and CPT code 55866 (Laparoscopy, surgical 
prostatectomy, retropubic radical, including nerve sparing, includes 
robotic assistance, when performed). The procedures that we proposed to 
remove from the IPO list for CY 2018 and subsequent years, including 
the HCPCS code, long descriptors, and the CY 2018 payment indicators, 
were displayed in Table 29 of the proposed rule.
    We note that we address the public comments we received on removing 
the procedure described by CPT code 55866 from the IPO list under 
section IX.B.2. of this final rule with comment period. We address the 
public comments we received on removing CPT code 27447 from the IPO 
list under section IX.B.3. of this final rule with comment period.
2. Removal of Procedure Described by CPT Code 55866
    In the CY 2018 OPPS/ASC proposed rule, we proposed to remove CPT 
code 55866 from the IPO list and to assign it to C-APC 5362 (Level 2 
Laparoscopy & Related Services) with status indicator ``J1''. We stated 
in the proposed rule that after consulting with stakeholders and our 
clinical advisors regarding the procedure described by CPT code 55866, 
we believe that this procedure meets criteria 1 and 2. We sought 
comment on whether the public believes that these criteria are met and 
whether CPT code 55866 meets any other of the five criteria cited 
earlier.
    Comment: Commenters, including cancer centers, physicians, and 
individual stakeholders, supported the proposal to remove CPT code 
55866 from the IPO list. These commenters believed this procedure could 
be safely performed on hospital outpatients and noted that many 
hospital outpatient departments are equipped to do so.
    Response: We appreciate the commenters' support.
    Comment: One commenter opposed the removal of CPT code 55866 from 
the IPO list, stating that the procedure cannot be safely performed as 
an outpatient procedure for a majority of patients.
    Response: We continue to believe that the procedure described by 
CPT code 55866 can be safely performed in the hospital outpatient 
setting on patients who are appropriate candidates to receive the 
procedure in that setting. Because the procedure meets several of the 
criteria for removal from the IPO list, we believe it is appropriate to 
remove it.
3. Removal of the Total Knee Arthroplasty (TKA) Procedure Described by 
CPT Code 27447
    For a number of years, total knee arthroplasty (TKA) has been a 
topic of discussion for removal from the IPO list with both stakeholder 
support and opposition. Most recently, in the CY 2017 OPPS/ASC proposed 
rule (81 FR 45679 through 45681), we sought public comments on the 
removal of the TKA procedure from the IPO list from interested parties, 
including specifically: 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. In the CY 2017 proposed rule comment 
solicitation, we requested stakeholder input on whether the TKA 
procedure met the established criteria used to identify procedures to 
remove from the IPO list. We also requested input regarding how to 
modify current Medicare payment models that include TKA, such as the 
Bundled Payments for Care Improvement (BPCI) and the Comprehensive Care 
for Joint Replacement (CJR) initiatives, if the procedure was removed 
from the IPO list.
    Below is a summary of the public comments we received in response 
to the comment solicitation in the CY 2017 OPPS/ASC proposed rule. 
These public comments were varied and nuanced.
     A number of commenters believed that continued refinements 
to the TKA surgical procedure allowed it to be performed safely on 
properly selected Medicare beneficiaries in the outpatient setting. 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. Commenters who supported removing the TKA procedure 
from the IPO list also noted recent peer-reviewed publications that 
reported on investigations of the feasibility of outpatient TKA with 
positive results; that is, TKA outpatients did not experience higher 
rates of complications or readmissions in comparison to TKA inpatients.
     A minority of commenters (including teaching hospital 
stakeholders and some professional organizations representing 
orthopedic surgeons) stated that the risk of postsurgical complications 
was too high for patients with the TKA procedure performed in the 
outpatient setting for the Medicare population and noted that patients 
appropriate for the TKA procedure performed on an outpatient basis tend 
to be younger, more active, have fewer complications, and have more at 
home support than most Medicare beneficiaries. These commenters also 
believed there was insufficient research on the TKA procedure performed 
on an outpatient basis to definitively claim that the procedure could 
be safely performed in the outpatient setting.
     Some commenters noted that if the TKA procedure was 
removed from the IPO list, inpatient TKA cases should not be subject to 
Recovery Audit Contractor (RAC) review for appropriate site-of-service. 
In addition, some commenters expressed concerns about the effect that 
removing the TKA procedure from the IPO list could have on the BPCI and 
CJR Medicare payment models. We stated in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79699) that we would consider all 
public comments received in future policymaking.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33643), we stated that 
we have reviewed the clinical characteristics of the TKA procedure and 
related evidence, including current

[[Page 59383]]

length-of-stay (LOS) data for inpatient TKA procedures and peer-
reviewed literature related to outpatient TKA procedures. We also 
stated that we have considered input from the comment solicitation in 
the CY 2017 OPPS/ASC proposed rule (as summarized earlier) and the 
professional opinions of orthopedic surgeons and CMS clinical advisors. 
In addition, we stated that we have taken into account the 
recommendation from the summer 2016 meeting of the HOP Panel to remove 
the TKA procedure from the IPO list. Based on this information, we 
stated in the CY 2018 OPPS/ASC proposed rule that we have determined 
that the TKA procedure would be an appropriate candidate for removal 
from the IPO list. We stated that we expect providers to carefully 
develop evidence-based patient selection criteria to identify patients 
who are appropriate candidates for an outpatient TKA procedure as well 
as exclusionary criteria that would disqualify a patient from receiving 
an outpatient TKA procedure. We believe that the subset of Medicare 
beneficiaries who meet patient selection criteria for performance of 
the TKA procedure on an outpatient basis may have the procedure 
performed safely in the outpatient setting.
    In the CY 2018 OPPS/ASC proposed rule, we stated that we believe 
that the TKA procedure described by CPT code 27447 meets a number of 
criteria for removal from the IPO list, including criteria 1, 2, and 4. 
We sought comments on whether the public believes that these criteria 
are met and whether the TKA procedure meets any other of the five 
criteria stated in the beginning of this section. In the proposed rule, 
we also proposed that CPT code 27447 would be assigned to C-APC 5115 
(Level 5 Musculoskeletal Procedures) with status indicator ``J1''.
    Comment: Numerous commenters, including individual stakeholders, 
orthopedic surgeons, clinical specialty societies, national and State-
level hospital associations, hospital systems, device manufacturers, 
and private insurance providers responded to this proposal. Some 
commenters, including some orthopedic specialty societies and surgeons, 
private insurance providers, ambulatory surgical centers, hospital 
systems, and beneficiaries supported the proposal to remove CPT code 
27447 from the IPO list. Many of these commenters believed that TKA met 
CMS' established criteria for removing a procedure from the IPO list 
and stated that appropriately selected patients who were in excellent 
health and with no or limited medical comorbidities and sufficient 
caregiver support could be successful candidates for outpatient TKA. 
Several commenters referenced their personal, positive experiences with 
outpatient TKA. Other commenters supported the proposal, but with 
certain caveats regarding patient safety, including requests that CMS 
develop, with input from stakeholders, patient selection criteria and 
risk stratification protocols for TKA to be performed in an outpatient 
setting. Two orthopedic specialty societies stated that their 
organization was in the process of developing these patient selection 
and protocol tools.
    In addition, some commenters requested that CMS explicitly state 
that the surgeon is the final arbiter of the appropriate site for the 
surgical procedure, that CMS provide an incentive for outpatient and 
ambulatory settings performing TKA, PHA, and THA to be a part of a 
registry such as the American Joint Replacement Registry, and that CMS 
confirm that surgeons will continue to have the option to select the 
appropriate setting (inpatient or outpatient) for the procedure.
    Some commenters expressed concerns that removal of TKA from the IPO 
list may lead commercial payers to implement coverage policies that 
would drive these surgeries from the inpatient setting to lower cost 
outpatient settings that may not be sufficiently prepared to handle the 
complexities or risks associated with some outpatient TKA procedures. 
Further, some commenters stated that removing TKA from the IPO list 
could drive TKA to specific facilities based on cost alone, which could 
result in significant further stresses in isolated rural care settings.
    Response: We appreciate the commenters' support of our proposal. As 
previously stated in the discussion of the CY 2018 OPPS/ASC proposed 
rule, we continue to believe that the decision regarding the most 
appropriate care setting for a given surgical procedure is a complex 
medical judgment made by the physician based on the beneficiary's 
individual clinical needs and preferences and on the general coverage 
rules requiring that any procedure be reasonable and necessary. We also 
reiterate our previous statement that the removal of any procedure from 
the IPO list does not require the procedure to be performed only on an 
outpatient basis.
    While we continue to expect providers who perform outpatient TKA on 
Medicare beneficiaries to use comprehensive patient selection criteria 
to identify appropriate candidates for the procedure, we believe that 
the surgeons, clinical staff, and medical specialty societies who 
perform outpatient TKA and possess specialized clinical knowledge and 
experience are most suited to create such guidelines. Therefore, we do 
not expect to create or endorse specific guidelines or content for the 
establishment of providers' patient selection protocols. However, we 
remind commenters that the ``2-midnight'' rule continues to be in 
effect and was established to provide guidance on when an inpatient 
admission would be appropriate for payment under Medicare Part A 
(inpatient hospital services). In general, this guidance provides that 
if the physician expects the beneficiary to require hospital care that 
spans at least 2 midnights and admits the beneficiary based upon that 
expectation, the case is appropriate for payment under the IPPS (80 FR 
70539). For stays for which the physician expects the patient to need 
less than 2 midnights of hospital care, an inpatient admission is 
payable under Medicare Part A on a case-by-case basis if the 
documentation in the medical record supports the admitting physician's 
determination that the patient requires inpatient hospital care. This 
documentation and the physician's admission decision are subject to 
medical review, which is discussed in greater detail below (80 FR 
70541). The 2-midnight rule does not apply to procedures on the IPO 
list; that is, medically necessary procedures that are on the IPO list 
are appropriate for Medicare Part A payment without regard to the 
actual or expected length of stay (80 FR 70539).
    With regard to the behavior of commercial insurance providers and 
site selection for outpatient TKA, while we believe that these comments 
are out of the scope of the proposed rule, we note that commercial 
providers are responsible for establishing their own rules governing 
payment for services.
    Comment: Several commenters opposed the proposal to remove the TKA 
procedure from the IPO list, including national and State-level 
hospital associations, hospital systems, and individual stakeholders. 
Some of these commenters expressed concerns that TKA was not clinically 
appropriate for the outpatient setting. The commenters stated that the 
TKA procedure is invasive and Medicare beneficiaries are more likely to 
have comorbidities that could make pain more difficult to control. The 
commenters also stated that, because of these comorbidities, Medicare 
beneficiaries will face greater complications, recovery times, and 
rehabilitation needs than non-Medicare populations to recover from TKA 
procedures.

[[Page 59384]]

    Response: We continue to believe that the TKA procedure meets a 
number of our established criteria for removal from the IPO list, 
including criteria 1, 2, and 4. We also continue to believe that there 
are a subset of Medicare beneficiaries with less medical complexity who 
are able to receive this procedure safely on a hospital outpatient 
basis and that providers should adopt evidence-based patient selection 
protocols to appropriately identify these patients. As previously 
noted, removal of a procedure from the IPO list does not require the 
procedure to be performed only on an outpatient basis. Rather, it 
allows payment to be made under the OPPS when the procedure is 
performed on a hospital outpatient. In addition, we expect that 
physicians will continue to exercise their complex medical judgment, 
based on a number of factors, including the patient's comorbidities, 
the expected length of stay in the hospital (in accordance with the 2-
midnight rule), the patient's anticipated need for postoperative 
skilled nursing care, and other factors.
    Comment: Several commenters stated their concerns regarding the 
ability of beneficiaries to access postacute care for a TKA procedure 
at an SNF. By statute, beneficiaries must have a prior inpatient 
hospital stay of no fewer than 3 consecutive days to be eligible for 
Medicare coverage of inpatient SNF care. The commenters stated that 
discharging outpatient TKA patients without a 3-day stay and access to 
adequate rehabilitation would increase the likelihood of further 
medical concerns that may result in readmissions, which will result in 
higher expenses for the beneficiary, the Medicare program, and the 
hospital. These commenters stated that if there is no commensurate 
waiver of the SNF 3-day stay requirement, all outpatient TKA patients 
would need to be appropriate for discharge to home or home health care. 
One commenter questioned beneficiaries' ability to access the SNF 
benefit if a beneficiary has outpatient TKA surgery and is then 
admitted as an inpatient after being discharged from the hospital 
outpatient department. Other commenters noted that the vast majority of 
beneficiaries who fit the criteria for an outpatient TKA or THA 
procedure would not need institutional postacute care services. 
Commenters also stated that a large percentage of TKA inpatients do not 
require a 3-day length of stay, and that removing TKAs from the IPO 
list would not preclude these patients from meeting the 3-day 
qualifying stay requirement when warranted.
    Response: We reiterate that removal of the TKA procedure from the 
IPO list does not require the procedure to be performed only on an 
outpatient basis. Removal of the TKA procedure from the IPO list allows 
for payment of the procedure in either the inpatient setting or the 
outpatient setting. The commenter is correct that a prior inpatient 
hospital stay of at least 3 consecutive days is required by law under 
Medicare FFS as a prerequisite for SNF coverage. We note that Medicare 
Advantage plans may elect, pursuant to 42 CFR 409.30 and 422.101(c), to 
provide SNF coverage without imposing the SNF 3-day qualifying stay 
requirement and that CMS has issued conditional waivers of the 3-day 
qualifying stay requirement as necessary to carry out the Medicare 
Shared Savings Program and to test certain Innovation Center payment 
models, including the Next Generation ACO Model.
    We agree that the physician should take the beneficiaries' need for 
post-surgical services into account when selecting the site of care to 
perform the surgery. We would expect that Medicare beneficiaries who 
are selected for outpatient TKA would be less medically complex cases 
with few comorbidities and would not be expected to require SNF care 
following surgery. Instead, we expect that many of these beneficiaries 
would be appropriate for discharge to home (with outpatient therapy) or 
home health care. We believe that comprehensive patient selection 
protocols should be implemented to properly identify these 
beneficiaries. However, we do not believe that Medicare should 
establish such protocols and believe that physicians and providers 
should select an appropriate patient selection protocol.
    Comment: Numerous commenters from stakeholders addressed the effect 
that removing TKA from the IPO list could potentially have on two 
Medicare payment models currently being administered by the Center for 
Medicare and Medicaid Innovation: BPCI and the CJR model. The 
commenters were concerned that the proposal to remove TKA from the IPO 
list could significantly alter the composition of BPCI and CJR 
participant hospitals' patient populations. Specifically, the 
commenters believed that younger and healthier patients would be more 
likely to receive outpatient TKAs and that a higher proportion of 
patients receiving inpatient TKAs would be high risk and/or more likely 
to require additional postacute care support. As a result, the 
commenters believed that a change in patient-mix could increase the 
average episode payment of the remaining inpatient TKA BPCI and CJR 
episodes when compared to current payment levels and affect a 
hospital's ability to fall below the established target price for the 
episode, thereby hindering the hospital's ability to generate savings 
under the BPCI or CJR model. The commenters presented several proposed 
refinements to the BPCI and CJR models to mitigate these effects, 
including adjusting the target price for BPCI and CJR episodes 
involving TKA to exclude procedures that could have been performed in 
the HOPD or allowing BPCI Model 2 and CJR episodes to be initiated by 
TKA performed in the hospital outpatient department.
    Response: As mentioned earlier, we believe that there is a subset 
of less medically complex TKA cases that could be appropriately and 
safely performed on an outpatient basis. However, we do not expect a 
significant volume of TKA cases currently being performed in the 
hospital inpatient setting to shift to the hospital outpatient setting 
as a result of removing this procedure from the IPO list. At this time, 
we expect that a significant number of Medicare beneficiaries will 
continue to receive treatment as an inpatient for TKA procedures. As 
providers' knowledge and experience in the delivery of hospital 
outpatient TKA treatment develops, there may be a greater migration of 
cases to the hospital outpatient setting. However, we do not expect a 
significant shift in TKA cases from the hospital inpatient setting to 
the hospital outpatient setting between January 1, 2018 (the effective 
date for the removal of TKA from the IPO list) and the current end 
dates of the performance periods for the BPCI and CJR models, September 
30, 2018 and December 31, 2020, respectively. Accordingly, we do not 
expect a substantial impact on the patient-mix for the BPCI and CJR 
models. We intend to monitor the overall volume and complexity of TKA 
cases performed in the hospital outpatient department to determine 
whether any future refinements to these models are warranted.
    Comment: Some commenters asked CMS to reconsider the proposed 
assignment of CPT code 27447 to C-APC 5115 (Level 5 Musculoskeletal 
Procedures) with status indicator ``J1''. The commenters presented an 
analysis of OPPS claims data which indicated that approximately one-
third of the TKA claims reported no joint implant HCPCS C-code on the 
claim. Some of these commenters asserted that the claims that did not 
include a joint implant had a geometric mean cost of approximately

[[Page 59385]]

$3,808 and the claims that did include a joint implant had a geometric 
mean cost of approximately $13,843, while the overall geometric mean 
cost for claims with CPT code 27447 was approximately $8,602. The 
commenters requested that CMS only use claims for ratesetting for CPT 
27447 that include a joint implant and to assign the procedure to APC 
5116 (Level 6 Musculoskeletal Procedures). One commenter also stated 
that CMS failed to provide the general public with an explanation of 
the source of the geometric mean cost of the TKA procedure, which was 
CMS' basis for assigning the TKA procedure to a C-APC.
    Response: Since the assignment of CPT code 27447 to the IPO list, 
no payment for claim lines billing this procedure code were made. Based 
on clinical similarity with other musculoskeletal procedures, we 
continue to believe that C-APC 5115 is an appropriate APC assignment 
for CPT code 27447. Further, we note that the 50th percentile IPPS 
payment for TKA without major complications or comorbidities (MS-DRG 
470) is roughly $11,760 for FY 2018. We note that the geometric mean 
cost for C-APC 5116 is over $15,000. As previously stated, we would 
expect that beneficiaries selected for outpatient TKA would generally 
be expected to be less complex and to not have major complications or 
comorbidities. Therefore, we do not believe that it would be 
appropriate for the OPPS payment rate to exceed the IPPS payment rate 
for TKA without major complications/comorbidities because IPPS cases 
would generally be expected to be more complicated and complex than 
those selected for performance in the hospital outpatient setting and 
because inpatient cases would include room and board as well as more 
time in the hospital.
    With respect to the billing concern, 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). As we do every year, we will review and 
evaluate the APC groupings based on the latest available data in the 
next rulemaking cycle.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the TKA procedure described by CPT 
code 27447 from the IPO list beginning in CY 2018 and to assign the TKA 
procedure to C-APC 5115 with status indicator ``J1''.
4. Recovery Audit Contractor (RAC) Review of TKA Procedures
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33643 and 33644), we 
proposed that if we finalized our proposal to remove the TKA procedure 
described by CPT code 27447 from the IPO list, we would also prohibit 
RAC review of patient status for TKA procedures performed in the 
inpatient setting for a period of 2 years to allow providers time to 
gain experience with these procedures in the outpatient setting. We 
believe this approach will help ensure that hospitals can determine 
whether to perform the procedure on a hospital outpatient or hospital 
inpatient basis without taking into account the possibility of an 
inpatient TKA claim being denied upon a patient status review by a RAC. 
That is, given that this surgical procedure is newly eligible for 
payment under either the IPPS or the OPPS, we proposed that RAC patient 
status reviews of a hospital claim is prohibited for a period of 2 
years. We note that RAC reviews of TKA procedures described by CPT code 
27447 will continue to be permitted for issues other than patient 
status as an inpatient or outpatient, including those for underlying 
medical necessity.
    Comment: Many commenters supported a prohibition on RAC review for 
patient status for TKA procedures performed in the inpatient setting 
for a period of 2 years. Some commenters suggested that CMS prohibit 
RAC review for a period of at least 36 months to allow consensus to 
develop around appropriate evidence-based patient selection criteria. 
One commenter requested that CMS impose a permanent moratorium on RAC 
reviews of patient status for TKA or confirm that after any moratorium 
is lifted, a RAC will only be permitted to undertake such a review upon 
a referral by a Quality Improvement Organization (``QIO''). One 
commenter also requested that CMS also clarify that its current 2-
midnight policy will apply to the TKA procedure if it were to be 
removed from the IPO, as it does for other inpatient admissions.
    Response: We continue to believe that a 2-year prohibition on RAC 
review for TKA procedures performed in the inpatient setting is an 
adequate amount of time to allow providers to gain experience with 
determining the most appropriate setting to perform these procedures 
and establishing patient selection criteria to assist in the 
determination. As stated in the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70538 through 70549), under the 2-midnight rule, 
an inpatient admission is generally appropriate for Medicare Part A 
payment if the physician (or other qualified practitioner) admits the 
patient as an inpatient based upon the expectation that the patient 
will need hospital care that crosses at least 2 midnights. However, 
Medicare Part A payment is allowed on a case-by-case basis for 
inpatient admissions that do not satisfy the 2-midnight benchmark, if 
the documentation in the medical record supports the admitting 
physician's determination that the patient requires inpatient hospital 
care despite an expected length of stay that is less than 2 midnights. 
The initial medical reviews of claims for short-stay inpatient 
admissions are conducted by QIOs, which may refer providers to the RACs 
due to exhibiting persistent noncompliance with Medicare payment 
policies, including, but not limited to: Having high denial rates and 
consistently failing to adhere to the 2-midnight rule, or failing to 
improve their performance after QIO educational intervention. The 2-
midnight rule and this medical review policy do not apply to procedures 
that are included on the IPO list. However, these policies do apply to 
other inpatient admissions for procedures that are not included on the 
IPO list and would also generally apply to TKA procedures performed in 
the hospital inpatient setting. As mentioned previously, however, RAC 
patient status reviews for TKA procedures performed in the hospital 
inpatient setting is prohibited for a period of 2 years.
5. Public Requests for Additions to or Removal of Procedures on the IPO 
List
    Commenters who responded to the CY 2018 OPPS/ASC proposed rule also 
requested that CMS remove several additional procedures from the IPO 
list. These additional procedures are listed in Table 77 below.

[[Page 59386]]



  Table 77--Procedures Requsted by Commenters To Be Removed From The CY
                        2018 Inpatient Only List
------------------------------------------------------------------------
      CY 2018  CPT code                 CY 2018 long descriptor
------------------------------------------------------------------------
23470........................  Arthroplasty, glenohumeral joint;
                                hemiarthroplasty.
23472........................  Arthroplasty, glenohumeral joint; total
                                shoulder (glenoid and proximal humeral
                                replacement (eg, total shoulder)).
27125........................  Hemiarthroplasty, hip, partial (eg,
                                femoral stem prosthesis, bipolar
                                arthroplasty).
27130........................  Arthroplasty, acetabular and proximal
                                femoral prosthetic replacement (total
                                hip arthroplasty), with or without
                                autograft or allograft.
27702........................  Arthroplasty, ankle; with implant (total
                                ankle).
27703........................  Arthroplasty, ankle; revision, total
                                ankle.
43282........................  Laparoscopy, surgical, repair of
                                paraesophageal hernia with implantation
                                of mesh.
43772........................  Laparoscopy, surgical, gastric
                                restrictive procedure; removal of
                                adjustable gastric restrictive device
                                component only.
43773........................  Laparoscopy, surgical, gastric
                                restrictive procedure; removal and
                                replacement of adjustable gastric
                                restrictive device component only.
43774........................  Laparoscopy, surgical, gastric
                                restrictive procedure; removal of
                                adjustable gastric restrictive device
                                and subcutaneous port components.
------------------------------------------------------------------------

    After evaluating the above list of codes that commenters requested 
to be removed from the IPO list against our established criteria, we 
believe that CPT codes 43282, 43772, 43773, 43774 meet several criteria 
to be removed from the IPO list, including criteria 3. Accordingly, we 
are removing these four CPT codes from the IPO list for CY 2018 and 
assigning them to APCs in this final rule with comment period.
    For the remaining CPT codes requested to be removed from the IPO 
list that describe joint replacement procedures, because of the strong 
public interest and numerous comments that we have received from 
stakeholders regarding our proposals to remove other joint replacement 
procedures, namely the TKA procedure, from the IPO list, we are not 
removing these procedures from the IPO list at this time to allow for 
further discussion. We will take these requests into consideration and 
any proposed policy changes regarding these procedures will be 
announced in future rulemaking. A further discussion of the comment 
solicitation of the possible removal of partial hip arthroplasty (PHA) 
and total hip arthroplasty (THA) procedures from the IPO list is 
included under section IX.C. of this final rule with comment period.
    One commenter requested that CMS add the procedure described by CPT 
code 92941 (Percutaneous transluminal revascularization of acute total/
subtotal occlusion during acute myocardial infarction, coronary artery 
or coronary artery bypass graft, any combination of intracoronary 
stent, artherectomy and angioplasty, including aspiration thrombectomy 
when performed, single vessel) to the IPO list because this procedure 
is performed emergently to treat acute myocardial infarction patients.
    We evaluated the procedure described by CPT code 92941 against our 
criteria, and we agree with the commenter that CPT code 92941 should be 
added to the IPO list.
6. Summary of Changes to the IPO List for CY 218
    After consideration of the public comments we received and for the 
reasons discuss previously, we are removing the following procedures 
from the IPO list for CY 2018: CPT codes 27447, 43282, 43772, 43773, 
43774, and 55866. We also are adding CPT code 92941 to the IPO list for 
CY 2018. The specific procedures, including the CPT code, long 
descriptors, and the CY 2018 status indicators, are displayed in Table 
78 below.

                            Table 78--CHanges to the Inpatient Only List for CY 2018
----------------------------------------------------------------------------------------------------------------
                                                                                  CY 2018  OPPS   CY 2018  OPPS
     CY 2018  CPT code        CY 2018 long descriptor            Status                APC            Status
                                                                                   assignment       indicator
----------------------------------------------------------------------------------------------------------------
27447.....................  Arthroplasty, knee, condyle  Removed...............            5115              J1
                             and plateau; medical and
                             lateral compartments with
                             or without patella
                             resurfacing (total knee
                             arthroplasty).
43282.....................  Laparoscopy, surgical,       Removed...............            5362              J1
                             repair of paraesophageal
                             hernia with implantation
                             of mesh.
43772.....................  Laparoscopy, surgical,       Removed...............            5303              J1
                             gastric restrictive
                             procedure; removal of
                             adjustable gastric
                             restrictive device
                             component only.
43773.....................  Laparoscopy, surgical,       Removed...............            5361              J1
                             gastric restrictive
                             procedure; removal and
                             replacement of adjustable
                             gastric restrictive device
                             component only.
43774.....................  Laparoscopy, surgical,       Removed...............            5303              J1
                             gastric restrictive
                             procedure; removal of
                             adjustable gastric
                             restrictive device and
                             subcutaneous port
                             components.
55866.....................  Laparoscopy, surgical        Removed...............            5362              J1
                             prostatectomy, retropubic
                             radical, including nerve
                             sparing, includes robotic
                             assistance, when performed.
92941.....................  Percutaneous transluminal    Added.................             N/A                C
                             revascularization of acute
                             total/subtotal occlusion
                             during acute myocardial
                             infarction, coronary
                             artery or coronary artery
                             bypass graft, any
                             combination of
                             intracoronary stent,
                             artherectomy and
                             angioplasty, including
                             aspiration thrombectomy
                             when performed, single
                             vessel.
----------------------------------------------------------------------------------------------------------------

    The complete list of codes (the IPO list) that will be paid by 
Medicare in CY 2018 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).

[[Page 59387]]

C. Discussion of Solicitation of Public Comments on the Possible 
Removal of Partial Hip Arthroplasty (PHA) and Total Hip Arthroplasty 
(THA) Procedures From the IPO List

1. Background
    Partial hip arthroplasty (PHA), CPT code 27125 (Hemiarthroplasty, 
hip, partial (eg, femoral stem prosthesis, bipolar arthroplasty)), and 
total hip arthroplasty (THA) or total hip replacement, CPT code 27130 
(Arthroplasty, acetabular and proximal femoral prosthetic replacement 
(total hip arthroplasty), with or without autograft or allograft), have 
traditionally been considered inpatient surgical procedures. The 
procedures were placed on the original IPO list in the CY 2001 OPPS 
final rule (65 FR 18780). 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 18455). 
In 2000, the geometric mean average length of stay for the DRG to which 
uncomplicated PHA and THA procedures were assigned was 4.6 days, and in 
2016, the average length of stay for current uncomplicated PHA and THA 
procedures for the MS-DRG was 2.7 days.
    In the CY 2017 OPPS/ASC proposed rule, we solicited public comments 
on the possible removal of total knee arthroplasty (TKA) from the IPO 
list (81 FR 45679 through 45681). Included in the public comments 
received related to the removal of TKA from the IPO list were several 
comments in support of removal of THA from the IPO list as well. Among 
those commenters expressing support for removal of THA from the IPO 
list were several surgeons and other stakeholders who believed that, 
given thorough preoperative screening by medical teams with significant 
experience and expertise involving hip replacement procedures, the THA 
procedure could be provided on an outpatient basis for some Medicare 
beneficiaries. These commenters noted significant success involving 
same day discharge for patients who met the screening criteria and 
whose experienced medical teams were able to perform the procedure 
early enough in the day for the patients to achieve postoperative 
goals, allowing home discharge by the end of the day. The commenters 
believed that the benefits of providing the THA procedure on an 
outpatient basis will lead to significant enhancements in patient well-
being, improved efficiency, and cost savings to the Medicare program, 
including shorter hospital stays resulting in fewer medical 
complications, improved results, and enhanced patient satisfaction.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33644 and 
33645), recent innovations have enabled surgeons to perform the PHA and 
THA procedures on an outpatient basis on non-Medicare patients (both in 
the HOPD and in the ASC). These innovations in PHA and THA care include 
minimally invasive techniques, improved perioperative anesthesia, 
alternative postoperative pain management, and expedited rehabilitation 
protocols. Patients undergoing minimally invasive surgical procedures 
instead of open surgical techniques generally benefit from a shorter 
hospital stay. However, not all patients are candidates for minimally 
invasive PHA or THA. Commenters on the CY 2017 OPPS/ASC proposed rule 
comment solicitation on the TKA procedure have stated that benefits of 
outpatient PHA and THA procedures 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.
    We stated in the CY 2018 OPPS/ASC proposed rule that, like most 
surgical procedures, both PHA and THA need 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 may likely be good candidates for an 
outpatient PHA or THA procedure. These patients may be determined to 
also be able to tolerate outpatient rehabilitation in either an 
outpatient facility or at home postsurgery. On the other hand, patients 
with multiple medical comorbidities, 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 PHA and THA procedures in public 
comments in response to our CY 2017 OPPS/ASC proposed rule comment 
solicitation on the TKA procedure have emphasized the importance of 
careful patient selection and strict protocols to optimize outpatient 
hip replacement 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, ambulation, and performance 
of activities of daily living.
    We also noted in the proposed rule 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. Topics and Questions for Public Comments
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33645), we sought 
public comments on whether we should remove the procedures described by 
CPT codes 27125 and 27130 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 PHA and/or THA procedures; hospitals 
and hospital trade associations; and any other interested stakeholders. 
We sought public comments on the following questions:
     Are most outpatient departments equipped to provide PHA 
and/or THA to some Medicare beneficiaries?
     Can the simplest procedure described by CPT codes 27125 
and 27130 be performed in most outpatient departments?
     Are the procedures described by CPT codes 27125 and 27130 
sufficiently related to or similar to other procedures we have already 
removed from the IPO list?
     How often is the procedure described by CPT codes 27125 
and 27130 being performed on an outpatient

[[Page 59388]]

basis (either in an HOPD or ASC) on non-Medicare patients?
     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 either a PHA or THA procedure 
as a hospital outpatient, which may or may not include a 24-hour period 
of recovery in the hospital after the operation?
    In addition, we sought public comments on whether the PHA and THA 
procedures may meet the criteria to be added to the ASC Covered 
Procedures List. We refer readers to section XII.C.1.d. of this final 
rule with comment period for a complete discussion of the ASC Covered 
Procedures List.
    Finally, as noted when we solicited public comment on removing the 
TKA procedure from the IPO list in the CY 2017 rulemaking, we solicited 
public comment on the effect of removing the TKA procedure from the IPO 
list on the CJR Model and the BPCI Model. We refer readers to the CY 
2017 OPPS/ASC proposed rule for a discussion of questions we raised for 
public comments, and we again sought public comment on the effect of 
removing the PHA and THA procedures from the IPO list on these models. 
For a discussion of these models in the CY 2017 rulemaking, we refer 
readers to 81 FR 79698 through 79699.
    Comment: Numerous commenters representing a variety of 
stakeholders, including physicians and other care providers, individual 
stakeholders, specialty societies, hospital associations, hospital 
systems, ASCs, device manufacturers, and beneficiaries responded to our 
solicitation of comments regarding the removal of PHA and THA from the 
IPO list. The comments were diverse and some were similar to the 
comments we received on our proposal to remove TKA from the IPO list. 
Some commenters, including hospital systems and associations, as well 
as specialty societies and physicians, stated that it would not be 
clinically appropriate to remove PHA and THA from the IPO list, 
indicating that the patient safety profile of outpatient THA and PHA in 
the non-Medicare population is not well-established. Commenters 
representing orthopedic surgeons also stated that patients requiring a 
hemiarthroplasty (PHA) for fragility fractures are by nature higher 
risk, suffer more extensive comorbidities and require closer monitoring 
and preoperative optimization; therefore, it would not be medically 
appropriate to remove the PHA procedure from the IPO list.
    Other commenters, including ambulatory surgery centers, physicians, 
and beneficiaries, supported the removal of PHA and THA from the IPO 
list. These commenters stated that the procedures were appropriate for 
certain Medicare beneficiaries and most outpatient departments are 
equipped to provide THA to some Medicare beneficiaries. They also 
referenced their own personal successful experiences with outpatient 
THA.
    Finally, commenters stated concerns regarding the effect of 
removing THA on the pricing methodologies, target pricing, and 
reconciliation process of the procedure in certain Medicare payment 
models (that is, the CJR and the BPCI models). They requested 
modifications to these models if the THA procedure is removed from the 
IPO list and requested that these procedures be suspended from quality 
programs such as the Hospital Readmissions Reduction Program, the 
Hospital Value-Based Purchasing Program, and Hospital Inpatient Quality 
Reporting Program if they are removed from the IPO list.
    Response: We thank the commenters for their detailed responses. We 
will consider these comments in future policymaking.

X. Nonrecurring Policy Changes

A. Payment for Certain Items and Services Furnished by Certain Off-
Campus Departments of a Provider

1. Background
    Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74), 
enacted on November 2, 2015, amended section 1833(t) of the Act 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. 
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. The implementation of section 603 of the Bipartisan Budget Act 
of 2015 was finalized in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79699 through 79719) and interim final rule with comment 
period (79720 through 79729).
2. Expansion of Services by Excepted Off-Campus Hospital Outpatient 
Departments
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33645 through 33648), 
we did not propose any policies to limit clinical service line 
expansion or volume increases at excepted off-campus provider-based 
departments (PBDs). However, we stated that we would continue to 
monitor claims data for changes in billing patterns and utilization, 
and continue to invite public comments on the issue of service 
expansion.
    We received a number of comments from various stakeholders 
regarding both clinical service line expansion and volume increases, as 
well as other topics not discussed in the CY 2018 OPPS/ASC proposed 
rule, including relocation and change of ownership. We appreciate all 
of the comments received, and we will consider them as we consider 
whether to pursue future rulemaking on these issues.
    We also received some public comments regarding issues that are 
outside the scope of the policies addressed in the CY 2018 OPPS/ASC 
proposed rule, including comments related to the proposed payment 
adjustment applied for nonexcepted items and services furnished by 
nonexcepted off-campus PBDs, which are addressed in the CY 2018 MPFS 
final rule, and comments regarding technical billing questions. With 
respect to the payment adjustment for nonexcepted items and services 
furnished by nonexcepted off-campus PBDs and changes to the payment 
relativity adjuster, we refer readers to the CY 2018 MPFS final rule 
for that information and, more broadly, for the payment rates under the 
MPFS that will apply to nonexcepted items and services furnished by 
nonexcepted off-campus PBDs for CY 2018. We expect the CY 2018 MPFS 
final rule to be issued on or about the same date as this OPPS/ASC 
final rule with comment. Comments submitted regarding technical billing 
questions are addressed through applicable program instructions.
3. Section 16002 of the 21st Century Cures Act (Treatment of Cancer 
Hospitals in Off-Campus Outpatient Department of a Provider Policy)
    As discussed in the CY 2018 OPPS/ACS proposed rule (82 FR 33648), 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699), 
we finalized a number of proposals to implement section 603 of the 
Bipartisan Budget Act of 2016 (Pub. L. 114-74), enacted on November 2, 
2015, which

[[Page 59389]]

amended section 1833(t) of the Act. Specifically, this provision 
amended the OPPS statute to require that certain items and services 
furnished by certain off-campus PBDs 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 
instead will be paid ``under the applicable payment system'' under 
Medicare Part B if the requirements for such payment are otherwise met. 
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699), 
we established the Medicare Physician Fee Schedule as the ``applicable 
payment system'' for the majority of the nonexcepted items and services 
furnished by nonexcepted off-campus PBDs.
    Section 16002(a) of the 21st Century Cures Act (Pub. L. 114-255) 
amended the Act at section 1833(t)(20)(B) and provided that, with 
respect to applicable items and services furnished during 2017 or a 
subsequent year, the term ``off-campus outpatient department of a 
provider'' excludes certain cancer hospitals. To meet this exclusion, 
section 16002(a) requires that such cancer hospitals (1) be described 
in section 1886(d)(1)(B)(v) of the Act; and (2) for hospital outpatient 
departments that meet the requirements for 42 CFR 413.65, after 
November 1, 2015 and before December 15, 2016, that the Secretary has 
received from the provider an attestation that the department met such 
requirements not later than 60 days after the date of enactment of 
section 16002 (December 13, 2016), or, for departments that meet the 
requirements after December 13, 2016, the Secretary has received from 
the provider an attestation that the department met the requirements 
not later than 60 days after the date the department first met the 
requirements of 42 CFR 413.65. As we stated in the CY 2018 OPPS/ASC 
proposed rule, through operational guidance, we have provided direction 
to all MACs regarding this provision. We also have provided guidance on 
this provision to hospital providers, which can be found on the CMS Web 
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/Sections-16001-16002.pdf.
    Section 16002(b) of Public Law 114-255 amended section 1833(t)(18) 
of the Act by adding a new subparagraph (C) that requires the 
Secretary, in applying 42 CFR 419.43(i) for services furnished on or 
after January 1, 2018, to use a target payment-to-cost ratio (PCR) that 
is 1 percentage point less than the target PCR that would otherwise 
apply. In addition to the 1 percentage point reduction, the Secretary 
may consider making an additional percentage point reduction to the 
target PCR that takes into account payment rates for applicable items 
and services described in section 1833(t)(21)(C) of the Act other than 
for services furnished by certain cancer hospitals. Further, in making 
any budget neutrality adjustments under section 1833(t) of the Act, the 
Secretary shall not take into account the reduced expenditures that 
result from application of section 1833(t)(18)(C) of the Act. We refer 
readers to section II.F. of this final rule with comment period for a 
discussion on the calculation of the target PCR for cancer hospitals 
for CY 2018.

B. Medicare Site-of-Service Price Transparency (Section 4011 of the 
21st Century Cures Act)

    Section 4011 of the 21st Century Cures Act (Pub. L. 114-255), 
enacted on December 13, 2016, amended section 1834 of the Act by adding 
a new subsection (t). New section 1834(t) of the Act provides that, in 
order to facilitate price transparency with respect to items and 
services for which payment may be made either to a hospital outpatient 
department or to an ambulatory surgical center under Title XVIII, the 
Secretary shall, for 2018 and each year thereafter, make available to 
the public via a searchable Web site, with respect to an appropriate 
number of items and services, the estimated payment amount for the item 
or service under the OPPS and ASC payment system and the estimated 
beneficiary liability applicable to the item or service. In the CY 2018 
OPPS/ASC proposed rule (82 FR 33648), we announced our plan to 
establish the searchable Web site required by section 1834(t) of the 
Act. We indicated that details regarding the Web site will be issued 
through our subregulatory process. We stated in the proposed rule that 
we anticipate that the Web site will be made available in early CY 
2018.
    Comment: One commenter requested that CMS ensure that the Web site 
is designed in a user-friendly manner, and err on the side of including 
services for display. Another commenter requested that Web site users 
be provided with the proper context for understanding some of the 
reasons for potential cost differences.
    Response: We appreciate these comments and will take them into 
consideration as we develop the Web site.

C. Appropriate Use Criteria for Advanced Diagnostic Imaging Services

    Section 218(b) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) added subsection (q) to section 1834 of the 
Act, which directs the Secretary to establish a program to promote the 
use of appropriate use criteria (AUC) for advanced diagnostic imaging 
services (the AUC program). Section 1834(q)(1)(B) of the Act defines 
AUC as criteria that are evidence-based (to the extent feasible) and 
assist professionals who order and furnish applicable imaging services 
to make the most appropriate treatment decisions for a specific 
clinical condition. The current policies for the AUC program for 
advanced diagnostic imaging services are codified in the regulations at 
42 CFR 414.94.
    There are four components of the AUC program for advanced 
diagnostic imaging services program. In the CY 2016 MPFS final rule 
with comment period (80 FR 71102 through 71116 and 80 FR 71380 through 
71382), we addressed the first component of the Medicare AUC program. 
The first component includes the requirements and process for the 
establishment and specification of the AUC. In the CY 2017 MPFS final 
rule (81 FR 80403 through 80428 and 81 FR 80554 through 80555), we 
addressed the second component of the AUC program. The second component 
includes the specification of qualified clinical decision support 
mechanisms (CDSMs). A CDSM is the electronic tool through which the 
ordering practitioner consults AUC. In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33648 and 33649), we stated that we had proposed in the CY 
2018 MPFS proposed rule to address the third component of the AUC 
program. The third component includes the requirements for an ordering 
professional to consult with a qualified CDSM when ordering an 
applicable imaging service, and for the furnishing professional to 
include that consultation information on claims for the service that is 
furnished in an applicable setting and paid under an applicable payment 
system. Based on the statutory language of section 1834(q)(4)(B) of the 
Act, the AUC program applies to advanced imaging services for which 
payment is made under the following applicable payment systems: The 
MPFS; the OPPS; and the ASC payment system. The fourth component of the 
program is prior authorization for outlier ordering professionals. This 
component will be discussed in future rulemaking.
    We indicated in the CY 2018 OPPS/ASC proposed rule that public

[[Page 59390]]

comments related to the requirements for the AUC program should be 
addressed in response to the CY 2018 MPFS proposed rule. Therefore, we 
refer readers to the CY 2018 MPFS final rule for further information 
governing the Medicare AUC program and the finalized policies for CY 
2018, including summaries of any public comments we received on the 
proposals in the CY 2018 MPFS proposed rule and our responses to those 
comments.

D. Enforcement Instruction for the Supervision of Outpatient 
Therapeutic Services in Critical Access Hospitals (CAHs) and Certain 
Small Rural Hospitals

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33649), 
in the CY 2009 OPPS/ASC proposed rule and final rule with comment 
period (73 FR 41518 through 41519 and 73 FR 68702 through 68704, 
respectively), we clarified that direct supervision is required for 
hospital outpatient therapeutic services covered and paid by Medicare 
that are furnished in hospitals as well as in PBDs of hospitals, as set 
forth in the CY 2000 OPPS final rule with comment period (65 FR 18525). 
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60575 
through 60591), we finalized a technical correction to the title and 
text of the applicable regulation at 42 CFR 410.27 to clarify that this 
standard applies in CAHs as well as hospitals. In response to concerns 
expressed by the hospital community, in particular CAHs and small rural 
hospitals, that they would have difficulty meeting this standard, on 
March 15, 2010, we instructed all MACs not to evaluate or enforce the 
supervision requirements for therapeutic services provided to 
outpatients in CAHs from January 1, 2010 through December 31, 2010, 
while the agency revisited the supervision policy during the CY 2011 
OPPS/ASC rulemaking cycle.
    Due to continued concerns expressed by CAHs and small rural 
hospitals, we extended this notice of nonenforcement (``enforcement 
instruction'') as an interim measure for CY 2011, and expanded it to 
apply to small rural hospitals having 100 or fewer beds (75 FR 72007). 
We continued to consider the issue further in our annual OPPS notice-
and-comment rulemaking, and implemented an independent review process 
in 2012 to obtain advice from the HOP Panel on this matter (76 FR 74360 
through 74371). Under this process used since CY 2012, the HOP Panel 
considers and advises CMS regarding stakeholder requests for changes in 
the required level of supervision of individual hospital outpatient 
therapeutic services. In addition, we extended the enforcement 
instruction through CY 2012 and CY 2013. The enforcement instruction 
has not been in effect since December 31, 2013. Congress has taken 
legislative action (Pub. L. 113-198 and Pub. L. 114-112) to extend 
nonenforcement of the direct supervision requirement for hospital 
outpatient therapeutic services in CAHs and small rural hospitals 
having 100 or fewer beds since December 31, 2013. The latest 
legislative action (Pub. L. 114-255) extended nonenforcement until 
December 31, 2016. The current enforcement instruction is available on 
the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/Downloads/Moratorium-on-Hospital-Supervision-Enforcement.pdf.
    As discussed in the CY 2018 OPPS/ASC proposed rule, stakeholders 
have consistently requested that CMS continue the nonenforcement of the 
direct supervision requirement for hospital outpatient therapeutic 
services for CAHs and small rural hospitals having 100 or fewer beds. 
Stakeholders stated that some small rural hospitals and CAHs have 
insufficient staff available to furnish direct supervision. The primary 
reason stakeholders cited for this request is the difficulty that CAHs 
and small rural hospitals have in recruiting physicians and 
nonphysician practitioners to practice in rural areas. These 
stakeholders noted that it is particularly difficult to furnish direct 
supervision for critical specialty services, such as radiation oncology 
services, that cannot be directly supervised by a hospital emergency 
department physician or nonphysician practitioner because of the volume 
of emergency patients or lack of specialty expertise. In addition, we 
are not aware of any quality of care complaints from beneficiaries or 
providers relating to the enforcement instruction related to direct 
physician supervision.
    Therefore, in the CY 2018 OPPS/ASC proposed rule, we proposed to 
reinstate the enforcement instruction for outpatient therapeutic 
services furnished in CAHs and small rural hospitals having 100 or 
fewer beds for CYs 2018 and 2019 to give these CAHs and small rural 
hospitals more time to comply with the supervision requirements for 
outpatient therapeutic services and to give all parties additional time 
to submit specific services to be evaluated by the HOP Panel for a 
recommended change in the supervision level. We stated that these 
hospitals will continue to be subject to conditions of participation 
for hospitals and other Medicare rules regarding supervision. We 
welcomed public comments on this proposal.
    Comment: A few commenters opposed the proposal to reinstate the 
enforcement instruction for CAHs and small rural hospitals because of 
concerns about patient safety or having qualified physicians perform 
certain medical services. One commenter believed that supervision 
requirements should be applied uniformly to hospitals in all care 
settings to ensure patient safety. Another commenter focused on 
radiation oncology services and believed that those services should be 
delivered by personnel trained in radiation oncology. The commenter 
understood concerns about physician availability in rural areas, but 
encouraged CMS to create more incentives for radiation oncologists to 
practice in rural areas instead of not enforcing requirements for 
direct supervision.
    Response: We agree that patient safety is a critically important 
consideration for each service, and that only qualified physicians and 
nonphysician practitioners who are practicing within their State scope 
of practice should perform and oversee therapeutic services, as 
applicable. We note that our proposal did not change State licensure 
and scope of practice requirements. We would expect all hospitals to 
ensure that appropriate clinical personnel direct and oversee each 
beneficiary's care such that patient safety is not compromised. As 
stated in our proposal, we are not aware of any quality of care 
complaints from beneficiaries or providers relating to the level of 
physician supervision for hospital outpatient therapeutic services. In 
addition, CAHs and small rural hospitals will continue to be subject to 
the Medicare conditions of participation for hospitals and other 
Medicare rules regarding supervision.
    Comment: Several commenters supported the proposal for CYs 2018 and 
2019. Some commenters suggested that CMS adopt the nonenforcement 
policy for CY 2017 and permanently beyond CY 2019. Commenters also 
suggested changing the level of supervision for some or most hospital 
outpatient therapeutic services, such as therapy services, to general 
supervision as the default supervision level. These commenters also 
suggested that the change in supervision level should apply to 
additional categories of hospitals or to all hospitals and not just for 
CAHs and small rural hospitals. The commenters believed changing the 
level of supervision for all hospitals will help rural providers with 
the shortages of

[[Page 59391]]

health care professionals and reduce the regulatory burden on providers 
while providing a level of supervision consistent with the conditions 
of participation for CAHs.
    Response: We appreciate the support for this proposal. Permanent 
changes to the supervision level for outpatient therapeutic services 
for all hospitals are beyond the scope of this proposal. We note that 
we have an established process for stakeholders to submit specific 
services to be evaluated by the HOP Panel for a recommended change in 
the supervision levels. Likewise, permanently reinstating the 
enforcement instruction after CY 2019 is beyond the scope of this 
proposal. As we stated in the CY 2018 OPPS/ASC proposed rule, we 
proposed to reinstate the enforcement instruction for 2 years to give 
small rural hospitals and CAHs additional time to comply with the 
supervision requirements for outpatient therapeutic services and to 
give all parties additional time to submit specific services to be 
evaluated by the HOP Panel for a recommended change in the supervision 
level.
    With respect to applying the nonenforcement policy to CY 2017, we 
proposed to reinstate the enforcement instruction prospectively, for 
services administered beginning on the effective date of this final 
rule with comment period, which is scheduled for January 1, 2018; and 
we are finalizing that proposal. We anticipate issuing guidance outside 
of this rule to address enforcement policy for the direct supervision 
requirement for outpatient therapeutic services for CY 2017.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reinstate the 
nonenforcement policy for direct supervision enforcement of outpatient 
therapeutic services furnished in CAHs and small rural hospitals having 
100 or fewer beds, and to reinstate our enforcement instruction for CYs 
2018 and 2019.

E. Payment Changes for Film X-Ray Services and Payment Changes for X-
Rays Taken Using Computed Radiography Technology

    Section 502 of Division O, title V of the Consolidated 
Appropriations Act, 2016 (Pub. L. 114-113), which was enacted on 
December 18, 2015, contains provisions to incentivize the transition 
from traditional X-ray imaging to digital radiography. In particular, 
section 502(b) of Public Law 114-113 amended section 1833(t)(16) of the 
Act by adding subparagraph (F), which includes provisions that limit 
payment for film X-ray imaging services and computed radiography 
imaging services.
    Section 1833(t)(16)(F)(i) of the Act specifies that, effective for 
services furnished during 2017 or a 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 under section 
1833(t) of the Act) shall be reduced by 20 percent. Section 
1833(t)(16)(F)(iii) of the Act provides that the reductions made under 
section 1833(t)(16)(F) of the Act 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.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33649 
through 33650), consistent with section 1833(t)(16)(F)(iv) of the Act, 
which requires the implementation of the reductions in payment set 
forth in subparagraph (F) through appropriate mechanisms, which may 
include modifiers, we implemented section 1833(t)(16)(F)(i) of the Act 
by establishing the modifier ``FX'' (X-ray taken using film), effective 
January 1, 2017. The payment for X-rays taken using film and furnished 
during 2017 or a subsequent year is reduced by 20 percent when modifier 
``FX'' (X-ray taken using film) is reported with the appropriate HCPCS 
codes. The applicable HCPCS codes describing imaging services can be 
found in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site). 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 is made and, therefore, there is no payment amount that can be 
attributed to the X-ray service. Accordingly, the amount of the payment 
reduction for a packaged film X-ray service is $0 (20 percent of $0). 
Further discussion of these policies and modifier ``FX'' can be found 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79729 
through 79730).
    Section 1833(t)(16)(F)(ii) of the Act provides for a phased-in 
reduction of payments for imaging services that are taken using 
computed radiography technology (as defined in section 1848(b)(9)(C) of 
the Act). Payments for such services (including the X-ray component of 
a packaged service) furnished during CY 2018, 2019, 2020, 2021, or 
2022, that would otherwise be determined under section 1833(t) of the 
Act (without application of subparagraph (F)(ii) and before application 
of any other adjustment), will be reduced by 7 percent, and if such 
services are furnished during CY 2023 or a subsequent year, by 10 
percent. For purposes of this reduction, computed radiography 
technology is defined in section 1848(b)(9)(C) of the Act as cassette-
based imaging which utilizes an imaging plate to create the image 
involved. (82 FR 33650).
    To further implement this provision, we stated in the proposed rule 
that we were establishing a new modifier (82 FR 33650), specifically, 
``FY'' (X-ray taken using computed radiography technology/cassette-
based imaging), as permitted by section 1833(t)(16)(F)(iv) of the Act, 
that would be reported on claims to identify those HCPCS codes that 
describe X-rays taken using computed radiography technology. (We note 
that modifier ``FY'' was listed as placeholder ``XX'' in the CY 2018 
OPPS/ASC proposed rule and that we indicated (82 FR 33650) that the 2-
digit modifier and long descriptor would be described in this final 
rule with comment period.) We proposed that the payment reduction would 
be taken when this payment modifier is reported with the applicable 
HCPCS code(s) to describe imaging services that are taken using 
computed radiography technology (82 FR 33650). In the proposed rule, we 
stated that the applicable HCPCS codes describing imaging services 
could be found in Addendum B to the proposed rule (which is available 
via the Internet on the CMS Web site). When payment for an X-ray 
service taken using computed radiography imaging is packaged into the 
payment for another item or service under the OPPS, no separate payment 
for the X-ray service is made and, therefore, there is no payment 
amount that can be attributed to the X-ray. Accordingly, the amount of 
the payment reduction for a packaged X-ray service would be $0 (7 
percent of $0, and 10 percent of $0). We invited public comments on 
these proposals.
    Comment: One commenter believed that reporting the modifier ``FY'' 
would be burdensome to hospitals and create another opportunity for 
miscoding.
    Response: Modifier ``FY'' will be reported by hospitals only to 
identify those services that involve X-rays taken using computed 
radiography technology. We do not believe that the use of this modifier 
would be unduly burdensome to hospitals. The reporting of this modifier 
is similar to the reporting of other existing modifiers that hospitals 
currently include when

[[Page 59392]]

reporting HCPCS codes and modifiers for procedures, services, and items 
on Medicare claims under the OPPS. To the extent the hospital is 
already reporting a code for an X-ray taken using computed radiography, 
appending the modifier to the same claim should not be unduly 
burdensome. Further, Medicare is required by law to make this payment 
adjustment and the commenter did not offer an alternative (less 
burdensome) method by which Medicare could ensure payment accuracy for 
these services.
    Comment: One commenter urged CMS to publish the list of specific 
CPT and HCPCS codes that would apply to this new modifier (``FY'') as 
well as to the film x-ray modifier (``FX'') that was implemented last 
year. The commenter indicated that not having published lists is 
burdensome to providers and also exposes them to additional risk of 
audit. This same commenter offered to provide technical assistance from 
its X-ray manufacturer members on the creation of such a list.
    Response: We thank the commenter for the offer of assistance. 
However, we expect hospitals to appropriately report the ``FY'' 
modifier to identify those services that involve X-rays taken using 
computed radiography technology, and to appropriately report the ``FX'' 
modifier to identify those X-ray services taken using film. The 
applicable HCPCS codes describing imaging services 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 detailed guidance on the 
implementation of the computed radiography to digital X-ray payment 
differential. Specifically, the commenter stated that CMS instructions 
are unclear as to which specific CPT and HCPCS codes require the 
amended modifier. Prior to implementation, the commenter suggested that 
CMS publish all applicable codes requiring the modifier, with specific 
billing guidance.
    Response: As indicated above, the new ``FY'' modifier will be used 
to report those services that involve X-rays taken using computed 
radiography technology. HOPDs should append modifier ``FY'' to those 
HCPCS codes that involve the use of X-ray systems taken using computed 
radiography technology. We believe that hospitals should know when they 
are billing a HCPCS code that involves the use of an X-ray taken using 
computed radiography and, therefore, we are not providing a list of 
codes.
    In addition, in accordance with section 1833(t)(16)(F)(ii) of the 
Act, payments for X-rays taken using computed radiography technology 
will be reduced by 7 percent during CY 2018, 2019, 2020, 2021, or 2022, 
and thereafter by 10 percent when furnished during CY 2023 or a 
subsequent year. Specifically, the payment reduction will apply when 
the ``FY'' modifier is reported with the applicable HCPCS code(s) to 
describe imaging services that are taken using computed radiography 
technology. In addition, when payment for an X-ray service taken using 
computed radiography imaging is packaged into the payment for another 
item or service under the OPPS, no separate payment for the X-ray 
service is made and, therefore, there is no payment amount that can be 
attributed to the X-ray. Accordingly, the amount of the payment 
reduction for a packaged X-ray service will be $0 (7 percent of $0, and 
10 percent of $0). We note that the applicable HCPCS codes describing 
imaging services could be found in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    Comment: Some commenters supported the transition to digital 
radiography. However, several commenters expressed concern with the 
statute requiring hospitals to upgrade to digital radiography systems 
and indicated that the requirement is financially burdensome and 
difficult to justify. One commenter stated that a typical computed 
radiography reader can cost between $60,000 and $80,000, while a new 
digital radiography system can cost up to $200,000. Another commenter 
indicated that it estimated its cost to replace or retrofit its nearly 
120 computed radiography systems to digital radiography systems to be 
approximately $11 million.
    One commenter suggested that, to truly incentivize the transition 
to digital radiography technology, CMS should offer bonus payments 
similar to the recently proposed 2015 Certified Health Record 
Technology (CEHRT) bonus under the Quality Payment Program (QPP) Year 
2. This same commenter recommended that, in lieu of bonus payments, CMS 
work with Congress to implement a delay of these cuts for the useful 
life of a typical computed radiography machine (5 years) to allow 
practices time to replace older equipment with digital radiography 
technology.
    Other commenters further indicated there is no clinical benefit to 
using digital radiography systems, and that, for certain clinical 
situations, computed radiography systems are preferable. Still other 
commenters stated that the reduction in payments not only penalizes 
hospitals, particularly in rural and underserved communities that do 
not have the financial resources to update their equipment systems, but 
would also force small clinics and hospitals to no longer provide 
imaging services that require computed radiography technology.
    Response: We are required by section 1833(t)(16)(F) of the Act to 
reduce payments under the OPPS for X-rays taken using film and X-rays 
taken using computed radiography technology. We note that the statute 
did not address either bonus payments to incentivize the transition to 
digital radiography technology or a delay in the implementation of 
section 1833(t)(16)(F) of the Act.
    After consideration of the public comments we received, we are 
finalizing our proposal to establish a new modifier ``FY'' (X-ray taken 
using computed radiography technology/cassette-based imaging) as 
permitted by section 1833(t)(16)(F)(iv) of the Act, that will be 
reported on claims to identify those HCPCS codes that describe X-rays 
taken using computed radiography technology. The payment reduction will 
be taken when this modifier is reported with the applicable HCPCS 
code(s) to describe imaging services that are taken using computed 
radiography technology. The applicable HCPCS codes describing imaging 
services can be found in Addendum B to this final rule with comment 
period (which is available via the Internet on the CMS Web site).
    In addition, although we adopted the payment reduction for the film 
X-ray imaging services, as required by section 1833(t)(16)(F)(i) of the 
Act in the CY 2017 OPPS/ASC final rule with comment period, we did not 
adopt corresponding regulation text. Therefore, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33650 and 33723 through 33724), we proposed to add 
new regulation text at 42 CFR 419.71 to codify our existing policies 
and our proposed policies for computed radiography technology services. 
We proposed to add the definition of ``computed radiography 
technology,'' as it is defined in section 1848(b)(9)(C) of the Act, in 
paragraph (a) of proposed new Sec.  419.71. We stated that the proposed 
regulation text under paragraph (b) of proposed new Sec.  419.71 would 
specify the 20-percent reduction for film X-ray imaging services. We 
proposed that the phased-in payment reduction for computed radiography 
technology imaging services would be codified at paragraph (c) of 
proposed new Sec.  419.71. Finally, we proposed that paragraph (d) of 
proposed new Sec.  419.71

[[Page 59393]]

would provide that the payment reductions taken under the section are 
not considered adjustments under section 1833(t)(2)(E) of the Act and 
are not implemented in a budget neutral manner. We invited public 
comments on this proposed regulation text.
    We did not receive any public comments on our proposed regulation 
text. Therefore, we are finalizing our proposal to codify our 
previously adopted and newly finalized policies regarding section 
1833(t)(16)(F) of the Act, without modifications.

F. Revisions to the Laboratory Date of Service Policy

1. Background on the Medicare Part B Laboratory Date of Service Policy
    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 
33650), the date of service (DOS) is a required data field on all 
Medicare claims for laboratory services. However, a laboratory service 
may take place over a period of time--the date the physician orders the 
laboratory test, the date the specimen is collected from the patient, 
the date the laboratory accesses the specimen, the date the laboratory 
performs the test, and the date results are produced may occur on 
different dates. In the final rule on coverage and administrative 
policies for clinical diagnostic laboratory services published in the 
Federal Register on November 23, 2001 (66 FR 58791 through 58792), we 
adopted a policy under which the DOS for clinical diagnostic laboratory 
services generally is the date the specimen is collected.
    A special rule was developed to apply to ``archived'' specimens. 
For laboratory tests that use an archived specimen, we established that 
the DOS is the date the specimen was obtained from storage (66 FR 
58792).
    In 2002, we issued Program Memorandum AB-02-134 which permitted 
contractors discretion in making determinations regarding the length of 
time a specimen must be stored to be considered ``archived.'' In 
response to comments requesting that we issue a national standard to 
clarify when a stored specimen can be considered ``archived,'' in the 
Procedures for Maintaining Code Lists in the Negotiated National 
Coverage Determinations for Clinical Diagnostic Laboratory Services 
final notice, published in the Federal Register on February 25, 2005 
(70 FR 9357), we defined an ``archived'' specimen as a specimen that is 
stored for more than 30 calendar days before testing. We established 
that the DOS for archived specimens is the date the specimen was 
obtained from storage. Specimens stored for 30 days or less continued 
to have a DOS of the date the specimen was collected.
2. Current Medicare DOS Policy (``14-Day Rule'')
    In the final rule with comment period entitled, in relevant part, 
``Revisions to Payment Policies, Five-Year Review of Work Relative 
Value Units, Changes to the Practice Expense Methodology Under the 
Physician Fee Schedule, and Other Changes to Payment Under Part B'' 
published in the Federal Register on December 1, 2006 (MPFS final rule) 
(71 FR 69705 through 69706), we added a new Sec.  414.510 in Title 42 
of the CFR regarding the clinical laboratory DOS requirements and 
revised our DOS policy for stored specimens. We explained in the MPFS 
final rule that the DOS of a test may affect payment for the test, 
especially in situations in which a specimen that is collected while 
the patient is being treated in a hospital setting (for example, during 
a surgical procedure), is later used for testing after the patient has 
been discharged from the hospital. We noted that payment for the test 
is usually bundled with payment for the hospital service, even where 
the results of the test did not guide treatment during the hospital 
stay. To address concerns raised for tests related to cancer recurrence 
and therapeutic interventions, we finalized modifications to the DOS 
policy in Sec.  414.510(b)(2)(i) for a test performed on a specimen 
stored less than or equal to 30 calendar days from the date it was 
collected (a non-archived specimen), so that the DOS is the date the 
test was performed (instead of the date of collection) if the following 
conditions are met:
     The test is ordered by the patient's physician at least 14 
days following the date of the patient's discharge from the hospital;
     The specimen was collected while the patient was 
undergoing a hospital surgical procedure;
     It would be medically inappropriate to have collected the 
sample other than during the hospital procedure for which the patient 
was admitted;
     The results of the test do not guide treatment provided 
during the hospital stay; and
     The test was reasonable and medically necessary for the 
treatment of an illness.
    As we stated in the MPFS final rule, we established these five 
criteria, which we refer to as the ``14-day rule,'' to distinguish 
laboratory tests performed as part of post-hospital care from the care 
a beneficiary receives in the hospital. When the 14-day rule applies, 
laboratory tests are not bundled into the hospital stay, but are 
instead paid separately under Medicare Part B (as explained in more 
detail below).
    We also revised the DOS requirements for a chemotherapy sensitivity 
test performed on live tissue. As discussed in the MPFS final rule (71 
FR 69706), we agreed with commenters that these tests, which are 
primarily used to determine post-hospital chemotherapy care for 
patients who also require hospital treatment for tumor removal or 
resection, appear to be unrelated to the hospital treatment in cases 
where it would be medically inappropriate to collect a test specimen 
other than at the time of surgery, especially when the specific drugs 
to be tested are ordered at least 14 days following hospital discharge. 
As a result, we revised the DOS policy for chemotherapy sensitivity 
tests, based on our understanding that the results of these tests, even 
if they were available immediately, would not typically affect the 
treatment regimen at the hospital. Specifically, we modified the DOS 
for chemotherapy sensitivity tests performed on live tissue in Sec.  
414.510(b)(3) so that the DOS is the date the test was performed if the 
following conditions are met:
     The decision regarding the specific chemotherapeutic 
agents to test is made at least 14 days after discharge;
     The specimen was collected while the patient was 
undergoing a hospital surgical procedure;
     It would be medically inappropriate to have collected the 
sample other than during the hospital procedure for which the patient 
was admitted;
     The results of the test do not guide treatment provided 
during the hospital stay; and
     The test was reasonable and medically necessary for the 
treatment of an illness.
    We explained in the MPFS final rule that, for chemotherapy 
sensitivity tests that meet this DOS policy, Medicare would allow 
separate payment under Medicare Part B, that is, separate from the 
payment for hospital services.
3. Billing and Payment for Laboratory Services Under the OPPS
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33651), 
the DOS requirements at 42 CFR 414.510 are used to determine whether a 
hospital bills Medicare for a clinical diagnostic laboratory test 
(CDLT) or whether the laboratory performing the test bills Medicare 
directly. This is because separate regulations at 42 CFR

[[Page 59394]]

410.42(a) and 411.15(m) generally provide that Medicare will not pay 
for a service furnished to a hospital patient during an encounter by an 
entity other than the hospital unless the hospital has an arrangement 
(as defined in 42 CFR 409.3) with that entity to furnish that 
particular service to its patients, with certain exceptions and 
exclusions. These regulations, which we will call the ``under 
arrangements'' provisions in this discussion, require that if the DOS 
falls during an inpatient or outpatient stay, payment for the 
laboratory test is usually bundled with the hospital service.
    Under our current rules, if a test meets all DOS requirements in 
Sec.  414.510(b)(2)(i) or Sec.  414.510(b)(3), the DOS is the date the 
test was performed, and the laboratory would bill Medicare directly for 
the test and would be paid under the Clinical Laboratory Fee Schedule 
(CLFS) directly by Medicare. However, if the test does not meet the DOS 
requirements in Sec.  414.510(b)(2)(i) or Sec.  414.510(b)(3), the DOS 
is the date the specimen was collected from the patient. In that case, 
the hospital would bill Medicare for the test and then would pay the 
laboratory that performed the test, if the laboratory provided the test 
under arrangement.
    In recent rulemakings, we have reviewed appropriate payment under 
the OPPS for certain diagnostic tests that are not commonly performed 
by hospitals. In CY 2014, we finalized a policy to package certain 
CDLTs under the OPPS (78 FR 74939 through 74942 and 42 CFR 419.2(b)(17) 
and 419.22(l)). In CYs 2016 and 2017, we made some modifications to 
this policy (80 FR 70348 through 70350; 81 FR 79592 through 79594). 
Under our current policy, certain CDLTs that are listed on the CLFS are 
packaged as integral, ancillary, supportive, dependent, or adjunctive 
to the primary service or services provided in the hospital outpatient 
setting during the same outpatient encounter and billed on the same 
claim. Specifically, we conditionally package most CDLTs and only pay 
separately for a laboratory test when it is: (1) The only service 
provided to a beneficiary on a claim; (2) considered a preventive 
service; (3) a molecular pathology test; or (4) an advanced diagnostic 
laboratory test (ADLT) that meets the criteria of section 
1834A(d)(5)(A) of the Act (78 FR 74939 through 74942; 80 FR 70348 
through 70350; and 81 FR 79592 through 79594). In the CY 2016 OPPS/ASC 
final rule with comment period, we excluded all molecular pathology 
laboratory tests from packaging because we believed these relatively 
new tests may have a different pattern of clinical use, which may make 
them generally less tied to a primary service in the hospital 
outpatient setting than the more common and routine laboratory tests 
that are packaged.
    For similar reasons, in the CY 2017 OPPS/ASC final rule with 
comment period, we extended the exclusion to also apply to all ADLTs 
that meet the criteria of section 1834A(d)(5)(A) of the Act.\32\ We 
stated that we will assign status indicator ``A'' (Separate payment 
under the CLFS) to ADLTs once a laboratory test is designated an ADLT 
under the CLFS. Laboratory tests that are separately payable and are 
listed on the CLFS are paid at the CLFS payment rates outside the OPPS.
---------------------------------------------------------------------------

    \32\ Under section 1834A(d)(5)(A) of the Act, an ADLT is a CDLT 
covered under Medicare Part B that is offered and furnished only by 
a single laboratory and not sold for use by a laboratory other than 
the original developing laboratory (or a successor owner) and . . . 
``the test is an analysis of multiple biomarkers of DNA, RNA, or 
proteins combined with a unique algorithm to yield a single patient-
specific result.'' CMS has established a regulatory definition for 
this type of ADLT in 42 CFR 414.502.
---------------------------------------------------------------------------

4. ADLTs Under the New Private Payor Rate-Based CLFS
    Section 1834A of the Act, as established by section 216(a) of the 
Protecting Access to Medicare Act of 2014 (PAMA), requires significant 
changes to how Medicare pays for CDLTs under the CLFS. Section 216(a) 
of PAMA also establishes a new subcategory of CDLTs known as ADLTs with 
separate reporting and payment requirements under section 1834A of the 
Act. In the CLFS final rule published in the Federal Register on June 
23, 2016, entitled ``Medicare Program; Medicare Clinical Diagnostic 
Laboratory Tests Payment System Final Rule'' (CLFS final rule) (81 FR 
41036), we implemented the requirements of section 1834A of the Act.
    As defined in Sec.  414.502, an ADLT is a CLDT covered under 
Medicare Part B that is offered and furnished only by a single 
laboratory. In addition, an ADLT cannot be sold for use by a laboratory 
other than the single laboratory that designed the test or a successor 
owner. Also, an ADLT must meet either Criterion (A), which implements 
section 1834A(d)(5)(A) of the Act, or Criterion (B), which implements 
section 1834A(d)(5)(B) of the Act, as follows:
     Criterion (A): The test is an analysis of multiple 
biomarkers of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), or 
proteins; when combined with an empirically derived algorithm, yields a 
result that predicts the probability a specific individual patient will 
develop a certain condition(s) or respond to a particular therapy(ies); 
provides new clinical diagnostic information that cannot be obtained 
from any other test or combination of tests; and may include other 
assays.
    Or:
     Criterion (B): The test is cleared or approved by the Food 
and Drug Administration.
    Generally, under the revised CLFS, ADLTs are paid using the same 
methodology based on the weighted median of private payor rates as 
other CDLTs. However, updates to ADLT payment rates occur annually 
instead of every 3 years. The payment methodology for ADLTs is detailed 
in the CLFS final rule (81 FR 41076 through 41083).
5. Discussion of Potential Revisions to the Laboratory DOS Policy in 
the CY 2018 OPPS/ASC Proposed Rule
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33650 through 33653), 
we described the history of our laboratory DOS policy and discussed 
potentially modifying the DOS policy for certain ADLTs and molecular 
pathology tests. We explained that, recently, we have heard from 
certain laboratory stakeholders about operational issues the current 
laboratory DOS policy creates for hospitals and laboratories with 
regard to molecular pathology tests and laboratory tests they expect 
will be designated by CMS as ADLTs that meet the criteria of section 
1834A(d)(5)(A) of the Act. These stakeholders have expressed that 
although these particular tests are not packaged under the OPPS, under 
current DOS policy, if the tests are ordered within 14 days of a 
patient's discharge from the hospital, Medicare still treats the tests 
as though they were ordered and furnished by the hospital itself. Under 
those circumstances, laboratories cannot directly seek Medicare payment 
for the molecular pathology test or ADLT. The hospital must bill 
Medicare for the test, and the laboratory must seek payment from the 
hospital. Specifically, we noted that stakeholders representing 
laboratories have expressed the following concerns:
     The current DOS policy permits hospitals to bill for tests 
they did not perform and that may have no relationship to or bearing on 
treatment received by the patient while in the hospital.
     The DOS policy may create inconsistent billing for 
specialty laboratories. For example, if the hospital is located in a 
different jurisdiction than the MAC used by the laboratory, a different 
MAC may be billed.

[[Page 59395]]

     Hospitals may be discouraged from utilizing ADLTs because 
billing for such tests that are not performed by hospitals could create 
administrative and financial complexities.
     The DOS policy is a potential barrier to CMS' goal of 
promoting personalized medicine because the policy may 
disproportionately impact smaller laboratories performing innovative 
diagnostic tests.
     Billing complexities may affect beneficiary access to 
needed laboratory tests and therapies. For example, orders might be 
delayed until at least 14 days after discharge or even canceled to 
avoid the DOS policy. This may restrict patient access to tests and 
reduce efficacy of treatment plans due to hospitals delaying or 
foregoing patient testing to avoid financial risk.
     The DOS policy may limit access for Medicare beneficiaries 
under original Medicare fee-for-service (that is, Medicare Part A and 
Part B) due to the fact that Medicare Advantage Plans under Medicare 
Part C and private payors allow laboratories to bill directly for tests 
they perform.
    As we stated in the proposed rule (82 FR 33652), we recognize that 
the current laboratory DOS rule may impose administrative difficulties 
for hospitals and laboratories that furnish laboratory tests that are 
excluded from OPPS packaging and therefore paid separately at CLFS 
payment rates. Hospitals may be reluctant to bill Medicare for 
laboratory tests they do not perform, which as noted by stakeholders, 
could lead to delays in patient access to care.
    In light of the concerns raised by stakeholders, we stated in the 
proposed rule that we were considering potential modifications to the 
DOS policy that would allow laboratories to bill Medicare directly for 
certain laboratory tests excluded from the OPPS packaging policy. We 
noted that one approach under consideration would create a new 
exception to the DOS policy for molecular pathology tests and ADLTs 
that meet the criteria of section 1834A(5)(A) of the Act and have been 
granted ADLT status by CMS. As we stated in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79592 through 79594), we believe these 
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 more common and routine laboratory tests that are 
packaged. In the proposed rule, we sought public comment on whether 
these tests, by their nature, are appropriately separable from the 
hospital stay that preceded the test and therefore should have a DOS 
that is the date of performance rather than the date of collection.
    As an example, we stated that we would consider modifying 42 CFR 
414.510(b) by adding a new paragraph (5) to establish that in the case 
of a molecular pathology test or an ADLT that meets the criteria of 
section 1834A(d)(5)(A) of the Act, the DOS must be the date the test 
was performed only if:
     The physician orders the test following the date of a 
hospital outpatient's discharge from the hospital outpatient 
department;
     The specimen was collected from a hospital outpatient 
during an encounter (as both are defined 42 CFR 410.2);
     It would be medically inappropriate to have collected the 
sample from the hospital outpatient other than during the hospital 
outpatient encounter;
     The results of the test do not guide treatment provided 
during the hospital outpatient encounter; and
     The test was reasonable and medically necessary for the 
treatment of an illness.
    We requested specific comments on this potential modification to 
the current laboratory DOS policy, which would allow laboratories to 
bill Medicare directly for molecular pathology tests and ADLTs that 
meet the criteria of section 1834A(d)(5)(A) of the Act and have been 
granted ADLT status by CMS, when the specimen is collected during a 
hospital outpatient procedure and the test is ordered after the patient 
is discharged from the hospital outpatient department. We also noted 
that we would consider finalizing this modification (82 FR 33653).
    Comment: Many commenters supported revising the laboratory DOS 
policy so that laboratories may bill Medicare and receive payment 
directly for ADLTs and molecular pathology tests performed on specimens 
collected from hospital outpatients, which are excluded from the OPPS 
packaging policy. The commenters indicated that revising the current 
laboratory DOS policy so that the performing laboratory can bill 
Medicare directly for molecular pathology tests and ADLTs is consistent 
with CMS' policy of excluding ``precision diagnostics'' performed on 
specimens collected in the hospital outpatient setting from the OPPS 
packaging policy. In general, commenters urged CMS to finalize a policy 
that focuses on whether the test was performed outside the hospital 
after the outpatient encounter, rather than on the date the specimen 
was collected or the date the test was initially ordered. These 
commenters stated that this approach would be consistent with how tests 
are ordered and billed for under Medicare Advantage plans and 
commercial insurers, which allow laboratories to bill directly for 
these tests.
    Commenters also reiterated previous concerns regarding 
administrative and billing complexities resulting from the current DOS 
policy that may affect timely beneficiary access to necessary molecular 
pathology tests. These commenters noted that hospitals may be reluctant 
to order a test that the hospital itself does not perform until at 
least 14 days following the date the patient is discharged from the 
hospital outpatient department so that the laboratory performing the 
test may bill Medicare directly for the test. One commenter explained 
that, for molecular pathology tests performed by an independent 
laboratory that is not affiliated with the hospital, the administrative 
complexity of the current laboratory DOS policy frequently leads 
hospitals to delay ordering of these tests.
    In addition, several commenters recommended specific modifications 
to the potential revisions to laboratory DOS policy discussed in the CY 
2018 OPPS/ASC proposed rule. These suggested modifications are 
summarized below.
     Expand the laboratory tests subject to the DOS exception. 
Commenters suggested that CMS expand the laboratory tests subject to 
the potential DOS exception to include all ADLTs (that is, both 
Criterion (A) and Criterion (B) ADLTs) and all Multi-Analyte Assays 
with Algorithmic Analysis (MAAA), Genomic Sequencing Procedures (GSP), 
and Proprietary Laboratory Analysis (PLA) test codes, even if they are 
not currently excluded from the OPPS packaging policy. The commenters 
argued that expanding the potential revision to the DOS policy to 
include the aforementioned laboratory tests would encompass all 
laboratory testing that has a different pattern of clinical use from 
routine testing and therefore is unconnected to the primary hospital 
outpatient service.
     Remove the test order date requirement. Several commenters 
recommended that CMS not finalize a requirement that the physician must 
order the test following the date of a hospital outpatient's discharge 
from the hospital outpatient department because testing on a ``liquid-
based'' specimen is typically ordered before the specimen is collected. 
These commenters noted that requiring the physician to order the test 
at least 1 day following the date of a patient's discharge from the 
hospital

[[Page 59396]]

outpatient department would exclude a blood-based molecular pathology 
test from an exception to the laboratory DOS policy.
     Require that it be ``medically appropriate'' to have 
collected the sample during the hospital outpatient encounter. Several 
commenters noted that it would be medically appropriate for an 
independent laboratory that is not associated with the hospital to 
collect a liquid-based specimen. These commenters suggested that the 
potential revision to the laboratory DOS policy that specified it would 
be medically inappropriate to have collected the sample from the 
hospital outpatient other than during the hospital outpatient 
encounter, applies to tests performed on tissue-based samples, but 
could inadvertently create incentives for hospitals to require hospital 
outpatients to go elsewhere for liquid-based specimen collection. These 
commenters also stated that requiring a patient to travel to a 
different location for the specimen collection could present access 
issues for patients with limited mobility. Therefore, these commenters 
suggested a modification to the potential revised DOS policy to focus 
on what is medically appropriate rather than what is not medically 
appropriate. To that end, these commenters requested that CMS replace 
the term ``medically inappropriate'' with a requirement that it ``was 
medically appropriate to have collected the sample from the hospital 
outpatient during the hospital outpatient encounter.''
    A few additional commenters suggested regulatory language to modify 
the existing laboratory DOS policy in accordance with the specific 
recommendations discussed previously. Specifically, these commenters 
suggested adding a new exception to the DOS policy so that, in the case 
of a molecular pathology test or an ADLT that meets the criteria of 
section 1834A(d)(5) of the Act, or a test that is a MAAA, the date of 
service must be the date the test was performed only if: (1) The 
specimen was collected from a hospital outpatient during an encounter 
(as both are defined 42 CFR 410.2); (2) it was medically appropriate to 
have collected the sample from the hospital outpatient during the 
hospital outpatient encounter; (3) the results of the test do not guide 
treatment provided during the hospital outpatient encounter; and (4) 
the test was reasonable and medically necessary for the diagnosis or 
treatment of an illness or injury.
    Response: We appreciate the support from commenters for our 
potential revisions to the laboratory DOS policy. We agree that some of 
the potential revisions to the laboratory DOS policy that we described 
in the CY 2018 OPPS/ASC proposed rule may not allow ADLT or molecular 
pathology testing performed on liquid-based samples to qualify for a 
DOS exception. In particular, we recognize that a requirement that it 
would be ``medically inappropriate'' to have collected the specimen 
from the hospital outpatient other than during the hospital outpatient 
encounter is primarily applicable to tissue-based specimens. It would 
not be applicable to liquid-based samples because it could be medically 
appropriate to collect a liquid-based specimen in settings outside of a 
hospital outpatient encounter, such as an independent laboratory not 
associated with the hospital. As such, we believe use of the term 
``medically inappropriate'' would inappropriately exclude laboratory 
testing performed on liquid-based specimens from qualifying for the 
proposed exception to the laboratory DOS policy. Therefore, we believe 
the revision suggested by the commenters, that is, to specify that it 
``was medically appropriate to have collected the sample from the 
hospital outpatient during the hospital outpatient encounter,'' would 
address concerns that the DOS exception should encompass testing 
performed on liquid-based samples as well as testing performed on 
tissue-based samples.
    In addition, we agree with the commenters that requiring the 
physician to order the test following the date of a hospital 
outpatient's discharge from the hospital outpatient department (as we 
described in the proposed rule) could also inappropriately exclude 
tests performed on liquid-based specimens from the DOS exception, 
because a blood test is typically ordered before the sample is 
collected. We proposed including the order date requirement for the 
same reason we included such a requirement in the 14-day rule: Because 
we believe it is more difficult to determine that a test ordered before 
discharge is appropriately separable from the hospital stay that 
preceded the test (71 FR 69706). However, as discussed more fully 
below, we believe the ADLTs and molecular pathology tests excluded from 
the OPPS packaging policy are, by their nature, tests that are used to 
determine posthospital care, and therefore can be legitimately 
distinguished from the care the patient receives in the hospital even 
if they are ordered prior to the patient's discharge. Therefore, we do 
not believe it is necessary to include an order date requirement as 
part of this exception. However, to help ensure that only tests that 
are not related to the care provided in the hospital fall under this 
provision, we will specify that the tests must be performed following 
the hospital outpatient's discharge. That is, in order for the DOS to 
be the date the test was performed, instead of the date the sample was 
collected, the test must be performed following a hospital outpatient's 
discharge from the hospital outpatient department. We understand this 
is standard practice for these types of tests and, therefore, we would 
not expect this provision to change current laboratory practices or 
have any adverse effect on patient care.
    We note that some of the commenters' suggested modifications to our 
potential DOS revisions are inconsistent with the current OPPS 
packaging policy and would result in allowing the laboratory to bill 
Medicare directly for a test that is not paid at the CLFS rate but paid 
under the hospital OPPS bundled rate. In the proposed rule (82 FR 
33652), we specifically discussed creating an exception to the current 
DOS policy for ADLTs approved by CMS under section 1834A(d)(5)(A) of 
the Act and molecular pathology tests because we have already 
recognized that these 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 tests that are packaged. In 
addition, these tests are already paid separately outside of the OPPS 
at CLFS payment rates. We note that laboratory tests granted ADLT 
status under section 1834A(d)(5)(B) of the Act \33\ currently are not 
excluded from the OPPS packaging policy. Likewise, GSP testing, PLA 
tests, and protein-based MAAAs that are not considered molecular 
pathology tests are also conditionally packaged under the OPPS at this 
time. In the proposed rule, we did not specifically discuss expanding 
the laboratory tests that may qualify for a DOS exception beyond the 
ADLTs and molecular pathology tests that are currently excluded from 
OPPS packaging, and therefore we are not including ADLTs under 
Criterion (B), GSP tests, PLA tests, or protein-based MAAAs in the 
revised DOS policy at this time. We intend to study this issue

[[Page 59397]]

and, if warranted, consider proposing changes to the laboratory tests 
subject to a DOS exception in future rulemaking.
---------------------------------------------------------------------------

    \33\ Under section 1834A(d)(5)(B) of the Act, an ADLT is a CDLT 
covered under Medicare Part B that is offered and furnished only by 
a single laboratory and not sold for use by a laboratory other than 
the original developing laboratory (or a successor owner) and . . . 
``[t]he test is cleared or approved by the Food and Drug 
Administration.'' CMS has established a regulatory definition for 
this type of ADLT in 42 CFR 414.502.
---------------------------------------------------------------------------

    As noted previously in this section, we believe the current 
laboratory DOS policy creates administrative complexities for hospitals 
and laboratories with regard to molecular pathology tests and 
laboratory tests expected to be designated by CMS as ADLTs that meet 
the criteria of section 1834A(d)(5)(A) of the Act. Under the current 
laboratory DOS policy, if the tests are ordered less than 14 days 
following a hospital outpatient's discharge from the hospital 
outpatient department, laboratories generally cannot bill Medicare 
directly for the molecular pathology test or ADLT. In those 
circumstances, the hospital must bill Medicare for the test, and the 
laboratory must seek payment from the hospital. We have heard from 
commenters that because ADLTs are performed by only a single laboratory 
and molecular pathology tests are often performed by only a few 
laboratories, and hospitals may not have the technical ability to 
perform these complex tests, the hospital may be reluctant to bill 
Medicare for a test it would not typically (or never) perform. As a 
result, the hospital might delay ordering the test until at least 14 
days after the patient is discharged from the hospital outpatient 
department or even cancel the order to avoid the DOS policy, which may 
restrict a patient's timely access to these tests. In addition, we have 
heard from commenters that the current laboratory DOS policy may 
disproportionately limit access for Medicare beneficiaries under 
original Medicare fee-for-service (that is, Medicare Part A and Part B) 
because Medicare Advantage plans under Medicare Part C and other 
private payors allow laboratories to bill directly for tests they 
perform.
    We also recognize that greater consistency between the laboratory 
DOS rules and the current OPPS packaging policy would be beneficial and 
would address some of the administrative and billing issues created by 
the current DOS policy. As noted previously, we exclude all molecular 
pathology tests and ADLTs under section 1834A(d)(5)(A) of the Act from 
the OPPS packaging policy because we believe these tests may have a 
different pattern of clinical use, which may make them generally less 
tied to a primary service in the hospital outpatient setting than the 
more common and routine laboratory tests that are packaged. Under the 
current DOS policy, we have established exceptions that permit the DOS 
to be the date of performance for certain tests that we believe are not 
related to the hospital treatment and are used to determine 
posthospital care. We believe a similar exception is justified for the 
molecular pathology tests and ADLTs excluded from the OPPS packaging 
policy, which we understand are used to guide and manage the patient's 
care after the patient is discharged from the hospital outpatient 
department. We believe that, like the other tests currently subject to 
DOS exceptions, these tests can legitimately be distinguished from the 
care the patient receives in the hospital, and thus we would not be 
unbundling services that are appropriately associated with hospital 
treatment. Moreover, as noted previously, these tests are already paid 
separately outside of the OPPS at CLFS payment rates. Therefore, we 
agree with the commenters that the laboratory performing the test 
should be permitted to bill Medicare directly for these tests, instead 
of relying on the hospital to bill Medicare on behalf of the laboratory 
under arrangements.
    For these reasons and in light of the commenters' suggestions, we 
are revising the current laboratory DOS policy at 42 CFR 414.510(b) for 
tests granted ADLT status by CMS under section 1834A(d)(5)(A) of the 
Act and molecular pathology tests that are excluded from the OPPS 
packaging policy under 42 CFR 419.2(b), so that the performing 
laboratory may bill and be paid by Medicare directly for these tests 
under the circumstances described below. The revision will provide an 
exception to the general laboratory DOS rule--that is, the DOS is the 
date the specimen was collected--so that the DOS for these tests is the 
date the laboratory test was performed. This exception to the current 
laboratory DOS policy will only apply to tests granted ADLT status by 
CMS under paragraph (1) of the definition of ``advanced diagnostic 
laboratory test'' in 42 CFR 414.502, which CMS promulgated to implement 
section 1834A(d)(5)(A) of the Act, and molecular pathology tests 
excluded from the OPPS packaging policy as defined in 42 CFR 419.2(b). 
By adding an exception to the current laboratory DOS policy at 42 CFR 
414.510(b) for molecular pathology tests and ADLTs that are excluded 
from the OPPS packaging policy under 42 CFR 419.2(b), the performing 
laboratory will be required to bill Medicare directly for tests that 
meet this exception. The hospital will no longer bill Medicare for 
these tests, and the laboratory will no longer have to seek payment 
from the hospital for these tests, if all of the conditions are met.
    We note that this new exception to the laboratory DOS policy will 
not apply to tests granted ADLT status by CMS under section 
1834A(d)(5)(A) of the Act and molecular pathology tests when performed 
on a specimen collected from a hospital inpatient. As discussed more 
fully below, we believe adding a laboratory DOS exception for hospital 
inpatients would have policy and ratesetting implications under the 
IPPS diagnosis related group (DRG) payment, and we did not solicit 
comments on potential revisions to our current laboratory DOS policy 
specific to the hospital inpatient setting.
    In order to allow a laboratory to bill Medicare directly for an 
ADLT or molecular pathology test excluded from the OPPS packaging 
policy, we are modifying 42 CFR 414.510(b) by adding a new paragraph 
(5) to establish that, in the case of a molecular pathology test or a 
test designated by CMS as an ADLT under paragraph (1) of the definition 
of advanced diagnostic laboratory test in 42 CFR 414.502, the DOS of 
the test must be the date the test was performed only if--
     The test was performed following a hospital outpatient's 
discharge from the hospital outpatient department;
     The specimen was collected from a hospital outpatient 
during an encounter (as both are defined in 42 CFR 410.2);
     It was medically appropriate to have collected the sample 
from the hospital outpatient during the hospital outpatient encounter;
     The results of the test do not guide treatment provided 
during the hospital outpatient encounter; and
     The test was reasonable and medically necessary for the 
treatment of an illness.
    We intend to continue to study the laboratory DOS policy and 
determine whether any additional changes are warranted. In particular, 
we will consider whether there should be any changes to the current 14-
day rule, including whether to address any inconsistencies with our new 
exception, and any changes to the ``under arrangements'' provisions, 
including with respect to the hospital inpatient setting. We expect to 
propose any future changes to the laboratory DOS policy through notice-
and-comment rulemaking.
    Comment: A few commenters requested that any changes to the 
laboratory DOS policy apply to ADLTs and molecular pathology tests 
performed on specimens collected from both hospital inpatients and 
hospital outpatients. These commenters stated

[[Page 59398]]

that it would be an administrative burden on hospitals that collect 
specimens, and laboratories that furnish and bill for ADLTs and 
molecular pathology tests, to track tests ordered for hospital 
outpatients in a way that is inconsistent with those performed on 
specimens obtained from hospital inpatients.
    One commenter stated that consistency between the DOS for hospital 
inpatients and hospital outpatients is important for evaluating data on 
patient outcomes. For example, the commenter noted that laboratory 
tests ordered for hospital inpatients do not have the tests' HCPCS 
code(s) on the inpatient claim. As a result, CMS cannot track patients 
who have received these tests using claims data, or evaluate how 
advanced testing contributes to cancer care and other advanced 
treatments, or evaluate the total cost of care. To that end, a few 
commenters suggested that CMS use coding modifiers to identify ADLTs 
and molecular pathology tests that do not guide treatment during an 
inpatient hospital stay so that separate payment can be made at the 
HCPCS code level for these laboratory tests.
    In contrast to the commenters suggesting a laboratory DOS revision 
for both hospital outpatients and hospital inpatients, one commenter 
requested that CMS limit revisions to the laboratory DOS policy to 
outpatient laboratory tests that are excluded from the OPPS packaging 
policy and separately payable at CLFS rates because it would merely 
change which entity bills for the laboratory test. The commenter noted 
that because all laboratory testing ordered on specimens obtained from 
hospital inpatients less than 14 days after discharge are currently 
bundled into the hospital IPPS rates, a change in the laboratory DOS 
policy for hospital inpatients would entail many other policy changes.
    Response: As discussed previously, we believe an exception to the 
DOS policy that is limited to the hospital outpatient setting is 
warranted for Criterion (A) ADLTs and molecular pathology tests 
excluded from the OPPS packaging policy because these tests are already 
paid at CLFS rates and not paid under the OPPS, among other reasons. We 
did not discuss or propose an analogous DOS exception for tests 
performed on specimens collected from hospital inpatients in the CY 
2018 OPPS/ASC proposed rule, and we agree with the commenter who stated 
that such an exception would have broader policy implications for the 
IPPS that need to be carefully considered. We acknowledge that there 
could be an administrative burden for hospitals and laboratories to 
track the DOS for ADLTs and molecular pathology tests ordered for 
hospital outpatients in a way that is different from those ordered for 
hospital inpatients. However, because laboratories will no longer need 
to seek payment from the hospital outpatient department for these tests 
if all requirements in new Sec.  414.510(b)(5) are met, we believe that 
some of the additional burden mentioned by the commenters is likely to 
be offset by the revised DOS policy. With regard to the comments on 
evaluating data on patient outcomes, we note that, in the CY 2018 OPPS/
ASC proposed rule, we focused only on potential revisions to the 
laboratory DOS policy for Criterion (A) ADLTs and molecular pathology 
tests excluded from the OPPS packaging policy that are performed on a 
specimen collected from a hospital outpatient during a hospital 
outpatient encounter to enable the laboratory to bill Medicare directly 
for those tests. We did not discuss revising the laboratory DOS policy 
to improve CMS' ability to evaluate patient outcomes. As noted 
previously, we intend to continue studying this issue and, if 
warranted, consider changes to the laboratory DOS policy for laboratory 
tests performed on specimens collected during an inpatient hospital 
stay in future rulemaking.
    Comment: A few commenters suggested that any changes to the DOS 
rule also apply to ``referred nonpatient specimens.'' The commenters 
explained that hospitals receive tissue and/or blood samples for 
testing from physician's offices or other locations in circumstances in 
which no hospital encounter occurs. The commenters recommended that CMS 
allow this type of testing to be billed separately and not be required 
to be billed with other outpatient hospital services.
    Response: In the situation described by the commenters, the 
laboratory would be performing the test as a hospital outreach 
laboratory. A hospital outreach laboratory is a hospital-based 
laboratory that furnishes laboratory tests to patients who are not 
admitted hospital inpatients or registered outpatients of the hospital. 
As discussed previously, the new exception to the laboratory DOS policy 
will apply to tests granted ADLT status under Criterion (A) by CMS and 
molecular pathology tests excluded from the OPPS packaging policy that 
are performed on a specimen collected from a hospital outpatient during 
a hospital outpatient encounter. Because hospital outreach laboratories 
perform laboratory tests on specimens collected from beneficiaries who 
are not patients of the hospital, a revision to the laboratory DOS 
policy is not necessary to allow a hospital outreach laboratory to bill 
Medicare separately for the test.
    Comment: One commenter requested clarification as to whether an 
exception to the laboratory DOS policy would allow a hospital to 
continue billing for ADLTs or molecular pathology tests excluded from 
the OPPS packaging policy or whether the policy change would require a 
laboratory to bill Medicare directly for these tests. Another commenter 
recommended that any change to laboratory DOS policy or the ``under 
arrangements'' provisions should allow either the hospital or the 
laboratory that performed the test to bill the Medicare program 
directly. The commenter indicated that, in some circumstances, other 
laboratory tests in addition to ADLTs and or molecular pathology tests 
are ordered following the patient's discharge from the hospital 
outpatient department and that it may be less of a burden on the 
laboratory to allow the hospital to bill for all laboratory tests 
ordered rather than require some tests to be billed by the hospital and 
other tests to be billed by the laboratory.
    Response: If a test meets all requirements for the new exception to 
the DOS policy in Sec.  414.510(b)(5), the DOS of the test must be the 
date the test was performed, which means the laboratory performing the 
test must bill Medicare for the test. The hospital would no longer be 
permitted to bill for these tests unless the hospital laboratory 
actually performed the test. That is, if the hospital laboratory 
performed the ADLT or molecular pathology test, the hospital laboratory 
would bill Medicare for the test. We believe the potential 
administrative burden on the laboratory to bill for some of the tests 
performed on a specimen collected from a hospital outpatient during a 
hospital outpatient encounter will be offset, to some degree, because 
the laboratory would no longer need to seek payment from the hospital 
outpatient department for those tests, if all requirements in Sec.  
414.510(b)(5) are met.
    Comment: A few commenters requested that CMS clarify that the date 
of performance is the date of a laboratory's final report. They 
suggested this clarification would avoid any ambiguity regarding the 
date of performance of the test. One commenter urged CMS to define the 
DOS as the date of final report for all laboratory tests.
    Response: We considered the commenters' suggestion to use the date 
of final report as the DOS for ADLTs and molecular pathology tests 
excluded from the OPPS packaging policy that are

[[Page 59399]]

performed on a specimen collected from a hospital outpatient during a 
hospital outpatient encounter. However, we have concerns with this 
approach because we believe there is no clear and consistent definition 
of ``final report'' that applies to all laboratories and all types of 
specimens collected; that is, liquid-based, cellular, or tissue 
samples. Regarding the comment requesting a revision to the DOS policy 
for all laboratory tests, we note that we focused on potential 
revisions regarding Criterion (A) ADLTs and molecular pathology tests 
excluded from the OPPS packaging policy in the CY 2018 OPPS/ASC 
proposed rule, and did not discuss potential revisions to the DOS 
policy for all laboratory tests.
    Comment: A few commenters requested that CMS modify the 14-day rule 
requirement for all laboratory tests because it is operationally 
complicated and may result in delays in testing until after the 14-day 
window has passed.
    Response: As discussed previously in this section, the discussion 
in the CY 2018 OPPS/ASC proposed rule was primarily focused on 
potential modifications to the DOS policy for Criterion (A) ADLTs and 
molecular pathology tests excluded from the OPPS packaging policy. We 
did not address potential modifications to the DOS policy that would 
apply to all laboratory tests, so we will not make such changes in this 
rule. However, as noted previously, we intend to continue studying this 
issue and, if warranted, will consider proposing further changes to the 
DOS policy in future rulemaking.
(a) Limiting the DOS Rule Exception to ADLTs
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33653), we also 
indicated that we were considering potentially revising the DOS rule to 
create an exception only for ADLTs that meet the criteria in section 
1834A(d)(5)(A) of the Act. This exception would not cover molecular 
pathology tests. We stated that we were considering this approach 
because ADLTs approved by CMS under Criterion (A), like all ADLTs, are 
offered and furnished only by a single laboratory (as defined in 42 CFR 
414.502). The hospital, or another laboratory, that is not the single 
laboratory (as defined in 42 CFR 414.502), cannot furnish the ADLT. 
Therefore, we noted in the proposed rule that there may be additional 
beneficiary access concerns for these ADLTs that may not apply to 
molecular pathology tests, and that could be addressed by allowing the 
laboratories to bill Medicare directly for these tests. For example, a 
hospital may not have an arrangement with the single laboratory that 
furnishes a particular ADLT, which could lead the hospital to delay the 
order for the ADLT until 14 days after the patient's discharge to avoid 
financial risk and thus potentially delay medically necessary care for 
the beneficiary.
    We stated in the proposed rule that we believe the circumstances 
may be different for molecular pathology tests, which are not required 
to be furnished by a single laboratory. In particular, we understood 
there may be ``kits'' for certain molecular pathology tests that a 
hospital can purchase, allowing the hospital to perform the test. 
Therefore, we stated that molecular pathology tests may not present the 
same concerns of delayed access to medically necessary care as ADLTs, 
which must be performed by a single laboratory.
    Thus, in the proposed rule, we requested specific comments on 
potentially creating an exception to the DOS policy that is limited to 
ADLTs that meet the criteria in section 1834A(d)(5)(A) of the Act and 
have been granted ADLT status by CMS. We also requested public comments 
on how the current laboratory DOS policy may affect billing for other 
separately payable laboratory test codes that are not packaged under 
the OPPS, such as a laboratory test that is the only service provided 
to a beneficiary on a claim or molecular pathology tests.
    Comment: Many commenters supported revising the current laboratory 
DOS policy for both Criterion (A) ADLTs and molecular pathology tests. 
They did not support an exception to the current laboratory DOS policy 
that would be limited only to ADLTs that meet the criteria in section 
1834A(d)(5)(A) of the Act and have been granted ADLT status by CMS (and 
therefore exclude molecular pathology tests from the DOS exception). 
Several commenters noted that creating an exception for only ADLTs 
would not be consistent with current OPPS packaging policy, which 
excludes both Criterion (A) ADLTs and molecular pathology tests.
    In addition, a few commenters indicated that beneficiary access 
issues similar to those for ADLTs, which are furnished by a single 
laboratory, may also exist for molecular pathology tests because 
molecular pathology testing is highly specialized and may be performed 
by only a few laboratories. The commenters also noted that a coverage 
policy for a given molecular pathology test may have only been issued 
by a MAC in the jurisdiction in which the laboratory is located. This 
could be problematic if the hospital that is billing for the test is 
located in a different MAC jurisdiction from the laboratory, and the 
MAC processing claims for the jurisdiction in which the hospital is 
located has not made a coverage determination for the test.
    A few other commenters explained that molecular pathology tests are 
important tools that guide patient treatment plans and that many 
hospitals currently lack the in-house technical expertise and Clinical 
Laboratory Improvement Amendments (CLIA) licensure to perform these 
tests and, therefore, send them out to a performing laboratory. The 
commenters noted that molecular pathology ``kits'' (as referenced by 
CMS in the CY 2018 OPPS/ASC proposed rule) are different from those 
used for other CDLTs. For example, the commenters explained that 
molecular pathology test kits require the hospital to have the highest 
licensure level under CLIA, as well as obtain specialized training for 
correct use and interpretation of the results, and that most hospitals 
are unlikely to have either the expertise or the technology to use 
these kits. To ensure appropriate access to molecular pathology tests 
by rural and community hospitals, as well as academic and specialty 
hospitals, the commenters requested that the revisions to the current 
laboratory DOS policy apply to both ADLTs and molecular pathology 
tests.
    Response: We agree with commenters that limiting the new laboratory 
DOS exception to include only ADLTs (and not molecular pathology tests) 
would be inconsistent with the OPPS packaging policy, which currently 
excludes tests granted ADLT status by CMS under section 1834A(d)(5)(A) 
of the Act and molecular pathology tests. As noted by the commenters, 
relatively few laboratories may perform certain molecular pathology 
testing. We also acknowledge that hospitals may not have the technical 
expertise or certification requirements necessary to perform molecular 
pathology testing and therefore must rely on independent laboratories 
to perform the test. Therefore, we believe similar beneficiary access 
concerns that apply to ADLTs may also apply to molecular pathology 
tests. As indicated previously, after consideration of the public 
comments received on this issue, in this final rule with comment 
period, we are revising the current laboratory DOS policy to create a 
new exception for tests granted ADLT status by CMS under Criterion (A) 
and molecular pathology tests excluded from the OPPS packaging policy.

[[Page 59400]]

(b) Other Alternative Approaches
    Finally, in the CY 2018 OPPS/ASC proposed rule (82 FR 33653), we 
invited public comments on alternative approaches to addressing 
stakeholders' concerns regarding the DOS policy, such as potentially 
modifying the ``under arrangements'' provisions in 42 CFR 410.42 and 
411.15(m). Specifically, we requested comments on whether an exception 
should be added to Sec.  410.42(b) and/or Sec.  411.15(m)(3) for 
molecular pathology tests and ADLTs that are excluded from the OPPS 
packaging policy under 42 CFR 419.2(b) and how such an exception should 
be framed.
    Comment: Several commenters preferred modifications to the ``under 
arrangements'' provisions to a laboratory DOS revision. They stated 
that modifying the ``under arrangements'' provisions could be a more 
direct approach for permitting a performing laboratory to bill Medicare 
directly for ADLTs and molecular pathology tests. Therefore, the 
commenters requested that CMS add another exception to the ``under 
arrangements'' provisions so that a revision to the laboratory DOS 
policy would not be necessary. They suggested that changes to the 
``under arrangements'' provisions could be made in lieu of modifying 
the laboratory DOS rules and asserted that this approach would only 
revise the ``billing regulation'' for tests performed on hospital 
outpatient specimens to align with CMS' existing exclusions from the 
OPPS packaging policy.
    In addition, a few commenters noted that certain practitioner 
services, such as physician services and nurse practitioner services, 
are not performed by the hospital outpatient department and paid under 
a separate fee schedule, and therefore, are currently excluded from the 
``under arrangements'' provisions. They contended that adding an 
exception to the ``under arrangements'' provisions for nonpackaged 
laboratory tests which are paid at the CLFS rates would be consistent 
with the exceptions for other services (for example, physician 
services) paid separately from the hospital service.
    A few commenters also provided specific recommendations on how CMS 
should revise the ``under arrangements'' regulations at Sec. Sec.  
410.42(b) and 411.15(m). Similar to their recommendations for revising 
the laboratory DOS policy, the commenters suggested adding an exception 
to the ``under arrangements'' provisions for molecular pathology tests, 
all ADLTs, and all MAAAs, irrespective of whether these tests are 
currently excluded from the OPPS packaging policy.
    Response: We appreciate the feedback that commenters provided in 
response to our request for comments on potential modifications to the 
``under arrangements'' provisions. As discussed previously, in this 
final rule with comment period, we are finalizing a revision to the 
current laboratory DOS policy so that laboratories performing Criterion 
(A) ADLTs and molecular pathology tests excluded from the OPPS 
packaging policy can bill Medicare directly for those tests, instead of 
seeking payment from the hospital outpatient department. We believe 
including this revision as part of Sec.  414.510 is more consistent 
with how we have historically addressed laboratory DOS issues and, at 
this stage, is the appropriate way to address stakeholders' 
administrative and billing concerns regarding these tests. As noted 
previously, we intend to continue to study this issue and specifically 
consider whether further revisions to the ``under arrangements'' 
provisions are warranted. If we believe revisions to the ``under 
arrangements'' provisions may be warranted, we expect we would propose 
those changes through notice-and-comment rulemaking.
    In summary, after considering the public comments we received, we 
are adding an additional exception to our current laboratory DOS 
regulations at Sec.  414.510(b)(5) so that the DOS for molecular 
pathology tests and tests designated by CMS as Criterion (A) ADLTs is 
the date the test was performed only if: (1) The test was performed 
following a hospital outpatient's discharge from the hospital 
outpatient department; (2) the specimen was collected from a hospital 
outpatient during an encounter (as both are defined in Sec.  410.2); 
(3) it was medically appropriate to have collected the sample from the 
hospital outpatient during the hospital outpatient encounter; (4) the 
results of the test do not guide treatment provided during the hospital 
outpatient encounter; and (5) the test was reasonable and medically 
necessary for the treatment of an illness. This new exception to the 
laboratory DOS policy will enable laboratories performing Criterion (A) 
ADLTs and molecular pathology tests excluded from the OPPS packaging 
policy to bill Medicare directly for those tests, instead of requiring 
them to seek payment from the hospital outpatient department.

XI. CY 2018 OPPS Payment Status and Comment Indicators

A. CY 2018 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.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33653), for CY 2018, 
we did not propose to make any changes to the definitions of status 
indicators that were listed in Addendum D1 to the CY 2017 OPPS/ASC 
final rule with comment period available on the CMS Web site at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1656-FC.html?DLPage=1&DLEntries=10&DLSort=2&DLSortDir=descending.
    We requested public comments on the proposed definitions of the 
OPPS status indicators for CY 2018. We did not receive any public 
comments. We believe that the existing CY 2017 definitions of the OPPS 
status indicators continue to be appropriate for CY 2018. Therefore, we 
are finalizing our proposed CY 2018 definitions of the OPPS status 
indicators without modifications.
    The complete list of the payment status indicators and their 
definitions that apply for CY 2018 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 2018 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.

B. CY 2018 Comment Indicator Definitions

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33654), we proposed to 
use four comment indicators for the CY 2018 OPPS. These comment 
indicators, ``CH'', ``NC'', ``NI'', and ``NP'', are in effect for CY 
2017 and we proposed to continue their use in CY 2018. The proposed CY 
2018 OPPS comment indicators are as follows:

[[Page 59401]]

     ``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.
     ``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.
     ``NI''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year, interim APC 
assignment; comments will be accepted on the interim APC assignment for 
the new code.
     ``NP''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year, proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code.
    We requested public comments on our proposed use of comment 
indicators for CY 2018. We did not receive any public comments. We 
believe that the CY 2017 definitions of the OPPS comment indicators 
continue to be appropriate for CY 2018. Therefore, we are continuing to 
use those definitions without modification for CY 2018.
    The definitions of the final OPPS comment indicators for CY 2018 
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 CYs 2012, 2013, 2014, 2015, 2016, and 2017 
OPPS/ASC final rules with comment period (76 FR 74378 through 74379; 77 
FR 68434 through 68467; 78 FR 75064 through 75090; 79 FR 66915 through 
66940; 80 FR 70474 through 70502; and 81 FR 79732 through 79753, 
respectively).
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). We release new 
and revised Level II HCPCS codes and recognize the release of new and 
revised CPT codes by the AMA and make these codes effective (that is, 
the codes are recognized on Medicare claims) via these ASC quarterly 
update CRs. We recognize the release of 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 
payments 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, which we finalized in the CY 
2012 OPPS/ASC final rule with comment period, is used to update HCPCS 
and CPT codes (76 FR 42291; 76 FR 74380 through 74381).
    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

[[Page 59402]]

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.
3. Definition of ASC Covered Surgical Procedures
    Since the implementation of the ASC prospective payment system, we 
have defined a ``surgical'' procedure under the payment system as any 
procedure described within the range of Category I CPT codes that the 
CPT Editorial Panel of the American Medical Association (AMA) defines 
as ``surgery'' (CPT codes 10000 through 69999) (72 FR 42478). We also 
have included as ``surgical,'' procedures that are described by Level 
II HCPCS codes or by Category III CPT 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, would not expect 
to require an overnight stay when performed in an ASC, and are 
separately paid under the OPPS (72 FR 42478).
    As we noted in the CY 2008 final rule that implemented the revised 
ASC payment system, using this definition of surgery would exclude from 
ASC payment certain invasive, ``surgery-like'' procedures, such as 
cardiac catheterization or certain radiation treatment services that 
are assigned codes outside the CPT surgical range (72 FR 42477). We 
stated in that final rule that we believed continuing to rely on the 
CPT definition of surgery is administratively straightforward, is 
logically related to the categorization of services by physician 
experts who both establish the codes and perform the procedures, and is 
consistent with a policy to allow ASC payment for all outpatient 
surgical procedures (72 FR 42477).
    Recently, some stakeholders have suggested that certain procedures 
that are outside the CPT surgical range but that are similar to 
surgical procedures currently covered in an ASC setting should be ASC 
covered surgical procedures. For example, these stakeholders stated 
that certain cardiac catheterization services, cardiac device 
programming services, and electrophysiology services should be added to 
the covered surgical procedures list. While we continue to believe that 
using the CPT code range to define surgery represents a logical, 
appropriate, and straightforward approach to defining a surgical 
procedure, we also believe it may be appropriate for us to use the CPT 
surgical range as a guide rather than a requirement as to whether a 
procedure is surgical, which would give us more flexibility to include 
``surgery-like'' procedures on the ASC Covered Procedures List (CPL). 
We are cognizant of the dynamic nature of ambulatory surgery and the 
continued shift of services from the inpatient setting to the 
outpatient setting over the past decade. Therefore, in the CY 2018 
OPPS/ASC proposed rule (82 FR 33655), we solicited public comments 
regarding services that are described by Category I CPT codes outside 
of the surgical range, or Level II HCPCS codes or Category III CPT 
codes that do not directly crosswalk and are not clinically similar to 
procedures in the CPT surgical range, but that nonetheless may be 
appropriate to include as covered surgical procedures that are payable 
when furnished in the ASC setting. In particular, we stated our 
interest in the public's views regarding additional criteria we might 
use to consider when a procedure that is surgery-like could be included 
on the ASC CPL. We requested that commenters on this issue take into 
consideration whether each individual procedure can be safely and 
appropriately performed in an ASC, as required by the regulations at 42 
CFR 416.166 (including that standard medical practice dictates that the 
beneficiary would not typically be expected to require active medical 
monitoring and care at midnight following the procedure), and whether 
the procedure requires the resources, staff, and equipment typical of 
an ASC. We also indicated that we were interested in the public's views 
on whether and how, if we were to include such services as ASC covered 
surgical procedures, we would need to revise our definition of ASC 
covered surgical procedures.
    Comment: Some commenters suggested that revising the definition of 
ASC covered surgical procedures would inappropriately move procedures 
from a hospital setting to an ASC setting and place Medicare patients 
in greater risk. Some commenters also suggested that revising the 
definition could further stress hospitals in isolated rural care 
settings because many ASCs are located in rural areas.
    Other commenters suggested that CMS develop and solicit comments on 
a clear definition and criteria for surgical site selection. Commenters 
also suggested patient selection and risk stratification protocols that 
would harmonize the different criteria of hospital outpatient 
departments and ASCs. In addition, they recommended that further 
clinical evaluation of the consequences to the Medicare population be 
performed before revising the definition of ASC covered surgical 
procedures.
    Many commenters supported revising the definition of ASC covered 
surgical procedures. Commenters supporting the revision of the 
definition of ASC covered surgical procedures suggested that the CPT 
surgical code range (10000-69999) has not properly accounted for 
technical advances in treatment and does not include invasive 
procedures that do not pose a significant safety risk, do not require 
an overnight stay for Medicare patients, and would otherwise be 
appropriate procedures to be added to the ASC list of covered surgical 
procedures. For example, some commenters believed that several 
catheter-based procedures would be appropriately performed in the ASC 
setting. Further, commenters stated that CMS has relied on alternative 
definitions of a surgical procedure in other operations of the Medicare 
program that are broader than the current definition of an ASC covered 
surgical procedure.
    Response: We appreciate the feedback we received from commenters. 
We acknowledge the importance of having clear criteria for covered 
surgical procedures that account for advances in surgical treatment in 
an ASC setting that also do not expose Medicare patients to significant 
safety risks. In the CY 2018 OPPS/ASC proposed rule (82 FR 33654 
through 33655), we did not propose any revisions to our current 
definition of ASC covered surgical procedures. For CY 2018, we will 
continue to define ``surgical'' procedures under the payment system as 
those procedures described by Category I CPT codes within the range the 
CPT Editorial Panel of the AMA defines as ``surgery'' (CPT codes 10000 
through 69999), or Level II HCPCS codes or Category III CPT 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, would not be expected to require an overnight stay when performed 
in an

[[Page 59403]]

ASC, and are separately paid under the OPPS. However, we will take 
these comments into consideration in future rulemaking.

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 
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 2018 OPPS/ASC 
final rule with comment period.
    We have separated our discussion below based on when the codes are 
released and whether we propose to solicit public comments in the CY 
2018 OPPS/ASC proposed rule (and respond to those comments in the CY 
2018 OPPS/ASC final rule with comment period) or whether we are 
soliciting public comments in this CY 2018 OPPS/ASC final rule with 
comment period (and responding to those comments in the CY 2019 OPPS/
ASC final rule with comment period).
    We note that we sought public comments in the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79735 through 79736) on the new 
and revised Level II HCPCS codes effective October 1, 2016, or January 
1, 2017. These new and revised codes, with an effective date of October 
1, 2016, or January 1, 2017, were flagged with comment indicator ``NI'' 
in Addenda AA and BB to the CY 2017 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 2017 OPPS/ASC final rule with 
comment period. We are responding to public comments and finalize the 
treatment of these codes under the ASC payment system in this CY 2018 
OPPS/ASC final rule with comment period.
    In Table 79 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 79--Comment and Finalization Timeframes for New or Revised HCPCS CODES
----------------------------------------------------------------------------------------------------------------
ASC quarterly update CR      Type of code           Effective date        Comments sought       When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2017..........  Level II HCPCS Codes  April 1, 2017..........  CY 2018 OPPS/ASC     CY 2018 OPPS/ASC
                                                                         proposed rule.       final rule with
                                                                                              comment period.
July 1, 2017...........  Level II HCPCS Codes  July 1, 2017...........  CY 2018 OPPS/ASC     CY 2018 OPPS/ASC
                                                                         proposed rule.       final rule with
                                                                                              comment perio.
                         Category I (certain   July 1, 2017...........  CY 2018 OPPS/ASC     CY 2018 OPPS/ASC
                          vaccine codes) and                             proposed rule.       final rule with
                          III CPT codes.                                                      comment period.
October 1, 2017........  Level II HCPCS Codes  October 1, 2017........  CY 2018 OPPS/ASC     CY 2019 OPPS/ASC
                                                                         final rule with      final rule with
                                                                         comment period.      comment period.
January 1, 2018........  Level II HCPCS Codes  January 1, 2018........  CY 2018 OPPS/ASC     CY 2019 OPPS/ASC
                                                                         final rule with      final rule with
                                                                         comment period.      comment period.
                         Category I and III    January 1, 2018........  CY 2018 OPPS/ASC     CY 2018 OPPS/ASC
                          CPT Codes.                                     proposed rule.       final rule with
                                                                                              comment period.
----------------------------------------------------------------------------------------------------------------
Note: In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised
  process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be
  effective January 1. We refer readers to section III.A.3. of this CY 2018 OPPS/ASC final rule with comment
  period for further discussion of this issue.

2. Treatment of New and Revised Level II HCPCS Codes Implemented in 
April 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/
ASC Proposed Rule
    In the April 2017 ASC quarterly update (Transmittal 3726, CR 9998, 
dated March 03, 2017), we added six new drug and biological Level II 
HCPCS codes to the list of covered ancillary services. Table 31 of the 
proposed rule listed the new Level II HCPCS codes that were implemented 
April 1, 2017, along with their payment indicators for CY 2018.
    We invited public comments on these proposed payment indicators and 
the proposed payment rates for the new Level II HCPCS codes that were 
recognized as ASC covered ancillary services in April 2017 through the 
quarterly update CRs, as listed in Table 31 of the proposed rule. We 
proposed to finalize their payment indicators and their payment rates 
in the CY 2018 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 2018 proposed payment indicators for these codes, as 
indicated in Table 80. We note that several of the HCPCS C-codes have 
been replaced with HCPCS J-codes, effective January 1, 2018. Their 
replacement codes are listed in Table 80. The final payment rates for 
these codes can be found in Addendum BB to this final rule with comment 
period (which is available via the Internet on

[[Page 59404]]

the CMS Web site). In addition, the payment indicator meanings can be 
found in Addendum DD1 to this final rule with comment period (which is 
available via the Internet on the CMS Web site).

    Table 80--New Level II HCPCS Codes for Covered Ancillary Services
                       Effective on April 1, 2017
------------------------------------------------------------------------
                                                                CY 2018
 CY 2017 HCPCS code    CY 2018 HCPCS code     CY 2018 long      payment
                                               descriptor      indicator
------------------------------------------------------------------------
C9484...............  J1428...............  Injection,               K2
                                             eteplirsen, 10
                                             mg.
C9485...............  J9285...............  Injection,               K2
                                             olaratumab, 10
                                             mg.
C9486...............  J1627...............  Injection,               K2
                                             granisetron
                                             extended
                                             release, 0.1 mg.
C9487 *.............  J3358...............  Ustekinumab, for         K2
                                             intravenous
                                             injection, 1 mg.
C9488...............  C9488...............  Injection,               K2
                                             conivaptan
                                             hydrochloride,
                                             1 mg.
J7328...............  J7328...............  Hyaluronan or            K2
                                             derivative,
                                             gelsyn-3, for
                                             intra-articular
                                             injection, 0.1
                                             mg.
------------------------------------------------------------------------
* HCPCS code C9487, which was effective April 1, 2017, was deleted June
  30, 2017 and replaced with HCPCS code Q9989 (Ustekinumab, for
  intravenous injection, 1 mg) effective July 1, 2017 through December
  31, 2017.

3. Treatment of New and Revised Level II HCPCS Codes Implemented in 
July 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/
ASC Proposed Rule
    In the July 2017 ASC quarterly update (Transmittal 3792, CR 10138, 
dated June 9, 2017), we added seven new Level II HCPCS codes to the 
list of covered surgical procedures and ancillary services. Table 32 of 
the proposed rule listed the new Level II HCPCS codes that are 
effective July 1, 2017. The proposed payment rates, where applicable, 
for these July codes were included in Addendum BB to the proposed rule 
(which is available via the Internet on the CMS Web site).
    Through the July 2017 quarterly update CR, we also implemented ASC 
payment for one new Category III CPT code as an ASC covered surgical 
procedure, effective July 1, 2017. This code was listed in Table 33 of 
the proposed rule, along with its proposed payment indicator. The 
proposed payment rate for this new Category III CPT code was included 
in Addendum AA to the proposed rule (which is available via the 
Internet on the CMS Web site).
    We invited public comments on these proposed payment indicators and 
the proposed payment rates for the new Category III CPT code and Level 
II HCPCS codes that were or are expected to be newly recognized as ASC 
covered surgical procedures or covered ancillary services in July 2017 
through the quarterly update CRs, as listed in Tables 32 and 33 of the 
proposed rule. We proposed to finalize their payment indicators and 
their payment rates in the CY 2018 OPPS/ASC final rule with comment 
period.
    Comment: One commenter supported the assignment of HCPCS code Q9986 
(Injection, hydroxyprogesterone caproate (Makena), 10 mg) to payment 
indicator ``K2''. However, the commenter requested that CMS review the 
calculated payment rate for the new HCPCS code Q9986, as it appeared to 
the commenter to be inaccurate. The commenter pointed out the 
following: The July 2017 OPPS and ASC Update indicates that this new 
HCPCS code is ``per 10 mg'' with a payment rate of $2.72 (as indicated 
in the July 2017 Addendum B/BB and in Addendum B and Addendum BB to the 
CY 2018 OPPS/ASC proposed rule). Prior to July 1, 2017, Makena[supreg] 
(NDC #64011-0247-02 and NDC #64011-0243-01) was reported under HCPCS 
code J1725, which had a dose and measure of ``per 1 mg'' and a payment 
rate of $2.74 (April 2017 Addendum B/BB). Makena[supreg] also has a WAC 
price of $30.57 per 10 mg. The commenter believed that when the new 
HCPCS code was added with a description of 10 mg instead of the prior 1 
mg, the payment rate was not appropriately adjusted to reflect the 
dosage change.
    Response: We agree with the commenter. The July 2017 and October 
2017 OPPS and ASC addenda incorrectly reflected a price for HCPCS code 
Q9986 based on a 1 mg dose rather than the revised 10 mg dose 
descriptor. We intend to correct the price for HCPCS code Q9986 
retroactive to July 1, 2017, in the respective January 2018 updates to 
the OPPS and ASC payment systems. Applicable program instructions will 
be posted to the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017-Transmittals.html.
    After consideration of the public comment we received, we are 
finalizing the proposed payment indicators for the new Category III CPT 
code and Level II HCPCS codes that were newly recognized as ASC covered 
surgical procedures or covered ancillary services in July 2017 through 
the quarterly update CRs, as indicated in Table 81 below. We note that 
several of the HCPCS C- and Q-codes have been replaced with HCPCS J-
codes, effective January 1, 2018. Their replacement codes are listed in 
Table 81 below. The CY 2018 final payment rates, where applicable, for 
these July codes can be found in Addendum BB to this final rule with 
comment period rule (which is available via the Internet on the CMS Web 
site). Table 82 below lists Category III CPT code 0474T, along with its 
final payment indicator. The CY 2018 final payment rate for this new 
Category III CPT code can be found in Addendum AA to the final rule 
with comment period (which is available via the Internet on the CMS Web 
site).

 Table 81--New Level II HCPCS Codes for Covered Surgical Procedures and
              Ancillary Services Effective on July 1, 2017
------------------------------------------------------------------------
                                                                CY 2018
 CY 2017 HCPCS code    CY 2018  HCPCS code    CY 2018 long      payment
                                               descriptor      indicator
------------------------------------------------------------------------
C9489...............  J2326...............  Injection,               K2
                                             nusinersen, 0.1
                                             mg.
C9490...............  J0565...............  Injection,               K2
                                             bezlotoxumab,
                                             10 mg.
C9745...............  C9745...............  Nasal endoscopy,         J8
                                             surgical;
                                             balloon
                                             dilation of
                                             eustachian tube.

[[Page 59405]]

 
C9746...............  C9746...............  Transperineal            J8
                                             implantation of
                                             permanent
                                             adjustable
                                             balloon
                                             continence
                                             device, with
                                             cystourethrosco
                                             py, when
                                             performed and/
                                             or fluoroscopy,
                                             when performed.
C9747...............  C9747...............  Ablation of              J8
                                             prostate,
                                             transrectal,
                                             high intensity
                                             focused
                                             ultrasound
                                             (HIFU),
                                             including
                                             imaging
                                             guidance.
Q9986...............  J1726...............  Injection,               K2
                                             hydroxyprogeste
                                             rone caproate
                                             (Makena), 10 mg.
Q9989 *.............  J3358...............  Ustekinumab, for         K2
                                             intravenous
                                             injection, 1 mg.
------------------------------------------------------------------------
* HCPCS code C9487, which was effective April 1, 2017, was replaced with
  HCPCS code Q9989 (Ustekinumab, for intravenous injection, 1 mg)
  effective July 1, 2017.


   Table 82--New Category III CPT Code for Covered Surgical Procedure
                        Effective on July 1, 2017
------------------------------------------------------------------------
                                                                CY 2018
  CY 2017 CPT code      CY 2018 CPT code      CY 2018 long      payment
                                               descriptor      indicator
------------------------------------------------------------------------
0474T...............  0474T...............  Insertion of             J8
                                             anterior
                                             segment aqueous
                                             drainage
                                             device, with
                                             creation of
                                             intraocular
                                             reservoir,
                                             internal
                                             approach, into
                                             the
                                             supraciliary
                                             space.
------------------------------------------------------------------------

4. Process for New and Revised Level II HCPCS Codes That Are Effective 
October 1, 2017 and January 1, 2018 for Which We Are Soliciting Public 
Comments in This CY 2018 OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new and 
revised Level II HCPCS codes that are effective January 1 in the final 
rule with comment period, thereby updating the OPPS and the ASC payment 
system for the following calendar year. These codes are released to the 
public via the CMS HCPCS Web site, and also through the January OPPS 
quarterly update CRs. In the past, we also released new and revised 
Level II HCPCS codes that are effective October 1 through the October 
OPPS quarterly update CRs and incorporated these new codes in the final 
rule with comment period.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33657), for CY 2018, 
consistent with our established policy, we proposed that the Level II 
HCPCS codes that will be effective October 1, 2017, and January 1, 
2018, would be flagged with comment indicator ``NI'' in Addendum B to 
the CY 2018 OPPS/ASC final rule with comment period to indicate that we 
have assigned the codes an interim OPPS payment status for CY 2018. We 
did not receive any public comments on our proposal. As we stated we 
would do in the proposed rule, we are inviting public comments in this 
CY 2018 OPPS/ASC final rule with comment period on the interim payment 
indicators and payment rates for these codes that will be finalized in 
the CY 2019 OPPS/ASC final rule with comment period.
5. Process for Recognizing New and Revised Category I and Category III 
CPT Codes That Are Effective January 1, 2018 for Which We Are 
Soliciting Public Comments in This CY 2018 OPPS/ASC Final Rule With 
Comment Period
    For new and revised CPT codes effective January 1, 2018, that were 
received in time to be included in the CY 2018 OPPS/ASC proposed rule, 
we proposed APC and status indicator assignments (82 FR 33657). We 
stated in the proposed rule that we would accept comments and finalize 
the APC and status indicator assignments in the CY 2018 OPPS/ASC final 
rule with comment period. For those new/revised CPT codes that were 
received too late for inclusion in the CY 2018 OPPS/ASC proposed rule, 
we stated 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.
    We stated in the proposed rule that, for the CY 2018 ASC update, 
the new and revised CY 2018 Category I and III CPT codes will be 
effective on January 1, 2018, and were included in ASC Addendum AA and 
Addendum BB to the proposed rule (which are available via the Internet 
on the CMS Web site). The new and revised CY 2018 Category I and III 
CPT codes were assigned to 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 the current calendar year, and that 
comments will be accepted on the proposed payment indicator. Further, 
in the proposed rule, we reminded readers that the CPT code descriptors 
that appear in Addendum AA and Addendum BB are short descriptors and do 
not fully 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 2018 CPT codes in 
Addendum O to the proposed rule (which is available via the Internet on 
the CMS Web site) so that the public can have time to adequately 
comment on our proposed payment indicator assignments. We stated in the 
proposed rule that the 5-digit placeholder codes can be found in 
Addendum O, specifically under the column labeled ``CY 2018 OPPS/ASC 
Proposed Rule 5-Digit Placeholder Code,'' to the proposed rule. We 
stated that the final CPT code numbers would be included in the CY 2018 
OPPS/ASC final rule with comment period. We noted that not every code 
listed in Addendum O is 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''.
    In summary, we solicited public comments on the proposed CY 2018 
payment indicators for the new and revised Category I and III CPT codes 
that will be effective January 1, 2018. The CPT codes were listed in 
Addendum AA and Addendum BB to the proposed rule with short descriptors 
only. We

[[Page 59406]]

listed them again in Addendum O to the proposed rule with long 
descriptors. We also proposed to finalize the payment indicator for 
these codes (with their final CPT code numbers) in the CY 2018 OPPS/ASC 
final rule with comment period. The proposed payment indicators for 
these codes were included in Addendum AA and Addendum BB to the 
proposed rule (which are available via the Internet on the CMS Web 
site).
    Comment: Some commenters addressed the proposed establishment of 
HCPCS G-codes under the MPFS to report the insertion and removal of 
buprenorphine hydrochloride, formulated as a 4-rod, 80 mg, long-acting 
subdermal drug implant for the treatment of opioid addiction (82 FR 
34011 through 34012). Specifically, the commenters requested that the 
MPFS proposal also apply to the OPPS and ASC payment systems. In 
addition, the commenters recommended that CMS assign the HCPCS G-codes 
to payment indicator ``P3'' (Office-based surgical procedure added to 
ASC list in CY 2008 or later with MPFS nonfacility Practice Expense 
Relative Value Units (PE RVUs); payment based on MPFS nonfacility PE 
RVUs).
    Response: As discussed in section III.D. (OPPS APC-Specific 
Policies) of this final rule with comment period, we are establishing 
these HCPCS G-codes in the OPPS, effective January 1, 2018, with status 
indicator ``Q1'' (Packaged APC payment if billed on the same claim as a 
HCPCS code assigned status indicator ``S'', ``T'', or ``V''). However, 
because these services are conditionally packaged under the OPPS, they 
are unconditionally packaged under the ASC payment system (payment 
indicator ``N1''). Therefore, we are not accepting the commenters' 
request to assign payment indicator ``P3'' to these HCPCS G-codes.
    Comment: One commenter disagreed with the proposed payment rate for 
four new CPT codes (31XX2, 31XX3, 31XX4, and 31XX5) that describe 
endoscopic sinus surgery services. The commenter noted that the 
multiple procedure reduction applies to these procedures when performed 
in an ASC which results in payment at 100 percent for the highest 
ranking procedure and 50 percent for each subsequent procedure when 
performed in the same encounter. Because the commenter believed that 
these payment rates are inadequate, the commenter requested that CMS 
consider an ASC payment rate that more closely aligns with ASCs' costs.
    Response: The national unadjusted ASC payment rates are calculated 
using our standard ASC ratesetting methodology of multiplying the ASC 
relative payment weight for the procedure by the ASC conversion factor 
for that same year. We have no cost data or information to assess 
whether ASC payments rates calculated using the standard ratesetting 
methodology align with ASC costs. Therefore, we are not accepting the 
commenter's recommendation and we are finalizing payment for proposed 
CPT codes 31XX2, 31XX3, 31XX4, and 31XX5, as replaced by CPT codes 
31253, 31257, 31259, and 31298, respectively, according to our standard 
ASC ratesetting methodology for CY 2018. We note the OPPS cost data 
informs ASC payment rates, and as data become available from hospitals 
paid under the OPPS, we will reassess the APC assignments for these 
codes.
    After consideration of the public comments we received, we are 
finalizing, without modification, the proposed CY 2018 ASC payment 
indicator assignments for new and revised CPT codes, effective January 
1, 2018. The final CY 2018 payment indicators for the new and revised 
Category I and III CPT codes (with their final CPT code numbers) that 
will be effective January 1, 2018 are listed in Addendum AA and 
Addendum BB to this final rule with comment period with short 
descriptors only. We list them again in Addendum O to the final rule 
with comment period with long descriptors.

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 2018 to Covered Surgical Procedures Designated as 
Office-Based
    In developing the CY 2018 OPPS/ASC proposed rule and this final 
rule with comment period, 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 
2016 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 2017 OPPS/
ASC final rule with comment period (81 FR 79736 through 79738).
    As discussed in the CY 2018 OPPS/ASC proposed rule, our review of 
the CY 2016 volume and utilization data resulted in our identification 
of two covered surgical procedures, CPT code 37241 (Vascular embolize/
occlude venous) and CPT code 67227

[[Page 59407]]

(Destruction extensive retinopathy), that we believe meet the criteria 
for designation as office-based. The data indicate that these 
procedures are performed more than 50 percent of the time in 
physicians' offices, and we believe that the services are of a level of 
complexity consistent with other procedures performed routinely in 
physicians' offices. The CPT codes that we proposed to permanently 
designate as office-based for CY 2018 were listed in Table 34 of the 
proposed rule.

      Table 83--ASC Covered Surgical Procedures Newly Designated as
                  Permanently Office-Based for CY 2018
------------------------------------------------------------------------
                                              CY 2017  ASC  CY 2018  ASC
  CY 2018  CPT code        CY 2018 long          payment       payment
                            descriptor          indicator    indicator *
------------------------------------------------------------------------
37241...............  Vascular embolization            G2            P3
                       or occlusion,
                       inclusive of all
                       radiological
                       supervision and
                       interpretation,
                       intraprocedural
                       roadmapping, and
                       imaging guidance
                       necessary to complete
                       the intervention;
                       venous, other than
                       hemorrhage (eg,
                       congenital or
                       acquired venous
                       malformations, venous
                       and capillary
                       hemangiomas, varices,
                       varioceles).
67227...............  Destruction of                   G2            P3
                       extensive or
                       progressive
                       retinopathy (eg,
                       diabetic
                       retinopathy),
                       cryotherapy,
                       diathermy.
------------------------------------------------------------------------
* 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 2018. For a discussion of the MPFS rates, we
  refer readers to the CY 2018 MPFS final rule with comment period.

    We also reviewed CY 2016 volume and utilization data and other 
information for 10 procedures designated as temporary office-based in 
Tables 48 and 49 in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79736 through 79738). Of these 10 procedures, there were very 
few claims in our data and no claims data for 8 procedures: 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 (eg, 
abscess, hematoma, seroma, lymphocele, cyst), soft tissue (eg, 
extremity, abdominal wall, neck), percutaneous); CPT code 36473 
(Endovenous ablation therapy of incompetent vein, extremity, inclusive 
of all imaging guidance and monitoring, percutaneous, mechanochemical; 
first vein treated); CPT code 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); 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); and CPT code 67229 (Treatment of 
extensive or progressive retinopathy, one or more sessions; preterm 
infant (less than 37 weeks gestation at birth), performed from birth up 
to 1 year of age (for example, retinopathy of prematurity), 
photocoagulation or cryotherapy). Consequently, we proposed to maintain 
the temporary office-based designations for these eight codes for CY 
2018. We listed all of these codes for which we proposed to maintain 
the temporary office-based designations for CY 2018 in Table 35 of the 
proposed rule. The procedures for which the proposed office-based 
designations for CY 2018 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).
    The volume and utilization data for one procedure that has a 
temporary office-based designation for CY 2017, HCPCS code G0429 
(Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) 
and provision of Radiesse or Sculptra dermal filler, including all 
items and supplies), is sufficient to indicate that this procedure is 
performed predominantly in physicians' offices and, therefore, should 
be assigned an office-based payment indicator in CY 2018. Consequently, 
we proposed to assign payment indicator ``P2/P3'' to this covered 
surgical procedure code in CY 2018.
    HCPCS code 0299T (Extracorporeal shock wave for integumentary wound 
healing, high energy, including topical application and dressing care; 
initial wound) was finalized for temporary office-based status in the 
CY 2017 OPPS/ASC final rule with comment period. However, this code 
will be deleted by the AMA, effective December 31, 2017.
    We invited public comment on our proposals.
    Comment: One commenter objected to the proposal to designate CPT 
codes 10030, 36473, and 36901 as temporarily office-based procedures 
for CY 2018. The commenter did not provide a clinical rationale but 
stated that, in the absence of data to examine site of service, it is 
premature to designate these CPT codes as temporarily office-based.
    Response: In consultation with our medical advisors, we reviewed 
the clinical characteristics, utilization, and volume of related codes 
and determined that the procedures described by CPT codes 10030, 36473, 
and 36901 would be predominantly performed in physicians' offices. 
However, because we do not have utilization data for these CPT codes, 
we made the office-based designation temporary rather than permanent 
for CY 2018. We will reevaluate office-based status for CPT codes 
10030, 36473, and 36901 in the CY 2019 rulemaking.
    After consideration of the public comment we received, for CY 2018 
we are finalizing our proposal, without modification, to designate the 
procedures listed in Table 84 below as temporary office-based.

[[Page 59408]]



Table 84--CY 2018 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporary Office-Based in
                               the CY 2018 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
                                                                                  CY 2017  ASC     CY 2018  ASC
          CY 2018  CPT code                    CY 2018 long descriptor              payment          payment
                                                                                  indicator *      indicator **
----------------------------------------------------------------------------------------------------------------
0299T................................  Extracorporeal shock wave for                      R2 *               NA
                                        integumentary wound healing, high
                                        energy, including topical application
                                        and dressing care; initial wound.
0402T................................  Collagen cross-linking of cornea                   R2 *            R2 **
                                        (including removal of the corneal
                                        epithelium and intraoperative
                                        pachymetry when performed).
10030................................  Image-guided fluid collection drainage             P2 *            P2 **
                                        by catheter (e.g., abscess, hematoma,
                                        seroma, lymphocele, cyst), soft tissue
                                        (e.g., extremity abdominal wall,
                                        neck), percutaneous.
36473................................  Endovenous ablation therapy of                     P2 *            P2 **
                                        incompetent vein, extremity, inclusive
                                        of all imaging guidance and
                                        monitoring, percutaneous,
                                        mechanochemical; first vein treated.
36901................................  Introduction of needle(s) and/or                   P2 *            P2 **
                                        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.
64461................................  Paravertebral block (PVB) (paraspinous             P3 *            P3 **
                                        block), thoracic; single injection
                                        site (includes imaging guidance, when
                                        performed).
64463................................  Continuous infusion by catheter                    P3 *            P3 **
                                        (includes imaging guidance, when
                                        performed).
65785................................  Implantation of intrastromal corneal               R2 *            P2 **
                                        ring segments.
67229................................  Treatment of extensive or progressive              R2 *            R2 **
                                        retinopathy, one or more sessions;
                                        preterm infant (less than 37 weeks
                                        gestation at birth), performed from
                                        birth up to 1 year of age (e.g.,
                                        retinopathy of prematurity),
                                        photocoagulation or cryotherapy.
G0429................................  Dermal injection procedure(s) for                  P3 *            P3 **
                                        facial lipodystrophy syndrome (LDS)
                                        and provision of Radiesse or Sculptra
                                        dermal filler, including all items and
                                        supplies.
----------------------------------------------------------------------------------------------------------------
 * If designation is temporary.
 ** 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 2018. For a discussion of the MPFS rates, we refer readers to the CY 2018 MPFS final rule with comment
  period.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33660), for CY 2018, 
we proposed to designate one new CY 2018 CPT code for ASC covered 
surgical procedures as temporary office-based, as displayed in Table 36 
of the proposed rule. After reviewing the clinical characteristics, 
utilization, and volume of related procedure codes, we determined that 
the procedure described by this new CPT code would be predominantly 
performed in physicians' offices. However, because we had no 
utilization data for the procedure specifically described by this new 
CPT code, we proposed to make the office-based designation temporary 
rather than permanent, and we stated that we will reevaluate the 
procedure when data become available. The procedure for which the 
proposed office-based designation for CY 2018 is temporary was 
indicated by asterisks in Addendum AA to the proposed rule (which is 
available via the Internet on the CMS Web site).
    We did not receive any public comments on our proposal. Therefore, 
for CY 2018, we are finalizing our proposal, without modification, to 
designate CPT code 38222 as temporary office-based for CY 2018 as 
displayed in Table 85 of this final rule with comment period. The 
procedure for which the office-based designation for CY 2018 is 
temporary is indicated by asterisks in Addendum AA to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site).

Table 85--CY 2018 Payment Indicators for New CY 2018 CPT Codes for ASC Covered Surgical Procedures Designated as
                                             Temporary Office-Based
----------------------------------------------------------------------------------------------------------------
  CY 2017  OPPS/ASC  proposed                                                                      CY 2018  ASC
rule 5-digit  CMS  placeholder         CY 2018  CPT code            CY 2018 long descriptor          payment
             code                                                                                  indicator **
----------------------------------------------------------------------------------------------------------------
382X3.........................  38222.........................  Diagnostic bone marrow;                    P3 *
                                                                 biopsy(ies) and aspiration(s).
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** 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 2018. For a discussion of the MPFS rates, we refer readers to the CY 2018 MPFS final rule with comment
  period.


[[Page 59409]]

b. ASC Covered Surgical Procedures To Be Designated as Device-Intensive
(1) Background
    As discussed in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79739 through 79740), we implemented a payment methodology for 
calculating the ASC payment rates for covered surgical procedures that 
are designated as device-intensive. Under Sec.  416.171(b)(2) of the 
regulations, we define an ASC device-intensive procedure as a procedure 
with a HCPCS code-level device offset of greater than 40 percent when 
calculated according to the standard OPPS APC ratesetting methodology.
    According to this 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 calculate the service portion of the ASC payment for 
device-intensive procedures by applying the uniform ASC conversion 
factor to the service (non-device) 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.
    We also finalized that device-intensive procedures will 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.
    In addition, in the CY 2017 OPPS/ASC final rule with comment 
period, we adopted a policy for new HCPCS codes describing procedures 
involving the implantation of medical devices that do not yet have 
associated claims data, 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 (81 FR 79739 through 79740). 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 will 
be applied to the code if the HCPCS code device offset is greater than 
40 percent, according to our policy of determining device-intensive 
status, by calculating the HCPCS code-level device offset.
(2) Changes to List of ASC Covered Surgical Procedures Designated as 
Device-Intensive for CY 2018
    In the CY 2018 OPPS/ASC proposed rule, for CY 2018, we proposed to 
update the ASC list of covered surgical procedures that are eligible 
for payment according to our device-intensive procedure payment 
methodology, reflecting the proposed individual HCPCS code device-
offset percentages based on CY 2016 OPPS claims and cost report data 
available for the proposed rule (82 FR 33660).
    The ASC covered surgical procedures that we proposed to designate 
as device-intensive, and therefore subject to the device-intensive 
procedure payment methodology for CY 2018, are assigned payment 
indicator ``J8'' and were included in Addendum AA to the proposed rule 
(which is available on the CMS Web site). The CPT code, the CPT code 
short descriptor, the proposed CY 2018 ASC payment indicator, 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: A few commenters 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 did not propose to change to lower the ASC device 
offset threshold and, therefore, are not accepting this request. We 
note that we addressed a similar comment in the CY 2017 OPPS/ASC final 
rule with comment period, and we refer readers to our response (81 FR 
79739).
    Comment: One commenter requested that CMS designate CPT code 55X87 
(which is replaced by CPT code 55874 in this final rule with comment 
period and effective January 1, 2018) as a device-intensive procedure 
in the ASC. The commenter stated that the procedure described by CPT 
code 55874 requires the implantation of an expensive device which 
represents an approximate range of 80 to 87 percent of the procedure 
cost.
    Response: When claims data are available for a new procedure 
requiring the implantation of a medical device, device-intensive status 
will be applied to the code if the HCPCS code level device offset is 
greater than 40 percent, according to our finalized policy of 
determining device-intensive status by calculating the HCPCS code-level 
device offset (81 FR 79658). With respect to CPT code 55874, although 
the CPT code is new, the procedure itself was previously described by 
two predecessor codes, HCPCS code C9743 and CPT code 0438T, for which 
we have claims data. Therefore, based on our analysis of the OPPS 
claims data used to determine the packaged device costs attributed to 
the predecessor HCPCS codes, CPT code 55874 is not eligible for device-
intensive status because the device offset for its predecessor codes 
are below the 40 percent threshold. For more information on how codes 
are designated as device-intensive status, we refer readers to section 
IV.B. (Device-Intensive Procedures) of this final rule with comment 
period.
    Comment: Commenters requested that CMS designate CPT code 0275T, a 
procedure described as percutaneous image guided lumbar decompression 
(PILD) for lumbar spinal stenosis, as a device-intensive procedure 
until claims data become available. Commenters stated that, beginning 
in CY 2017, PILD is the only procedure reported with CPT code 0275T. In 
addition, to ensure CMS collects robust data on the cost of the device, 
one commenter requested that CMS establish a specific device code.
    Response: As discussed in section IV.B.2 of this final rule with 
comment period, claims data for CPT code 0275T shows that the 
percentage of packaged device cost is below the 40 percent threshold; 
therefore, it is not eligible for designation as a device-intensive 
procedure. CPT code 0275T was implemented as a payable code in the OPPS 
and ASC settings on July 1, 2011 (July 2011 OPPS Update, Transmittal 
2234, Change Request 7443). We are unclear why a separate device code 
is needed if PILD is the only procedure reported with CPT code 0275T.
    Comment: One commenter requested that CMS designate CPT code 67027 
(Implant eye drug system) as a device-intensive procedure in the ASC.

[[Page 59410]]

    Response: CPT code 67027 does not have a device offset that is 
greater than 40 percent. Accordingly, it is not device-intensive under 
current policy.
    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 2018. The CPT code, the CPT code short 
descriptor, the final CY 2018 ASC payment indicator, 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 2018 
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. Specifically, the OPPS policy that was in effect through 
CY 2013 provided a reduction in 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 (77 FR 68356 
through 68358). 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 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 2018 OPPS/ASC proposed rule (82 FR 33661), we proposed to 
update the list of ASC covered device-intensive procedures that would 
be subject to the no cost/full credit and partial credit device 
adjustment policy for CY 2018. 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 2018. For CY 2018, 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

[[Page 59411]]

is furnished without cost or with full credit. In addition, for CY 
2018, 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
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33661), 
we conducted a review of HCPCS codes that currently are paid under the 
OPPS, but not included on the ASC list of covered surgical procedures, 
to determine if changes in technology and/or medical practice affected 
the clinical appropriateness of these procedures for the ASC setting. 
Based on this review, we proposed to update the list of ASC covered 
surgical procedures by adding three procedures to the list for CY 2018. 
These procedures included procedures described by CPT codes 22856, 
22858, and 58572. We determined that these three procedures are 
separately paid under the OPPS, would not be expected to pose a 
significant risk to beneficiary safety when performed in an ASC, and 
would not be expected to require active medical monitoring and care of 
the beneficiary at midnight following the procedure. Therefore, we 
proposed to include these three procedures on the list of ASC covered 
surgical procedures for CY 2018.
    The procedures that we proposed to add to the ASC list of covered 
surgical procedures, including the HCPCS code long descriptors and the 
proposed CY 2018 payment indicators, were displayed in Table 37 of the 
proposed rule. We invited public comments on our proposals.
    Comment: Some commenters supported adding the three procedures 
described by CPT codes 22856, 22858, and 58572 to the ASC list of 
covered surgical procedures. These commenters believed that all three 
procedures met the criteria to be added to the ASC list of covered 
surgical procedures.
    Response: We appreciate the commenters' support. As indicated later 
in this section, we are finalizing our proposal to add these procedures 
to the ASC list of covered surgical procedures.
    Comment: One commenter suggested that including the procedures 
described by CPT codes 22856, 22858, and 58572 on the ASC list of 
covered surgical procedures would allow physicians to inappropriately 
direct patients to receive these procedures in an ASC setting with 
which they have a financial relationship rather than an inpatient 
hospital setting, and thereby jeopardize patient access to these 
procedures in an inpatient setting.
    Response: We do not believe that including the procedures described 
by CPT codes 22856, 22858, and 58572 on the ASC list of covered 
surgical procedures would lead to inappropriate shifting of patients to 
the ASC setting or jeopardize access to these procedures in an 
inpatient hospital setting. We believe the decision regarding the most 
appropriate care setting for a given surgical procedure is made by the 
physician based on the beneficiary's individual clinical needs and 
preferences. In addition, as discussed in the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74377 and 74378), section 
1832(a)(2)(F)(i) of the Act provides that benefits under Medicare Part 
B include payment for facility services furnished in connection with 
surgical procedures specified by the Secretary that are performed in an 
ASC. Under 42 CFR 416.2 and 416.166 of the Medicare regulations, 
subject to certain exclusions, we define covered surgical procedures as 
those procedures which are separately paid under the OPPS, 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. We 
believe it is appropriate and necessary to include procedures that meet 
these criteria on the list of ASC covered surgical procedures for 
Medicare patients who may be suitable candidates to undergo these 
procedures in an ASC setting.
    After consideration of the public comments we received, we are 
finalizing our proposal to add the three procedures described by CPT 
codes 22856, 22858, and 58572 to the ASC list of covered surgical 
procedures. The procedures that we are adding to the ASC list of 
covered surgical procedures, including the code long descriptors and 
the final CY 2018 payment indicators, are displayed in Table 86 below.

 Table 86--Additions to the List of ASC Covered Surgical Procedures for
                                 CY 2018
------------------------------------------------------------------------
                                                           CY 2018  ASC
     CY 2018  CPT code        CY 2018 long descriptor        payment
                                                            indicator
------------------------------------------------------------------------
22856.....................  Total disc arthroplasty                  J8
                             (artificial disc),
                             anterior approach,
                             including discectomy with
                             end plate preparation
                             (includes osteophytectomy
                             for nerve root or spinal
                             cord decompression and
                             microdissection); single
                             interspace, cervical.
22858.....................  Total disc arthroplasty                  N1
                             (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).
58572.....................  Laparoscopy, surgical, with              G2
                             total hysterectomy, for
                             uterus greater than 250g.
------------------------------------------------------------------------

e. Discussion of Comment Solicitation on Adding Additional Procedures 
to the ASC Covered Procedures List
    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 IPO 
list for possible inclusion on the ASC list of covered surgical 
procedures.
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45679 through 45681), 
we solicited comments regarding whether the TKA procedure described by 
CPT code 27447 should be removed from the OPPS IPO list. During the 
comment period, some stakeholders requested that CMS also add the TKA 
procedure to the list of surgical procedures covered in an ASC setting. 
In the CY 2017 OPPS/ASC proposed rule, we solicited public

[[Page 59412]]

comments on removing the TKA procedure from the OPPS IPO list for CY 
2017. However, in the CY 2018 OPPS/ASC proposed rule (82 FR 33643 
through 33644), we proposed to remove the TKA procedure from the OPPS 
IPO list for CY 2018, as discussed in section IX. of both the proposed 
rule and this final rule with comment period. In light of the public 
comments we received on the CY 2017 OPPS/ASC proposed rule (81 FR 79697 
through 79699) and our proposal to remove the TKA procedure from the 
OPPS IPO list for CY 2018, in the CY 2018 OPPS/ASC proposed rule, we 
solicited public comments on whether the TKA procedure should also be 
added to the ASC list of covered surgical procedures. We also invited 
public comments on our proposed continued exclusion of CPT code 55866 
(Laparoscopy, surgical prostatectomy, retropubic radical, including 
nerve sparing, includes robotic assistance, when performed) from the 
list of ASC covered surgical procedures.
    In considering whether or not the TKA procedure should be added to 
the ASC list of covered surgical procedures, we requested that 
commenters take into consideration the regulations at 42 CFR 416.2 and 
416.166. We indicated that commenters should assess, for example, 
whether this procedure would be expected to pose a significant risk to 
beneficiary safety when performed in an ASC, whether standard medical 
practice dictates that the beneficiary would typically be expected to 
require active medical monitoring and care at midnight following the 
procedure (``overnight stay''), and whether this procedure would fall 
under our general exclusions for covered surgical procedures at 42 CFR 
416.166(c) (for example, would it generally result in extensive blood 
loss, require major or prolonged invasion of body cavities, directly 
involve major blood vessels, among others).
    As discussed in the CY 2018 OPPS/ASC proposed rule, we evaluated 
each of the procedures described by CPT codes 27447 and 55866 that we 
proposed to remove from the OPPS IPO list for CY 2018 according to the 
criteria for inclusion on the list of ASC covered surgical procedures, 
and considered whether they should be added to the list of ASC covered 
surgical procedures for CY 2018. We stated that, because our 
understanding is that these procedures typically require more than 24 
hours of active medical care following the procedure, we believed they 
should continue to be excluded from the list of ASC covered surgical 
procedures.
    In addition, in the CY 2018 OPPS/ASC proposed rule, we solicited 
comments on whether CPT codes 27125 (Hemiarthroplasty, hip, partial 
(eg, femoral stem prosthesis, bipolar arthroplasty)) and 27130 
(Arthroplasty, acetabular and proximal femoral prosthetic replacement 
(total hip arthroplasty), with or without autograft or allograft) meet 
the criteria to be removed from the OPPS IPO list, as discussed in 
section IX. of the proposed rule. As noted in that section, we also 
solicited comments on whether these two procedures meet the criteria to 
be added to the ASC covered surgical procedures list.
    Comment: In addition to the comments CMS received as to whether CPT 
codes 27447, 27125, 27130, and 55866 should be removed from the OPPS 
IPO list, several commenters suggested that these procedures should be 
added to the ASC covered surgical procedures list. The commenters 
argued that many ASCs are equipped to perform these procedures and 
orthopedic surgeons in ASCs are increasingly performing these 
procedures safely and effectively on non-Medicare patients and 
appropriate Medicare patients. They also noted that CPT code 27446 
(Arthroplasty, knee, condyle and plateau; medial or lateral 
compartment) is a similar procedure that is currently included on the 
list of ASC covered surgical procedures. In addition, the commenters 
also stated that adding TKA and partial and total hip arthroplasty 
procedures to the ASC covered surgical procedures list allows for 
greater choices in care settings for Medicare patients and would 
provide a more patient-centered approach to joint arthroplasty 
procedures. Further, commenters stated that, in some cases, it may be 
safer to have joint arthroplasty procedures performed in an outpatient 
setting to prevent certain hospital-acquired infections.
    Some commenters suggested a stepwise approach to transitioning TKA 
to the ASC setting and recommended allowing performance of 1 to 2 years 
in the hospital outpatient department setting before adding TKA to the 
ASC covered surgical procedures list. Other commenters recommended that 
ASCs obtain enhanced certification from a national accrediting 
organization that certifies an ASC meets higher quality standards to 
safely perform joint arthroplasty procedures.
    Some commenters opposed adding procedures described by CPT codes 
27447, 27125, 27130, and 55866 to the ASC covered surgical procedures 
list. These commenters believed that the vast majority of ASCs are not 
equipped to safely perform these procedures on patients and that the 
vast majority of Medicare patients are not suitable candidates to 
receive ``overnight'' joint arthroplasty procedures in an ASC setting.
    Response: We appreciate the feedback we received as to whether TKA, 
partial and total hip replacement procedures meet the criteria to be 
added to the ASC covered surgical procedures list. For CY 2018, we are 
not removing CPT codes 27125 and 27130 from the OPPS IPO list. While we 
are finalizing our proposal to remove CPT codes 27447 and 55866 from 
the OPPS IPO list for CY 2018, we are not adding these procedures to 
the ASC covered surgical procedures list for CY 2018. We solicited 
comments on whether to add these procedures to the ASC list of covered 
surgical procedures, and we will take the suggestions and 
recommendations into consideration for future rulemaking.
    Comment: Many commenters requested that CMS add certain CPT codes 
that are outside of the 10000-69999 CPT code surgical range. These 
codes are shown in Table 87 below and included gastrointestinal 
diagnostic procedures, chemotherapy, cardiac catheterization 
procedures, and cardiac diagnostic procedures, as well as other 
cardiology procedures.

Table 87--Procedures Requested by Commenters for Addition to the CY 2018
                List of ASDC Covered Surgical Procedures
------------------------------------------------------------------------
     CY 2018  CPT/HCPCS  code             CY 2018 short descriptor
------------------------------------------------------------------------
23470.............................  Reconstruct shoulder joint.
23472.............................  Reconstruct shoulder joint.
27702.............................  Reconstruct ankle joint.
27703.............................  Reconstruction ankle joint.
91010.............................  Esophagus motility study.
91013.............................  Esophgl motil w/stim/perfus.
91020.............................  Gastric motility studies.
91022.............................  Duodenal motility study.
91030.............................  Acid perfusion of esophagus.
91034.............................  Gastroesophageal reflux test.
91035.............................  G-esoph reflx tst w/electrod.
91037.............................  Esoph imped function test.
91038.............................  Esoph imped funct test > 1hr.
91040.............................  Esoph balloon distension tst.
91110.............................  Gi tract capsule endoscopy.
91111.............................  Esophageal capsule endoscopy.
91112.............................  Gi wireless capsule measure.
91117.............................  Colon motility 6 hr study.
91120.............................  Rectal sensation test.
91122.............................  Anal pressure record.
92920.............................  Prq cardiac angioplast 1 art.
92921.............................  Prq cardiac angio addl art.
92924.............................  Prq card angio/athrect 1 art.
92925.............................  Prq card angio/athrect addl.
92928.............................  Prq card stent w/angio 1 vsl.
92929.............................  Prq card stent w/angio addl.
92937.............................  Prq revasc byp graft 1 vsl.
92938.............................  Prq revasc byp graft addl.

[[Page 59413]]

 
92960.............................  Cardioversion electric ext.
92973.............................  Prq coronary mech thrombect.
92978.............................  Endoluminl ivus oct c 1st.
92979.............................  Endoluminl ivus oct c ea.
93312.............................  Echo transesophageal.
93313.............................  Echo transesophageal.
93315.............................  Echo transesophageal.
93316.............................  Echo transesophageal.
93451.............................  Right heart cath.
93452.............................  Left hrt cath w/ventrclgrphy.
93453.............................  R&l hrt cath w/ventriclgrphy.
93454.............................  Coronary artery angio s&i.
93455.............................  Coronary art/grft angio s&i.
93456.............................  R hrt coronary artery angio.
93457.............................  R hrt art/grft angio.
93458.............................  L hrt artery/ventricle angio.
93459.............................  L hrt art/grft angio.
93460.............................  R&l hrt art/ventricle angio.
93461.............................  R&l hrt art/ventricle angio.
93462.............................  L hrt cath trnsptl puncture.
93463.............................  Drug admin & hemodynmic meas.
93505.............................  Biopsy of heart lining.
93530.............................  Rt heart cath congenital.
93531.............................  R & l heart cath congenital.
93532.............................  R & l heart cath congenital.
93533.............................  R & l heart cath congenital.
93563.............................  Inject congenital card cath.
93564.............................  Inject hrt congntl art/grft.
93565.............................  Inject l ventr/atrial angio.
93566.............................  Inject r ventr/atrial angio.
93567.............................  Inject suprvlv aortography.
93568.............................  Inject pulm art hrt cath.
93600.............................  Bundle of his recording.
93602.............................  Intra-atrial recording.
93603.............................  Right ventricular recording.
93612.............................  Intraventricular pacing.
93613.............................  Electrophys map 3d add-on.
93620.............................  Electrophysiology evaluation.
93621.............................  Electrophysiology evaluation.
93622.............................  Electrophysiology evaluation.
93623.............................  Stimulation pacing heart.
93624.............................  Electrophysiologic study.
93650.............................  Ablate heart dysrhythm focus.
93653.............................  Ep & ablate supravent arrhyt.
93654.............................  Ep & ablate ventric tachy.
93655.............................  Ablate arrhythmia add on.
93656.............................  Tx atrial fib pulm vein isol.
93657.............................  Tx l/r atrial fib addl.
96413.............................  Chemo iv infusion 1 hr.
96415.............................  Chemo iv infusion addl hr.
0237T.............................  Trluml perip athrc brchiocph.
0398T.............................  Mrgfus strtctc les abltj.
C9600.............................  Perc drug-el cor stent sing.
C9601.............................  Perc drug-el cor stent bran.
C9602.............................  Perc d-e cor stent ather s.
C9603.............................  Perc d-e cor stent ather br.
C9604.............................  Perc d-e cor revasc t cabg s.
C9605.............................  Perc d-e cor revasc t cabg b.
------------------------------------------------------------------------

    Response: We reviewed all of the codes that commenters requested 
for addition to the ASC list of covered surgical procedures. Of the 
codes requested for addition to the ASC list, we did not consider 
procedures that are reported by CPT codes that are on the OPPS IPO 
list. Codes that are on the OPPS IPO list for CY 2018 are not eligible 
for addition to the ASC list of covered surgical procedures.
    As we discussed in section XII.A.3. of this final rule with comment 
period, we solicited public comments regarding our definition of a 
surgical procedures and whether services described by Category I CPT 
codes outside of the surgical range (10000-69999), or Level II HCPCS 
codes or Category III CPT codes that do not directly crosswalk and are 
not clinically similar to procedures in the CPT surgical range, may 
nonetheless be appropriate to include as covered surgical procedures 
that are payable when furnished in the ASC setting. We did not propose 
any revisions to our definition of covered surgical procedures, and, 
for CY 2018, we continue to use the current definition of surgical 
procedure.
    We appreciate the commenters' recommendations for procedures that 
may be suitable candidates to include on the list of ASC covered 
surgical procedures. We acknowledge that some of the procedures may be 
``surgery-like.'' However, we remain concerned that these procedures 
may impose a significant safety risk to the Medicare population in an 
ASC setting. For CY 2018, we continue to rely on defining surgical 
procedures as those that are described by Category I CPT codes within 
the surgical range, or Level II HCPCS codes or Category III CPT codes 
that directly crosswalk or are clinically similar to procedures in the 
CPT surgical range. Therefore, we do not believe that the remaining 
codes should be added to the list of ASC covered surgical procedures 
for CY 2018 because they do not meet our criteria for inclusion on the 
list. However, we will take these comments into consideration in future 
rulemakings.

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, 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 the application of the office-based designation.
    The rate calculation established for device-intensive procedures 
(payment indicator ``J8'') is structured so that the packaged device 
payment amount is the same as under the OPPS, and only the service 
portion of the rate is subject to the ASC standard ratesetting 
methodology. In the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79732 through 79753), we updated the CY 2016 ASC payment rates for 
ASC covered surgical procedures with payment indicators of ``A2'', 
``G2'', and ``J8'' using CY 2015 data, consistent with the CY 2017 OPPS 
update. We also updated payment rates for device-intensive procedures 
to incorporate the CY 2017 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 2018 MPFS proposed and 
final rules) or the amount calculated using the ASC standard rate 
setting methodology for the procedure. In the CY 2017 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 2017 rate for each of the office-based procedures, calculated 
according to the ASC standard rate setting methodology, to the MPFS 
nonfacility PE RVU-based amount to determine which was lower and, 
therefore, would be the CY 2017 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.

[[Page 59414]]

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 since CY 2014.
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33663), we proposed to 
update ASC payment rates for CY 2018 and subsequent years using the 
established rate calculation methodologies under Sec.  416.171 and 
using our definition of device-intensive procedures, as discussed in 
section XII.C.1.b. of the proposed rule. Because the proposed OPPS 
relative payment weights are based on geometric mean costs, 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 to calculate payment rates for office-based procedures 
(payment indicators ``P2'', ``P3'', and ``R2'') and device-intensive 
procedures (payment indicator ``J8'') according to our established 
policies and, for device-intensive procedures, using our modified 
definition of device-intensive procedures, as discussed in section 
XII.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 rate setting methodology and the 
payment amount for the device portion based on the proposed CY 2018 
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 2018 MPFS 
nonfacility PE RVU-based amount or the proposed CY 2018 ASC payment 
amount calculated according to the ASC standard ratesetting 
methodology.
    As we did for CYs 2014 through 2017, for CY 2018, 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: A few commenters objected to the proposed payment 
indicator of ``G2'' (Non-office-based surgical procedure) for CPT code 
0465T (Suprachoroidal injection of a pharmacologic agent (does not 
include supply of medication)) and requested that CMS designate it an 
office-based procedure. The commenters noted CMS' recognition of CPT 
code 0465T as an office-based procedure in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79735).
    Response: We agree with the commenters that CPT code 0465T is an 
office-based procedure. Therefore, we are modifying our proposal to 
assign CPT code 0465T to payment indicator ``R2'' for CY 2018.
    Comment: One commenter requested that CMS use the CY 2016 ASC 
payment rates for six procedures to set the CY 2018 ASC payment rate 
for the same procedures. The specific procedures include:
     CPT 62321 (Cervicothoracic epidural);
     CPT 62323 (Lumbosacral epidural);
     CPT 64490 (Cervicothoracic facet joint injection);
     CPT 64493 (Lumbosacral facet joint injection);
     CPT G0620 (Sacroiliac joint injection); and
     CPT 62264 (Percutaneous adhesiolysis).
    Response: We are required by law to review and update the data on 
which we establish payment rates on an annual basis. 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 are updating ASC payment rates 
for CY 2018 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 generally 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 2018 payment rates for ASC covered surgical procedures according 
to our established methodologies using the modified definition of 
device-intensive procedures. For those covered office-based surgical 
procedures where the payment rate is the lower of the final rates under 
the ASC standard ratesetting methodology and the MPFS nonfacility PE 
RVU-based amount, the final payment indicators and rates set forth in 
this final rule with comment period are based on a comparison using the 
MPFS PE RVUs and conversion factor effective January 1, 2018. For a 
discussion of the MPFS rates, we refer readers to the CY 2018 MPFS 
final rule with comment period.
2. Payment for Covered Ancillary Services
a. Background
    Our payment policies under the 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

[[Page 59415]]

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 the CY 2018 OPPS/ASC 
proposed rule). Thus, our 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 (``Z3''), 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 ASC payment system policies (72 FR 42502 and 42508 
through 42509; 42 CFR 416.164(b)). Under the 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 (non-device) 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 a reference to diagnostic services 
and those for which the payment is based on the MPFS nonfacility PE 
RVU-based amount be assigned payment indicator ``Z3,'' and revised the 
definition of payment indicator ``Z3'' to include a reference to 
diagnostic services.
b. Payment for Covered Ancillary Services for CY 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33663), for CY 2018 
and subsequent years, 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 
2018 OPPS and ASC payment rates and subsequent year payment rates. We 
also proposed to continue to set the CY 2018 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 
2018 and subsequent year payment rates.
    Covered ancillary services and their proposed payment indicators 
for CY 2018 were listed in Addendum BB to the proposed rule (which is 
available via the Internet on the CMS Web site). For those covered 
ancillary services where the payment rate is the lower of the proposed 
rates under the ASC standard rate setting methodology and the MPFS 
proposed rates, the proposed payment indicators and rates set forth in 
the proposed rule were based on a comparison using the proposed MPFS 
rates effective January 1, 2018. For a discussion of the MPFS rates, we 
referred readers to the CY 2018 MPFS proposed rule that is available on 
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    We did not receive public comments on our proposals regarding 
payment for covered ancillary services. Therefore, we are finalizing 
these policies as proposed for CY 2018.

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

[[Page 59416]]

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 2018
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2018 by March 1, 2017, the due date published in the CY 
2017 OPPS/ASC final rule with comment period (81 FR 79748).
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 2018. 
The final ASC payment adjustment amount for NTIOLs for CY 2018 is $50.
4. Announcement of CY 2019 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 2019, 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 1, 2018. 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 the CY 2017 OPPS/ASC final 
rule with comment period, we responded to public comments and finalized 
the ASC treatment of all codes that were 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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79748 
through 79749), for CY 2017 and subsequent years, we finalized our 
policy to continue using the current comment indicators of ``NP'' and 
``CH''.

2. ASC Payment and Comment Indicators

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33665), 
for CY 2018, there are proposed new and revised Category I and III CPT 
codes as well as new and revised Level II HCPCS codes. Therefore, 
proposed 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 2018 compared to the CY 2017 
descriptors that were included in ASC Addenda AA and BB to the proposed 
rule are labeled with proposed new comment indicator ``NP'' to indicate 
that these CPT and Level II HCPCS codes were open for comment as part 
of the proposed rule. Comment indicator ``NP'' in the proposed rule 
meant a new code for the next calendar

[[Page 59417]]

year or an existing code with substantial revision to its code 
descriptor in the next calendar year, as compared to current calendar 
year; and denotes that comments will be accepted on the proposed ASC 
payment indicator for the new code.
    We stated in the proposed rule that we will respond to public 
comments on ASC payment and comment indicators and finalize their ASC 
assignment in the CY 2018 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 2018 update.
    We did not receive any public comments on the ASC payment and 
comment indicators. Therefore, we are finalizing their use as proposed 
without modification. Addenda DD1 and DD2 to this final rule with 
comment period (which are available via the Internet on the CMS Web 
site) contain the complete list of ASC payment and comment indicators 
for the CY 2018 update.

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 costs 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: 
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2013/b13-01.pdf). In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 
through 49963), we implemented the use of the CBSA delineations issued 
by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index beginning 
in FY 2015. In the CY 2015 OPPS/ASC final rule with comment period (79 
FR 66937), we finalized a 1-year transition policy that we applied in 
CY 2015 for all ASCs that experienced any decrease in their actual wage 
index exclusively due to the implementation of the new OMB 
delineations. This transition does not apply in CY 2018.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB

[[Page 59418]]

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/sites/whitehouse.gov/files/omb/bulletins/2015/15-01.pdf.
    OMB Bulletin No. 15-01 made changes that are relevant to the IPPS 
and ASC wage index. We refer readers to the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79750) for a discussion of these changes and 
our implementation of these revisions.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33667), 
for CY 2018, the proposed CY 2018 ASC wage indexes fully reflect the 
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: A few 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), CY 2015 (79 FR 
66937), CY 2016 (80 FR 70499), and CY 2017 (81 FR 79750) OPPS/ASC 
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).
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2018 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 2018 OPPS/ASC proposed rule (82 FR 33667), we 
proposed to scale the CY 2018 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 2016, we 
proposed to compare the total payment using the CY 2017 ASC relative 
payment weights with the total payment using the CY 2018 ASC relative 
payment weights to take into account the changes in the OPPS relative 
payment weights between CY 2017 and CY 2018. We proposed to use the 
ratio of CY 2017 to CY 2018 total payments (the weight scalar) to scale 
the ASC relative payment weights for CY 2018. The proposed CY 2018 ASC 
weight scalar was 0.8995 and scaling would apply to the ASC relative 
payment weights of the covered surgical procedures, covered ancillary 
radiology services, and certain diagnostic tests within the medicine 
range of CPT codes, which are covered ancillary services for which the 
ASC payment rates are based on OPPS relative payment weights.
    Scaling would not apply in the case of ASC payment for separately 
payable covered ancillary services that have a predetermined national 
payment amount (that is, their national ASC payment amounts are not 
based on OPPS relative payment weights), such as drugs and biologicals 
that are separately paid or services that are contractor-priced or paid 
at reasonable cost in ASCs. Any service with a predetermined national 
payment amount would be included in the ASC budget neutrality 
comparison, but scaling of the ASC relative payment weights would not 
apply to those services. The ASC payment weights for those services 
without predetermined national payment amounts (that is, those services 
with national payment amounts that would be based on OPPS relative 
payment weights) would be scaled to eliminate any difference in the 
total payment between the current year and the update year.
    For any given year's ratesetting, we typically use the most recent 
full calendar year of claims data to model budget neutrality 
adjustments. At the time of the proposed rule, we had available 98 
percent of CY 2016 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 2016 ASC claims by ASC and by HCPCS 
code. We used the National Provider Identifier for the purpose of 
identifying unique ASCs within the CY 2016 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.
    Comment: Several commenters requested that CMS not scale the ASC 
relative payment weights when calculating the final CY 2018 ASC

[[Page 59419]]

payment rates. Some commenters requested that if CMS must apply a 
weight scalar, as an alternative, CMS make a one-time adjustment to 
restore the historical relativity between the OPPS and ASC setting at 
65 percent.
    Response: We note that applying the weight scalar in calculation of 
ASC payment rates ensures that the ASC payment system remains budget 
neutral. For a more detailed discussion on why we apply a budget 
neutrality adjustment to the ASC ratesetting methodology, we refer 
readers to the August 2, 2007 final rule (72 FR 42531 through 42533). 
We refer the commenters to that discussion for our detailed response in 
promulgating the scaling policy that was initially applied in CY 2009 
to maintain budget neutrality of the ASC payment system. The ASC weight 
scaling methodology is consistent with the OPPS methodology for scaling 
the relative payment weights and the increased payment differentials 
between the ASC and OPPS payments for the same services are not, for 
the most part, attributable to scaling ASC relative payment weights. 
With respect to the relativity between the OPPS and the ASC payment 
system, we recognize that the relativity has declined from 65 percent 
in 2008 to 56 percent in 2017. We believe this change in relativity is 
based on a number of factors, including the addition of new surgical 
procedures in both payment settings, packaged payment policies, device-
intensive policies, and the advent of the C-APC policy, which was 
implemented under the OPPS effective January 1, 2015, but could not be 
implemented in the ASC system, given systems limitations in ASC claims 
processing because ASC claims are submitted on the professional claim 
and are not processed by the same system as hospital claims. Further, 
the absence of cost data from ASCs makes it difficult to determine what 
an appropriate relativity between the two payment systems would be. 
That is, without cost data from ASCs, we are unable to determine 
precisely how ASC costs compare to those of hospitals paid under the 
OPPS. We note that the commenters did not provide any empirical 
evidence to support increasing ASC payment rates relative to OPPS 
payment rates.
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 final rule with comment 
period (81 FR 79751 through 79753), we finalized our policy 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 2018, we calculated the proposed adjustment for the ASC payment 
system by using the most recent CY 2016 claims data available and 
estimating the difference in total payment that would be created by 
introducing the proposed CY 2018 ASC wage indexes. Specifically, 
holding CY 2016 ASC utilization, service-mix, and the proposed CY 2018 
national payment rates after application of the weight scalar constant, 
we calculated the total adjusted payment using the CY 2017 ASC wage 
indexes (which would fully reflect the new OMB delineations) and the 
total adjusted payment using the proposed CY 2018 ASC wage indexes. 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 2017 ASC wage indexes to the total adjusted payment 
calculated with the proposed CY 2018 ASC wage indexes and applied the 
resulting ratio of 1.0004 (the proposed CY 2018 ASC wage index budget 
neutrality adjustment) to the CY 2017 ASC conversion factor to 
calculate the proposed CY 2018 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

[[Page 59420]]

1833(i)(2)(D)(iv) of the Act, we would reduce the annual update by 2.0 
percentage points for an ASC that fails to submit quality information 
under the rules established by the Secretary in accordance with section 
1833(i)(7) of the Act. Section 1833(i)(2)(D)(v) of the Act, as added by 
section 3401(k) of the Affordable Care Act, requires that the Secretary 
reduce the annual update factor, after application of any quality 
reporting reduction, by the MFP adjustment, and states that application 
of the MFP adjustment to the annual update factor after application of 
any quality reporting reduction may result in the update being less 
than zero for a year. If the application of the MFP adjustment to the 
annual update factor after application of any quality reporting 
reduction would result in an MFP-adjusted update factor that is less 
than zero, the resulting update to the ASC payment rates would be 
negative and payments would decrease relative to the prior year. We 
refer readers to the CY 2011 OPPS/ASC final rule with comment period 
(75 FR 72062 through 72064) for examples of how the MFP adjustment is 
applied to the ASC payment system.
    For the proposed rule, based on IHS Global Inc.'s (IGI's) 2017 
first quarter forecast with historical data through the fourth quarter 
of 2016, for the 12-month period ending with the midpoint of CY 2018, 
the CPI-U update was projected to be 2.3 percent. Also, based on IGI's 
2017 first quarter forecast, the MFP adjustment for the period ending 
with the midpoint of CY 2018 was projected to be 0.4 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 2018 OPPS/ASC proposed rule (82 FR 33668), for CY 2018, 
we proposed to reduce the CPI-U update of 2.3 percent by the MFP 
adjustment of 0.4 percentage point, resulting in an MFP-adjusted CPI-U 
update factor of 1.9 percent for ASCs meeting the quality reporting 
requirements. Therefore, we proposed to apply a 1.9 percent MFP-
adjusted CPI-U update factor to the CY 2017 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 2.3 percent by 2.0 percentage points for ASCs that do 
not meet the quality reporting requirements and then apply the 0.4 
percentage point MFP adjustment. Therefore, we proposed to apply a -0.1 
percent MFP-adjusted CPI-U update factor to the CY 2017 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 2018 CPI-U update and MFP 
adjustment), we would use such data, if appropriate, to determine the 
CY 2018 ASC update for the final rule with comment period.
    For CY 2018, we proposed to adjust the CY 2017 ASC conversion 
factor ($45.003) by the proposed wage index budget neutrality factor of 
1.0004 in addition to the MFP-adjusted CPI-U update factor of 1.9 
percent discussed above, which resulted in a proposed CY 2018 ASC 
conversion factor of $45.876 for ASCs meeting the quality reporting 
requirements. For ASCs not meeting the quality reporting requirements, 
we proposed to adjust the CY 2017 ASC conversion factor ($45.003) by 
the proposed wage index budget neutrality factor of 1.0004 in addition 
to the quality reporting/MFP-adjusted CPI-U update factor of -0.1 
percent discussed above, which resulted in a proposed CY 2018 ASC 
conversion factor of $44.976.
    We invited public comments on these proposals.
    Comment: Numerous commenters urged CMS to update ASC payment rates 
using the same update factor as hospital outpatient departments, which 
is the IPPS hospital market basket. Commenters argued that because the 
ASC relative weights are derived from the OPPS weights, the same annual 
update factor that is used for the OPPS should also be used for ASCs. 
Commenters stated that the use of different update indices has 
contributed to the divergence in payments between the HOPD and ASC 
setting. Several commenters cited findings from a 2013 Ambulatory 
Surgery Center Association (ASCA) study (with cost savings analysis 
produced by the University of California-Berkeley) that found ASCs 
saved the Medicare program and its beneficiaries $7.5 billion during 
the 4-year period from 2008 to 2011 over what would have been paid if 
care had been provided in other settings. The study also projected that 
ASCs have the potential to save the Medicare system an additional $57.6 
billion over the next decade ``if policymakers take steps to encourage 
the use of these innovative healthcare facilities within the Medicare 
system.'' \34\
---------------------------------------------------------------------------

    \34\ ASCA. Medicare Cost Savings Tied to Ambulatory Surgery 
Centers with Cost Analysis done by Nicholas C. Petris University of 
California-Berkeley Center on Health Care Markets and Consumer 
Welfare. September 2013. Available at: http://www.ascassociation.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=7b33b916-f3f1-42e5-a646-35cc2f38fe4d&forceDialog=0.
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    One commenter, a trade association representing several ASCs noted 
that surgical care in too many markets continues to be provided 
predominantly in hospitals, which the commenter attributed to 
Medicare's failure to pay competitive rates to ASCs. The commenter 
asserted that this lack of migration comes at a high price to the 
Medicare program, the taxpayers who fund it, and the beneficiaries who 
needlessly incur higher out-of-pocket expenses. This commenter also 
noted that the hospital market basket is comprised of data that 
reflects the cost of items and services necessary to furnish an 
outpatient surgical procedure, such as compensation, utilities, labor-
related services and non-labor related services. In addition, in 
response to the comment solicitation on ASC payment reform (including 
the collection of cost data), described later in this section, this 
commenter stated its willingness to work with the Secretary to 
collaborate on ideas and asserted its belief that that the same types 
of costs that apply to the hospital outpatient department are also 
present in the ASC, but that it did not know if they are weighted the 
same. This commenter welcomed the opportunity to discuss how ASCs might 
potentially use a simple, cost-effective survey, perhaps voluntary in 
nature, that calculates expense categories as a percentage of total 
expenses to help determine the appropriate weights and price proxies 
for the ASC setting. The commenter noted that ``a complicating factor, 
however, remains the heterogeneity of the ASC model--the range of size 
and specialty care varies greatly from one ASC to the next.''
    Commenters also made the following arguments in support of 
replacing the CPI-U with the hospital market basket:
     The CPI-U does not accurately represent the costs borne by 
ASC facilities to furnish surgical services. Approximately 8.5 percent 
of the CPI-U inputs are directly related to health care, yet the CPI-U 
is based on consumer experience purchasing health care rather than a 
provider's experience necessary to furnish a health care service.

[[Page 59421]]

     ASCs are one of few remaining Medicare payment systems 
tied to the CPI-U. Most other systems use indices derived from the 
basket of goods those providers purchase (for example, ESRD PPS uses 
ESRD bundled market basket; FQHC PPS uses Medicare Economic Index; IPPS 
and OPPS uses the hospital market basket).
     The hospital market basket is a more accurate reflection 
of ASC costs because it is comprised of data that reflects the cost of 
items and services necessary to furnish an outpatient surgical 
procedure, such as compensation, utilities, labor-related services and 
nonlabor-related services.
    MedPAC objected to the proposed 1.9 percent update based on CPI-U 
and recommended that CMS not update payments to ASCs in 2018, 
consistent with its recommendation to Congress in the March 2017 Report 
to the Congress. MedPAC contended that, because indicators of payment 
adequacy for ASCs--capacity and supply of providers, volume of 
services, access to capital, payment to providers per fee-for-service 
beneficiary--are positive, and in light of the importance of 
maintaining financial pressure on providers to constrain costs, the 
proposed 1.9 percent update is unnecessarily high. While MedPAC 
acknowledged that the CPI-U likely does not reflect ASC's cost 
structure because the CPI-U is heavily weighted for factors that have a 
relatively small effect on ASCs such as housing and transportation, it 
commented that it understood that the method for arriving at the 
proposed 1.9 percent CPI-U update is mandated by law. MedPAC strongly 
urged CMS to collect cost data from ASCs to better assess payment 
adequacy to ASCs.
    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; 
80 FR 70501; and 81 FR 79752), 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 may also not be well aligned with the 
cost structures of ASCs. While there are some similarities between the 
cost structure of hospitals and ASCs, hospitals provide a wider range 
of services, such as room and board and emergency services, and the 
costs associated with providing these services do not appear to be 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.
    Nonetheless, we recognize that ASCs may incur some of the same 
costs that hospitals incur and share the commenters' concern that the 
disparity in payments between the OPPS and ASC payment systems may 
affect migration from the HOPD setting to the less costly ASC setting. 
To the extent that it is clinically appropriate for a beneficiary to 
receive services in a lower cost setting, we believe it would be 
appropriate to continue to develop payment incentives and remove 
payment disincentives to facilitate this choice. We will continue to 
monitor access to services, such as by reviewing utilization in 
different settings and soliciting stakeholder input, to ascertain the 
degree to which choices are available. While there are several factors 
that contribute to the divergence in payment between the two systems, 
certain of which are identified in the comment solicitation on ASC 
payment reform, we believe that an alternative update factor could be a 
mitigating step to address the differential between OPPS and ASC 
payment. In other words, to the extent that the CPI-U has been lower 
than the hospital market basket, we believe this difference or gap has 
contributed to the difference between payments for services when they 
are provided by an ASC or a HOPD. Additionally, we believe that, in 
response to our proposal and comment solicitation, commenters have 
raised an important issue that merits consideration given the 
Administration's priorities, particularly those seeking to promote and 
improve affordability and accessibility of care. For example, under 
Executive Order 13813 (issued October 12, 2017), entitled 
``Presidential Executive Order Promoting Healthcare Choice and 
Competition Across the United States,'' ``it shall be the policy of the 
executive branch, to the extent consistent with law, to facilitate . . 
. the development and operation of a healthcare system that provides 
high-quality care at affordable prices for the American people'' and 
the Administration shall ``continue to focus on promoting competition 
in healthcare markets and limiting excessive consolidation throughout 
the healthcare system.'' \35\
---------------------------------------------------------------------------

    \35\ Available at: https://www.gpo.gov/fdsys/pkg/FR-2017-10-17/pdf/2017-22677.pdf.
---------------------------------------------------------------------------

    While MedPAC recommends a zero percent update, we do not believe 
that such update would serve to promote competition in health care 
markets and it could hinder ASCs' ability to provide services to 
Medicare beneficiaries at a lower cost than HOPDs. We know that the 
differential in payments between hospitals paid under the OPPS and the 
ASC has increased from approximately 65 percent in 2008 to 
approximately 56 percent in 2017. Accordingly, we plan to study this 
issue further to ensure ASCs can continue to offer lower cost surgical 
services to Medicare beneficiaries.
    With respect to MedPAC's comment about collecting cost data and 
comments from ASCs expressing a willingness to work with CMS to share 
data in a way that balances administrative risk with the benefit of 
collecting such data, we will take these comments under advisement for 
future consideration, as discussed in greater detail in the comment 
solicitation section below. For the reasons stated above, we are 
finalizing our proposal to use the CPI-U update factor to update ASC 
rates for CY 2018. However, given the many comments supporting 
alternative update methodologies, such as the hospital market basket, 
and given our interest in site neutrality and the efficiency of care in 
the ASC setting, we intend to explore this issue further.
    After consideration of the public comments we received, we are 
finalizing our proposal to apply our established methodology for 
determining the final CY 2018 ASC conversion factor. Using more 
complete CY 2016 data for this final rule with comment period than were 
available for the proposed rule, we calculated a wage index budget 
neutrality adjustment of 1.0007. Based on IGI's 2017 third quarter 
forecast, the CPI-U for the 12-month period ending with the midpoint of 
CY 2018 is now projected to be 1.7 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 0.5 
percent, resulting in an MFP-adjusted CPI-U update factor of 1.2 
percent for ASCs that meet the quality reporting requirements. The 
final ASC conversion factor of $45.575, for ASCs that meet the quality 
reporting requirements, is the product of the CY 2017 conversion factor 
of $45.003 multiplied by the wage index budget neutrality adjustment of 
1.0007 and the MFP-adjusted CPI-U payment update of 1.2 percent. For 
ASCs that do not meet the quality reporting requirements, we are 
reducing the CPI-U update of 1.7 percent by 2.0 percentage points and 
then we are applying the 0.5 percentage point MFP adjustment, resulting 
in a -0.8 percent MFP adjusted CPI-U update factor for CY 2018. The 
final

[[Page 59422]]

ASC conversion factor of $44.663 for ASCs that do not meet the quality 
reporting requirements is the product of the CY 2017 conversion factor 
of $45.003 multiplied by the wage index budget neutrality adjustment of 
1.0007 and the MFP-adjusted CPI-U payment update of -0.8 percent.
3. Discussion of Comment Solicitation on ASC Payment Reform
a. Historical Perspective
    In 1982, Medicare implemented the ASC benefit to provide payment to 
ASCs to perform certain covered surgical procedures.\36\ ASCs were 
recognized by Medicare as a less costly alternative to hospital 
inpatient care given differences in patient acuity and specialization 
of services, which promotes efficient and cost-effective delivery of 
care. Medicare's initial payment rates to ASCs were based on ASC 
historical cost and charge data from 1979 and 1980 collected from 
approximately 40 ASCs and used to establish four facility payment rate 
groups (55 FR 4527).
---------------------------------------------------------------------------

    \36\ Omnibus Reconciliation Act of 1980 (ORA), Public Law 96-
499, 934(b), 94 Stat. 2599, 2637 (codified, as amended, at 42 U.S.C. 
1395l(i)).
---------------------------------------------------------------------------

    The ASC facility payment rate was set as a standard overhead amount 
based on CMS' (known then as the Health Care Financing Administration 
(HCFA)) estimate of a fair fee, taking into account the costs incurred 
by ASCs generally in providing facility services in connection with the 
performance of a specific procedure. The Report of the Conference 
Committee accompanying section 934 of the Omnibus Budget Reconciliation 
Act of 1980 (Pub. L. 96-499), which enacted the ASC benefit in December 
1980, states, ``This overhead factor is expected to be calculated on a 
prospective basis . . . utilizing sample survey and similar techniques 
to establish reasonable estimated overhead allowances for each of the 
listed procedures which take account of volume (within reasonable 
limits)'' (H.R. Rep. No 7479, 96th Cong., 2nd Sess. 134 (1980)).
    In 1987, we updated the ASC facility payment rates for the first 
time since 1982. The updated rates were based on the projected increase 
in the CPI-U from September 1982 to January 1988. CMS (then, HCFA) 
rebased payments to ASCs in 1990, relying on a survey of 1986 ASC cost, 
charge, and utilization data. The ASC payments were updated annually 
based on the 1986 cost data until implementation of the revised ASC 
payment system in 2008.
    Congress directed the GAO to conduct a study comparing the relative 
costs of procedures furnished in ASCs to those furnished in HOPDs paid 
under the OPPS, including examining the accuracy of the APC codes, with 
respect to surgical procedures furnished in ASCs. On November 30, 2006, 
the GAO published the statutorily mandated report entitled, ``Medicare: 
Payment for Ambulatory Surgical Centers Should Be Based on the Hospital 
Outpatient Payment System'' (GAO-07-86).\37\ As directed by section 
626(d) of Public Law 108-173, the report included recommendations on 
the following issues:
---------------------------------------------------------------------------

    \37\ Available at: http://www.gao.gov/assets/260/253992.pdf.
---------------------------------------------------------------------------

    1. Appropriateness of using groups of covered services and relative 
weights established for the OPPS as the basis of payment for ASCs.
    2. If the OPPS relative weights are appropriate for this purpose, 
whether the ASC payments should be based on a uniform percentage of the 
payment rates or weights under the OPPS, or should vary, or the weights 
should be revised based on specific procedures or types of services.
    3. Whether a geographic adjustment should be used for ASC payment 
and, if so, the labor and nonlabor shares of such payment.
    We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (71 FR 42474) for a detailed summary of the GAO's methodology, 
results, and recommendations. Notably, based on the findings from the 
study, the GAO recommended that CMS implement a payment system for 
procedures performed in ASCs based on the OPPS, taking into account the 
lower relative costs of procedures performed in ASCs compared to HOPDs 
in determining ASC payment rates.
    We considered the report's methodology, findings, and 
recommendations implementing the current ASC payment system, effective 
in 2008 (71 FR 42474). Consistent with statutory requirements and the 
GAO's recommendations, we finalized policies to implement a revised ASC 
payment system based on the OPPS resource costs and relativity of 
service offerings.
    The payment system for ASC facility services was designed as a 
prospective payment system to pay all procedures included in an APC a 
standard rate. Under a prospective payment system, payment is set to 
reflect the average cost to furnish a service. That is, some cases may 
be more costly than the average while others may be less costly. This 
type of payment system inherently provides incentives for each facility 
to be more efficient.
    MedPAC conducts an annual review of the ASC payment system and 
submits its findings and recommendations in a report to Congress. As 
part of this review, MedPAC examines indicators such as beneficiaries' 
access to care, capacity and supply of providers, and volume of 
services, in part to assess the adequacy of Medicare payments to ASCs. 
Based on its analysis of indicators of payment adequacy, in its March 
2017 Report to Congress, MedPAC found that the number of Medicare-
certified ASCs had increased, beneficiaries' use of ASCs had increased, 
and access to capital has been adequate. As a result, for CY 2018, 
MedPAC stated that payments to ASCs are adequate and recommended that 
no payment update should be given for 2018 (that is, the update factor 
would be 0 percent). In addition, MedPAC recommended that Congress 
require ASCs to report cost data to enable the Commission to examine 
the growth of ASCs' costs over time and analyze Medicare payments 
relative to the costs of efficient providers, which would help inform 
decisions about the ASC update. Also, while MedPAC is concerned that 
the CPI-U may not reflect ASCs' cost structure, until cost information 
is available from ASCs, MedPAC cannot determine whether an alternative 
update factor would be more appropriate.\38\
---------------------------------------------------------------------------

    \38\ MedPAC. March 2017 Report to Congress. Chapter 5 
``Ambulatory Surgical Center Services''. Available at: http://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch5.pdf?sfvrsn=0.
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b. Solicitation of Comments
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33668), we stated that 
we are broadly interested in feedback, including recommendations and 
ideas for ASC payment system reform. We recognize that ASCs provide a 
critically important access point to beneficiaries who may be too ill 
or have the need for too complicated a procedure to be treated in the 
physician office setting, but for whom hospital care is either not 
medically necessary or undesirable. The current ASC payment system was 
implemented in 2008 and major revisions have not been made since that 
time. Average ASC payment rates have declined relative to OPPS payments 
rates over the past 10 years, from 65 percent of average OPPS rates in 
CY 2008 to 56 percent (as proposed) of average OPPS rates in CY 2018. 
However, in the absence of ASC-specific cost data, it is difficult, if 
not impossible, to determine whether ASC facility payment rates are in 
line with

[[Page 59423]]

ASC facility resource costs and the impact on beneficiary access to 
care.
    With respect to the update factor that is applied to ASC payments, 
section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary has 
not updated the payment 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, except in the absence of any update, when 
it requires the payment amounts to be increased by the increase in the 
CPI-U.
    CMS adopted a policy, 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). 
This update factor is adjusted by the productivity adjustment described 
in section 1886(b)(3)(B)(xi)(II) of the Act, as required by section 
1833(i)(2)(D)(v) of the Act. In the CY 2018 OPPS/ASC proposed rule, we 
solicited comments on the ASC payment system update factor and 
indicated that we are interested in data from ASCs that would help 
determine whether the ASC payment system should continue to be updated 
by the CPI-U, or by an alternative update factor, such as the hospital 
market basket, the Medicare Economic Index, and a blend of update 
factors or other mechanism. The hospital market basket update is 
typically higher than the CPI-U, while the Medicare Economic Index is 
typically lower. Because the rate update is not applied in a budget 
neutral manner, applying a higher update factor would be a cost to the 
Medicare program while applying a lower update factor would result in 
savings to the Medicare program. As mentioned above, in the absence of 
an alternative update, the Act requires payments to ASCs to be 
increased in an amount equal to the percentage increase in the CPI-U.
    With respect to the ASC update, in its March 2017 Report to 
Congress, MedPAC stated that ASCs have a much higher share of expenses 
for supplies and drugs than do hospitals or physician offices, a much 
smaller share of employee compensation costs than hospitals, and a 
smaller share of all other costs (such as rent) than physician offices. 
In the proposed rule, we sought public comments on information related 
to ASC costs for items such as supplies, drugs, employee compensation, 
rent, and other inputs, as compared to those of hospitals or physician 
offices, including qualitative and quantitative data from ASCs. We 
stated that information on the cost structure of ASCs will help to 
identify an appropriate alternative update factor.
    In addition, we sought public comments on whether the Secretary 
should collect cost data from ASCs to use in determining ASC payment 
rates. To the extent commenters recommend that ASC cost data should be 
used in the determination of ASC payment rates, we sought comments on 
what specific method of cost collection commenters recommend (such as 
cost reports or a survey). We recognize that the submission of costs 
may be an administrative burden to ASCs, and we stated that we were 
interested in comments that detail how we could mitigate the burden of 
reporting costs on ASCs while also collecting enough data to reliably 
use such data in the determination of ASC costs. We noted that the 
ability to calculate ASC-specific costs may obviate the need for tying 
the ASC payment system to that of the OPPS. In addition, collecting 
cost data from ASCs could inform whether an alternative input price 
index would be an appropriate proxy for ASC costs or whether an ASC-
specific market basket should be developed.
    With respect to the ability to adopt payment policies that exist 
under the OPPS into the ASC payment system, as discussed in prior 
rulemaking, due to differences in the systems used to process claims 
for hospitals and ASCs, we were not able to implement certain OPPS 
payment policies in the ASC payment system, such as comprehensive APCs, 
conditional packaging, and the ``FD'' value modifier for device credits 
(79 FR 66923). ASC facilities report services on a professional claim 
(or CMS-1500) rather than an institutional claim (or UB-04) used by 
hospitals. The ASC claim form is processed in the Medicare Claims 
System (MCS), the same system used to process claims submitted by 
physicians and other clinicians, while hospital claims are processed 
through the Fiscal Intermediary Shared System (FISS). In part, because 
of differences in the claim form and the claims processing systems, it 
is not always possible to adopt OPPS payment policies into the ASC 
payment system. The resulting divergence in payment policies between 
the two systems may contribute to unintended disparities in payment 
rates for the same services. In the CY 2018 proposed rule, we stated 
that we were interested in stakeholder comments on whether billing on 
an institutional claim form rather than a professional claim form would 
address some of the issues affecting ASC payment reform.
    As noted earlier in this section, we stated we were broadly 
interested in feedback from stakeholders and other interested parties 
on potential reforms to the current ASC payment system, including, but 
not limited to (1) the rate update factor applied to ASC payments, (2) 
whether and how ASCs should submit costs, (3) whether ASCs should bill 
on the institutional claim form rather than the professional claim 
form, and (4) other ideas to improve payment accuracy for ASCs.
    Comment: Many commenters provided detailed comments and their 
feedback is summarized below.
     Rate update factor: The vast majority of commenters were 
in favor of applying the hospital market basket to update annual ASC 
payment. Commenters believed that because ASC provide the types of 
surgical services as hospitals that the hospital market basket is the 
most appropriate index. As an alternative to the hospital market 
basket, one commenter noted that there are other indices in the CPI and 
MEI that would be suitable to both the OPPS and ASC settings; for 
example, the CPI for medical care.
     Collection of cost data: One commenter stated that the 
same types of costs that apply to HOPDs also apply to ASCs, but they 
may not be weighted the same. The commenter offered to collaborate with 
CMS on ways to collect ASC cost information. For example, a simple, 
cost effective survey, perhaps voluntary, cost collection tool that 
calculates expense categories as a percentage of total expenses to help 
determine the appropriate weights and price proxies for the ASC 
setting. However, the commenter urged CMS to be mindful of imposing an 
excessive administrative burden. Commenters representing individual 
ASCs were generally opposed to submitting formal cost reports but 
expressed a willingness to complete a survey so long as it was not 
administratively burdensome.
    MedPAC recommended that CMS begin collecting new cost data and use 
that information to examine whether an existing Medicare price index is 
an appropriate proxy for the cost of ASC facilities or an ASC-specific 
market basket should be developed. MedPAC suggested that, to minimize 
burden on ASCs and CMS, CMS could require all ASCs to submit 
streamlined cost reports or require a random sample of ASCs to respond 
to annual surveys. For example, MedPAC recommended that CMS

[[Page 59424]]

collect cost data for items such as drugs, medical supplies (including 
costly implantable devices), medical equipment, employee compensation, 
building expenses (such as rent), and other professional services (such 
as legal, accounting, and billing services).
     Billing: One commenter noted that the major issues 
affecting the payment differential between the ASC and OPPS would not 
be fixed by billing on an institutional claim form.
    A few ASC facilities expressed support for requiring ASCs to bill 
on a UB-04 (institutional claim). These commenters stated they 
currently bill on a UB-04 for commercial payers and would benefit from 
a consistent claim form across all payers, especially for Medicare 
crossover claims. One commenter noted that billing on a UB-04 ``is not 
a foreign concept'' and that it warranted further exploration by CMS. A 
few commenters acknowledged that because not all ASCs currently bill on 
an UB-04, a transition period would be necessary to allow for 
successful implementation, though a suggested timeframe was not 
provided.
    MedPAC also recommended that CMS transition ASCs to billing on an 
UB-04. MedPAC stated that because the ASC payment system is closely 
linked to the OPPS, to fully align OPPS payment policies with the ASC 
payment system, ASCs and hospitals should use the same claim form. 
However, MedPAC suggested that implementation of a requirement to bill 
on an UB-04 and to submit cost data should be staggered.
     Payment relativity: Several commenters recommended that 
CMS discontinue applying the ``secondary scaling adjustment'' and 
instead to apply the OPPS relative weights to ASC services. In 
addition, commenters also recommended that CMS restore the historical 
relativity between the OPPS and ASC setting. Some commenters suggested 
a conservative relativity adjustment of 55 percent while others 
suggested 65 percent (CY 2008 ratio).
    Response: We will take the feedback on all of these potential ASC 
payment reform issues under advisement and consideration for future 
policymaking.
4. Display of CY 2018 ASC Payment Rates
    Addenda AA and BB to this final rule with comment period (which are 
available on the CMS Web site) display the final updated ASC payment 
rates for CY 2018 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, 2018. For a 
discussion of the MPFS rates, we refer readers to the CY 2018 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 2018 payment rates. Specifically, 
in Addendum AA, a ``Y'' in the column titled ``To be Subject to 
Multiple Procedure Discounting'' indicates that the surgical procedure 
will 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 2018. 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 ``Final CY 2018 Payment 
Weight'' are the final relative payment weights for each of the listed 
services for CY 2018. 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 2018 payment rate displayed in the ``Final 
CY 2018 Payment Rate'' column, each ASC payment weight in the ``Final 
CY 2018 Payment Weight'' column was multiplied by the final CY 2018 
conversion factor of $45.575. The final 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 2018 Payment Weight'' column for items and services with 
predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Final CY 2018 Payment'' column displays 
the final CY 2018 national unadjusted ASC payment rates for all items 
and services. The final CY 2018 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 2017.
    Addendum EE provides the HCPCS codes and short descriptors for 
surgical procedures that are to be excluded from payment in ASCs for CY 
2018.

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. Consistent with 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 is generally aligned with 
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

[[Page 59425]]

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)). We note that 
2018 is the last year of the PQRS payment adjustment. Beginning in 
2019, eligible clinicians may be subject to upward or downward payment 
adjustments under the Merit-based Incentive Payment System (MIPS) or be 
able to earn a positive payment incentives through participation in 
certain advanced alternative payment models (APMs) under the Quality 
Payment Program (QPP) (81 FR 77008);
     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 that link payment to performance, including the Hospital 
Value-Based Purchasing (VBP) Program; the Hospital-Acquired Condition 
(HAC) Reduction Program; and the End-Stage Renal Disease (ESRD) Quality 
Incentive Program (QIP); and the Quality Payment Program (QPP).
    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 for conditions with 
reported wide cost and treatment variations despite established 
clinical treatment 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 
for our quality programs.
    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. We did not 
propose any changes to these policies.
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.
3. Regulatory History of the Hospital OQR Program
    We refer readers to the CY 2008 through 2017 OPPS/ASC final rules 
with comment period (72 FR 66860 through 66875; 73 FR 68758 through 
68779; 74 FR 60629 through 60656; 75 FR 72064 through 72110; 76 FR 
74451 through 74492; 77 FR 68467 through 68492; 78 FR 75090 through 
75120; 79 FR 66940 through 66966; 80 FR 70502 through 70526; and 81 FR 
79753 through 79797). We have also codified certain requirements under 
the Hospital OQR Program at 42 CFR 419.46. In the CY 2018 OPPS/ASC 
proposed rule (82 FR 33671), we proposed editorial changes to 42 CFR 
419.46, replacing the terms ``Web'' and ``Web site'' with the terms 
``web'' and ``website,'' respectively.
    We did not receive any comments on our proposal. Therefore, we are 
finalizing our changes to 42 CFR 419.46 as proposed, by replacing the 
terms ``Web'' and ``Web site'' with the terms ``web'' and ``website,'' 
respectively.

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality 
Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74458 through 74460) for a detailed discussion of the 
priorities we consider for the Hospital OQR Program quality measure 
selection. We did not propose any changes to our measure selection 
policy.
2. Accounting for Social Risk Factors in the Hospital OQR Program
    We understand that social risk factors such as income, education, 
race and ethnicity, employment, disability, community resources, and 
social support (certain factors of which are also sometimes referred to 
as socioeconomic status (SES) factors or socio-demographic status (SDS) 
factors) play a major role in health. One of our core objectives is to 
improve beneficiary outcomes including reducing health disparities, and 
we want to ensure that all beneficiaries, including those with social 
risk factors, receive high quality care. In addition, we seek to ensure 
that the quality of care furnished by providers and suppliers is 
assessed as fairly as possible under our programs while ensuring that 
beneficiaries have adequate access to excellent care.
    We have been reviewing reports prepared by the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) \39\ and the 
National Academies of Sciences, Engineering, and Medicine on the issue 
of measuring and accounting for social risk factors in CMS' value-based 
purchasing and quality reporting programs, and considering options on 
how to address the issue in these programs. On December 21, 2016, ASPE 
submitted a Report to Congress on a study it was required to conduct 
under section 2(d) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014. The study analyzed the effects of 
certain social risk factors of Medicare beneficiaries on quality 
measures and measures of resource use used in one or more of nine 
Medicare value-based purchasing programs.\40\ The report also included 
considerations for strategies to account for social risk factors in 
these programs. In a January 10, 2017 report released by the National 
Academies of Sciences, Engineering, and Medicine, that body provided 
various potential methods for measuring and accounting for social risk 
factors, including stratified public reporting.\41\
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    \39\ Office of the Assistant Secretary for Planning and 
Evaluation. 2016. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at: https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \40\ Ibid.
    \41\ National Academies of Sciences, Engineering, and Medicine. 
2017. Accounting for social risk factors in Medicare payment. 
Washington, DC: The National Academies Press.
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    As noted in the FY 2017 IPPS/LTCH PPS final rule, the NQF has 
undertaken a 2-year trial period in which new measures, measures 
undergoing maintenance review, and measures endorsed with the condition 
that they enter the trial period can be assessed to determine whether 
risk adjustment for selected social risk factors is appropriate

[[Page 59426]]

for these measures. This trial entailed temporarily allowing inclusion 
of social risk factors in the risk-adjustment approach for these 
measures. Since publication of the proposed rule, we have learned that 
the National Quality Forum (NQF) has concluded their initial trial on 
risk adjustment for quality measures.\42\ Based on the findings from 
the initial trial, we have been informed that the NQF intends to 
continue its work to evaluate the impact of social risk factor 
adjustment on intermediate outcome and outcome measures for an 
additional three years. We understand that the extension of this work 
will allow NQF to determine further how to effectively account for 
social risk factors through risk adjustment and other strategies in 
quality measurement.
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    \42\ NQF. NQF Initiative to Determine the Impact of Adjusting 
Healthcare Performance Measures for Social Risk Factors Highlights 
Successes, Opportunities. Available at: https://www.qualityforum.org/News_And_Resources/Press_Releases/2017/NQF_Initiative_to_Determine_the_Impact_of_Adjusting_Healthcare_Performance_Measures_for_Social_Risk_Factors_Highlights_Successes,_Opportunities.aspx.
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    As we continue to consider the analyses and recommendations from 
these reports and the results of the NQF trial on risk adjustment for 
quality measures, we are continuing to work with stakeholders in this 
process. As we have previously communicated, we are concerned about 
holding providers to different standards for the outcomes of their 
patients with social risk factors because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes 
for disadvantaged populations. Keeping this concern in mind, in the 
proposed rule we sought public comment on whether we should account for 
social risk factors in the Hospital OQR Program, and if so, what method 
or combination of methods would be most appropriate for accounting for 
social risk factors. Examples of methods include: Confidential 
reporting to providers of measure rates stratified by social risk 
factors; public reporting of stratified measure rates; and potential 
risk adjustment of a particular measure as appropriate based on data 
and evidence.
    In addition, we requested public comment on which social risk 
factors might be most appropriate for reporting stratified measure 
scores and/or potential risk adjustment of a particular measure. 
Examples of social risk factors include, but are not limited to, dual 
eligibility/low-income subsidy, race and ethnicity, and geographic area 
of residence. We requested comments on which of these factors, 
including current data sources where this information would be 
available, could be used alone or in combination, and whether other 
data should be collected to better capture the effects of social risk. 
We will take commenters' input into consideration as we continue to 
assess the appropriateness and feasibility of accounting for social 
risk factors in the Hospital OQR Program.
    We look forward to working with stakeholders as we consider the 
issue of accounting for social risk factors and reducing health 
disparities in CMS programs. Of note, implementing any of the above 
methods would be taken into consideration in the context of how this 
and other CMS programs operate (for example, data submission methods, 
availability of data, statistical considerations relating to 
reliability of data calculations, among others), so we also welcome 
comment on operational considerations. CMS is committed to ensuring 
that its beneficiaries have access to and receive excellent care, and 
that the quality of care furnished by providers and suppliers is 
assessed fairly in CMS programs.
    We received extensive comments in response to our request for 
public comments on whether we should account for social risk factors in 
the Hospital OQR Program, and if so, what method or combination of 
methods would be most appropriate for accounting for social risk 
factors.
    Comment: Many commenters supported CMS' effort to address social 
risk factors in the Hospital OQR Program, noting that social risk 
factors are powerful drivers of outcomes and requested that CMS adopt 
risk adjustment methodologies soon. Commenters also noted that lack of 
risk adjustment can contribute to disparities by diverting resources 
away from communities in need.
    One commenter specifically recommended risk adjustment in quality 
measurement in the psychiatric setting. Another commenter recommended 
that when identifying social risk factors, CMS consider the 
relationship with the outcome of interest, a risk factor's presence at 
the start of care, and whether it can be modified or manipulated 
through providers' actions. A third commenter noted that approaches to 
risk adjustment should be measure-specific.
    A few commenters recommended that CMS apply risk adjustment by 
stratifying providers into groups by proportion of patients that are at 
risk, noting that this approach does not require measure-level research 
and recommending that risk adjustment results be shared with providers. 
One commenter supported methodologies including providing confidential 
reporting of stratified measure rates to providers and risk adjustment 
of measures. Several commenters expressed concern with public reporting 
of risk adjusted data, while others recommended that publicly reported 
data specifically be risk adjusted.
    A few commenters noted concern that adjusting for social risk 
factors will not address the underlying disparities that are associated 
with poor health outcomes and could instead lead to masking these 
disparities. One commenter noted that using social risk factors may not 
be appropriate until it is clear how the information is collected and 
shared. One commenter recommended that any risk adjustment methodology 
adopted adhere to CMS' previously adopted standards of setting minimum 
case volumes and using confidence intervals. Some commenters noted that 
better data sources for socioeconomic status are needed, including 
patient-level and community-level data sources.
    Response: We appreciate all the comments and interest in this 
topic. As we have previously stated regarding risk adjustment of 
publicly reported data for these factors, we are concerned about 
holding providers to different standards for the outcomes of their 
patients with social risk factors, because we do not want to mask 
potential disparities or minimize incentives to improve outcomes for 
disadvantaged populations. With respect to public reporting, while we 
agree with commenters and believe it is important to avoid a scenario 
in which underlying disparities are masked rather than addressed, we 
also agree with commenters who support the public reporting of risk-
adjusted data. We appreciate the need to balance risk adjustment as a 
strategy to account for social risk factors with the concern that risk 
adjustment could minimize incentives and reduce efforts to address 
disparities for patients with social risk factors. We believe that the 
path forward should incentivize improvements in health outcomes for 
disadvantaged populations while ensuring that beneficiaries have access 
to excellent care.
    As with previous policies, we intend to follow our previously 
adopted standards for setting case minimums. We refer readers to the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68773 through 
68775) where we discuss these standards. In addition, we acknowledge 
that administrative claims data can be limited; we will investigate the 
feasibility and appropriateness of

[[Page 59427]]

additional data sources for obtaining patient and community-level data.
    We reiterate that we are committed to ensuring that CMS 
beneficiaries have access to and receive excellent care and that the 
quality of care furnished by providers and suppliers is assessed fairly 
in CMS programs. We thank the commenters, and we will consider their 
views as we develop further policy regarding social risk factors in the 
Hospital OQR Program.
    Comment: Many commenters recommended many factors to consider 
including: Body mass index; race; smoking status; age; sex; back pain; 
pain in non-operative lower extremity joint; health risk status; mental 
health factors; chronic narcotic use; socioeconomic status; pre-
procedure ambulatory status; literacy; marital status; live-in home 
support; family support structure; home health resources; patient 
travel distance; homelessness; community distress; unavoidable 
readmissions; readmission risks; and poverty; as well as access to 
health care, transportation, and healthy food.
    One commenter recommended that the following variables not be used: 
American Society of Anesthesiologists score; range of motion; or mode 
of patient-reported outcome measure collection. Several commenters 
supported the use of dual eligible status as a factor, while one 
commenter opposed it and noted concern that that it does not reflect 
the conditions where the hospital is located and that there are 
variations between States in dual eligibility status.
    Response: We appreciate commenters' recommendations regarding 
specific social risk factor variables and will consider them as we 
continue exploring options for accounting for social risk factors in 
the Hospital OQR Program.
    Comment: Several commenters recommended empirical testing to 
prioritize the national collection of data that are most essential for 
valid risk adjustment methodologies and that CMS focus on factors that 
have an empirically proven relationship to outcomes or processes of 
care metrics. Some commenters recommended that CMS consider 
recommendations from NQF, ASPE, the National Academy of Medicine, and 
the Agency for Healthcare Research and Quality (AHRQ). One commenter 
suggested that CMS engage providers and vendors in demonstration 
projects allowing collection of sociodemographic data elements in 
electronic health records. A few commenters recommended that testing 
and methodologies be made transparent. Some commenters also recommended 
that CMS monitor any unintended consequences that result from risk 
adjustment.
    Response: We plan to actively perform additional research and 
monitor for trends to prevent unintended consequences. We intend to 
conduct further analyses on the impact of different approaches to 
accounting for social risk factors in quality programs. In addition, we 
will consider the commenters' suggestion that we conduct empirical 
testing of risk-adjusted quality metrics, and assess the potential 
impact of the findings from such testing on the prioritization of 
national data collection, in relation to risk adjustment methodologies. 
We look forward to continuing to work with stakeholders such as NQF, 
ASPE, the National Academy of Medicine, and AHRQ.
    We thank commenters for their suggestion that we allow collection 
of sociodemographic data elements in electronic health records, but 
note that the Hospital OQR Program does not yet include eCQMs. Any 
testing and methodologies used would be made transparent through future 
rulemaking, which includes the public notice and comment process. 
Moreover, any proposals would be made in future rulemaking after 
further analysis, research, and continued stakeholder engagement.
    Comment: Several commenters recommended that CMS align across 
quality payment programs when accounting for social risk factors.
    Response: We thank the commenters for their feedback. We intend to 
investigate options for adjusting for social risk factors with 
continued consideration of alignment across programs.
    Comment: Several commenters asked that CMS consider the impact of 
socioeconomic data collection on the patient as well as on provider 
burden. A few commenters recommended that CMS consider potential 
administrative complexities as CMS develops social risk factor 
adjustment processes.
    Response: As we consider the feasibility of collecting patient-
level data and the impact of strategies to account for social risk 
factors through further analysis, we will also continue to evaluate the 
reporting burden on providers and patients.
    We thank all of the commenters for their input and will consider 
all suggestions as we continue to assess the issue of accounting for 
social risk factors within individual measures, the Hospital OQR 
Program as a whole, and across CMS quality programs.
3. Retention of Hospital OQR Program Measures Adopted in Previous 
Payment Determinations
    We previously adopted a policy to retain measures from the previous 
year's Hospital OQR Program measure set for subsequent years' measure 
sets in the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68471). Quality measures adopted in a previous year's rulemaking are 
retained in the Hospital OQR Program for use in subsequent years unless 
otherwise specified. We refer readers to that rule for more 
information. We did not propose any changes to our retention policy for 
previously adopted measures.
4. Removal of Quality Measures From the Hospital OQR Program Measure 
Set
a. Considerations in Removing Quality Measures From the Hospital OQR 
Program
    In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863), for the 
Hospital IQR Program, we finalized a process for immediate retirement, 
which we later termed ``removal,'' of Hospital IQR Program measures 
based on evidence that the continued use of the measure as specified 
raised patient safety concerns. We adopted the same immediate measure 
retirement policy for the Hospital OQR Program in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60634 through 60635). We refer 
readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68472 through 68473) for a discussion of our reasons for changing the 
term ``retirement'' to ``removal'' in the Hospital OQR Program. We 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. We did 
not

[[Page 59428]]

propose any changes to our measure removal policy.
b. Criteria for Removal of ``Topped-Out'' Measures
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period where we finalized our proposal to refine the criteria for 
determining when a measure is ``topped-out'' (79 FR 66942). We did not 
propose any changes to our ``topped-out'' criteria policy.
c. Removal of Quality Measures From the Hospital OQR Program Measure 
Set
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33673), we proposed to 
remove a total of six measures. Specifically, beginning with the CY 
2020 payment determination, we proposed to remove: (1) OP-21: Median 
Time to Pain Management for Long Bone Fracture; and (2) OP-26: Hospital 
Outpatient Volume Data on Selected Outpatient Surgical Procedures. In 
addition, beginning with the CY 2021 payment determination, we proposed 
to remove: (1) OP-1: Median Time to Fibrinolysis; (2) OP-4: Aspirin at 
Arrival; (3) OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional; and (4) OP-25: Safe Surgery Checklist. By 
removing these six measures, our intent is to alleviate the maintenance 
costs and administrative burden to hospitals associated with retaining 
them. While we proposed to remove two measures beginning with the CY 
2020 payment determination and four measures for the CY 2021 payment 
determination, in this final rule, we are finalizing removal of all six 
measures for the CY 2020 payment determination. These are discussed in 
detail below.
(1) Removal of OP-21: Median Time to Pain Management for Long Bone 
Fracture Beginning With the CY 2020 Payment Determination
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72088), where we adopted the OP-21: Median Time to Pain 
Management for Long Bone Fracture measure. This process of care measure 
assesses the median time from emergency department arrival to time of 
initial oral, nasal, or parenteral pain medication (opioid and non-
opioid) administration for emergency department patients with a 
principal diagnosis of long bone fracture (LBF).
    We have previously finalized a policy to note that 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). Accordingly, although 
it does not exactly meet one of the specific measure removal criteria 
finalized for the Hospital OQR Program (77 FR 68472 through 68473), it 
has the potential to lead to negative unintended consequences (removal 
factor #7). Therefore, we proposed to remove OP-21: Median Time to Pain 
Management for Long Bone Fracture for the CY 2020 payment determination 
and subsequent years due to the concerns described in more detail 
below.
    Given the growing body of evidence on the risks of opioid misuse, 
CMS has developed a strategy to impact the national opioid misuse 
epidemic by combating nonmedical use of prescription opioids, opioid 
use disorder, and overdose through the promotion of safe and 
appropriate opioid utilization, improved access to treatment for opioid 
use disorders, and evidence-based practices for acute and chronic pain 
management.\43\
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    \43\ CMS Opioid Misuse Strategy 2016. Available at: https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/Prescription-Drug-Information-for-Partners-Items/CMS-Opioid-Misuse-Strategy-2016.html.
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    Due to the potential for a misinterpretation of the intent of the 
measure, we are concerned that OP-21: Median Time to Pain Management 
for Long Bone Fracture may create undue pressure for hospital staff to 
prescribe more opioids. We note that the measure only assesses the time 
to initial, acute administration of pain medication in a specific acute 
clinical situation, and does not promote long-term pain medication 
prescriptions. In fact, this measure assesses an element of appropriate 
pain management, specifically the time to pain medication 
administration in the case of long bone fracture. In addition, the 
measure assesses the use of both opioid and nonopioid pain medications. 
While we acknowledge that pain control is an important issue for 
patients and clinical care, and the measure does not call for increased 
opioid prescriptions, many factors outside the control of CMS quality 
program requirements may contribute to the perception of a link between 
the measure and opioid prescribing practices. Although we are not aware 
of any scientific studies that support an association between this 
measure and opioid prescribing practices, out of an abundance of 
caution, we proposed to remove the measure in order to remove any 
potential ambiguity and to avoid misinterpretation of the intent of the 
measure. We also note that, in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79856), we removed 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 for the Hospital VBP Program for similar reasons. In addition, in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38342), we finalized 
refinements to the former pain management questions in the HCAHPS 
Survey measure for the Hospital IQR Program.
    We invited public comment on our proposal to remove the OP-21: 
Median Time to Pain Management for Long Bone Fracture measure for the 
CY 2020 payment determination and subsequent years as discussed above.
    Comment: Many commenters supported the removal of OP-21 for the CY 
2020 payment determination noting concern about the potential incentive 
to over prescribe opioids. One commenter applauded CMS' efforts to 
combat the opioid epidemic. A few commenters noted that the measure 
could be more appropriate or valuable if it were refined, for example 
to include oral pain medication or to ensure that it does not 
incentivize prescribing opioids. One commenter recommended that CMS 
remove the measure for the CY 2019 payment determination.
    Response: We disagree that it would be more appropriate to refine 
this measure. We do not believe that introducing a modified version of 
the measure would address our main concern regarding potential for 
misinterpretation of the intent of the measure because whether pain 
management is initiated, our main concern for misinterpretation, is 
what this measure is meant to assess. As stated in our proposal, many 
factors outside the control of CMS quality program requirements may 
contribute to the perception of a link between the measure and opioid 
prescribing practices. Although we are not aware of any scientific 
studies that support an association between this measure and opioid 
prescribing practices, out of an abundance of caution, we proposed to 
remove the measure in order to remove any potential ambiguity and to 
avoid misinterpretation of the intent of the measure. We note that due 
to operational limitations, we cannot remove the measure for the CY 
2019 payment determination. The CY 2020 payment determination (CY 2018 
data collection) is the earliest we can remove this measure from the 
program.
    Comment: One commenter did not support the proposal to remove OP-21 
and noted that there is a lack of evidence that the measure 
incentivizes overprescribing of opioids.

[[Page 59429]]

    Response: We acknowledge the commenter's concerns. As stated in our 
proposal, although we are not aware of any scientific studies that 
support an association between this measure and opioid prescribing 
practices, out of an abundance of caution, however, we believe it is 
important to remove the measure in order to remove any potential 
ambiguity and to avoid any misinterpretation of the intent of the 
measure. We want to ensure that the Hospital OQR Program measure set 
does not create any potential undue pressure for hospital staff to 
overprescribe opioids.
    After consideration of the public comments we received, we are 
finalizing the proposal to remove OP-21: Median Time to Pain Management 
for Long Bone Fracture for the CY 2020 payment determination and 
subsequent years, as proposed.
(2) Removal of OP-26: Hospital Outpatient Volume Data on Selected 
Outpatient Surgical Procedures Beginning With the CY 2020 Payment 
Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74468), where we adopted OP-26: Hospital Outpatient 
Volume Data on Selected Outpatient Surgical Procedures beginning with 
the CY 2014 payment determination. This measure, which is submitted via 
a web-based tool, collects surgical procedure volume data on eight 
categories of procedures frequently performed in the outpatient 
hospital setting.
    We believe there is a lack of evidence to support this measure's 
link to improved clinical quality. The measure requires hospitals to 
report on the volumes of surgical procedures performed at the 
facility.\44\ This information, number of surgical procedures, does not 
offer insight into the facilities' overall performance or quality 
improvement in regard to surgical procedures. Accordingly, this measure 
meets the following measure removal criterion: performance or 
improvement on a measure does not result in better patient outcomes (79 
FR 66941). We believe the burden of this measure, which is submitted 
via a web-based tool, outweighs the value, and, therefore, we proposed 
to remove OP-26: Hospital Outpatient Volume Data on Selected Outpatient 
Surgical Procedures for the CY 2020 payment determination and 
subsequent years. We also refer readers to section XIV.B.3.b.(3) of 
this final rule with comment period, where the ASCQR Program is 
finalizing the removal of a similar measure.
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    \44\ OP-26 Measure Information Form. Available at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FSpecsManualTemplate&cid=1228775748170.
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    We invited public comment on our proposal to removal the OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures measure for the CY 2020 payment determination and subsequent 
years as discussed above.
    Comment: Many commenters supported the removal of OP-26 for the CY 
2020 payment determination. One commenter recommended that CMS remove 
the measure for the CY 2019 payment determination.
    Response: We thank the commenters for their support and feedback. 
We note that due to operational limitations, we cannot remove the 
measure for the CY 2019 payment determination. The CY 2020 payment 
determination (CY 2018 data collection) is the earliest we can remove 
this measure from the program.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove OP-26: Hospital Outpatient Volume 
Data on Selected Outpatient Surgical Procedures for the CY 2020 payment 
determination and subsequent years, as proposed.
(3) Removal of OP-1: Median Time to Fibrinolysis Beginning With the CY 
2020 Payment Determination
    We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (referred to as ``ED-AMI-2--Median Time to Fibrinolysis'' in 72 
FR 66862 through 66865) where we adopted OP-1: Median Time to 
Fibrinolysis beginning with services furnished in CY 2009. This chart-
abstracted measure assesses the median time from ED arrival to 
administration of fibrinolytic therapy in ED patients with ST-segment 
elevation on the ECG performed closest to ED arrival and prior to 
transfer.
    We believe that this measure meets the following measure removal 
criterion--the availability of a measure that is more strongly 
associated with desired patient outcomes for the particular topic (79 
FR 66941). We note that the currently adopted OP-2: Fibrinolytic 
Therapy Received Within 30 Minutes of ED Arrival (72 FR 66862 through 
66865) has been designed with a threshold that is based on a clinical 
standard, allows us to measure this topic area, and provides meaningful 
and clinically relevant data on the receipt of fibrinolytic therapy. 
National guidelines recommend that fibrinolytic therapy be given within 
30 minutes of hospital arrival in patients with ST-segment elevation 
myocardial infarction.\45\ Because OP-1: Median Time to Fibrinolysis 
measures only the median time from door to needle and does not note 
whether or not that value exceeds the clinical best practice of 30 
minutes, we do not believe that reporting of OP-1 improves quality of 
care or patient outcomes. In addition, we believe that retaining OP-1: 
Median Time to Fibrinolysis would be redundant with OP-2: Fibrinolytic 
Therapy Received Within 30 Minutes of ED Arrival. As a result, we 
proposed to remove OP-1: Median Time to Fibrinolysis for the CY 2021 
payment determination and subsequent years. We note that although OP-1: 
Median Time to Fibrinolysis is a chart-abstracted measure, we do not 
expect removing this measure would reduce burden, as the data collected 
for this measure is required to calculate another program measure in 
the AMI measure set (OP-2: Fibrinolytic Therapy Received Within 30 
Minutes of ED Arrival) and will, therefore, continue to be collected 
even if the proposal to remove OP-1: Median Time to Fibrinolysis is 
finalized as proposed.
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    \45\ Antman EM, Hand M, Armstrong PW, Bates ER, Green LA, 
Halasyamani LK, et al. 2007 focused update of the ACC/AHA 2004 
Guidelines for the Management of Patients With ST-Elevation 
Myocardial Infarction: A report of the American College of 
Cardiology/American Heart Association Task Force on Practice 
Guidelines (Writing Group to Review New Evidence and Update the ACC/
AHA 2004 Guidelines for the Management of Patients With ST-Elevation 
Myocardial Infarction). Journal of the American College of 
Cardiology. 2008; 51:210-47.
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    We invited public comment on our proposal to remove OP-1: Median 
Time to Fibrinolysis for the CY 2021 payment determination and 
subsequent years as discussed above.
    Comment: Several commenters supported the proposal to remove OP-1: 
Median Time to Fibrinolysis for the CY 2021 payment determination. Some 
commenters supported the proposal to remove the measure, but 
recommended that it be removed as soon as possible. Many commenters 
supported the proposal to remove the measure, but recommended that it 
be removed beginning with the CY 2020 payment determination, one year 
earlier than proposed.
    Response: We thank the commenters for their support and feedback. 
While planning for the proposed rule, we did not believe we had the 
logistical capacity to support successful removal of all six measures 
at once from our systems. Upon further consideration however, we have 
determined it is, in fact, operationally feasible to remove OP-1 
beginning with the CY 2020 payment determination rather than the

[[Page 59430]]

CY 2021 payment determination as proposed. We believe that removing 
this measure one year earlier than proposed will reduce hourly and 
financial burden on hospital. Therefore, we agree that we should remove 
the measure as soon as possible.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove OP-1: Median Time to Fibrinolysis 
with modification. Instead of beginning with the CY 2021 payment 
determination as proposed, we are finalizing the removal of this 
measure for the CY 2020 payment determination and subsequent years, one 
year earlier than proposed.
(4) Removal of OP-4: Aspirin at Arrival Beginning With the CY 2020 
Payment Determination
    We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66862 through 66865) where we adopted OP-4: Aspirin at 
Arrival beginning with services furnished in CY 2009. This chart-
abstracted measure assesses the rate of patients with chest pain or 
possible heart attack who received aspirin within 24 hours of arrival 
or before transferring from the emergency department.
    We previously finalized two criteria for determining when a measure 
is ``topped out'' under the Hospital OQR Program: (1) When there is 
statistically indistinguishable performance at the 75th and 90th 
percentiles of national facility performance; and (2) when the 
measure's truncated coefficient of variation (COV) is less than or 
equal to 0.10 (79 FR 66942). Based on our analysis of Hospital OQR 
Program measure data, we have determined that performance on this 
measure is so high and unvarying that meaningful distinctions in 
improvement cannot be made; specifically, our analyses show that there 
is statistically indistinguishable performance at the 75th and 90th 
percentiles of national facility performance for this measure. These 
analyses are captured in the table below.

                                  OP-4--Aspirin at Arrival Topped Out Analysis
----------------------------------------------------------------------------------------------------------------
                                                     Number of         75th            90th
                   Encounters                        hospitals      percentile      percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2014.........................................           1,706          100.00          100.00           0.030
CY 2015.........................................           1,749          100.00          100.00           0.035
CY 2016.........................................           1,803          100.00          100.00           0.042
----------------------------------------------------------------------------------------------------------------

    As displayed in the table above, there is no distinguishable 
difference in hospital performance between the 75th and 90th 
percentiles under the OP-4: Aspirin at Arrival measure, and the 
truncated coefficient of variation has been below 0.10 since 2014. 
Therefore, this measure meets both ``topped out'' measure criteria for 
the ASCQR Program.
    Thus, we believe the burden of reporting this chart-abstracted 
measure is not justified by the value of retaining it in the program 
and we proposed to remove OP-4: Aspirin at Arrival from the program for 
the CY 2021 payment determination and subsequent years.
    We invited public comment on our proposal to remove the OP-4: 
Aspirin at Arrival measure for the CY 2021 payment determination and 
subsequent years as discussed above.
    Comment: Several commenters supported the removal of OP-4: Aspirin 
at Arrival for the CY 2021 payment determination. Some commenters 
supported the proposal to remove the measure, but recommended that it 
be removed as soon as possible. Many commenters supported the proposal 
to remove the measure, but recommended that it be removed beginning 
with the CY 2020 payment determination, one year earlier than proposed.
    Response: We thank the commenters for their support. While planning 
for the proposed rule, we did not believe we had the logistical 
capacity to support successful removal of all six measures at once from 
our systems. Upon further consideration, we have determined it is, in 
fact, operationally feasible to remove OP-4 beginning with the CY 2020 
payment determination rather than the CY 2021 payment determination as 
proposed. We believe that removing this measure one year earlier than 
proposed will reduce hourly and financial burden on hospitals. 
Therefore, we agree that we should remove the measure as soon as 
possible.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove OP-4: Aspirin at Arrival measure with 
modification. Instead of beginning with the CY 2021 payment 
determination as proposed, we are finalizing the removal of this 
measure for the CY 2020 payment determination and subsequent years, one 
year earlier than proposed.
(5) Removal of OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional Beginning With the CY 2020 Payment Determination
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72087 through 72088) where we adopted OP-20: Door to 
Diagnostic Evaluation by a Qualified Medical Professional for the CY 
2013 payment determination. This chart-abstracted measure assesses the 
time from ED arrival to provider contact for Emergency Department 
patients.
    During regular measure maintenance, specific concerns about OP-20: 
Door to Diagnostic Evaluation by a Qualified Medical Professional were 
raised by a Technical Expert Panel (TEP), comprised of experts 
representing a variety of stakeholders and was convened by a CMS 
contractor. These concerns include: (1) Limited evidence linking the 
measure to improved patient outcomes; (2) validity concerns related to 
wait times and the accuracy of door-to-door time stamps; and (3) 
potential for skewed measure performance due to disease severity and 
institution-specific confounders. After our own analysis, we agree with 
the TEP's analysis and believe that this measure meets the following 
measure removal criterion: Performance or improvement on a measure does 
not result in better patient outcomes. As a result, we believe the 
burden of continuing to include this chart-abstracted measure in the 
program outweighs the benefits; and thus, we proposed to remove OP-20: 
Door to Diagnostic Evaluation by a Qualified Medical Professional for 
the CY 2021 payment determination and subsequent years.
    We invited public comment on our proposal to remove OP-20: Door to 
Diagnostic Evaluation by a Qualified Medical Professional for the CY 
2021 payment determination and subsequent years as discussed above.
    Comment: Several commenters supported the proposal to remove OP-20: 
Door to Diagnostic Evaluation by a Qualified Medical Professional for 
the CY 2021 payment determination. Some commenters supported the 
proposal to remove the measure, but recommended that it be removed as 
soon as possible.

[[Page 59431]]

Many commenters supported the proposal to remove the measure, but 
recommended that it be removed beginning with the CY 2020 payment 
determination, one year earlier than proposed.
    Response: We thank the commenters for their support. While planning 
for the proposed rule, we did not believe we had the logistical 
capacity to support successful removal of all six measures at once from 
our systems. Upon further consideration, we have determined it is, in 
fact, operationally feasible to remove OP-20 beginning with the CY 2020 
payment determination rather than the CY 2021 payment determination as 
proposed. We believe that removing this measure one year earlier than 
proposed will reduce hourly and financial burden on hospitals. 
Therefore, we agree that we should remove the measure as soon as 
possible.
    Comment: A few commenters expressed concern that there are 
socioeconomic pressures that can vary by community that cause variation 
in performance on this measure. However, these commenters also noted 
the value of the measure and recommended that CMS consider a refined 
version of OP-20 that stratifies by hospital size and other factors 
related to measure performance.
    Response: We acknowledge the suggestion that OP-20 be refined to 
account for community factors that influence performance. While the TEP 
found a potential for skewed measure performance due to disease 
severity and institution-specific confounders, we do not believe 
modifying the measure to account for social risk factors will address 
our primary concern that the measure is not adequately tied to better 
patient outcomes. We thank the commenters for their recommendation, 
however; we will take these comments into consideration as we continue 
to review and refine the Hospital OQR Program measure set. In addition, 
we acknowledge the suggestion that OP-20 be refined to account for 
community factors that influence performance and note that the TEP 
found a potential for skewed measure performance due to disease 
severity and institution-specific confounders. However, modifying the 
measure to account for social risk factors in this or future rulemaking 
will not address our primary concern that the measure is not adequately 
tied to patient outcomes.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove OP-20: Door to Diagnostic Evaluation 
by a Qualified Medical Professional with modification. Instead of 
beginning with the CY 2021 payment determination as proposed, we are 
finalizing the removal of this measure for the CY 2020 payment 
determination and subsequent years, one year earlier than proposed.
(6) Removal of OP-25: Safe Surgery Checklist Use Beginning With the CY 
2020 Payment Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74464 through 74466), where we adopted OP-25: Safe 
Surgery Checklist Use beginning with the CY 2014 payment determination. 
This structural measure of hospital process assesses whether a hospital 
employed a safe surgery checklist that covered each of the three 
critical perioperative periods (prior to administering anesthesia, 
prior to skin incision, and prior to patient leaving the operating 
room) for the entire data collection period. Based on our review of 
reported data under the measure, this measure meets our first criterion 
for measure removal that measure performance is so high and unvarying 
that meaningful distinctions and improvements in performance can no 
longer be made.
    The Hospital OQR Program previously finalized two criteria for 
determining when a measure is ``topped out'': (1) When there is 
statistically indistinguishable performance at the 75th and 90th 
percentiles of national facility performance; and (2) when the 
measure's truncated coefficient of variation is less than or equal to 
0.10 (79 FR 66942). Our estimations indicate that performance on this 
measure is trending towards topped out status. This analysis is 
captured in the table below.

                             OP-25--Safe Surgery Checklist Use Performance Analysis
----------------------------------------------------------------------------------------------------------------
                                     Number of                         75th            90th
           Encounters                hospitals         Rate         percentile      percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2012.........................           3,227           0.910         100.000         100.000           0.314
CY 2013.........................           3,184           0.949         100.000         100.000           0.232
CY 2014.........................           3,177           0.963         100.000         100.000           0.196
CY 2015.........................           3,166           0.970         100.000         100.000           0.176
----------------------------------------------------------------------------------------------------------------

    Based on the analysis above, the national rate of ``Yes'' response 
for the OP-25 measure is nearly 1.0, or 100 percent, nationwide, and 
has remained at this level for the last two years. In addition, the 
truncated coefficient of variation has decreased such that it is 
trending towards 0.10 and there is no distinguishable difference in 
hospital performance between the 75th and 90th percentiles. We have 
previously stated 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 believe that removal of this measure from the 
Hospital OQR Program measure set is appropriate, as there is little 
room for improvement. We believe that safe surgical checklist is widely 
used and that hospitals will continue its use. In addition, removal of 
this measure would alleviate the administrative burden to hospitals 
associated with reporting on this measure. As such, we believe the 
reporting burden of this measure outweigh the benefits of keeping the 
measure in the Hospital OQR Program.
    Therefore, we proposed to remove OP-25: Safe Surgery Checklist Use 
for the CY 2021 payment determination and subsequent years. We refer 
readers to section XIV.B.3.b.(2) of this final rule with comment 
period, where the ASCQR Program is finalizing a proposal to remove a 
similar measure.
    We invited public comment on our proposal to remove the OP-25: Safe 
Surgery Checklist Use measure for the CY 2021 payment determination and 
subsequent years as discussed above.
    Comment: Several commenters supported the proposal to remove OP-25 
for the CY 2021 payment determination. Some commenters supported the 
proposal to remove the measure, but recommended removal as soon as 
possible. Many commenters supported the proposal to remove the measure, 
but recommended that it be removed beginning with the CY 2020 payment 
determination, one year earlier than proposed.
    Response: We thank the commenters for their support. While planning 
for the proposed rule, we did not believe we had the logistical 
capacity to support

[[Page 59432]]

successful removal of all six measures at once from our systems. Upon 
further consideration, we have determined it is, in fact, operationally 
feasible to remove OP-25 beginning with the CY 2020 payment 
determination rather than the CY 2021 payment determination as 
proposed. We believe that removing this measure one year earlier than 
proposed will reduce hourly and financial burden on hospitals. 
Therefore, we agree that we should remove the measure as soon as 
possible.
    Comment: A few commenters opposed the proposal to remove OP-25: 
Safe Surgery Checklist Use, noting that the measure adds value. One 
commenter recommended that CMS retain the measure until there is 
further evidence that the use of a safe surgery checklist is supporting 
effective perioperative communication.
    Response: As stated in our proposal, we believe that there is 
little room for improvement as shown by the data in our table above. In 
addition, removal of this measure would alleviate the maintenance costs 
and administrative burden to hospitals of data collection and 
reporting. While retaining the measure may add some nominal value, we 
believe that the burdens outweigh the benefits. In addition, in 
response to the suggestion that we retain the measure until there is 
further evidence that the use of a safe surgery checklist is supporting 
effective perioperative communication, we would like to make clear that 
high performance on OP-25: Safe Surgery Checklist Use is not intended 
to indicate whether perioperative communication among team members is 
effective; this measure is not specified to assess the effectiveness of 
a team's communication, only whether a safe surgery checklist is used. 
Therefore, we do not believe continuing to collect--or, conversely, 
ceasing to collect--data under this measure will assess or affect the 
effectiveness of perioperative communication within Hospital Outpatient 
Departments.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove OP-25: Safe Surgery Checklist Use 
with modification. Instead of beginning with the CY 2021 payment 
determination as proposed, we are finalizing the removal of this 
measure for the CY 2020 payment determination and subsequent years, one 
year earlier than proposed.
5. Delay of OP-37a-e: Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based 
Measures Beginning With the CY 2020 Payment Determination
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period where we adopted OP-37a-e (81 FR 79771 through 79784), and 
finalized data collection and data submission timelines (81 FR 79792 
through 79794). These measures assess patients' experience with care 
following a procedure or surgery in a hospital outpatient department by 
rating patient experience as a means for empowering patients and 
improving the quality of their care.
    In CY 2018 OPPS/ASC proposed rule (82 FR 33675), we proposed to 
delay implementation of the Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based 
Measures OP-37a-e beginning with the CY 2020 payment determination 
(2018 data collection) and subsequent years. Since our adoption of 
these measures, we have come to believe that we need to collect more 
operational and implementation data. Specifically, we want to ensure 
that the survey measures appropriately account for patient response 
rates, both aggregate and by survey administration method; reaffirm the 
reliability of national implementation of OAS CAHPS Survey data; and 
appropriately account for the burden associated with administering the 
survey in the outpatient setting of care. We note that commenters 
expressed concern over the burden associated with the survey in the CY 
2017 OPPS/ASC final rule with comment period (81 FR 79777). We believe 
that the voluntary national implementation of the survey, which began 
in January 2016, would provide valuable information moving forward.\46\ 
We plan to conduct analyses of the national implementation data to 
undertake any necessary modifications to the survey tool and/or CMS 
systems. We believe it is important to allow time for any modifications 
before requiring the survey under the Hospital OQR Program. However, we 
continue to believe that these measures address an area of care that is 
not adequately addressed in our current measure set and will be useful 
to assess aspects of care where the patient is the best or only source 
of information. Further, we continue to believe these measures will 
enable objective and meaningful comparisons between hospital outpatient 
departments. Therefore, we proposed to delay implementation of OP-37a-e 
beginning with the CY 2020 payment determination (2018 data collection) 
until further action in future rulemaking. We also refer readers to 
section XIV.B.4. of this final rule with comment period where we are 
finalizing a similar proposal in the ASCQR Program.
---------------------------------------------------------------------------

    \46\ About the National Implementation and Public Reporting. 
Available at: https://oascahps.org/General-Information/National-Implementation.
---------------------------------------------------------------------------

    We invited public comment on our proposal to delay the OAS CAHPS 
Survey measures beginning with the CY 2020 payment determination (2018 
data collection) as discussed above.
    Comment: Many commenters supported the proposal to delay 
implementation of the OAS CAHPS Survey, noting agreement that an 
analysis of the national implementation will provide valuable 
information. One commenter noted that the high volume of facilities and 
hospitals participating in the voluntary national implementation 
indicates that the data collection burden of the survey is low.
    Response: We thank the commenters for their support, and note our 
belief that an analysis of the national implementation of OAS CAHPS 
Survey will provide valuable information.
    Comment: Citing the importance of patient experience data, a few 
commenters recommended that CMS move toward mandatory data collection 
in the future as some hospitals have already invested resources to 
begin data collection. One commenter recommended a dry run for the 
first quarter of mandatory implementation. A few commenters recommended 
that the survey be voluntary for all future years of the program. 
Another commenter recommended that the survey be introduced with 
advance notice so hospitals can prepare.
    Response: We thank the commenters for their recommendations, and 
will take these comments under consideration as we craft future policy 
for the OAS CAHPS Survey. First, we acknowledge the work completed thus 
far by hospitals beginning to prepare for OAS CAHPS Survey data 
collection and thank them for their commitment to improving patient 
experience. We note that changes to this measure would be made in 
notice and comment rulemaking so that stakeholders can prepare. 
Finally, while we do not anticipate conducting a dry run for this 
survey at this time, we refer readers to the voluntary national 
implementation of the OAS CAHPS Survey.\47\
---------------------------------------------------------------------------

    \47\ Ibid.

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

[[Page 59433]]

    Comment: Several commenters noted specific concerns about the OAS 
CAHPS Survey, including that the survey is unnecessarily long, that not 
all of the questions are relevant, and that requiring a standardized 
survey prevents hospitals from targeting specific areas for 
improvement. Some commenters noted that the use of a third-party vendor 
is too costly. Several commenters recommended that vendors should 
provide electronic or email options for conducting the OAS CAHPS Survey 
in order to increase response rates. Others recommended that CMS 
administer the survey on its Web site. One commenter noted concern that 
timely results are not provided. A few commenters expressed concern 
about the use of CPT codes to determine eligibility for the survey and 
one noted that the CPT codes include procedures that a patient may not 
perceive as a surgery.
    Response: While web-based surveys are not available survey modes at 
present, we are actively investigating these modes as possible options 
for the future. We are exploring whether hospitals and ASCs receive 
reliable email addresses from patients and whether there is adequate 
access to the internet across all types of patients. Ultimately, the 
purpose of the investigation is to ensure that any future survey 
administration method does not introduce bias in the survey process and 
reduces length and burden if at all possible. Although we are 
investigating other modes of survey administration, we do not expect 
that CMS will directly administer the survey; the survey would still be 
administered through vendors. Finally, we acknowledge the concern about 
the use of CPT codes, including those for procedures that patients may 
not perceive as surgery, and note that we will consider this issue. We 
note that many CPT codes have been excluded from inclusion in the OAS 
CAHPS Survey, including services like application of a cast or splint, 
in order to ensure that only patients receiving applicable procedures 
are surveyed.\48\ We thank the commenters and will take all comments 
under consideration as we craft future policy for the OAS CAHPS Survey.
---------------------------------------------------------------------------

    \48\ OASCAHPS.org. Additional Procedural Codes for Exclusion 
from the OAS CAHPS Survey. Available at: https://oascahps.org/General-Information/Announcements/EntryId/80/Additional-Procedural-Codes-for-Exclusion-from-the-OAS-CAHPS-Survey.
---------------------------------------------------------------------------

    Comment: Several commenters recommended that the survey be NQF-
endorsed prior to implementation and that the survey should be refined 
with input from stakeholders.
    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. While we 
strive to adopt NQF-endorsed measures when feasible and practicable, 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), review by the MAP, broad acceptance and use of the measure, and 
public comments. As stated in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79772), the OAS CAHPS Survey measures were 
included on the CY 2014 MUC list,\49\ and reviewed by the MAP.\50\ 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.\51\ The MAP stated that these 
are high impact measures that will improve both quality and efficiency 
of care and be meaningful to consumers.\52\ 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.\53\ 
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.\54\ 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. In addition, we refer readers to the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79775), where we 
received public comments on this measure during development.
---------------------------------------------------------------------------

    \49\ 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.
    \50\ 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.
    \51\ Ibid.
    \52\ Ibid.
    \53\ Ibid.
    \54\ Ibid.
---------------------------------------------------------------------------

    Comment: One commenter requested that survey development and 
testing data be made public.
    Response: We refer commenters to the voluntary national 
implementation of the OAS CAHPS Survey for more information on results 
to date (https://oascahps.org/General-Information/National-Implementation).
    After consideration of the public comments we received, we are 
finalizing the proposal to delay implementation of the Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based Measures (OP-37a-e) beginning with the 
CY 2020 payment determination (CY 2018 data collection) until further 
action in future rulemaking, as proposed. We refer readers to section 
XIV.B.4. of this final rule with comment where we are also finalizing 
delay of the OAS CAHPS Survey-based measures in the ASCQR Program.
6. Previously Adopted Hospital OQR Program Measure Set for the CY 2020 
Payment Determination and Subsequent Years
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79784) for the previously finalized measure set for the 
Hospital OQR Program CY 2020 payment determination and subsequent 
years. These measures also are listed below.

  Previously Finalized Hospital OQR Program Measure Set for the CY 2020
               Payment Determination and Subsequent Years
------------------------------------------------------------------------
           NQF No.                            Measure name
------------------------------------------------------------------------
0287.........................  OP-1: Median Time to
                                Fibrinolysis.[dagger]
0288.........................  OP-2: Fibrinolytic Therapy Received
                                Within 30 Minutes of ED Arrival.
0290.........................  OP-3: Median Time to Transfer to Another
                                Facility for Acute Coronary
                                Intervention.
0286.........................  OP-4: Aspirin at Arrival.[dagger]
0289.........................  OP-5: Median Time to ECG.[dagger]

[[Page 59434]]

 
0514.........................  OP-8: MRI Lumbar Spine for Low Back Pain.
None.........................  OP-9: Mammography Follow-up Rates.
None.........................  OP-10: Abdomen CT--Use of Contrast
                                Material.
0513.........................  OP-11: Thorax CT--Use of Contrast
                                Material.
None.........................  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.
None.........................  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.
None.........................  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.
None.........................  OP-25: Safe Surgery Checklist Use.
None.........................  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.
None.........................  OP-35: Admissions and Emergency
                                Department (ED) Visits for Patients
                                Receiving Outpatient Chemotherapy.
2687.........................  OP-36: Hospital Visits after Hospital
                                Outpatient Surgery.
None.........................  OP-37a: OAS CAHPS--About Facilities and
                                Staff.****
None.........................  OP-37b: OAS CAHPS--Communication About
                                Procedure.****
None.........................  OP-37c: OAS CAHPS--Preparation for
                                Discharge and Recovery.****
None.........................  OP-37d: OAS CAHPS--Overall Rating of
                                Facility.****
None.........................  OP-37e: OAS CAHPS--Recommendation of
                                Facility.****
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** We note that measure name was revised to reflect NQF title.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
  through 66947).
**** Measure reporting delayed beginning with CY 2018 reporting and for
  subsequent years as discussed in section XIII.B.5. of this final rule
  with comment period.

7. Newly Finalized Hospital OQR Program Measure Set for the CY 2020 
Payment Determination and Subsequent Years
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33676), we did not 
propose any new measures for the Hospital OQR Program. However, 
beginning with the CY 2020 payment determination, in section 
XIII.B.4.c. of this final rule with comment period, we are finalizing 
proposals to remove six measures, and in section XIII.B.5. of this 
final rule with comment period, we are finalizing a proposal to delay 
OP-37a-e beginning with the CY 2020 payment determination (2018 data 
collection). The table below outlines the Hospital OQR Program measure 
set we are finalizing in this final rule with comment period for the CY 
2020 payment determination and subsequent years.

Newly Finalized Hospital OQR Program Measure Set for the CY 2020 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
           NQF No.                            Measure name
------------------------------------------------------------------------
0288.........................  OP-2: Fibrinolytic Therapy Received
                                Within 30 Minutes of ED Arrival.
0290.........................  OP-3: Median Time to Transfer to Another
                                Facility for Acute Coronary
                                Intervention.
0289.........................  OP-5: Median Time to ECG.[dagger]
0514.........................  OP-8: MRI Lumbar Spine for Low Back Pain.
None.........................  OP-9: Mammography Follow-up Rates.
None.........................  OP-10: Abdomen CT--Use of Contrast
                                Material.
0513.........................  OP-11: Thorax CT--Use of Contrast
                                Material.
None.........................  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.
None.........................  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.
0499.........................  OP-22: Left Without Being Seen.[dagger]

[[Page 59435]]

 
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.
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.
None.........................  OP-35: Admissions and Emergency
                                Department (ED) Visits for Patients
                                Receiving Outpatient Chemotherapy.
2687.........................  OP-36: Hospital Visits after Hospital
                                Outpatient Surgery.
None.........................  OP-37a: OAS CAHPS--About Facilities and
                                Staff.***
None.........................  OP-37b: OAS CAHPS--Communication About
                                Procedure.***
None.........................  OP-37c: OAS CAHPS--Preparation for
                                Discharge and Recovery.***
None.........................  OP-37d: OAS CAHPS--Overall Rating of
                                Facility.***
None.........................  OP-37e: OAS CAHPS--Recommendation of
                                Facility.***
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
[cir] 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).
*** Measure reporting delayed beginning with CY 2018 reporting and for
  subsequent years as discussed in section XIII.B.5. of this final rule
  with comment period.

8. Hospital OQR Program Measures and Topics for Future Consideration
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33678), we requested 
public comment on: (1) Future measure topics; and (2) future 
development of OP-2: Fibrinolytic Therapy Received Within 30 Minutes of 
ED Arrival as an electronic clinical quality measure (eCQM). 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, Health Information Technology (health IT) use, care 
coordination, and patient safety. Measures are of various types, 
including those of process, structure, outcome, and efficiency. 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 our Medicare quality reporting 
and value-based purchasing programs. 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: A few commenters recommended that we adopt the eCQM 
version of OP-18: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients.
    Response: We thank the commenters for their feedback. We will 
consider these suggestions as we consider including and developing 
eCQMs for future rulemaking.
    Comment: Several commenters suggested measure topics for future 
consideration, including measures that address Total Knee Arthroplasty 
(TKA) and Total Hip Arthroplasty (THA) procedures and measures that 
address recommended vaccines for adults, including pneumococcal 
immunization measures. A few commenters noted support for outcome 
measures, and recommended that CMS engage with stakeholders in 
identifying priority measurement areas. One commenter specifically 
recommended patient reported outcomes and patient reported experience 
measures. A commenter recommended the inclusion of pain experience and 
management measures. One commenter recommended the following topic 
areas for quality measures: Patient safety outcomes, readmission rates, 
risk-adjusted mortality, effective patient transitions, diabetes, 
obesity, guidelines for overused procedures, end of life care according 
to preferences, cost per episode, behavioral health and patient 
experience.
    Response: We thank the commenters for their recommendations and 
suggestions and agree that there are additional high priority topic 
measurement areas that may be appropriate for the Hospital OQR Program. 
We will consider the suggested topic areas for future rulemaking and 
intend to work with stakeholders as we continue to develop the Hospital 
OQR Program measure set.
b. Possible Future Adoption of the Electronic Version of OP-2: 
Fibrinolytic Therapy Received Within 30 Minutes of Emergency Department 
Arrival
    We have previously stated that automated electronic extraction and 
reporting of clinical quality data, including measure results 
calculated automatically by appropriately certified health IT, could 
significantly reduce the administrative burden on hospitals under the 
Hospital OQR Program (81 FR 79785). In the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79786), some commenters supported CMS' goal 
to incorporate electronic clinical quality measures (eCQMs) in the 
Hospital OQR Program.
    OP-2: Fibrinolytic Therapy Received Within 30 Minutes of Emergency 
Department Arrival was finalized in the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66865), where

[[Page 59436]]

it was designated as ED-AMI-3. In the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68761), the measure was re-labeled as OP-2 for 
the CY 2010 payment determination and subsequent years. OP-2 measures 
the number of AMI patients receiving fibrinolytic therapy during the ED 
visit with a time from hospital arrival to fibrinolysis of 30 minutes 
or less.
    We are considering developing OP-2: Fibrinolytic Therapy Received 
Within 30 Minutes of Emergency Department Arrival \55\ as an eCQM and 
proposing the eCQM in future rulemaking. We note that since OP-2 is not 
yet developed as an eCQM; electronic measure specifications are not 
available at this time. We are considering OP-2: Fibrinolytic Therapy 
Received Within 30 Minutes of Emergency Department Arrival in 
particular because we believe this measure is the most feasible out of 
all the existing Hospital OQR Program measures for development as an 
eCQM.
---------------------------------------------------------------------------

    \55\ eCQI Resource Center: https://ecqi.healthit.gov/eh/ecqms-2016-reporting-period/fibrinolytic-therapy-received-within-30-minutes-hospital-arrival.
---------------------------------------------------------------------------

    We invited public comment on the possible future development and 
future adoption of an eCQM version of OP-2: Fibrinolytic Therapy 
Received Within 30 Minutes of Emergency Department Arrival.
    Comment: A few commenters supported the adoption of an eCQM version 
of OP-2: Fibrinolytic Therapy Received Within 30 Minutes of Emergency 
Department Arrival. Several commenters noted their support for the 
adoption of eCQMs, but expressed concern about the future adoption of 
an eCQM version OP-2: Fibrinolytic Therapy Received Within 30 Minutes 
of Emergency Department Arrival in the Hospital OQR Program noting that 
other measures, such as OP-18, are already specified as an eCQM and 
that other measures may be more relevant to the Hospital OQR Program 
since fibrinolytic therapy is not always appropriate with the 
increasing availability of cardiac catheterization labs.
    Response: We will consider OP-18 for future rulemaking. In 
addition, while we acknowledge that OP-2 may not be relevant to all 
hospitals due to the increased availability of cardiac catheterization 
labs, we believe this measure would be important for smaller hospitals 
that continue to rely on fibrinolytic therapy. We thank the commenters 
for their feedback and will consider these concerns and suggestions 
before we decide whether to develop an eCQM version of OP-2: 
Fibrinolytic Therapy Received Within 30 Minutes of Emergency Department 
Arrival or propose the eCQM in future rulemaking.
    Comment: Other commenters opposed the adoption of eCQMs in the 
Hospital OQR Program and expressed concern that eCQMs add, rather than 
reduce, administrative burden. Some commenters recommended that CMS 
delay implementation of eCQMs in the Hospital OQR Program until the 
vendor and CMS systems issues noted in Hospital IQR Program rulemaking 
are addressed and until the Hospital IQR Program demonstrates accurate 
and feasible submission of electronic data.
    Response: In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38355), 
commenters raised concerns about EHR system upgrades, the difficulty of 
transitioning to a new EHR vendor, and updating to new editions of 
certified health IT. We appreciate commenters sharing their concerns 
about the challenges associated with eCQM reporting, including the 
significant expenditure of resources required to make necessary changes 
to health IT systems, documentation or utilization of EHRs, and 
workflow process changes and acknowledge commenters' feedback that many 
hospitals may not be ready to report eCQMs. We will take lessons 
learned from eCQM submission in the Hospital IQR Program into 
consideration as we develop policy for the Hospital OQR Program. As we 
stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57177) regarding 
the Hospital IQR Program, however, we acknowledge that there are 
initial costs, but believe that long-term benefits associated with 
electronic data capture outweigh those costs. In addition, as we stated 
in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49696) regarding the 
Hospital IQR Program, we believe that it is appropriate to consider 
reporting of eCQMs given that measures available now and those being 
developed for the future are increasingly based on electronic 
standards. We thank the commenters for their feedback and acknowledge 
the concerns raised. We will consider these concerns and suggestions as 
we further consider developing OP-2: Fibrinolytic Therapy Received 
Within 30 Minutes of Emergency Department Arrival as an eCQM or 
proposing the eCQM in future rulemaking.
9. Maintenance of Technical Specifications for Quality Measures
    CMS maintains technical specifications for previously adopted 
Hospital OQR Program measures. These specifications are updated as we 
modify the Hospital OQR Program measure set. The manuals that contain 
specifications for the previously adopted measures can be found on the 
QualityNet Web site at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
    For a history of our policies regarding maintenance of technical 
specifications for quality measures, we refer readers to the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60631), the CY 2011 
OPPS/ASC final rule with comment period (75 FR 72069), and the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68469 through 68470). We 
did not propose any changes to our technical specifications policies.
10. Public Display of Quality Measures
a. Background
    We refer readers to the CY 2014 and CY 2017 OPPS/ASC final rules 
with comment period (78 FR 75092 and 81 FR 79791, respectively) for our 
previously finalized policies regarding public display of quality 
measures.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33679), we proposed to 
update public reporting for the OP-18: Median Time from ED Arrival to 
ED Departure for Discharged ED Patients measure.
b. Public Reporting of OP-18c: Median Time From Emergency Department 
Arrival to Emergency Department Departure for Discharged Emergency 
Department Patients--Psychiatric/Mental Health Patients
    OP-18 Median Time from ED Arrival to ED Departure for Discharged ED 
Patients was finalized for reporting for the CY 2013 payment 
determination and subsequent years in the CY 2011 OPPS/ASC final rule 
with comment period (75 FR 72086). This measure addresses ED efficiency 
in the form of the median time from ED arrival to time of departure 
from the ED for patients discharged from the ED (also known as ED 
throughput). Reducing the time patients spend in the ED can improve the 
quality of care. As discussed in the measure specifications and Measure 
Information Form (MIF),\56\ \57\ OP-18 measure data is stratified into 
four separate calculations: (1) OP-18a is defined as the overall rate; 
(2) OP-18b is defined as the reporting measure; (3) OP-18c is defined 
as assessing

[[Page 59437]]

Psychiatric/Mental Health Patients; and (4) OP-18d is defined as 
assessing Transfer Patients.
---------------------------------------------------------------------------

    \56\ A Measure Information Form provides detail on the rationale 
for a measure as well as the relevant numerator statements, 
denominator statements and measure calculations.
    \57\ Hospital OQR Program ED Throughput Measures Information 
Form. Available at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FSpecsManualTemplate&cid=1228775748170.
---------------------------------------------------------------------------

    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 and 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. Currently, and as detailed in the OP-18 MIF, the OP-18 measure 
publicly reports data only for the calculations designated as OP-18b: 
Median Time from Emergency Department Arrival to Emergency Department 
Departure for Discharged Emergency Department Patients--Reporting 
Measure, which excludes psychiatric/mental health patients and transfer 
patients.\58\
---------------------------------------------------------------------------

    \58\ Ibid.
---------------------------------------------------------------------------

    The ICD-10 diagnostic codes for OP-18c include numerous substance 
abuse codes for inclusion in this subset, along with numerous 
nonsubstance abuse codes. We believe it is important to publicly report 
data for OP-18c (Median Time from Emergency Department Arrival to 
Emergency Department Departure for Discharged Emergency Department 
Patients--Psychiatric/Mental Health Patients) to address a behavioral 
health gap in the publicly reported Hospital OQR Program measure set. 
Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33679), we 
proposed to also publicly report OP-18c and begin public reporting as 
early as July of 2018 using data from patient encounters during the 
third quarter of 2017. In addition, we would make corresponding updates 
to our MIF to reflect these proposals,\59\ such as: (1) Renaming OP-18b 
from ``Median Time from Emergency Department Arrival to Emergency 
Department Departure for Discharged Emergency Department Patients--
Reporting Measure'' to ``OP-18b: Median Time from Emergency Department 
Arrival to Emergency Department Departure for Discharged Emergency 
Department Patients--Excluding Psychiatric/Mental Health Patients and 
Transfer Patients;'' and (2) modifying the form to reflect that OP-18c 
would also be publicly reported. Administrative changes made to the MIF 
would not affect hospital reporting requirements or burden. The data 
required for public reporting are already collected and submitted by 
participating outpatient hospital departments and our proposal to 
publicly report OP-18c does not create additional burden. We note that 
hospitals would be able to preview these data in accordance with our 
previously established 30-day preview period procedures (81 FR 79791).
---------------------------------------------------------------------------

    \59\ Ibid.
---------------------------------------------------------------------------

    In developing this proposal, we also considered proposing to 
publicly report around July 2019 (not 2018 as proposed) using data from 
patient encounters occurring during the first quarter of 2018. However, 
we decided against this timeline, because under this reporting option, 
we would not be able to publicly report behavioral health data until as 
early as July of 2019, creating a delay in our efforts to address the 
behavioral health data gap in the publicly reported measure set.
    We invited public comment on our proposal to publicly report OP-
18c: Median Time from Emergency Department Arrival to Emergency 
Department Departure for Discharged Emergency Department Patients--
Psychiatric/Mental Health Patients beginning with third quarter 2017 
data as discussed above.
    Comment: Some commenters supported the proposal to publicly display 
OP-18c Median Time from ED Arrival to ED Departure for Discharged ED 
Patients--Psychiatric/Mental Health Patient, noting that the data can 
be valuable to improving patient care.
    Response: We thank the commenters for their support; we agree that 
these data can be useful toward improving patient care for these 
patients.
    Comment: Several commenters opposed the proposal to publicly report 
OP-18c: Median Time from ED Arrival to ED Departure for Discharged ED 
Patients--Psychiatric/Mental Health Patients. These commenters 
expressed concern that publicly reporting the measure will not address 
the behavioral health gap in the Hospital OQR Program. Several 
commenters expressed concern that data on time to departure may not 
help patients make care decisions. One commenter expressed concern that 
the measure sample size is small, leading to large variation in month-
to-month performance. Another commenter recommended that data for 
substance abuse and non-substance abuse patients be separated in 
publicly reported OP-18c data, citing a concern that substance abuse 
patients may spend more time in the ED.
    A few commenters cited concerns that delays in discharging 
psychiatric patients are caused by a lack of community resources rather 
than poor quality of care. One commenter recommended that publicly 
displayed data for OP-18c also include data on mental health resources 
in the community to provide context for the data. Other commenters 
expressed concern that the data could incentivize limiting the care 
provided to these patients in the ED in order to discharge them 
quickly.
    Response: We disagree that OP-18c does not address the Hospital OQR 
Program's gap in measuring behavioral health or that it would not 
provide useful information. We believe this helps to address a gap in 
measuring behavioral health by attempting to address the increased wait 
times experienced by mental health patients in EDs. Research has 
indicated that mental health patients experience a prolonged ED length 
of stay as compared to other patients, and that these longer wait times 
can lead to medication errors and adverse outcomes.\60\ Another study 
demonstrated that patients presenting to the ED with acute myocardial 
infarction who have a history of depression are given lower priority 
care.\61\ In addition, we believe data from OP-18c will be useful to 
researchers and hospital staff as they attempt to address these 
disparities, as well as to patients choosing a care location. We 
further disagree that measure sample size will lead to inconsistent 
measure results. This measure has undergone the NQF endorsement process 
and, as such, has been tested and determined to be reliable.\62\ 
Although, we acknowledge commenters concerns that substance abuse 
patients may spend more time in the ED, we believe it is important to 
not separate substance abuse patients in the measure, as research shows 
that illicit drug use is particularly high among adults with serious 
mental illnesses and that these co-occurring disorders tend to go 
undetected and untreated, especially among the elderly population.\63\ 
\64\ Given this, we believe it is important to include substance abuse 
populations for quality improvement.
---------------------------------------------------------------------------

    \60\ Pearlmutter, Mark D. et al. Analysis of Emergency 
Department Length of Stay for Mental Health Patients at Ten 
Massachusetts Emergency Departments. Annals of Emergency Medicine, 
Volume 70, Issue 2, 193-202.e16.
    \61\ Atzema CL, Schull MJ, Tu JV. The effect of a charted 
history of depression on emergency department triage and outcomes in 
patients with acute myocardial infarction. CMAJ 2011;183:663-9.
    \62\ NQF: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients. Available at: https://qualityforum.org/qps/0496.
    \63\ SAMHSA. Results from the 2014 National Survey on Drug Use 
and Health: Mental Health Findings.
    \64\ Robert Drake. ``Dual Diagnosis and Integrated Treatment of 
Mental Illness and Substance Abuse Disorder.''
---------------------------------------------------------------------------

    However, the comments received have shed some light on aspects of 
this particular subset of data that may need additional consideration 
prior to posting on the consumer-facing Hospital

[[Page 59438]]

Compare Web site. We acknowledge commenters' concerns regarding 
unintended consequences, including that the time to discharge for 
mental health patients may be influenced, in part, by the availability 
of community resources and that the measure could be perceived as 
creating pressure on providers to inappropriately limit care in order 
to quickly discharge mental health patients. Literature has shown that 
the number of inpatient psychiatric beds as decreased from 400,000 in 
1970 to 50,000 in 2006.\65\
---------------------------------------------------------------------------

    \65\ Tuttle GA. Report of the Council on Medical Service, 
American Medical Association: Access to psychiatric beds and impact 
on emergency medicine [Internet]. Chicago (IL): AMA; 2008.
---------------------------------------------------------------------------

    Therefore, after considering the public comments we received, 
including these additional factors, we would like to err on the side of 
caution and take additional time for further consideration prior to 
posting this particular subset of data on Hospital Compare, a consumer-
facing Web site. As background, we typically allow 30 days for 
hospitals to preview their data two months prior to public reporting, 
after which we deliver final public reporting files for the Hospital 
Compare Web site (77 FR 68483). Simultaneously, in addition to posting 
on Hospital Compare, Hospital OQR Program quality measure data are also 
typically published on data.medicare.gov in downloadable data 
files.\66\ \67\ \68\ While we will not publicly report OP-18c on 
Hospital Compare, we will instead publish it on data.medicare.gov. 
Affected parties will be notified via CMS listservs, CMS email blasts, 
national provider calls, and QualityNet announcements regarding the 
release of preview reports followed by the posting of data on a Web 
site other than Hospital Compare (76 FR 74453).
---------------------------------------------------------------------------

    \66\ Data.medicare.gov OP Imaging Measures: https://data.medicare.gov/Hospital-Compare/Outpatient-Imaging-Efficiency-Hospital/wkfw-kthe.
    \67\ Data.medicare.gov OP Procedure Volume: https://data.medicare.gov/Hospital-Compare/Outpatient-Procedures-Volume/xbz4-gvaz.
    \68\ Data.medicare.gov Timely and Effective Care Measures: 
https://data.medicare.gov/Hospital-Compare/Timely-and-Effective-Care-Hospital/yv7e-xc69.
---------------------------------------------------------------------------

    Based on the public comments we received, we intend to make measure 
data available in a downloadable data file rather than on Hospital 
Compare so that we may continue to evaluate the concerns raised by 
commenters regarding unintended consequences. We believe this modified 
approach to our original proposal is more appropriate than publishing 
on Hospital Compare, which is more public facing, because we want to 
avoid any potential circumstance in which the publication of these data 
exacerbate the concerns raised by commenters. We continue to believe 
the measure provides value to hospital quality improvement efforts and 
to patients. However, out of an abundance of caution, we intend to make 
data available on data.medicare.gov instead of Hospital Compare until 
we have been able to evaluate the concerns raised by commenters.
    To be clear, data for what is referred to as OP-18b Median Time 
from Emergency Department Arrival to Emergency Department Departure for 
Discharged Emergency Department Patients--Reporting Measure will still 
continue to be made available on Hospital Compare as it has in the 
past. In addition, in accordance with our decision to not publish OP-
18c data on Hospital Compare, we are also not finalizing the proposed 
measure subset name changes or MIF form changes described in our 
proposal. We will continue to work toward finding the best means to 
make this subset of information more easily understandable to the 
public and consider other measures to help fill the behavioral health 
gap in the future.
    After consideration of the public comments we received, we are 
finalizing the proposal, with modification, as discussed in our 
response above, such that we will make OP-18c rates available to the 
public on https://data.medicare.gov in downloadable files. We will take 
additional time to further assess how best to make this subset of data 
available on the Hospital Compare Web site for consumers. In addition, 
we are not finalizing our proposals to: (1) Rename OP-18b from ``Median 
Time from Emergency Department Arrival to Emergency Department 
Departure for Discharged Emergency Department Patients--Reporting 
Measure'' to ``OP 18b: Median Time from Emergency Department Arrival to 
Emergency Department Departure for Discharged Emergency Department 
Patients--Excluding Psychiatric/Mental Health Patients and Transfer 
Patients;'' and (2) modify the MIF to reflect that OP-18c would also be 
publicly reported on Hospital Compare.

C. Administrative Requirements

1. QualityNet Account and Security Administrator
    The previously finalized QualityNet security administrator 
requirements, including setting up a QualityNet account and the 
associated timelines, are described 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).
2. Requirements Regarding Participation Status
a. Background
    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 these 
procedural requirements at 42 CFR 419.46(a) and 42 CFR 419.46(b). In 
the CY 2018 OPPS/ASC proposed rule (82 FR 33679), we proposed changes 
to the NOP submission deadline, as described below.
b. Proposed Changes to the NOP Submission Deadline
    We finalized in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75108 through 75109) that participation in the Hospital OQR 
Program requires that hospitals must: (1) Register on the QualityNet 
Web site before beginning to report data; (2) identify and register a 
QualityNet security administrator; and (3) complete and submit an 
online participation form available at the QualityNet.org Web site if 
this form has not been previously completed, if a hospital has 
previously withdrawn, or if the hospital acquires a new CMS 
Certification Number (CCN). In addition, in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75108 through 75109) we finalized the 
requirement that hospitals must submit the NOP according to the 
following deadlines:
     If a hospital has a Medicare acceptance date before 
January 1 of the year prior to the affected annual payment update, the 
hospital must complete and submit to CMS a completed Hospital OQR 
Program Notice of Participation Form by July 31 of the calendar year 
prior to the affected annual payment update.
     If a hospital has a Medicare acceptance date on or after 
January 1 of the year prior to the affected annual payment update, the 
hospital must submit a completed participation form no later than 180 
days from the date identified as its Medicare acceptance date.
    These requirements are also codified at 42 CFR 419.46(a).
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33680), beginning with 
the CY 2020 payment determination, we

[[Page 59439]]

proposed to: (1) Revise the NOP submission deadline described above, 
and (2) make corresponding revisions at 42 CFR 419.46(a). Specifically, 
we proposed to change the NOP submission deadlines such that hospitals 
are required to submit the NOP any time prior to registering on the 
QualityNet Web site, rather than by the deadlines specified above. For 
example, under this proposal, and in accordance with the data 
submission deadlines described in section XIII.D.1. of this final rule 
with comment period, below and finalized in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70519 through 70520), a hospital 
submitting data for Q1 2019 encounters would be required to submit the 
NOP only prior to registering on the QualityNet Web site, which must be 
done prior to the data submission deadline of August 1, 2019 (80 FR 
70519 through 70520).
    We believe this proposed timeline is appropriate, because 
registration with the QualityNet Web site is necessary to submit data. 
We believe that extending the NOP submission deadline will better 
enable hospitals to meet the Hospital OQR Program participation 
requirements.
    As discussed above, we also proposed to make conforming revisions 
at 42 CFR 419.46(a).
    We invited public comment on our proposals as discussed above.
    We did not receive any public comment on our proposal to require 
submission of the NOP any time prior to registering on the QualityNet 
Web site. However, due to logistical and operational constraints, 
participants in the Hospital OQR Program must still first login to 
QualityNet in order to access the NOP form; therefore, we are unable to 
implement this proposal. As a result, we are not finalizing our 
proposals to extend the NOP submission deadline and to make conforming 
revisions at 42 CFR 419.46(a). We intend to revisit this issue in 
future rulemaking, because we believe that extending the NOP submission 
deadline will better enable hospitals to meet the Hospital OQR Program 
participation requirements.

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 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, beginning with the CY 2018 payment 
determination. The finalized deadlines for the CY 2020 payment 
determination and subsequent years are illustrated in the tables below.

           CY 2020 Payment Determination and Subsequent Years
------------------------------------------------------------------------
                                                               Clinical
                                                                 data
                 Patient encounter quarter                    submission
                                                               deadline
------------------------------------------------------------------------
Q2 2018 (April 1-June 30)..................................    11/1/2018
Q3 2018 (July 1-September 30)..............................     2/1/2019
Q4 2018 (October 1-December 31)............................     5/1/2019
Q1 2019 (January 1-March 31)...............................     8/1/2019
------------------------------------------------------------------------

    For the CY 2020 payment determination and subsequent years, we 
proposed to revise the data submission requirements for hospitals that 
did not participate in the previous year's Hospital OQR Program. 
Specifically, we proposed to revise the first quarter for which newly 
participating hospitals are required to submit data (see details 
below). We did not propose any changes to the previously finalized data 
submission deadlines for each quarter.
    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68482), we finalized the following data submission requirements for 
hospitals that did not participate in the previous year's Hospital OQR 
Program:
     If a hospital has a Medicare acceptance date before 
January 1 of the year prior to the affected annual payment update, the 
hospital must submit data beginning with encounters occurring during 
the first calendar quarter of the year prior to the affected annual 
payment update;
     If a hospital has a Medicare acceptance date on or after 
January 1 of the year prior to the affected annual payment update, the 
hospital must submit data for encounters beginning with the first full 
quarter following submission of the completed Hospital OQR Program 
Notice of Participation Form; and
     Hospitals with a Medicare acceptance date before or after 
January 1 of the year prior to an affected annual payment update must 
follow data submission deadlines as posted on the QualityNet Web site.
    These policies are also codified at 42 CFR 419.46(c)(3). In the CY 
2018 OPPS/ASC proposed rule (82 FR 33680), we proposed to: (1) Align 
the timeline specifying the initial quarter for which hospitals must 
submit data for all hospitals that did not participate in the previous 
year's Hospital OQR Program, rather than specifying different timelines 
for hospitals with Medicare acceptance dates before versus after 
January 1 of the year prior to an affected annual payment update; and 
(2) make conforming revisions at 42 CFR 419.46(c)(3). Specifically, we 
proposed that any hospital that did not participate in the previous 
year's Hospital OQR Program must submit data beginning with encounters 
occurring during the first calendar quarter of the year prior to the 
affected annual payment update. We note that hospitals must still 
follow data submission deadlines corresponding to the quarter for which 
they are reporting data as posted on the QualityNet Web site.
    We invited public comment on our proposals to align the initial 
data submission timeline for all hospitals that did not participate in 
the previous year's Hospital OQR Program and to make conforming 
revisions at 42 CFR 419.46(c)(3).
    We did not receive any public comment on our proposals. Therefore, 
we are finalizing our proposals to align the initial data submission 
timeline for all hospitals that did not participate in the previous 
year's Hospital OQR Program and to make conforming revisions at 42 CFR 
419.46(c)(3), as proposed.
2. Requirements for Chart-Abstracted Measures Where Patient-Level Data 
Are Submitted Directly to CMS for the CY 2020 Payment Determination and 
Subsequent Years
    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 chart-abstracted 
measures for the CY 2014 payment determination and subsequent years.
    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.
    We note that, in section XIII.B.4.c. of this final rule with 
comment period, we are finalizing the removal of OP-21: Median Time to 
Pain Management for Long Bone Fracture, OP-1: Median Time to 
Fibrinolysis, OP-4: Aspirin at Arrival, and OP-20: Door to Diagnostic 
Evaluation by a Qualified Medical

[[Page 59440]]

Professional for the CY 2020 payment determination and subsequent 
years. Therefore, the following previously finalized Hospital OQR 
Program chart-abstracted measures will require patient-level data to be 
submitted for the CY 2020 payment determination and subsequent years:
     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-5: Median Time to ECG (NQF #0289);
     OP-18: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (NQF #0496);
     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).
3. Claims-Based Measure Data Requirements 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 75111 through 75112) for a discussion of the general 
claims-based measure data submission requirements for the CY 2015 
payment determination and subsequent years. We did not propose any 
changes to our claims-based measures submission policies for the CY 
2020 payment determination and subsequent years.
    There are 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).
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
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79792 through 79794) for a discussion of the previously 
finalized requirements related to survey administration and vendors for 
the OAS CAHPS Survey-based measures. However, we refer readers to 
section XIII.B.5. of this final rule with comment period, where we are 
finalizing our proposal to delay implementation of the OP-37a-e OAS 
CAHPS Survey-based measures beginning with the CY 2020 payment 
determination (2018 data collection) until further action in future 
rulemaking.
    As noted in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79815), some commenters suggested shortening 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 continue to consider the removal of two 
demographic questions--the ``gender'' and ``age'' questions--from the 
OAS CAHPS Survey in a future update.
    Comment: Some commenters supported removal of the gender and age 
questions from the survey.
    Response: We thank the commenters for their support. We will take 
these comments under consideration as we craft future policies for the 
OAS CAHPS Survey.
5. Data Submission Requirements for Previously Finalized Measures for 
Data Submitted via a Web-Based Tool 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 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 Centers for Disease Control and Prevention 
(CDC) NHSN Web site. We did not propose any changes to our policies 
regarding the submission of measure data submitted via a web-based 
tool.
    We note that, in section XIII.B.4.c. of this final rule with 
comment period, we are finalizing the removal of OP-25: Safe Surgery 
Checklist Use and OP-26: Hospital Outpatient Volume on Selected 
Outpatient Surgical Procedures beginning with the CY 2020 payment 
determination and for subsequent years. Therefore, the following web-
based quality measures previously finalized and retained in the 
Hospital OQR Program will require data to be submitted via a web-based 
tool (CMS' QualityNet Web site or CDC's NHSN Web site) for the CY 2020 
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-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).
6. Population and Sampling Data Requirements for the CY 2020 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2011 OPPS/ASC final rule with comment

[[Page 59441]]

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 
population and sampling requirements.
    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 2020 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 2018 OPPS/ASC proposed rule (82 FR 33682), we: (1) 
Clarified the hospital selection process previously finalized for 
validation; (2) proposed to codify the procedures for targeting 
hospitals at 42 CFR 419.46(e); and (3) proposed to formalize and update 
our educational review process. These are discussed in more detail 
below.
a. Clarification
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74485), we finalized a validation selection process in which we select 
a random sample of 450 hospitals for validation purposes, and select an 
additional 50 hospitals based on the following specific criteria:
     Hospital fails the validation requirement that applies to 
the previous year's payment determination; or
     Hospital has an outlier value for a measure based on the 
data it submits. We defined an ``outlier value'' for purposes of this 
targeting as a measure value that appears to deviate markedly from the 
measure values for other hospitals. Specifically, we would select 
hospitals for validation if their measure value for a measure is 
greater than 5 standard deviations from the mean, placing the expected 
occurrence of such a value outside of this range at 1 in 1,744,278.
    We note that the criteria for targeting 50 outlier hospitals, 
described above, does not specify whether high or low performing 
hospitals will be targeted. Therefore, we clarified that hospitals with 
outlier values indicating specifically poor scores on a measure (for 
example, a long median time to fibrinolysis) will be targeted for 
validation. In other words, an ``outlier value'' is a measure value 
that is greater than 5 standard deviations from the mean of the measure 
values for other hospitals, and indicates a poor score.
    Comment: One commenter recommended that CMS target hospitals for 
validation whether their score is greater than five standard deviations 
above or below the mean, noting that very good scores may especially 
indicate a need for validation.
    Response: The intent of this policy is to target and prevent 
extreme negative values rather than to identify high performance. This 
is also evidenced in the first of our two criteria for targeting 
hospitals for validation--to target hospitals that fail the validation 
requirement that applies to the previous year's payment determination. 
We believe it is appropriate to specifically target hospitals with poor 
performance, rather than those performing well to encourage improved 
performance among low performing hospitals. We note that only 50 
hospitals will be selected for validation through these targeting 
criteria and in order to address the issue of very low performance, we 
believe it is appropriate to use these targeting criteria to identify 
extreme negative measure values. An additional 450 hospitals will be 
selected at random, and will include both low and high performing 
hospitals. However, we thank the commenter for their feedback that 
extremely high performance could indicate a need for validation, and 
will take this into consideration as we craft future policies.
b. Codification
    We note that the previously finalized procedures for targeting 
hospitals for validation, described in section XIII.D.7.a. of this 
final rule with comment period, and finalized in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74485), are not yet codified at 
42 CFR 419.46. We proposed to codify the previously finalized 
procedures for targeting hospitals and well as the procedures regarding 
outlier hospitals as discussed and clarified above at 42 CFR 
419.46(e)(3).
    We invited public comment on our proposal to codify our validation 
targeting criteria as discussed above.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal to codify the previously finalized 
procedures for targeting hospitals and well as the procedures regarding 
outlier hospitals as discussed and clarified above at 42 CFR 
419.46(e)(3), as proposed.
c. Formalization and Modifications to the Educational Review Process 
for Chart-Abstracted Measures Validation
(1) Background
    We have described our processes for educational review on the 
QualityNet Web site.\69\ We note that historically this process 
functioned as an outreach and education opportunity we provided to 
hospitals, but based on our experience, stakeholder feedback, and more 
robust validation requirements, we believed that it would be beneficial 
to hospitals to propose formalizing and updating this process.
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    \69\ Data Validation--Educational Reviews: Hospitals-Outpatient. 
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    Under the current informal process, if results of an educational 
review indicate that CDAC or CMS has incorrectly scored a hospital 
after validation, those results are not changed, but are taken into 
consideration if the hospital submits a reconsideration request. 
Stakeholder feedback, provided via email, has indicated that while the 
educational review process is helpful to participating hospitals, it is 
limited in its impact, given that a hospital's validation result is not 
corrected even after an educational review determines that CMS reached 
an incorrect conclusion regarding a hospital's validation score for a 
given quarter. Based on this feedback, we proposed to formalize and 
update the Hospital OQR Program's chart-abstracted measure validation 
educational review process. Our goal is to reduce the number of 
reconsideration requests by identifying and correcting errors before 
the final yearly validation score is derived. By identifying and 
correcting any mistakes early on, this process could help decrease the 
burden during the annual reconsideration process, both for hospitals 
and CMS.
    Therefore, in an effort to streamline this process, we proposed to: 
(1) Formalize this process; and (2) specify that if the results of an 
educational review indicate that we incorrectly scored a hospital's 
medical records

[[Page 59442]]

selected for validation, the corrected quarterly validation score would 
be used to compute the hospital's final validation score at the end of 
the calendar year. These proposals are discussed in more detail below.
(2) Educational Review Process for the CY 2020 Payment Determination 
and Subsequent Years
(a) Formalizing the Educational Review Process
    As stated above, our informal processes for educational review have 
been described on the QualityNet Web site.\70\ Under the informal 
process, hospitals that were selected and received a score for 
validation may request an educational review in order to better 
understand the results. Many times, hospitals request an educational 
review to examine any data element discrepancies, if they believe the 
score is incorrect, or when they have general questions about their 
score. Currently, hospitals receive validation results on a quarterly 
basis \71\ and can request informal educational reviews for each 
quarter. Under this informal process, a hospital has 30 calendar days 
from the date the validation results are posted on the QualityNet 
Secure Portal Web site to contact the CMS designated contractor, 
currently known as the Validation Support Contractor (VSC), to request 
an educational review.\72\ In response to a request, the VSC obtains 
and reviews medical records directly from the Clinical Data Abstraction 
Center (CDAC) and provides feedback. CMS, or its contractor, generally 
provides educational review results and responses via a secure file 
transfer to the hospital.\73\
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    \70\ Ibid.
    \71\ QualityNet: Data Validation--Overview. Available at: 
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228758729356.
    \72\ The educational review request form can be found at: 
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228764927987.
    \73\ Hospital OQR Validation Educational Review Process: 
Available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228764927987.
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    We proposed to formalize this educational review process, as 
described above, for the CY 2020 payment determination and subsequent 
years--in other words, starting for validations of CY 2018 data 
affecting the CY 2020 payment determination and subsequent years.
    We invited public comment on our proposal to formalize the chart-
abstracted measures validation educational review process for the CY 
2020 payment determination and subsequent years as described above.
    We did not receive any public comments on our proposal. Therefore, 
we are finalizing the proposal to formalize the chart-abstracted 
measures validation educational review process for the CY 2020 payment 
determination and subsequent years, as proposed.
(b) Validation Score Review and Correction
    We previously finalized, in the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 72105 to 72106), that we calculate validation 
scores under the Hospital OQR Program using the upper bound of a one-
tailed confidence interval (CI) with a 75 percent threshold level with 
a binomial approach. Using that approach, at the end of each calendar 
year, CMS computes a CI using the results of all four quarters to 
determine the final validation score.\74\ If the upper bound of this 
confidence interval is 75 percent or higher, the hospital will pass the 
Hospital OQR Program validation requirement.\75\ We proposed that if 
the results of a validation educational review determine that the 
original quarterly validation score was incorrect, the corrected score 
would be used to compute the final validation score and CI at the end 
of each calendar year.
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    \74\ QualityNet Data Validation Overview. Available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228758729356.
    \75\ Ibid.
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    To determine whether a quarterly validation score was correct, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33683), we proposed to use a 
similar process as one previously finalized for reconsideration 
requests. Specifically, we proposed that during an educational review 
request, evaluating a validation score would consist of and be limited 
to reviewing data elements that were labeled as mismatched (between the 
originally calculated measure score and the measure score calculated in 
validation) in the original validation results. We would also take into 
consideration written justifications provided by hospitals in the 
Educational Review request. For more information about the previously 
finalized reconsideration request 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), the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70524), and the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79795).
    For the CY 2020 payment determination and subsequent years, we 
further proposed that if an educational review requested for any of the 
first 3 quarters of validation yields incorrect CMS validation results 
for chart-abstracted measures, according to the review process 
described above, we would use the corrected quarterly score, as 
recalculated during the educational review process, to compute the 
final CI at the end of the calendar year.\76\ We note that for the last 
quarter of validation, because of the need to calculate the confidence 
interval in a timely manner and the insufficient time available to 
conduct educational reviews prior to the annual payment update, the 
validation score review and correction would not be available. Instead, 
the existing reconsideration process would be used to dispute any 
unsatisfactory validation result. We refer readers to section XIII.D.9. 
of this final rule with comment period for a discussion about our 
reconsideration and appeals process.
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    \76\ Validation pass-fail status is determined by the confidence 
interval report. Detail at: http://www.qualityreportingcenter.com/wp-content/uploads/2017/01/OQR-CY18-Validation-Webinar.508.2.pdf.
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    The corrected scores would be applicable to the corresponding 
quarter, for the first 3 quarters of validation, for which a request 
was submitted. Under this proposal, after evaluating the validation 
score during the educational review process, if results show that there 
was indeed an error in the originally calculated score, we would take 
steps to correct it. However, so as not to dissuade participation in 
the educational review process, corrected scores identified through the 
educational review would only be used to recalculate the CI if they 
indicate that the hospital performed more favorably than previously 
determined. If the hospital performed less favorably, their score would 
not be updated to reflect the less favorable score.
    We note that under this proposal, the quarterly validation reports 
issued to hospitals would not be updated to reflect the corrected score 
due to the burden associated with reissuing corrected reports. However, 
the corrected score would be communicated to the hospital via secure 
file format as discussed above.
    We invited public comment on our proposal, as discussed above for 
the CY 2020 payment determination and subsequent years, to use 
corrected quarterly scores, as recalculated during the educational 
review process

[[Page 59443]]

described and finalized in section XIII.D.7.c.(2)(a) of this final rule 
with comment period above, to compute the final confidence interval for 
the first 3 quarters of validation.
    Comment: Several commenters supported the proposed changes to use 
the educational review process to correct validation scores, noting 
that the policy will increase efficiency and help hospitals understand 
their annual validation score. One commenter recommended that CMS 
accept educational review requests from facilities that have a passing 
validation score, given that there could be errors that result in a 
mistakenly low, though still passing, score.
    Response: We thank the commenters for their support and note that 
under the formalized process we are finalizing, hospitals may request 
an educational review to examine any data element discrepancies, if 
they believe the score is incorrect, or when they have general 
questions about their score (82 FR 33682). Under this process, 
hospitals receive validation results on a quarterly basis and can 
request informal educational reviews for each quarter. A hospital has 
30 calendar days from the date the validation results are posted on the 
QualityNet Secure Portal Web site to contact the CMS designated 
contractor, currently known as the Validation Support Contractor (VSC), 
to request an educational review. To be clear, educational review 
requests are not limited to hospitals that fail validation; any 
hospital that receives validation results (pass or fail) may request a 
validation educational review.
    After consideration of the public comments received, we are 
finalizing our proposal to use corrected quarterly scores, as 
recalculated during the educational review process described in section 
XIII.D.7.c.(2)(a) of this final rule with comment period above, to 
compute the final confidence interval for the first 3 quarters of 
validation for the CY 2020 payment determination and subsequent years, 
as proposed.
8. Extraordinary Circumstances Exception Process for the CY 2020 
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 final rule with comment period (81 FR 
79795), we finalized an update to 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, 
effective with ECEs requested on or after January 1, 2017.
    We note that many of our quality reporting and value-based 
purchasing programs share a common process for requesting an exception 
from program reporting due to an extraordinary circumstance not within 
a provider's control. The Hospital IQR, Hospital OQR, IPFQR, ASCQR, and 
PCHQR Programs, as well as the Hospital Acquired Condition Reduction 
Program and the Hospital Readmissions Reduction Program, share similar 
processes for ECE requests. We refer readers to policies for the 
Hospital IQR Program (76 FR 51651 through 51652, 78 FR 50836 through 
50837, 79 FR 50277, 81 FR 57181 through 57182, and 42 CFR 
412.140(c)(2)), the IPFQR Program (77 FR 53659 through 53660 and 79 FR 
45978), the ASCQR Program (77 FR 53642 through 53643 and 78 FR 75140 
through 75141), the PCHQR Program (78 FR 50848), the HAC Reduction 
Program (80 FR 49579 through 49581), and the Hospital Readmissions 
Reduction Program (80 FR 49542 through 49543) for program specific 
information about extraordinary circumstances exceptions requests. As 
noted below, some of these policies were updated in the FY 2018 IPPS/
LTCH PPS final rule.
    In reviewing the policies for these programs, we recognized that 
there are five areas in which these programs have variances regarding 
ECE requests. These are: (1) Allowing the facilities or hospitals to 
submit a form signed by the facility's or hospital's CEO versus CEO or 
designated personnel; (2) requiring the form be submitted within 30 
days following the date that the extraordinary circumstance occurred 
versus within 90 days following the date the extraordinary circumstance 
occurred; (3) inconsistency regarding specification of a timeline for 
us to provide our formal response notifying the facility or hospital of 
our decision; (4) inconsistency regarding specification of our 
authority to grant ECEs due to CMS data system issues; and (5) 
referring to the program as ``extraordinary extensions/exemptions'' 
versus as ``extraordinary circumstances exceptions.'' We believe 
addressing these five areas, as appropriate, can improve administrative 
efficiencies for affected facilities or hospitals.
    We note that, in the FY 2018 IPPS/LTCH PPS final rule, we examined 
our policies in these areas for the Hospital Readmissions Reduction 
Program, the HAC Reduction Program, the Hospital IQR Program, the PCHQR 
Program and the IPFQR Program (82 FR 38240, 38277, 38410, 38425 and 
38473 through 38474, respectively) and finalized proposals to address 
differences in these areas for those programs. In section XIV.D.6. of 
this final rule with comment period, we are also finalizing revisions 
to our ECE policies for the ASCQR Program.
    With the exception of the specification of a timeline for us to 
provide our formal response and the terminology used to describe these 
processes (items 3 and 5 above), the Hospital OQR Program is aligned 
with the existing and proposed policies for the other quality reporting 
programs discussed above. As a result, we proposed to rename the 
process as the extraordinary circumstances exceptions (ECE) policy and 
make conforming changes to 42 CFR 419.46(d).
a. ECE Policy Nomenclature
    We have observed that while all quality programs listed above have 
developed similar policies to provide exceptions from program 
requirements to facilities that have experienced extraordinary 
circumstances, such as natural disasters, these programs refer to these 
policies using inconsistent terminology. Some programs refer to these 
policies as ``extraordinary circumstances extensions/exemptions'' while 
others refer to the set of policies as ``extraordinary circumstances 
exceptions.'' Several programs (specifically, the Hospital VBP Program, 
HAC Reduction Program, and the Hospital Readmissions Reduction Program) 
are not able to grant extensions to required data reporting timelines 
due to their reliance on data external to their program and, thus, the 
term, ``extraordinary circumstances extensions/exemptions'' is not 
applicable to all programs. However, all of the described programs are 
able to offer exceptions from their reporting requirements.
    As stated above, in order to align this policy across CMS quality 
programs, we proposed to: (1) Change the name of this policy from 
``extraordinary circumstances extensions or exemptions'' to 
``extraordinary circumstances exceptions'' for the Hospital OQR 
Program, beginning January 1, 2018; and (2) revise 42 CFR

[[Page 59444]]

419.46(d) of our regulations to reflect this change. We note that 
changing the terminology for this policy does not change the 
availability for a hospital to request an extension under the Hospital 
OQR Program.
    We invited public comment on these proposals as discussed above.
    Comment: One commenter supported the proposed alignment of the ECE 
process across quality reporting programs.
    Response: We appreciate the commenter's support.
    After consideration of the public comment we received, we are 
finalizing the proposal to rename the process as the extraordinary 
circumstances exceptions (ECE) policy and make conforming changes to 42 
CFR 419.46(d), as proposed.
b. Timeline for CMS Response to ECE Requests
    We also note that we believe it is important for facilities to 
receive timely feedback regarding the status of ECE requests. We strive 
to complete our review of each ECE request as quickly as possible. 
However, we recognize that the number of requests we receive, and the 
complexity of the information provided impacts the actual timeframe to 
make ECE determinations. To improve transparency of our process, we 
believe it is appropriate to specify that we will strive to complete 
our review of each request within 90 days of receipt.
9. Hospital OQR Program Reconsideration and Appeals Procedures for the 
CY 2020 Payment Determination and Subsequent Years
    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), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70524), and the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79795) for a discussion of our 
reconsideration and appeals procedures. 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.
    We did not propose any changes to our reconsideration and appeals 
procedure.

E. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR 
Program Requirements for the CY 2018 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 
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 year.
    The application of a reduced OPD fee schedule increase factor 
results in reduced national unadjusted payment rates that apply to 
certain outpatient items and services provided by hospitals that are 
required to report outpatient quality data in order to receive the full 
payment update factor and that fail to meet the Hospital OQR Program 
requirements. Hospitals that meet the reporting requirements receive 
the full OPPS payment update without the reduction. For a more detailed 
discussion of how this payment reduction was initially implemented, we 
refer readers to the CY 2009 OPPS/ASC final rule with comment period 
(73 FR 68769 through 68772).
    The national unadjusted payment rates for many services paid under 
the OPPS equal the product of the OPPS conversion factor and the scaled 
relative payment weight for the APC to which the service is assigned. 
The OPPS conversion factor, which is updated annually by the OPD fee 
schedule increase factor, is used to calculate the OPPS payment rate 
for services with the following status indicators (listed in Addendum B 
to the final rule, which is available via the Internet on the CMS Web 
site): ``J1'', ``J2'', ``P'', ``Q1'', ``Q2'', ``Q3'', ``R'', ``S'', 
``T'', ``V'', or ``U''. In the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79796), we clarified 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 
separately through the OPPS. 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

[[Page 59445]]

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 
2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33684 through 33685), 
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 2018 annual payment update factor. 
For the CY 2018 OPPS, the proposed reporting ratio was 0.980, 
calculated by dividing the proposed reduced conversion factor of 74.953 
by the proposed full conversion factor of 76.483. We proposed to 
continue to apply the reporting ratio to all services calculated using 
the OPPS conversion factor. For the CY 2018 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'', ``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 but no comments were 
received. For the CY 2018 OPPS, the final reporting ratio is 0.980, 
calculated by dividing the final reduced conversion factor of 77.064 by 
the final full conversion factor of 78.636. We are finalizing the rest 
of our proposal without modification.

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 seek to promote higher quality and more efficient health care 
for beneficiaries. This effort is supported by the adoption of widely-
agreed-upon quality measures. We have worked with relevant stakeholders 
to define measures of quality in almost every healthcare setting and 
currently measure some aspect of care for almost all Medicare 
beneficiaries. These measures assess structural aspects of care, 
clinical processes, patient experiences with care, and outcomes. We 
have implemented quality measure reporting programs for multiple 
settings of care. To measure the quality of ASC services, we 
implemented 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. of the CY 2015 OPPS/ASC final rule with comment period (79 
FR 66966 through 66987), section XIV. of the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70526 through 70538) and section XIV. 
of the CY 2017 OPPS/ASC final rule with comment period (81 FR 79797 
through 79826) for an overview of the regulatory history of the ASCQR 
Program.

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68493 through 68494) for a detailed discussion of the 
priorities we consider for ASCQR Program quality measure selection. We 
did not propose any changes to this policy.
2. Accounting for Social Risk Factors in the ASCQR Program
    We understand that social risk factors such as income, education, 
race and ethnicity, employment, disability, community resources, and 
social support (certain factors of which are also sometimes referred to 
as socioeconomic status (SES) factors or socio-demographic status (SDS) 
factors) play a major role in health. One of our core objectives is to 
improve beneficiary outcomes including reducing health disparities, and 
we want to ensure that all beneficiaries, including those with social 
risk factors, receive high quality care. In addition, we seek to ensure 
that the quality of care furnished by providers and suppliers is 
assessed as fairly as possible under our programs while ensuring that 
beneficiaries have adequate access to excellent care.
    We have been reviewing reports prepared by the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) \77\ and the 
National Academies of Sciences, Engineering, and Medicine on the issue 
of measuring and accounting for social risk factors in CMS' value-based 
purchasing and quality reporting programs, and considering options on 
how to address the issue in these programs. On December 21, 2016, ASPE 
submitted a

[[Page 59446]]

Report to Congress on a study it was required to conduct under section 
2(d) of the Improving Medicare Post-Acute Care Transformation (IMPACT) 
Act of 2014. The study analyzed the effects of certain social risk 
factors of Medicare beneficiaries on quality measures and measures of 
resource use used in one or more of nine Medicare value-based 
purchasing programs.\78\ The report also included considerations for 
strategies to account for social risk factors in these programs. In a 
January 10, 2017 report released by the National Academies of Sciences, 
Engineering, and Medicine, the body provided various potential methods 
for accounting for social risk factors, including stratified public 
reporting.\79\
---------------------------------------------------------------------------

    \77\ Office of the Assistant Secretary for Planning and 
Evaluation. 2016. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 21 
Dec. 2016. Available at: https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \78\ Ibid.
    \79\ National Academies of Sciences, Engineering, and Medicine. 
2017. Accounting for social risk factors in Medicare payment. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    As noted in the FY 2017 IPPS/LTCH PPS final rule, the NQF has 
undertaken a 2-year trial period in which new measures, measures 
undergoing maintenance review, and measures endorsed with the condition 
that they enter the trial period can be assessed to determine whether 
risk adjustment for selected social risk factors is appropriate for 
these measures. This trial entailed temporarily allowing inclusion of 
social risk factors in the risk-adjustment approach for some 
performance measures. Since publication of the proposed rule, we have 
learned that the National Quality Forum (NQF) has concluded their 
initial trial on risk adjustment for quality measures.\80\ Based on the 
findings from the initial trial, we have been informed that the NQF 
intends to continue its work to evaluate the impact of social risk 
factor adjustment on intermediate outcome and outcome measures for an 
additional three years. We understand that the extension of this work 
will allow NQF to determine further how to effectively account for 
social risk factors through risk adjustment and other strategies in 
quality measurement.
---------------------------------------------------------------------------

    \80\ NQF. NQF Initiative to Determine the Impact of Adjusting 
Healthcare Performance Measures for Social Risk Factors Highlights 
Successes, Opportunities. Available at: https://www.qualityforum.org/News_And_Resources/Press_Releases/2017/NQF_Initiative_to_Determine_the_Impact_of_Adjusting_Healthcare_Performance_Measures_for_Social_Risk_Factors_Highlights_Successes,_Opportunities.aspx.
---------------------------------------------------------------------------

    As we continue to consider the analyses and recommendations from 
these reports and the results of the NQF trial on risk adjustment for 
quality measures, we are continuing to work with stakeholders in this 
process. As we have previously communicated, we are concerned about 
holding providers to different standards for the outcomes of their 
patients with social risk factors because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes 
for disadvantaged populations. Keeping this concern in mind, in the 
proposed rule we sought public comment on whether we should account for 
social risk factors in the ASCQR Program, and if so, what method or 
combination of methods would be most appropriate for accounting for 
social risk factors. Examples of methods include: Confidential 
reporting to providers of measure rates stratified by social risk 
factors; public reporting of stratified measure rates; and potential 
risk adjustment of a particular measure as appropriate based on data 
and evidence.
    In addition, we requested public comment on which social risk 
factors might be most appropriate for reporting stratified measure 
scores and/or potential risk adjustment of a particular measure. 
Examples of social risk factors include, but are not limited to, dual 
eligibility/low-income subsidy, race and ethnicity, and geographic area 
of residence. We sought comments on which of these factors, including 
current data sources where this information would be available, could 
be used alone or in combination, and whether other data should be 
collected to better capture the effects of social risk. We will take 
commenters' input into consideration as we continue to assess the 
appropriateness and feasibility of accounting for social risk factors 
in the ASCQR Program. We note that any such changes would be proposed 
through future notice and comment rulemaking.
    We look forward to working with stakeholders as we consider the 
issue of accounting for social risk factors and reducing health 
disparities in CMS programs. Of note, implementing any of the above 
methods would be taken into consideration in the context of how this 
and other CMS programs operate (for example, data submission methods, 
availability of data, statistical considerations relating to 
reliability of data calculations, among others), so we also welcome 
comment on operational considerations. CMS is committed to ensuring 
that its beneficiaries have access to and receive excellent care, and 
that the quality of care furnished by providers and suppliers is 
assessed fairly in CMS programs.
    We received extensive comments in response to our request for 
public comment on whether we should account for social risk factors in 
the ASCQR Program, and if so, what method or combination of methods 
would be most appropriate for accounting for social risk factors.
    Comment: Many commenters expressed support for CMS' effort to 
address social risk factors in the ASCQR Program, noting that social 
risk factors are powerful drivers of care provision and clinical 
outcomes.
    One commenter recommended that CMS apply risk adjustment by 
stratifying providers into groups by proportion of at-risk patients, 
noting that this approach does not require measure-level research. 
Another commenter recommended that CMS determine whether or not social 
risk factor disparities exist in the ASC setting prior to committing to 
adjusting any measures for these factors, and that CMS rely on data 
elements existing in CMS databases. A few commenters recommended that 
CMS provide ASCs with both risk-adjusted and unadjusted data in order 
to allow for transparency.
    One commenter noted that better data sources for socioeconomic 
status are needed, including patient-level and community-level data 
sources, and that measure-specific risk adjustment methodologies are 
appropriate. Finally, one commenter noted that risk adjustment should 
balance fair measurement with ensuring that disparities are not masked.
    Response: We appreciate all the comments and interest in this 
topic. As we have previously stated regarding risk adjustment of 
publicly reported data for these factors, we are concerned about 
holding providers and suppliers to different standards for the outcomes 
of their patients with social risk factors, because we do not want to 
mask potential disparities or minimize incentives to improve outcomes 
for disadvantaged populations. With respect to public reporting, while 
we agree with commenters and believe it is important to avoid a 
scenario in which underlying disparities are masked rather than 
addressed, we also agree with commenters who support the public 
reporting of risk-adjusted data. We appreciate the need to balance risk 
adjustment as a strategy to account for social risk factors with the 
concern that risk adjustment could minimize incentives and reduce 
efforts to address disparities for patients with social risk factors. 
We believe that the path forward should incentivize improvements in 
health outcomes for disadvantaged populations while ensuring that 
beneficiaries have access to excellent care. We will consider all 
suggestions as we continue to assess the issue of accounting for social 
risk factors within individual measures and the program as a whole, and 
will actively perform

[[Page 59447]]

additional research and monitor for trends to prevent unintended 
consequences. We intend to conduct further analyses on the impact of 
different approaches to accounting for social risk factors in quality 
programs.
    Comment: Many commenters recommended several social variables and 
comorbidities, including: Body mass index; race; smoking status; age; 
gender; back pain; pain in non-operative lower extremity joint; health 
risk status; mental health factors; chronic narcotic use; socioeconomic 
status; and pre-procedure ambulatory status. Commenters also 
recommended that future risk variables could include literacy, marital 
status, live-in home support, family support structure, and home health 
resources. One commenter recommended that the following variables not 
be used: American Society of Anesthesiologists score; range of motion; 
and mode of patient-reported outcome measure collection. One commenter 
expressed concern with the use of dual eligible status as a factor, 
noting that it does not identify or address the specific factors that 
result in higher spending and/or poorer health outcomes.
    Response: We appreciate commenters' recommendations regarding 
specific social risk factor variables and will consider them as we 
continue exploring options for accounting for social risk factors in 
the ASCQR Program.
    Comment: Several commenters recommended that CMS consider potential 
administrative complexities as well as patient impact when implementing 
risk-adjustment methodologies.
    Response: As we consider the feasibility of collecting patient-
level data and the impact of strategies to account for social risk 
factors through further analysis, we will also continue to evaluate the 
reporting burden on patients and providers. We reiterate that we are 
committed to ensuring that CMS beneficiaries have access to and receive 
excellent care and that the quality of care furnished by providers and 
suppliers is assessed fairly in CMS programs.
    Comment: Some commenters recommended that CMS consider 
recommendations from NQF, ASPE, and the Agency for Healthcare Research 
and Quality (AHRQ).
    Response: Any proposals would be made in future rulemaking after 
further research and continued stakeholder engagement including from 
NQF. In addition, we look forward to working with all stakeholders, 
including NQF, ASPE, the National Academy of Medicine, and AHRQ.
    We thank all of the commenters for their input and will consider 
all suggestions as we continue to assess the issue of accounting for 
social risk factors within individual measures, the ASCQR Program as a 
whole, and across CMS quality programs.
3. Policies for Retention and Removal of Quality Measures From the 
ASCQR Program
a. Retention of Previously Adopted ASCQR Program Measures
    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; and 79 FR 66967 through 66969). We did not propose 
any changes to this policy.
b. Measure Removal
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66967 through 66969) and 42 CFR 416.320 for a detailed 
discussion of the process for removing adopted measures from the ASCQR 
Program. We did not propose any changes to this process.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33687), we proposed to 
remove a total of three measures for the CY 2019 payment determination 
and subsequent years: (1) ASC-5: Prophylactic Intravenous (IV) 
Antibiotic Timing; (2) ASC-6: Safe Surgery Checklist Use; and (3) ASC-
7: ASC Facility Volume Data on Selected Procedures. These proposals are 
discussed in more detail below.
(1) Removal of ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing 
Beginning With the CY 2019 Payment Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74499 through 74501) where we adopted ASC-5: Prophylactic 
Intravenous (IV) Antibiotic Timing measure (formerly NQF #0264) 
beginning with the CY 2014 payment determination and finalized the 
measure's data collection and data submission timelines (76 FR 74515 
through 74516). This measure assesses whether intravenous antibiotics 
given for prevention of surgical site infection were administered on 
time per clinical guidelines.
    Based on our analysis of ASCQR Program measure data for CY 2014 
through 2016 encounters, ASC performance on this measure is so high and 
unvarying that meaningful distinctions in improvement cannot be made; 
as a result, we believe this measure meets removal criterion number one 
under the ASCQR Program's finalized measure removal criteria. The ASCQR 
Program previously finalized two criteria for determining when a 
measure is ``topped out:'' (1) When there is statistically 
indistinguishable performance at the 75th and 90th percentiles of 
national facility performance; and (2) when the measure's truncated 
coefficient of variation (COV) is less than or equal to 0.10 (79 FR 
66968 through 66969). These analyses are captured in the table below.

                   ASC-5--Prophylactic Intravenous (IV) Antibiotic Timing Topped Out Analysis
----------------------------------------------------------------------------------------------------------------
                                                                       75th            90th
                   Encounters                     Number of ASCs    percentile      percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2014.........................................           2,206         100.000         100.000         0.02633
CY 2015.........................................           2,196         100.000         100.000         0.03289
CY 2016.........................................           2,158         100.000         100.000         0.02619
----------------------------------------------------------------------------------------------------------------

    As displayed in the table above, there is no distinguishable 
difference in ASC performance between the 75th and 90th percentiles 
under the ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing 
measure, and the truncated coefficient of variation has been below 0.10 
since 2014. Therefore, the ASC-5: Prophylactic Intravenous (IV) 
Antibiotic Timing measure meets both ``topped out'' measure criteria 
for the ASCQR Program.
    Furthermore, we note that the NQF endorsement was removed on 
February 13, 2015; in its discussion of whether to

[[Page 59448]]

continue endorsement for the ASC-5: Prophylactic Intravenous (IV) 
Antibiotic Timing measure, the Surgery Standing Committee also noted 
that ASC performance on this measure was very high, with 99 percent of 
facilities meeting the timely antibiotic administration threshold in CY 
2013.\81\ We believe that removal of this measure from the ASCQR 
Program measure set is appropriate, as there is little room for 
improvement and removal would alleviate maintenance costs and 
administrative burden to ASCs. As such, we believe the burdens outweigh 
the benefits of keeping the measure in the ASCQR Program. Therefore, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33687), we proposed to remove 
the ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing measure for 
the CY 2019 payment determination and subsequent years. Furthermore, we 
note that a similar measure was removed from the Hospital OQR Program 
in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66942 
through 66944) due to topped-out status.
---------------------------------------------------------------------------

    \81\ NQF. ``NQF-Endorsed Measures for Surgical Procedures.'' 
Technical Report. Available at: http://www.qualityforum.org/Publications/2015/02/NQF-Endorsed_Measures_for_Surgical_Procedures.aspx.
---------------------------------------------------------------------------

    We invited public comment on our proposal to remove the ASC-5: 
Prophylactic Intravenous (IV) Antibiotic Timing measure for the CY 2019 
payment determination and subsequent years as discussed above.
    Comment: Many commenters supported the proposal to remove the ASC-
5: Prophylactic Intravenous (IV) Antibiotic Timing measure, and agreed 
with CMS' rationale that the measure does not add value and that 
removal of this measure reduces administrative burden.
    Response: We thank the commenters for their support.
    Comment: One commenter opposed the proposed removal of ASC-5: 
Prophylactic Intravenous (IV) Antibiotic Timing measure. The commenter 
noted that the measure provides value and recommended that the measure 
be retained in the ASCQR Program despite having ``topped-out'' status.
    Response: We understand commenter's concern with removing the ASC-
5: Prophylactic Intravenous (IV) Antibiotic Timing measure, and agree 
that the data captured under the ASC-5 measure could be useful in 
selecting an ASC at which to receive care. However, we believe that 
removal of this measure from the ASCQR Program measure set is 
appropriate as there is little room for improvement, as shown by our 
data in the table above, and removal would alleviate maintenance costs 
and administrative burden to ASCs. Overall, we believe the burdens 
outweigh the benefits of keeping the measure in the ASCQR Program, as 
stated in our proposal. In response to concerns that the measure adds 
value, we note that Prophylactic Intravenous (IV) Antibiotic Timing 
measure data are collected and publicly reported by the ASC Quality 
Collaboration.
    After consideration of the public comments we received, we are 
finalizing the proposal to remove the ASC-5: Prophylactic Intravenous 
(IV) Antibiotic Timing measure for the CY 2019 payment determination 
and subsequent years, as proposed.
(2) Removal of ASC-6: Safe Surgery Checklist Use Beginning With the CY 
2019 Payment Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74505 through 74507 and 74509), where we adopted the ASC-
6: Safe Surgery Checklist Use measure beginning with the CY 2015 
payment determination. This structural measure of facility process 
assesses whether an ASC employed a safe surgery checklist that covered 
each of the three critical perioperative periods (prior to 
administering anesthesia, prior to skin incision, and prior to patient 
leaving the operating room) for the entire data collection period.
    Based on our analysis of ASCQR Program measure data for CYs 2014 to 
2016 encounters, the ASC-6: Safe Surgery Checklist Use measure meets 
our first criterion for measure removal that measure performance is so 
high and unvarying that meaningful distinctions and improvements in 
performance can no longer be made. The ASCQR Program previously 
finalized two criteria for determining when a measure is ``topped 
out:'' (1) When there is statistically indistinguishable performance at 
the 75th and 90th percentiles of national facility performance; and (2) 
when the measure's truncated coefficient of variation is less than or 
equal to 0.10 (79 FR 66968 through 66969). These analyses are captured 
in the table below.

                             ASC-6--Safe Surgery Checklist Use Performance Analysis
----------------------------------------------------------------------------------------------------------------
                                                                       75th            90th
           Encounters             Number of ASCs       Rate         percentile      percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2012.........................           4,356           0.989         100.000         100.000           0.106
CY 2013 \82\....................             (*)             (*)             (*)             (*)             (*)
CY 2014.........................           4,328           0.997         100.000         100.000           0.050
CY 2015.........................           4,305           0.998         100.000         100.000           0.043
----------------------------------------------------------------------------------------------------------------

    Based on the analysis above the national rate of ``Yes'' response 
for the ASC-6: Safe Surgery Checklist Use measure is nearly 1.0, or 100 
percent, nationwide, and has remained at this level for the last 2 
years. In addition, there is no distinguishable difference in ASC 
performance between the 75th and 90th percentiles under measure, and 
the truncated coefficient of variation has been below 0.10 since 2014. 
We believe that removal of this measure from the ASCQR Program measure 
set is appropriate, as there is little room for improvement. In 
addition, removal of this measure would alleviate the maintenance costs 
and administrative burden to ASCs associated with retaining the 
measure. As such, we believe the burdens of this measure outweigh the 
benefits of keeping the measure in the Program.
---------------------------------------------------------------------------

    \82\ We note that no performance data was collected for CY 2013 
events for the web-based measures; therefore, we lack performance 
data for the ASC-6 measure for this year of the ASCQR Program. 
Available at: https://www.qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228890196351&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3DASC_wbnr_prsntn_121813_1ppg.pdf&blobcol=urldata&blobtable=MungoBlobs.
---------------------------------------------------------------------------

    Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33688), we 
proposed to remove ASC-6: Safe Surgery Checklist Use from the ASCQR 
Program measure set beginning with the CY 2019 payment determination. 
We also refer readers to section XIII.B.4.c.(6) of this final rule with 
comment period, where the Hospital OQR Program is removing a similar 
measure.

[[Page 59449]]

    We invited public comment on our proposal to remove the ASC-6: Safe 
Surgery Checklist Use measure for the CY 2019 payment determination and 
subsequent years as discussed above.
    Comment: Many commenters supported the proposal to remove the ASC-
6: Safe Surgery Checklist Use measure, and agreed with our rationale 
that the measure does not add value and that removal would reduce 
administrative burden.
    Response: We thank the commenters for their support.
    Comment: A few commenters opposed the proposed removal of the ASC-
6: Safe Surgery Checklist Use measure, noting that this measure 
provides value and recommending retention of this measure in the ASCQR 
Program. One commenter expressed concern that high performance on the 
measure does not indicate whether perioperative communication among 
team members is effective, and recommended that CMS retain the measure 
until there is further evidence of whether the use of a safe surgery 
checklist is supporting effective perioperative communication.
    Response: While we agree the ASC-6: Safe Surgery Checklist Use 
measure captures data patients may find useful in comparing ASCs while 
selecting an ASC for their care, we believe that removal of this 
measure from the ASCQR Program measure set is appropriate as there is 
little room for improvement, as shown by our data in the table above. 
In addition, removal of this measure would alleviate the maintenance 
costs and administrative burden to ASCs. Therefore, overall, we believe 
the burden outweighs the benefits of keeping the measure in the ASCQR 
Program, as stated in our proposal. We also note that high performance 
on the ASC-6: Safe Surgery Checklist Use measure does not indicate 
whether perioperative communication among team members is effective; 
this measure is not specified to assess the effectiveness of a team's 
communication, only whether a safe surgery checklist is used at the 
ASC. Therefore, we do not believe continuing to collect--or, 
conversely, ceasing to collect--data under this measure will assess or 
affect the effectiveness of perioperative communication within ASCs.
    After consideration of the public comments we received, we are 
finalizing the proposal to remove ASC-6: Safe Surgery Checklist Use 
from the ASCQR Program measure set beginning with the CY 2019 payment 
determination, as proposed. We also refer readers to section 
XIII.B.4.c.(6) of this final rule where we are finalizing removal of a 
similar measure from the Hospital OQR Program.
(3) Removal of ASC-7: ASC Facility Volume Data on Selected Procedures 
Beginning With the CY 2019 Payment Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74507 through 74509), where we adopted the ASC-7: ASC 
Facility Volume Data on Selected Procedures measure beginning with the 
CY 2015 payment determination. This structural measure of facility 
capacity collects surgical procedure volume data on six categories of 
procedures frequently performed in the ASC setting (76 FR 74507).
    We adopted the ASC-7: ASC Facility Volume Data on Selected 
Procedures measure based on evidence that volume of surgical 
procedures, particularly of high-risk surgical procedures, is related 
to better patient outcomes, including decreased medical errors and 
mortality (76 FR 74507). We further stated our belief that publicly 
reporting volume data would provide patients with beneficial 
performance information to use in selecting a care provider. However, 
over time, we have adopted, and intend to continue to adopt, more 
measures assessing ASCs' performance on specific procedure types, like 
ASC-14. As stated below, we believe measures on specific procedure 
types will provide patients with more valuable ASC performance data. 
These types of measures are also more strongly associated with desired 
patient outcomes for the particular topic. For example, in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79801 through 79803), we 
adopted ASC-14: Unplanned Anterior Vitrectomy, a measure assessing 
patient outcomes following ophthalmologic procedures, and proposed to 
adopt a second ophthalmology-specific measure, ASC-16: Toxic Anterior 
Segment Syndrome, in the CY 2018 proposed rule (82 FR 33689 through 
33691). We believe these procedure-type-specific measures provide 
patients with more valuable ASC performance data than the ASC-7: ASC 
Facility Volume Data on Selected Procedures measure in selecting an ASC 
for their care. For this reason, we believe the ASC-7: ASC Facility 
Volume Data on Selected Procedures measure meets our second criterion 
for removal from the program; specifically, that there are other 
measures available that are more strongly associated with desired 
patient outcomes for the particular topic. In addition, removal of this 
measure would alleviate the maintenance costs and administrative burden 
to ASCs associated with retaining the measure. As such, we believe the 
burdens of this measure outweigh the benefits of keeping the measure in 
the ASCQR Program. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33688), we proposed to remove ASC-7: ASC Facility Volume Data on 
Selected Procedures from the ASCQR Program beginning with the CY 2019 
payment determination. We refer readers to section XIII.B.4.c.(2) of 
this final rule with comment period where we are removing a similar 
measure from the Hospital OQR Program.
    We invited public comment on our proposal to remove the ASC-7: ASC 
Facility Volume Data on Selected Procedures measure for the CY 2019 
payment determination and subsequent years as discussed above.
    Comment: Many commenters supported the proposal to remove the ASC-
7: ASC Facility Volume Data on Selected Procedures measure and agreed 
with CMS' rationale that the measure does not add value and that its 
removal reduces administrative burden.
    Response: We thank the commenters for their support.
    Comment: A few commenters opposed the proposal to remove the ASC-7: 
ASC Facility Volume Data on Selected Procedures measure. One commenter 
cited concern that removal of this measure will limit the availability 
of important data that informs comparative research, outcomes research, 
and that this measure provides immediate consumer value. Moreover, the 
commenter expressed concern that reducing the data available will 
interfere with the growing acceptance of ASC-based procedures. Another 
commenter noted that the measure is not overly burdensome and that it 
is helpful for strategic planning.
    Response: While we believe that continuing to collect and publicly 
report facility volume data would provide patients with beneficial 
performance information to use in selecting a care provider, over time, 
we have adopted, and intend to continue to adopt, more measures 
assessing ASCs' performance on specific procedure types. In addition, 
removal of this measure would alleviate the maintenance costs and 
administrative burden to ASCs associated with retaining the measure. As 
such, although we recognize the value of the measure for research, 
strategic planning, and in demonstrating the value of ASC-based 
procedures, overall we believe the burden of this measure outweighs the 
benefits of

[[Page 59450]]

keeping the measure in the ASCQR Program as stated in our proposal.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove ASC-7: ASC Facility Volume Data on 
Selected Procedures from the ASCQR Program beginning with the CY 2019 
payment determination, as proposed.
4. Delaying Implementation of ASC-15a-e: Outpatient and Ambulatory 
Surgery Consumer Assessment of Healthcare Providers and Systems (OAS 
CAHPS) Survey-Based Measures Beginning With the CY 2020 Payment 
Determination
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period where we adopted ASC-15a-e (81 FR 79803 through 79817), and 
finalized data collection and data submission timelines (81 FR 79822 
through 79824). These measures assess patients' experience with care 
following a procedure or surgery in an ASC by rating patient experience 
as a means for empowering patients and improving the quality of their 
care.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33688), we proposed to 
delay implementation of the Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based 
Measures (ASC-15a-e) beginning with the CY 2020 payment determination 
(CY 2018 data collection) until further action in future rulemaking. 
Since our adoption of these measures, we have come to believe that we 
need to collect more operational and implementation data. Specifically, 
we want to ensure that the survey measures appropriately account for 
patient response rates, both aggregate and by survey administration 
method; reaffirm the reliability of national implementation of OAS 
CAHPS Survey data; and appropriately account for the burden associated 
with administering the survey in the outpatient setting of care. We 
note that commenters expressed concern over the burden associated with 
the survey in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79810). We believe that the voluntary national implementation of the 
survey, which began in January 2016, would provide valuable information 
moving forward. We plan to conduct analyses of the national 
implementation data to undertake any necessary modifications to the 
survey tool and/or CMS systems. We believe it is important to allow 
time for any modifications before requiring the survey under the ASCQR 
Program. However, we continue to believe that these measures address an 
area of care that is not adequately addressed in our current measure 
set and will be useful to assess aspects of care where the patient is 
the best or only source of information.
    Further, we continue to believe these measures will enable 
objective and meaningful comparisons between ASCs. Therefore, we 
proposed to delay implementation of ASC-15a-e beginning with the CY 
2020 payment determination (CY 2018 data collection) until further 
action in future rulemaking. We also refer readers to section XIII.B.5. 
of this final rule with comment period where we are finalizing a 
similar policy in the Hospital OQR Program.
    We invited public comment on our proposal to delay the OAS CAHPS 
Survey-based measures beginning with the CY 2020 payment determination 
as discussed above.
    Comment: Many commenters supported the proposal to delay 
implementation of the OAS CAHPS Survey and noted that if the survey 
could be improved, ASCs would benefit from having their scores 
available for comparison to hospital outpatient departments. One 
commenter agreed that an analysis of the national implementation will 
provide valuable information. Another commenter noted that the high 
volume of facilities and hospitals participating in the voluntary 
national implementation indicates that the data collection burden of 
the survey is low.
    Response: We thank the commenters for their support, and agree that 
an analysis of the national implementation of OAS CAHPS Survey will 
provide valuable information as we continue to assess the survey. We 
also acknowledge that comparing scores between ASCs and hospital 
outpatient departments may be useful to ASCs and that some ASCs may 
find the survey to have only limited burden. However, as discussed 
below, in order to be responsive to concerns about vendor costs and to 
review the results of the national implementation, we are finalizing 
our proposal to delay implementation of the OAS CAHPS Survey.
    Comment: A few commenters opposed the proposal to delay 
implementation of the OAS CAHPS Survey, noting the importance of 
patient experience data. One commenter noted that the survey assesses 
areas of care not yet adequately addressed and that patient experience 
of care is a priority area. Another commenter noted a belief that the 
use of surveys about patient experience in health care settings is the 
best way to examine whether high-quality, patient-centered care 
actually takes place.
    Response: We agree that patient experience of care data is valuable 
in assessing the quality of care provided at an ASC and assisting 
patients in selecting a provider or supplier for their care. However, 
we seek to ensure the value of this data is appropriately balanced 
against the implementation and operational burdens imposed to collect 
and submit these data. As we stated in the proposed rule, we believe 
delaying implementation of the OAS CAHPS Survey will provide additional 
time to assess these issues before moving forward.
    Comment: A few commenters recommended that the survey be voluntary 
indefinitely or until implementation issues with the survey are 
addressed. One commenter recommended that CMS delay implementation of 
the OAS CAHPS indefinitely and instead increase the number of surveyors 
that inspect ASCs. Another commenter recommended that CMS adopt the 
CAHPS surgical care survey as a survey option.
    Response: We thank the commenters for their recommendations, and we 
will take these comments under consideration as we craft future policy. 
We do not believe that inspectors replace a patient-experience-of-care 
survey, because inspections and surveys collect different information. 
Specifically, we believe that patient experience data is an important 
category of information to collect and would not be captured by 
surveyors. Further, we believe a patient experience of care survey will 
provide important information to not just providers, but also patients 
and the general public. Therefore, we will continue to work towards a 
successful implementation of a patient experience survey. In addition, 
we acknowledge the commenter's suggestion that we adopt the surgical 
CAHPS survey and we will consider this recommendation.
    Comment: A few commenters expressed concern about the burden 
associated with collecting 300 surveys and requested that only 100 
surveys be required. Other commenters noted that the survey is 
unnecessarily long, which could reduce response rates or skew results 
if only patients with negative feedback respond, and that not all of 
the questions are relevant. Some commenters noted that the use of a 
third-party vendor is too costly and could lead to more impersonal 
contacts with patients than if ASCs surveyed patients directly. Several 
commenters recommended that vendors should provide electronic or email 
options for

[[Page 59451]]

conducting the OAS CAHPS Survey in order to increase response rates. 
Other commenters recommended that CMS administer the survey on its Web 
site. One commenter noted concern that timely results are not provided. 
A few commenters expressed concern that the CPT codes included in the 
eligibility criteria for the survey are not always applicable.
    Response: While web-based surveys are not available survey modes at 
present, we are actively investigating these modes as possible options 
for the future. We are exploring whether hospitals and ASCs receive 
reliable email addresses from patients and whether there is adequate 
access to the internet across all types of patients. Ultimately, the 
purpose of the investigation is to ensure that any future survey 
administration method does not introduce bias in the survey process and 
reduces length and burden if at all possible. Although we are 
investigating other modes of survey administration, we do not expect 
that CMS will directly administer the survey; the survey would still be 
administered through vendors. In addition, we acknowledge commenters 
concerns that ASCs would not receive immediate feedback from patients 
that is obtained through the survey. Finally, we acknowledge the 
concern about the use of CPT codes, including those for procedures that 
patients may not perceive as surgery. We note that many CPT codes have 
been excluded from inclusion in the OAS CAHPS, including services like 
application of a cast or splint, in order to ensure that only patients 
receiving applicable procedures are surveyed.\83\ We thank the 
commenters and will take all comments under consideration as we craft 
future policy for the OAS CAHPS Survey.
---------------------------------------------------------------------------

    \83\ OASCAHPS.org. Additional Procedural Codes for Exclusion 
from the OAS CAHPS Survey. Available at: https://oascahps.org/General-Information/Announcements/EntryId/80/Additional-Procedural-Codes-for-Exclusion-from-the-OAS-CAHPS-Survey.
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing the proposal to delay implementation of the Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based Measures (ASC-15a-e) beginning with 
the CY 2020 payment determination (CY 2018 data collection) until 
further action in future rulemaking, as proposed. We refer readers to 
section XIII.B.5. of this final rule with comment where we are also 
finalizing delay of the OAS CAHPS Survey-based measures in the Hospital 
OQR Program.
5. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    For the CY 2020 payment determination and subsequent years, we have 
previously finalized the following measure set. We note that this chart 
still includes the ASC-5, ASC-6, and ASC-7 measures, which are being 
finalized for removal beginning with the CY 2019 payment determination 
as discussed above, as well as the ASC-15a-e measures, which are being 
finalized for delay beginning with the CY 2020 payment determination 
and until further action as discussed above:

    ASCQR Program Measure Set Previously Finalized for the CY 2020 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
           ASC No.                        NQF No.                                Measure name
----------------------------------------------------------------------------------------------------------------
ASC-1........................  0263.........................  Patient Burn.
ASC-2........................  0266.........................  Patient Fall.
ASC-3........................  0267.........................  Wrong Site, Wrong Side, Wrong Patient, Wrong
                                                               Procedure, Wrong Implant.
ASC-4........................  0265[dagger].................  All-Cause Hospital Transfer/Admission.
ASC-5........................  0264[dagger].................  Prophylactic Intravenous (IV) Antibiotic Timing.*
ASC-6........................  None.........................  Safe Surgery Checklist Use.*
ASC-7........................  None.........................  ASC Facility Volume Data on Selected 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.......................  None.........................  Normothermia Outcome.
ASC-14.......................  None.........................  Unplanned Anterior Vitrectomy.
ASC-15a......................  None.........................  OAS CAHPS--About Facilities and Staff.***
ASC-15b......................  None.........................  OAS CAHPS--Communication About Procedure.***
ASC-15c......................  None.........................  OAS CAHPS--Preparation for Discharge and
                                                               Recovery.***
ASC-15d......................  None.........................  OAS CAHPS--Overall Rating of Facility.***
ASC-15e......................  None.........................  OAS CAHPS--Recommendation of Facility.***
----------------------------------------------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* Measure finalized for removal beginning with the CY 2019 payment determination, as discussed in section
  XIV.B.3.b. of this final rule with comment period.
** 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).
*** Measure finalized for delay in reporting beginning with the CY 2020 payment determination (CY 2018 data
  collection) until further action in future rulemaking as discussed in section XIV.B.4. of this final rule with
  comment period.


[[Page 59452]]

6. New ASCQR Program Quality Measures for the CY 2021 and CY 2022 
Payment Determinations 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 2018 OPPS/ASC 
proposed rule (82 FR 33689 through 33698), we proposed to adopt a total 
of three new measures for the ASCQR Program: one measure collected via 
a CMS web-based tool for the CY 2021 payment determination and 
subsequent years (ASC-16: Toxic Anterior Segment Syndrome), and two 
measures collected via claims for the CY 2022 payment determination and 
subsequent years (ASC-17: Hospital Visits after Orthopedic Ambulatory 
Surgical Center Procedures; and ASC-18: Hospital Visits after Urology 
Ambulatory Surgical Center Procedures). These measures are discussed in 
detail below.
a. Proposal To Adopt ASC-16: Toxic Anterior Segment Syndrome Beginning 
With the CY 2021 Payment Determination
(1) Background
    Toxic Anterior Segment Syndrome (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.\84\ The TASS measure assesses the number of ophthalmic 
anterior segment surgery patients diagnosed with TASS within two 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.\85\ Prevention requires 
careful attention to solutions, medications, and ophthalmic devices and 
to cleaning and sterilization of surgical equipment because of the 
numerous potential etiologies.\86\ Despite a recent focus on 
prevention, cases of TASS continue to occur, sometimes in clusters.\87\ 
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.
---------------------------------------------------------------------------

    \84\ Centers for Disease Control and Prevention. Toxic Anterior 
Segment Syndrome after Cataract Surgery--Maine, 2006. MMWR. 
Morbidity and Mortality Weekly Report. 2007 Jun 29;56(25):629-630.
    \85\ Breebaart AC, Nuyts RM, Pels E, Edelhauser HF, Verbraak FD. 
Toxic Endothelial Cell Destruction of the Cornea after Routine 
Extracapsular Cataract Surgery. Archives of Ophthalmology 
1990;108:1121-1125.
    \86\ 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. Journal of Cataract 
and Refractive Surgery. 2007 Jun;33(6):1095-1100.
    \87\ Moyle W, Yee RD, Burns JK, Biggins T. Two Consecutive 
Clusters of Toxic Anterior Segment Syndrome. Optometry and Vision 
Science. 2013 Jan;90(1):e11-23.
---------------------------------------------------------------------------

    TASS 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.\88\
---------------------------------------------------------------------------

    \88\ National Quality Forum. ``MAP 2017 Considerations for 
Implementing Measures in Federal Programs: Hospitals.'' Report. 
2017. Available at: http://www.qualityforum.org/map/ under 
``Hospitals--Final Report.''
---------------------------------------------------------------------------

(2) Overview of Measure
    We believe it is important to monitor the rate of TASS in the ASC 
setting because ophthalmologic procedures such as anterior segment 
surgery are commonly performed in this setting of care. Therefore, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33690), we proposed to adopt 
the ASC-16: Toxic Anterior Segment Syndrome 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 2021 payment determination and subsequent years. We expect the 
measure would promote improvement in patient care over time, because 
measurement coupled with transparency in publicly reporting of measure 
information would make patient outcomes following anterior segment 
procedures more visible to ASCs and patients and incentivize ASCs to 
incorporate quality improvement activities to reduce the incidence of 
TASS 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 ASC-16 
measure was included on the 2015 MUC list \89\ and reviewed by the MAP. 
The MAP reviewed the measure (MUC15-1047) and conditionally supported 
it for the ASCQR Program pending NQF review and endorsement.\90\ The 
MAP noted 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 also cautioned that the measure 
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.\91\ A summary of the MAP recommendations can 
be found at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    \89\ National Quality Forum. 2015 Measures Under Consideration 
List. National Quality Forum, Dec. 2016. Available at: http://www.qualityforum.org/2015_Measures_Under_Consideration.aspx, under 
``2015 Measures Under Consideration List (PDF).''
    \90\ National Quality Forum. 2016 Spreadsheet of Final 
Recommendations to HHS and CMS. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \91\ Ibid.
---------------------------------------------------------------------------

    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 measure meets these statutory 
requirements.
    The proposed ASC-16: Toxic Anterior Segment Syndrome measure is not 
NQF-endorsed. However, this measure is maintained by the ASC Quality 
Collaboration,\92\ an entity recognized within the community as an 
expert in measure development for the ASC

[[Page 59453]]

setting. We believe that this measure is appropriate for the 
measurement of quality care furnished by ASCs because ophthalmologic 
procedures are commonly performed in ASCs and, as discussed above, the 
inflammatory response associated with TASS can cause serious damage to 
patients' vision, but TASS is also preventable through careful 
attention to solutions, medications, ophthalmic devices, and to 
cleaning and sterilization of surgical equipment. While the ASC-16: 
Toxic Anterior Segment Syndrome 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 \93\ for use in the ASCQR Program. The MAP agreed 
that this measure is high-value and urgent in the current healthcare 
marketplace and the number of new entrants to the surgical center 
place, as well as the clustering outbreaks of TASS.\94\ Furthermore, we 
believe that this measure is scientifically acceptable, because the 
measure steward has completed reliability testing and validity 
assessment of the measure.\95\ Specifically, an internal retrospective 
chart audit of the ASCs participating in measurement testing found no 
differences between the originally submitted and re-abstracted TASS 
rates, providing strong evidence the measure is reliable. The measure 
steward also conducted a formal consensus review to assess the 
measure's validity; the results of this assessment showed participants 
believe the measure appears to measure what it is intended to, and is 
defined in a way that will allow for consistent interpretation of the 
inclusion and exclusion criteria from ASC to ASC.
---------------------------------------------------------------------------

    \92\ ASC Quality Collaboration. ``ASC Quality Collaboration.'' 
Available at: http://www.ascquality.org/.
    \93\ National Quality Forum. 2016 Spreadsheet of Final 
Recommendations to HHS and CMS. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \94\ Ibid.
    \95\ AHRQ Measure Summary. Available at: https://www.qualitymeasures.ahrq.gov/summaries/summary/49582/ambulatory-surgery-percentage-of-ophthalmic-anterior-segment-surgery-patients-diagnosed-with-toxic-anterior-segment-syndrome-tass-within-2-days-of-surgery.
---------------------------------------------------------------------------

(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-16 
measure would be the calendar year two years prior to the applicable 
payment determination year. For example, for the CY 2021 payment 
determination, the data collection period would be CY 2019. 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 2021 payment determination, 
the submission period would be January 1, 2020 to May 15, 2020. 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-16: Toxic Anterior Segment 
Syndrome measure is the number of ophthalmic anterior segment surgery 
patients diagnosed with TASS within 2 days of surgery. The numerator 
for this measure is all anterior segment surgery patients diagnosed 
with TASS within 2 days of surgery. The denominator for this measure is 
all anterior segment surgery patients. The specifications for this 
measure for the ASC setting can be found at: http://ascquality.org/documents/ASC%20QC%20Implementation%20Guide%203.2%20October%202015.pdf.
(5) Cohort
    The measure includes all patients, regardless of age, undergoing 
anterior segment surgery at an ASC. 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 proposed ASC-16: Toxic Anterior Segment Syndrome measure is not 
risk-adjusted; risk adjustment for patient characteristics is not 
appropriate for this measure.
    We invited public comment on our proposal to adopt the ASC-16: 
Toxic Anterior Segment Syndrome measure for the CY 2021 payment 
determination and subsequent years as discussed above.
    Comment: Some commenters supported CMS' proposal to adopt ASC-16: 
Toxic Anterior Segment Syndrome beginning with the CY 2021 payment 
determination, citing the measure's clinical significance and impact on 
patients. One commenter specifically noted the measure could improve 
patient care while adding little administrative burden. One commenter 
noted the measure's potential to promote collaboration between surgeons 
and facilities and ensure that prevention guidelines are appropriately 
followed. Another commenter noted this measure is currently in use as 
part of the ASC Quality Collaboration's public report of ASC quality 
data, and expressed particular support for submission of aggregated 
measure data for the proposed ASC-16: Toxic Anterior Segment Syndrome 
measure via QualityNet.
    Response: We thank the commenters for their support.
    Comment: Another commenter specifically noted the measure could 
improve patient care while adding little administrative burden, but 
also expressed concern about an ASC's ability to collect measure data 
if patients do not present back to the ASC where their procedure was 
performed.
    Response: We thank the commenter for their feedback and acknowledge 
that it may be difficult to collect data based on where patients 
present.
    Comment: One commenter expressed conditional support for the 
proposed ASC-16: Toxic Anterior Segment Syndrome measure pending NQF 
endorsement prior to adoption. Other commenters expressed concern that 
the measure is not NQF-endorsed and recommended CMS secure NQF 
endorsement for the measure prior to adopting it for use in the ASCQR 
Program.
    Response: 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 NQF-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

[[Page 59454]]

measures, and consensus through public comment. This measure is 
maintained by the ASC Quality Collaboration,\96\ an entity recognized 
within the community as an expert in measure development for the ASC 
setting. Furthermore, the ASC-16 measure was included on the 2015 MUC 
list \97\ and reviewed by the MAP. While the ASC-16: Toxic Anterior 
Segment Syndrome 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 \98\ for use in the ASCQR Program. The MAP agreed that this 
measure is high-value and urgent in the current healthcare marketplace 
and the number of new entrants to the surgical center place, as well as 
the clustering outbreaks of TASS.\99\
---------------------------------------------------------------------------

    \96\ ASC Quality Collaboration. ``ASC Quality Collaboration.'' 
Available at: http://www.ascquality.org/.
    \97\ National Quality Forum. 2015 Measures Under Consideration 
List. National Quality Forum, Dec. 2016. Available at: http://www.qualityforum.org/2015_Measures_Under_Consideration.aspx, under 
``2015 Measures Under Consideration List (PDF).''
    \98\ National Quality Forum. 2016 Spreadsheet of Final 
Recommendations to HHS and CMS. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \99\ Ibid.
---------------------------------------------------------------------------

    Comment: Several commenters did not support adoption of the 
proposed ASC-16: Toxic Anterior Segment Syndrome measure. Two 
commenters noted it may not be feasible for ASCs to implement the 
measure due to the small number of patients experiencing TASS. Other 
commenters similarly asserted ASCs will encounter operational 
difficulties incorporating the measure into their clinical workflow, 
because the measure requires information sharing across clinicians in 
order to collect accurate data, making accurate data collection both 
expensive and labor-intensive. A commenter also expressed concern that 
patients may not understand the difference between TASS and infection, 
leading to inaccurate data being present in charts. Another commenter 
expressed concern that the measure's reliance on self-reported data may 
lead to subjective results or manipulation, and that the measure is 
limited to a segment of the larger ASC industry, as only very few ASCs 
will have patients presenting with TASS. One commenter expressed 
concern that the proposed ASC-16: Toxic Anterior Segment Syndrome 
measure will not improve healthcare quality because the measure 
provides data that is retrospective in nature and the commenter 
believes the measure will not assist ASCs in implementing improvement 
activities.
    Response: We thank the commenters for their suggestions and note 
the concerns about the proposal to adopt ASC-16: Toxic Anterior Segment 
Syndrome beginning with the CY 2021 payment determination. While we 
believe the measure is reliable, we recognize that there are concerns 
over the feasibility of implementing the TASS measure. Some commenters 
expressed concern that ASCs will have difficulty reporting the measure 
if patients present to another facility with TASS within 2 days of a 
procedure and we acknowledge that some cases could be missing from 
inclusion in the measure especially given the very low incidence of 
TASS. In response to concerns that ASCs will receive retrospective data 
on the measure, rather than during the time that a patient is 
experiencing TASS, we note our belief that tracking TASS for the 
purpose of the measure reporting would increase facility awareness of 
potential outbreaks. In addition, we disagree with commenters that the 
measure relies on subjective or self-reported data, as data sources for 
this measure include physician diagnosis and report, clinical 
administrative data, paper medical records, or incident/occurrence 
reports.\100\
---------------------------------------------------------------------------

    \100\ ASC Quality Measures Implementation Guide. Available at: 
http://ascquality.org/documents/ASC-QC-Implementation-Guide-4.0-September-2016.pdf.
---------------------------------------------------------------------------

    Regarding concerns about the low volume of procedures, although 
data show that TASS occurs in clusters, these clusters do indeed 
include low numbers, ranging from just a few cases to up to 20 cases 
during a year's time.\101\ As a result of this low volume, we agree 
that this measure may not be appropriate for national implementation in 
the ASCQR Program. Upon further consideration of the difficulty of 
implementing the measure, the likelihood of applicability to only very 
specific ASC facilities where TASS occurs, and from incoming comments, 
we believe that the burden of the measure would outweigh the benefits 
and no longer believe that the measure is appropriate for the ASCQR 
Program at this time. Therefore, we are not finalizing this measure. 
However, we refer readers to the ASC Quality Collaboration, the measure 
steward, which is independently collecting and publicly reporting this 
TASS measure: http://ascquality.org/documents/ASC-QC-Implementation-Guide-4.0-September-2016.pdf.
---------------------------------------------------------------------------

    \101\ Moyle W, Yee RD, Burns JK, Biggins T. Two Consecutive 
Clusters of Toxic Anterior Segment Syndrome. Optometry and Vision 
Science. 2013 Jan;90(1):e11-23.
---------------------------------------------------------------------------

    Comment: One commenter recommended CMS instead enable ASCs to learn 
best practices and techniques from other facilities by facilitating 
data-sharing among facilities.
    Response: We agree that data-sharing among facilities could inform 
quality improvement activities. We will consider opportunities to 
further promote the sharing of best practices across ASCs.
    After consideration of the public comments we received, we are not 
finalizing the proposal to adopt the ASC-16: Toxic Anterior Segment 
Syndrome measure for the CY 2021 payment determination and subsequent 
years for reasons discussed in our responses above.
    The measure set for the ASCQR Program CY 2021 payment determination 
and subsequent years is as listed below. We note that the measures we 
are finalizing for removal in this final rule with comment period are 
not included in this chart.

       ASCQR Program Measure Set Finalized for the CY 2021 Payment
                 Determination and Subsequent Years ***
------------------------------------------------------------------------
        ASC No.                 NQF No.               Measure name
------------------------------------------------------------------------
ASC-1.................  0263..................  Patient Burn.
ASC-2.................  0266..................  Patient Fall.
ASC-3.................  0267..................  Wrong Site, Wrong Side,
                                                 Wrong Patient, Wrong
                                                 Procedure, Wrong
                                                 Implant.
ASC-4.................  0265 [dagger].........  All-Cause Hospital
                                                 Transfer/Admission.
ASC-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.

[[Page 59455]]

 
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................  None..................  Normothermia Outcome.
ASC-14................  None..................  Unplanned Anterior
                                                 Vitrectomy.
ASC-15a...............  None..................  OAS CAHPS--About
                                                 Facilities and Staff.**
ASC-15b...............  None..................  OAS CAHPS--Communication
                                                 About Procedure.**
ASC-15c...............  None..................  OAS CAHPS--Preparation
                                                 for Discharge and
                                                 Recovery.**
ASC-15d...............  None..................  OAS CAHPS--Overall
                                                 Rating of Facility.**
ASC-15e...............  None..................  OAS CAHPS--
                                                 Recommendation of
                                                 Facility.**
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* 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).
** Measure reporting delayed beginning with the CY 2020 payment
  determination (CY 2018 data collection) and until further action in
  future rulemaking, as discussed in section XIV.B.4. of this final rule
  with comment period.
*** The ASC-5, ASC-6 and ASC-7 measures are finalized for removal
  beginning with the CY 2019 payment determination, as discussed in
  section XIV.B.3.b. of this final rule with comment period.

b. Adoption of ASC-17: Hospital Visits After Orthopedic Ambulatory 
Surgical Center Procedures Beginning With the CY 2022 Payment 
Determination
(1) Background
    Reporting the quality of care provided at ASCs is a key priority in 
the context of growth in the number of ASCs and the number of 
procedures performed in this setting. More than 60 percent of all 
medical or surgical procedures performed in 2006 were performed at 
ASCs; this represents a three-fold increase from the late 1990s.\102\ 
In 2015, more than 3.4 million fee-for-service Medicare beneficiaries 
were treated at 5,475 Medicare-certified ASCs, and spending on ASC 
services by Medicare and its beneficiaries amounted to 4.1 billion 
dollars.\103\ The patient population served at ASCs has increased not 
only in volume, but also in age and complexity, which can be partially 
attributed to improvements in anesthetic care and innovations in 
minimally invasive surgical techniques.104 105 As such, ASCs 
have become the preferred setting for the provision of low-risk 
surgical and medical procedures in the United States, as many patients 
experience shorter wait times, prefer to avoid hospitalization, and are 
able to return to work more quickly.\106\ As the number of orthopedic 
procedures performed in ASCs increases, it is increasingly important to 
report the quality of care for patients undergoing these procedures. 
According to Medicare claims data, approximately seven percent of 
surgeries performed in ASCs in 2007 were orthopedic in nature, which 
reflects a 77-percent increase in orthopedic procedures performed at 
ASCs from 2000 to 2007.\107\
---------------------------------------------------------------------------

    \102\ Cullen KA, Hall MJ, Golosinskiy A, Statistics NFcH. 
Ambulatory Surgery in the United States, 2006. National Health 
Statistics Report; 2009.
    \103\ Medicare Payment Advisory Commission (MedPAC). Report to 
Congress: Medicare Payment Policy. March 2017; Available at: http://www.medpac.gov/docs/default-source/reports/mar17_entirereport.pdf?sfvrsn=0.
    \104\ Bettelli G. High Risk Patients in Day Surgery. Minerva 
Anestesiologica. 2009;75(5):259-268. See also Fuchs K. Minimally 
Invasive Surgery. Endoscopy. 2002;34(2):154-159.
    \105\ Fuchs K. Minimally invasive surgery. Endoscopy. 
200234(2):154159.
    \106\ Cullen KA, Hall MJ, Golosinskiy A, Statistics NFcH. 
Ambulatory Surgery in the United States, 2006. National Health 
Statistics Report; 2009.
    \107\ Goyal KS, Jain S, Buterbaugh GA, et al. The Safety of Hang 
and Upper-Extremity Surgical Procedures at a Freestanding Ambulatory 
Surgical Center. The Journal of Bone and Joint Surgery. 2016;90:600-
604.
---------------------------------------------------------------------------

    We believe measuring and reporting seven-day unplanned hospital 
visits following orthopedic ASC procedures will incentivize ASCs to 
improve care and care transitions. Patients that have hospital visits 
that occur at or after discharge from the ASC and may not be readily 
visible to clinicians because such patients often present to 
alternative facilities, such as emergency departments where patient 
information is not linked back to the ASC. Furthermore, many of the 
reasons for hospital visits following surgery at an ASC are 
preventable; patients often present to the hospital for complications 
of medical care, including infection, post-operative bleeding, urinary 
retention, nausea and vomiting, and pain. One study found that of 
10,032 patients who underwent orthopedic surgery in an ASC between 1993 
and 2012, 121 (1.2 percent) needed attention in the emergency 
department in the first 24 hours after discharge due to pain or 
bleeding, while others were admitted later for issues related to pain 
and swelling.\108\ Therefore, we believe tracking and reporting these 
events would facilitate efforts to lower the rate of preventable 
adverse events and to improve the quality of care following orthopedic 
surgeries performed at an ASC.
---------------------------------------------------------------------------

    \108\ Mart[iacute]n-Ferrero MA, Faour-Mart[iacute]n O. 
Ambulatory surgery in orthopedics: experience of over 10,000 
patients. Journal of Orthopaedic Surgery. 2014;19:332-338.
---------------------------------------------------------------------------

(2) Overview of Measure
    Based on the increasing prevalence of orthopedic surgery in the ASC 
setting, we believe it is important to minimize adverse patient 
outcomes associated with these orthopedic ASC surgeries. Therefore, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33692), we proposed to adopt 
the ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures measure into the ASCQR Program for the CY 2022 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 unplanned hospital visits (emergency department visits, 
observation stays, and unplanned inpatient admissions) following 
orthopedic surgery at ASCs more visible to both ASCs and patients and 
would incentivize ASCs to incorporate quality improvement activities to 
reduce these unplanned hospital visits. The measure also addresses the 
CMS National Quality Strategy domains of making care safer by reducing 
harm caused in the delivery of care and promoting effective

[[Page 59456]]

communication and coordination of care.
    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 ASC-17: 
Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures 
measure was included on a publicly available document entitled ``List 
of Measures under Consideration for December 1, 2016.'' \109\ The MAP 
reviewed this measure (MUC16-152) and recommended this measure be 
refined and resubmitted prior to adoption, stating that testing results 
should demonstrate reliability and validity at the facility level in 
the ambulatory surgical setting.\110\ MAP also recommended that this 
measure be submitted to NQF for review and endorsement.\111\ At the 
time of the MAP's review, this measure was still undergoing field 
testing.
---------------------------------------------------------------------------

    \109\ National Quality Forum. List of Measures under 
Consideration for December 1, 2016. National Quality Forum, Dec. 
2016. Available at: http://www.qualityforum.org/map/.
    \110\ National Quality Forum. 2016-2017 Spreadsheet of Final 
Recommendations to HHS and CMS. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \111\ Ibid.
---------------------------------------------------------------------------

    Since the MAP's review and recommendation of `Refine and Resubmit' 
in 2016, we have completed testing for this measure and continued to 
refine this proposed measure in response to the MAP's recommendations. 
Results of continued development activities, including stakeholder 
feedback from the public comment period and pilot test findings will be 
presented to the MAP during the MAP feedback loop meeting in fall 2017. 
The proposed measure is consistent with the information submitted to 
the MAP, and the original MAP submission and our continued refinements 
support its scientific acceptability for use in quality reporting 
programs. Facility-level testing showed variation in unplanned hospital 
visits among ASCs after adjusting for case-mix differences, which 
suggests variation in quality of care and opportunities for quality 
improvement; and reliability testing showed fair measure score 
reliability.\112\ As expected, the reliability increased for ASCs with 
more patients; ASCs with at least 250 cases showed moderate 
reliability, consistent with other publicly reported Medicare claims-
based, risk-adjusted outcome measures.\113\ The validity testing 
results demonstrated that the measure scores are valid and useful 
measures of ASC orthopedic surgical quality of care and will provide 
ASCs with information that can be used to improve their quality of 
care. Detailed testing results are available in the technical report 
for this measure, located at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \112\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
    \113\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
---------------------------------------------------------------------------

    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-NQF-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-17: Hospital Visits after Orthopedic Ambulatory 
Surgical Center Procedures measure is not currently NQF-endorsed. 
However, we intend to submit this measure for review and endorsement by 
NQF once an appropriate NQF project has a call for measures. We believe 
that this measure is appropriate for the measurement of quality care 
furnished by ASCs, because surgeries are becoming increasingly common 
in ASCs and, as discussed above, can signify unanticipated admissions 
after care provided in ASCs. Such visits are an unexpected and 
potentially preventable outcome for patients with a low anticipated 
perioperative risk. We also believe this proposed measure reflects 
consensus among affected parties, because it was developed with 
stakeholder input from a Technical Expert Panel convened by a CMS 
contractor as well as from the measure development public comment 
period.\114\ During the MAP and measure development processes, public 
commenters supported the measure's focus on assessing patient outcomes 
after orthopedic surgery performed in ASC setting of care, and agreed 
that the measure would be meaningful and improve quality of care. In 
addition, the ASC-17: Hospital Visits after Orthopedic Ambulatory 
Surgical Center Procedures measure addresses the MAP-identified 
priority measure area of surgical complications for the ASCQR 
Program.\115\ Therefore, we believe it is appropriate to incorporate 
this measure into the ASCQR Program measure set because collecting and 
publicly reporting these data will improve transparency, inform 
patients and providers, and foster quality improvement efforts.
---------------------------------------------------------------------------

    \114\ National Quality Forum. ``MAP 2017 Considerations for 
Implementing Measures in Federal Programs: Hospitals.'' Report. 
2017. Available at: http://www.qualityforum.org/map/ under 
``Hospitals--Final Report.''
    \115\ Ibid.
---------------------------------------------------------------------------

(3) Data Sources
    This measure is claims-based and uses Part A and Part B Medicare 
administrative claims and Medicare enrollment data to calculate the 
measure.
    We proposed that the data collection period for the proposed ASC-
17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures measure would be the two calendar years ending two years 
prior to the applicable payment determination year. For example, for 
the CY 2022 payment determination, the data collection period would be 
CY 2019 to 2020. Because the measure data are collected via claims, 
ASCs will not need to submit any additional data directly to CMS. We 
refer readers to section XIV.D.4. of this final rule with comment 
period for a more detailed discussion of

[[Page 59457]]

the requirements for data submitted via claims.
(4) Measure Calculation
    The measure outcome is all-cause, unplanned hospital visits within 
seven days of an orthopedic procedure performed at an ASC. For the 
purposes of this measure, ``hospital visits'' include emergency 
department visits, observation stays, and unplanned inpatient 
admissions. When there are two or more qualifying surgical procedures 
within a 7-day period, the measure considers all procedures as index 
procedures; however, the timeframe for outcome assessment is defined as 
the interval between procedures (including the day of the next 
procedure) and then 7 days after the last procedure.
    The facility-level score is a risk-standardized hospital visit 
rate, calculated by multiplying the ratio of the predicted to the 
expected number of post-surgical hospital visits among the given ASC's 
patients by the national observed hospital visit rate for all ASCs. For 
each ASC, the numerator of the ratio is the number of hospital visits 
predicted for the ASC's patients accounting for its observed rate, the 
number of the orthopedic surgeries performed at the ASC, the case-mix, 
and the surgical complexity mix. The denominator of the ratio is the 
expected number of hospital visits given the ASC's case-mix and 
surgical complexity mix. A ratio of less than one indicates the ASC 
facility's patients were estimated as having fewer post-surgical visits 
than expected compared to ASCs with similar surgical complexity and 
patients; and a ratio of greater than one indicates the ASC facility's 
patients were estimated as having more visits than expected. The 
national observed hospital visit rate is the national unadjusted 
proportion of patients who had a hospital visit following an orthopedic 
ASC surgery. For more information on measure calculations, we refer 
readers to: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
(5) Cohort
    The patient cohort for the proposed ASC-17 measure includes all 
Medicare beneficiaries ages 65 and older undergoing outpatient 
orthopedic surgery at an ASC who have 12 prior months of Medicare fee-
for-service Parts A and B enrollment. The target group of procedures 
includes those that: (1) Are routinely performed at ASCs; (2) involve 
some increased risk of post-surgery hospital visits; and (3) are 
routinely performed by orthopedists.
    Procedures included in the measure cohort are on Medicare's list of 
covered ambulatory surgical center (ASC) procedures.\116\ Medicare 
developed this list to identify surgeries that have a low to moderate 
risk profile. 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. Medicare annually reviews and updates 
this list, and includes a transparent public comment submission and 
review process for addition and/or removal of procedures codes.\117\ 
The current list is accessible in the Downloads section at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/11_addenda_updates.html.
---------------------------------------------------------------------------

    \116\ Centers for Medicare and Medicaid Services. ``Ambulatory 
Surgical Center (ASC) Payment: Addenda Updates.'' Available at: 
https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/11_addenda_updates.html.
    \117\ Ibid.
---------------------------------------------------------------------------

    In addition, to focus the measure only on the subset of surgeries 
on Medicare's list of covered ASC procedures that impose a meaningful 
risk of post-orthopedic ASC surgery hospital visits, the measure 
includes only ``major'' and ``minor'' procedures, as indicated by the 
Medicare Physician Fee Schedule global surgery indicator (GSI) values 
of 090 and 010, respectively. This list of GSI values is publicly 
available at: https://www.cms.gov/Medicare/Medicare-fee-for-service-payment/physicianfeesched/pfs-federal-regulation-notices-items/cms-1590-fc.html (download Addendum B). Moreover, to identify the subset of 
ASC procedures typically performed by orthopedists, we used the 
Clinical Classifications Software (CCS) developed by the Agency for 
Healthcare Research and Quality (AHRQ) and include in this measure 
procedures from AHRQ's ``operations on the musculoskeletal system'' 
group of procedures.\118\ For more cohort details, we refer readers to 
the measure technical report located at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \118\ Healthcare Cost and Utilization Project. Clinical 
Classifications Software for Services and Procedures. Available at: 
https://www.hcup-us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp.
---------------------------------------------------------------------------

    The measure excludes patients who survived at least 7 days 
following orthopedic surgery at an ASC, but were not continuously 
enrolled in Medicare fee-for-service Parts A and B in the 7 days after 
surgery. These patients are excluded to ensure all patients captured 
under this measure have full data available for outcome assessment. 
There are no additional inclusion or exclusion criteria for the 
proposed ASC-17 measure. Additional methodology and measure development 
details are available at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
(6) Risk Adjustment
    The statistical risk-adjustment model includes 29 clinically 
relevant risk-adjustment variables that are strongly associated with 
risk of hospital visits within seven days following ASC orthopedic 
surgery. The measure risk adjusts for age, 27 comorbidities, and a 
variable for work Relative Value Units (RVUs) to adjust for surgical 
complexity.\119\ Additional risk adjustment details are available in 
the technical report at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \119\ 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.
---------------------------------------------------------------------------

(7) Public Reporting
    As stated above, facility-level testing showed variation in 
unplanned hospital visits among ASCs after adjusting for case-mix 
differences, which suggests variation in quality of care and 
opportunities for quality improvement.\120\ Reliability testing showed 
fair measure score reliability.\121\ As expected, the reliability 
increased for ASCs with more patients; ASCs with at least 250 cases 
showed moderate reliability, consistent with other publicly reported 
Medicare claims-based, risk-adjusted outcome measures. We proposed that 
if this measure were adopted, we would publicly report results only for 
facilities with sufficient case numbers to meet moderate reliability 
standards.\122\ CMS will determine the case size cutoff for meeting 
moderate reliability standards using the intraclass correlation (ICC)

[[Page 59458]]

during the measure dry run (discussed below) by testing the reliability 
of the scores at different case sizes in the dry run data. However, we 
would also provide confidential performance data directly to smaller 
facilities, which do not meet the criteria for sufficient case numbers 
for reliability considerations that would benefit from seeing their 
measure results and individual patient-level outcomes. These data are 
currently largely unknown to ASCs and providers. The validity testing 
results demonstrated that the measure scores are valid and useful 
measures of ASC orthopedic surgical quality of care and will provide 
ASCs with information that can be used to improve their quality of 
care. Detailed testing results are available in the technical report 
for this measure, located at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \120\ Yale New Haven Health Services Corporation. Hospital 
Visits after Orthopedic Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
    \121\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
    \122\ Ibid.
---------------------------------------------------------------------------

(8) Provision of Facility-Specific Information Prior to Public 
Reporting
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33694), we stated that 
if this proposed measure is finalized as proposed, we intend to conduct 
a dry run before the official data collection period or any public 
reporting. A dry run is a period of confidential reporting and feedback 
during which ASCs may review their dry-run measure results, and in 
addition, further familiarize themselves with the measure methodology 
and ask questions. For the dry-run, we intend to use the most current 
2-year set of complete claims (usually 12 months prior to the start 
date) available at the time of dry run. For example, if the dry run 
began in June 2018, the most current 2-year set of data available would 
likely be July 2015 to June 2017. Because we use paid, final action 
Medicare claims, ASCs would not need to submit any additional data for 
the dry run. The dry run would generate confidential feedback reports 
for ASCs, including patient-level data indicating whether the patient 
had a hospital visit and, if so, the type of visit (emergency 
department visit, observation stay, or unplanned inpatient admission), 
the admitting facility, and the principal discharge diagnosis. Further, 
the dry run would enable ASCs to see their risk-standardized hospital 
visit rate prior to the measure being implemented. General information 
about the dry run as well as confidential facility-specific reports 
would be made available for ASCs to review on their accounts at: http://www.qualitynet.org. We plan to continue to generate these reports for 
ASCs after we implement the measure so ASCs can use the information to 
identify performance gaps and develop quality improvement strategies.
    These confidential dry run results are not publicly reported and do 
not affect payment. We expect the dry run to take approximately one 
month to conduct, during which facilities would be provided the 
confidential report and the opportunity to review their performance and 
provide feedback to us. However, after the dry run, measure results 
would have a payment impact and be publicly reported beginning with the 
CY 2022 payment determination and for subsequent years as proposed. 
Although not previously stated in the CY 2018 OPPS/ASC proposed rule 
(82 FR 33694), we note that the primary purpose of the records 
maintained in the National Claims History system of records (SOR) is 
for evaluating and studying the operation and effectiveness of the 
Medicare program, which aligns with the purposes of the ASCQR Program 
and a permissible use of beneficiary information. In addition, under 45 
CFR 164.506(c)(4) of the HIPAA Privacy Rule, we may disclose protected 
health information to another covered entity, such as the ASCs, 
provided that both the ASC and CMS have or had a relationship with each 
individual who is the subject of the PHI being requested, the PHI 
pertains to such relationship, and the disclosure is for the purposes 
of conducting quality assessment and improvement activities listed in 
paragraph (1) or (2) of the definition of ``health care operations'' at 
45 CFR 164.501. We believe that this provision is extensive enough to 
cover the uses that we would expect an ASC to make of the PHI.
    We invited public comment on our proposal to adopt the ASC-17: 
Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures 
measure beginning with the CY 2022 payment determination as discussed 
above.
    Comment: A few commenters supported the proposed adoption of the 
ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures in the ASCQR Program. One of the commenters noted that these 
measures will provide patients with valuable data and address clinical 
areas critical to providers.
    Response: We thank the commenters for their support. We agree that 
measuring quality of care associated with orthopedic procedures 
performed at ASCs is patient-centered and is an important clinical care 
area to evaluate.
    Comment: Two commenters believed that the measure should be refined 
and resubmitted prior to rulemaking, as suggested by the MAP. Several 
commenters noted or were concerned that the measure lacks NQF 
endorsement. A few commenters also suggested that CMS seek input from 
the MAP on the finalized measure prior to including the measure in the 
program.
    Response: Section 1833(h)(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 the NQF specifically. 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 the requirement that 
measures reflect consensus among affected parties can be achieved in 
other ways, including through the measure development process, broad 
acceptance and use of the measure, and public comments. As part of the 
measure development process, a national Technical Expert Panel (TEP), 
clinical experts, and stakeholders provided input at multiple points 
during development. We believe the ASC-17 measure meets these statutory 
requirements.
    We strive to adopt NQF-endorsed measures when possible. Although 
ASC-17 is not currently NQF-endorsed, our research and analysis 
conducted during development demonstrate that the measure is accurate, 
valid, and actionable. We refer readers to the technical report for 
more information about the measure and testing results: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf. 
We will submit this measure, with complete evidence, specifications, 
and testing results, to NQF for endorsement when an appropriate NQF 
project has a call for the measure.
    In addition, in December 2016, the MAP Hospital Workgroup reviewed 
and classified the measure as ``Refine and Resubmit Prior to 
Rulemaking.'' \123\ We understand that the measure received this 
classification because: (1) The measure was still undergoing field 
testing at the time, and (2) the MAP also recommended that the measure 
be submitted to the NQF for review and endorsement. Between that 
initial MAP review in December 2016 and the CY 2018 OPPS/ASC proposed 
rule, we

[[Page 59459]]

completed field testing and refined the measure.\124\ The final 
methodology report, which was presented in the proposed rule, included 
the final results of measure testing and completed measure 
specifications that occurred between the MAP's review in December 2016 
and CMS' proposal to adopt the measure in the ASCQR Program.\125\ We 
also intend to update the MAP at the next appropriate opportunity. As 
stated above, we also intend to submit the measure to the NQF for 
endorsement during the next appropriate call for measures.
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    \123\ Spreadsheet of MAP 2017 Final Recommendations. February 1, 
2017. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=84452.
    \124\ MAP 2017 Considerations for Implementing Measures in 
Federal Programs: Hospitals. Final Report. February 15, 2017. 
Available at: http://www.qualityforum.org/Publications/2017/02/2017_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
    \125\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
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    Comment: A few commenters expressed concerns over the measure 
outcome. One commenter stated that it is not well proven that a 
hospital visit within 7 days of ASC procedure is a sign of poor 
quality. Similarly, one commenter suggested that CMS should adopt a 
measure that captures hospital visits directly tied to complications 
arising from orthopedic procedures performed in an ASC, and another 
commenter suggested that CMS exclude unrelated hospital visits. A 
commenter suggested that CMS remove ED visits and observation stays 
from the measure outcome because the ED is seen not as a healthcare 
resource to be avoided, but a key stabilization and decision point for 
patient disposition. Another commenter expressed concern about the 
attribution of outcomes. Specifically, the commenter flagged four of 
the top reasons for hospital visits within 7 days of orthopedic 
procedures that likely reflect routine follow-up rather than quality of 
care as intended by the measure.
    Response: We have designed the measure to capture all unplanned 
hospital visits that may be a signal of poor quality of care and 
encourage ASCs to minimize the risk of follow-up hospital visits. The 
outcome captures the full range of adverse events related to undergoing 
orthopedic ASC surgery. We believe that the measure, as specified, has 
the potential to illuminate differences in quality, inform patient 
choice, drive quality improvement, enhance care coordination, and 
ultimately to minimize acute complications and reduce unplanned 
hospital visits following orthopedic procedures performed at ASCs.
    The measure was purposely designed to evaluate all-cause hospital 
visits to broadly capture serious adverse events experienced by 
patients after undergoing orthopedic ASC procedures, rather than a 
narrow set of identifiable complications, for many reasons. The outcome 
of all-cause hospital visits is consistent with a patient-centric view 
of care that is designed to prompt ASC providers to minimize the risk 
and reduce the need for a broad range of outcomes after undergoing 
orthopedic ASC procedures, including the risk of dehydration, nausea 
and vomiting, dizziness, and urinary retention. Measuring only hospital 
visits that are overtly related to a procedure, such as visits for pain 
and bleeding, would limit the measure's intended broad impact on 
quality improvement efforts.
    Furthermore, the rate of hospital visits is not expected to be 
zero, since some patients will have visits for reasons unrelated to the 
procedure. In designing the measure, we narrowed the measure to include 
surgical procedure that: (1) Are routinely performed at ASCs; (2) 
involve increased risk of post-surgery hospital visits; and (3) are 
routinely performed by orthopedists. In addition, the measure is risk 
adjusted for patient demographics, clinical characteristics, and 
surgical procedural complexity, so that facilities that experience more 
unrelated visits due to a generally higher-risk patient mix will not be 
disadvantaged. We refer readers to the methods section in the measure 
specifications for more information about the risk-adjustment 
methodology.
    In addition, we only measure the rate of unplanned hospital 
admissions; ED visits and observation stays are never considered 
planned.126 127 This approach removes from the outcome 
admissions that are not a signal of quality of care, because they 
represent: (1) A condition or diagnosis that is considered to be always 
planned (such as transplants or maintenance chemotherapy); or (2) that 
are considered potentially planned (such as cardiovascular procedures) 
and are not accompanied by an acute diagnosis. The planned admission 
algorithm is based on CMS' widely-used Planned Readmission Algorithm 
v4.0.\128\ We refer readers to the measure methodology report at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/HospitalQualityInits/Measure-Methodology.html for more 
details.
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    \126\ Horwitz, Leora I., et al. ``Development and validation of 
an algorithm to identify planned readmissions from claims data.'' 
Journal of hospital medicine 10.10 (2015): 670-677.
    \127\ Ranasinghe, Isuru, et al. ``Differences in colonoscopy 
quality among facilities: development of a post-colonoscopy risk-
standardized rate of unplanned hospital visits.'' Gastroenterology 
150.1 (2016): 103-113.
    \128\ Ibid.
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    Furthermore, we disagree with the commenter's suggestion that we 
remove ED visits and observation stays from the measure outcome, 
because these are unplanned visits for patients undergoing low- to 
moderate-risk outpatient procedures. From a patient perspective, we 
believe that ED visits and observation stays are an undesirable 
outcome. We believe a quality measure assessing hospital visits 
following ASC surgery will serve to improve transparency, inform 
patients and providers, and foster quality improvement, because 
providers at ASCs are often unaware of patients' subsequent acute care 
visits given that patients tend to present to the emergency department 
or to hospitals unaffiliated with the ASC. Moreover, the measure 
outcome of hospital visits within 7 days after a procedure aligns with 
the NQF-endorsed measure Facility 7-Day Risk-Standardized Hospital 
Visit Rate after Outpatient Colonoscopy Measure (NQF #2539).
    Regarding the commenter's concerns about the attribution of 
outcomes and whether hospital visits within 7 days of ASC procedure is 
a sign of poor quality, we believe that the measure captures the full 
range of potentially serious adverse events related to orthopedic 
procedures performed as ASCs. We limited the outcome timeframe for 
hospital visits (ED visits, observation stays, and unplanned 
admissions) to 7 days because existing literature suggests that the 
vast majority of adverse events after an orthopedic procedure occur 
within the first 7 days following the procedure and because the highest 
rates of hospital visits were observed in claims data within 7 days 
following the procedure.129 130 A 7-day timeframe helps to 
ensure that the measure will capture adverse events following the 
procedure, but will not capture events impacted by factors unrelated to 
the

[[Page 59460]]

care patients received.\131\ We appreciate the commenter's careful 
review of the top hospital visit diagnoses within seven days of 
orthopedic procedures. We welcome specific examples of potentially 
planned admissions following outpatient orthopedic procedures.
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    \129\ Mattila K, Toivonen J, Janhunen L, Rosenberg PH, Hynynen 
M. Postdischarge symptoms after ambulatory surgery: First-week 
incidence, intensity, and risk factors. Anesthesia and Analgesia. 
2005;101(6):1643-1650.
    \130\ 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. 2004;139(1):67-72.
    \131\ Parry, Nicola. ``7-Day Readmissions: Better Indicators of 
Patient Care.'' Medscape, 2016.
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    Comment: One commenter suggested that CMS provide a detailed 
clinical review of all the measure results by several seasoned 
orthopedic surgeons to ensure the measure algorithm is appropriate.
    Response: In developing the measure, we incorporated significant 
input from various experts and stakeholders. In addition to the MUC and 
MAP processes described above, a multidisciplinary team of clinicians, 
health services researchers, and statisticians were informed, in part, 
by a national TEP consisting of patients, methodologists, researchers, 
and providers, including orthopedists who conducted a detailed clinical 
review of all the measure results to ensure the measure algorithm is 
appropriate. We also held a public comment period soliciting 
stakeholder input on the measure methodology, including the planned 
admission algorithm. However, we will continue to evaluate the measure 
as our goal is to ensure that the measure accurately reflects the 
quality of care provided in ASCs.
    We appreciate the commenter's careful review of the top hospital 
visit diagnoses within seven days of orthopedic procedures. We welcome 
specific examples of potentially planned admissions following 
outpatient orthopedic procedures.
    Comment: Some commenters were concerned that ASCs may not have 
actionable information generated from ASC-17. Specifically, some 
commenters did not support adoption of the measure, because measure 
score calculation relies on retrospective claims data. The commenters 
expressed concerns that the delay in providing data to facilities would 
provide limited usefulness for quality improvement or for consumers in 
choosing an ASC facility. Regarding a similar measure, ASC-12 Facility 
Risk-Standardized Visit Rate after Outpatient Colonoscopy, one 
commenter noted that in their members' experience with the confidential 
feedback reports, facilities were already aware of most of the visits 
in the claims detail report and did not review the reports unless the 
facilities were categorized as underperforming. The commenter also 
questioned the usefulness of the measure to make distinction among 
facilities and to consumers, because the performance for the 
overwhelming majority of the facilities would be no different than 
expected.
    Response: We acknowledge the commenters' concerns regarding the use 
of claims data for the ASC-17 measure; however, the measure would 
provide facilities with the most recently available, patient-level data 
to help guide quality improvement efforts that would also be low 
burden.
    Further, we believe that measures of hospital events following 
specific types of surgical procedures fully based on Medicare FFS 
claims recently adopted (for example, ASC-12: Facility 7-Day Risk 
Standardized Hospital Visit Rate after Outpatient Colonoscopy Measure) 
and including those newly finalized in this final rule with comment 
period (that is, ASC-17: Hospital Visits after Orthopedic Ambulatory 
Surgical Center Procedures and ASC-18: Hospital Visits after Urology 
Ambulatory Surgical Center Procedures) will better inform Medicare 
beneficiaries and other consumers about post-procedure complication 
rates. Existing ASC quality measures tend to focus on very rare, 
patient safety-related events. For example, ASC-3 counts cases in which 
a wrong site, wrong side, wrong patient, wrong procedure, or wrong 
implant event occurred (76 FR 74499).\132\ Measures designed to capture 
more common adverse outcomes that patients experience, such as pain, 
bleeding, urinary retention, and other complications, prompting acute 
care hospital visits or admissions are lacking at this time, and this 
is what this measure is intended to accomplish.
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    \132\ Centers for Medicare & Medicaid Services. Ambulatory 
Surgical Center Quality Reporting Specifications Manual Release 
Notes Version: 6.0. 2016; http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754. Accessed July 13, 2016.
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    While we appreciate the commenter's feedback that some ASCs were 
already aware of most of the visits in the claims detail report and did 
not review the reports unless the facilities were categorized as 
underperforming, that is not always the case. Providers at ASCs are 
often unaware of patients' subsequent acute care visits given that 
separate providers (for example, emergency department physicians) tend 
to provide post-surgical care when it is required.\133\ This measure is 
intended to bring greater awareness to a larger number of ASCs and 
patients, in addition to actionable information to lower the rate of 
preventable adverse events and to improve the quality of care following 
procedures performed at an ASC.
---------------------------------------------------------------------------

    \133\ Mezei G, Chung F. Return hospital visits and hospital 
readmissions after ambulatory surgery. Annals of Surgery. 
1999;230(5):721-727.
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    Although the majority of ASCs would be expected to have risk-
standardized rates that would be classified as ``no different than the 
national rate'' on Hospital Compare, we believe that the measure will 
be able to make distinction among facilities and to consumers because 
the variation in risk-standardized hospital visit rates across ASCs 
nationally suggests that there is still room for quality improvement. 
Hospital Compare will also report facilities' risk-standardized rates, 
and facilities will receive confidential feedback reports to support 
quality improvement efforts. Furthermore, feedback from national TEP 
members showed that the ASC-17 measure, as specified, can be used to 
distinguish between better and worse quality facilities. \134\ This 
shows TEP agreement with the overall face validity of the measure.
---------------------------------------------------------------------------

    \134\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
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    Comment: A few commenters expressed concerns about risk adjustment. 
A commenter noted that the measure is not risk adjusted to account for 
socioeconomic status and other factors beyond an ASC's control. Another 
commenter noted that successful application of risk stratification 
methods must be accomplished before using claims data, especially with 
the move from traditionally inpatient procedures to the outpatient and 
ambulatory settings. A third commenter expressed a concern about 
including condition category (CC 82), Respirator dependence/
tracheostomy status, on the list of condition categories that are not 
risk-adjusted if the condition occurs only at the time of the 
procedure. The commenter noted that this type of condition is not 
something that develops acutely within the timeframe of an ASC 
procedure, but rather is reflective of a more chronic patient 
condition.
    Response: We understand the important role that factors outside of 
an ASC's control, for example, socioeconomic and sociodemographic 
status, play in the care of patients.

[[Page 59461]]

Although the risk-adjustment methodology does not stratify by social 
risk factors, it does account for risk by adjusting for risk factors 
associated with increased risk for hospital visits after surgery. In 
developing this measure, we evaluated the potential effects of risk 
adjusting for three socioeconomic status (SES) factors that are 
available in CMS claims (Medicaid dual-eligibility status, African-
American race, and the AHRQ SES index). Our results show that adjusting 
for these three factors at the patient level do not change the measure 
scores. We assessed the relationship of SES to hospital visits at the 
patient and facility levels. Unadjusted and adjusted ASC-level risk-
standardized hospital visit rates were highly correlated (Spearman 
correlation coefficients of nearly 1.0) when calculated with and 
without the addition of the three SES variables (Medicaid dual-
eligibility status, African-American race, and the AHRQ SES index). 
This indicates that including SES variables in the ASC-level risk-
adjusted measure score will result in limited differences in measure 
results after accounting for other risk factors, such as age and 
comorbidities. We refer readers to the methodology in the measure 
specifications for more information about SES testing for this measure 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. 
We also refer readers to section XIV.B.2. of this final rule with 
comment period where we discuss social risk factors in the ASCQR 
Program in more detail.
    In addition, analyses of ASCs categorized into quartiles based on 
proportions of Medicaid dual-eligible patients, of African-American 
patients, and of low-SES patients (as identified by the AHRQ SES 
index),\135\ showed largely overlapping distributions (with similar 
median values) of the risk-standardized hospital visit rates (RSHVRs) 
by quartile. This means that facilities serving larger proportions of 
low-SES patients perform similarly to facilities serving lower 
proportions of low-SES patients.
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    \135\ Bonito A, Bann C, Eicheldinger C, Carpenter L. Creation of 
new race-ethnicity codes and socioeconomic status (SES) indicators 
for Medicare beneficiaries. RTI International, Agency for Healthcare 
Research and Quality. 2008.
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    Furthermore, we appreciate the commenter's concern about including 
condition category (CC) 82 on the list of condition categories that are 
not risk-adjusted for if they occur only at the time of the 
procedure.\136\ Condition categories are used to classify diagnoses 
into clinically coherent groups.\137\ We consolidated like risk factors 
into candidate variables, which were the variables that we considered 
for the risk-adjustment model. We agree with the commenter for noting 
that CC 82 is unlikely to develop acutely during the timeframe of a 
procedure; we will review this group of codes and will consider 
revising the list of CCs that are not risk-adjusted for if the 
condition occurs at the time of the procedure. As explained above, this 
measure was reviewed using a consensus-driven approach, with input from 
a national TEP and surgeons, including orthopedists, providing care in 
the ASC setting. Potential candidate risk factors and condition 
categories were identified from related quality measures and the 
literature; 138 139 a preliminary list of risk factors was 
developed and then revised based on national TEP and clinical expert 
review that included several orthopedists. These risk variables were 
further released and reviewed during the measure development public 
comment period prior to the selection of the final model.\140\ This 
consensus-based approach was used to achieve clinical face validity 
prior to the model selection.
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    \136\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
    \137\ HCUP CCS Fact Sheet. Healthcare Cost and Utilization 
Project (HCUP). January 2012. Agency for Healthcare Research and 
Quality, Rockville, MD. https://www.hcup-us.ahrq.gov/toolssoftware/ccs/ccsfactsheet.jsp.
    \138\ Sherman SL, Lyman S, Koulouvaris P, Willis A, Marx RG. 
Risk factors for readmission and revision surgery following rotator 
cuff repair. Clinical Orthopaedics and Related Research. 
2008;466(3):608-613.
    \139\ 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. 2004;139(1):67-72.
    \140\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
---------------------------------------------------------------------------

    Comment: One commenter suggested that the ASC-17 should not be tied 
to payment or measure procedures until after the first year of 
provision in the ASC setting and noted concern that doing so at the 
outset would not accurately reflect quality and risks incentivizing 
hospital services over ASCs. Another commenter noted that ASCs still 
receive a full payment update even if the ASCs are not involved in the 
measure.
    Response: We thank the commenters for their suggestions regarding 
the link of the ASC-17 measure to payment. We do not believe that the 
measure risks incentivizing hospital services over ASCs. The ASCQR 
Program is a pay-for-reporting quality data program. This means that 
payments under our pay-for-reporting quality data program are tied to 
reporting of the measures in the form and manner specified, not to 
specific performance on the measures, like for pay-for-performance 
programs (for example, the Hospital VBP Program (82 FR 38240)). In 
addition, we believe that the measure does indeed reflect quality. 
Feedback from national TEP members showed that the ASC-17 measure, as 
specified, can be used to distinguish between better and worse quality 
facilities.\141\ This shows TEP agreement with the overall face 
validity of the measure.
---------------------------------------------------------------------------

    \141\ Ibid.
---------------------------------------------------------------------------

    We note that while ASCs will not be required to submit additional 
data for measure calculation, because this is a claims-based measure, 
we strongly encourage ASCs to review measure scores to improve quality 
of care and patient outcomes. The detailed feedback reports, which 
provide information on every procedure performed during the performance 
period and the details of the hospital visits within seven days of the 
orthopedic procedure, will enable ASCs to understand the post-surgical 
hospital visit patterns. We believe this will help to facilitate ASCs 
to tailor clinical and educational interventions with the goal of 
reducing or eliminating the risk of hospital visits for complication of 
an orthopedic surgery. We also believe that the measure will facilitate 
improvements via public reporting by informing the general public and 
ASCs even if particular ASCs are not active in the measure.
    Comment: A few commenters expressed concerns about the reliability 
of the measure. One commenter noted that low-volume situations tend to 
produce measure scores that lack reliability. The commenter noted that 
the measure is only ``fairly'' reliable and suggested the reliability 
for a measure intended for public reporting should be substantially 
reliable, or have an ICC of 0.61 to 0.80. Furthermore, the commenter 
noted that the measure also suffers from limited discriminatory power 
because the number of underperforming facilities is very small.

[[Page 59462]]

The commenter urged CMS to ensure that the publicly reported scores are 
reliable. A few commenters expressed concern about the reliability of 
the measure for public reporting.
    Response: We thank the commenters for their feedback about the 
measure reliability. We disagree with the commenters and believe that 
ASC-17 is sufficiently reliable to be included in the ASCQR Program. 
Our calculated intraclass correlation coefficient (ICC),\142\ a measure 
of reliability or the degree to which the measure can produce accurate 
and consistent results across multiple measurements of the same 
entities in a time period, for this measure was 0.226.\143\ The NQF 
considers ICC values ranging from 0.01-0.20 as ``slight'' reliability, 
0.21-0.40 as ``fair'' reliability, 0.41 to 0.60 as ``moderate'' 
reliability, and 0.61 to 0.80 as ``strong'' reliability.\144\ Although 
this value indicates fair measure score reliability,\145\ we recognize 
that it is lower than for other claims-based outcomes measures 
developed by CMS.\146\ However, as we would expect, the ICC increases 
for ASCs with more patients.\147\ We disagree that the measure 
reliability should be ``substantially'' reliable, or have an ICC of 
0.61 to 0.80, and believe the publicly reported scores will be 
sufficiently reliable based on results showing increased reliability 
with increased case numbers.\148\ Specifically, for ASCs with at least 
250 cases in each of the two samples, the ICC was 0.359, which reflects 
better reliability that is more consistent with previously developed 
measures.\149\ During the measure dry run, we intend to determine the 
case size cutoff for meeting moderate reliability standards using the 
ICC by testing the reliability of the scores at different case sizes in 
the dry run data. In the 4-year data set, of the 3,075 ASCs, 467 (15.2 
percent) had 250 or more procedures, accounting for 57.3 percent of all 
procedures in the measure cohort.\150\
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    \142\ Landis J, Koch G. The measurement of observer agreement 
for categorical data, Biometrics 1977;33:159-174.
    \143\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
    \144\ Landis J, Koch G. The measurement of observer agreement 
for categorical data, Biometrics 1977;33:159-174.
    \145\ The NQF considers ICC values ranging from 0.01-0.20 as 
``slight'' reliability, 0.21-0.40 as ``fair'' reliability, 0.41 to 
0.60 as ``moderate'' reliability, and 0.61 to 0.80 as ``strong'' 
reliability. http://www.qualityforum.org/Measuring_Performance/Improving_NQF_Process/Measure_Testing_Task_Force_Final_Report.aspx.
    \146\ See the Risk-Standardized Hospital Visits within 7 Days 
After Hospital Outpatient Surgery Measure. For ICC score of 0.50: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf.
    \147\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures (Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
    \148\ Ibid.
    \149\ Ibid.
    \150\ Ibid.
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    Regarding the comment about lack of discriminatory power, we agree 
that the many small-volume ASCs will limit the ability to make 
distinctions in performance between facilities. ASCs with few cases in 
a given year limit our ability to capture variation in ASC-level 
measure scores because our modeling methodology is conservative and 
will estimate measure scores toward the national mean for facilities 
with small volumes. Specifically, ASCs with relatively few cases in the 
performance period may have a true rate that is worse/better than the 
national average. However, the model estimates their rate as close to 
the mean because their low volume does not provide enough information 
to accurately estimate a value near their true rate. As a result, the 
model may capture less variation than truly exists due to low case 
sizes. To improve the measure's ability to detect quality differences, 
we crafted our proposal to use 2 years of data for public reporting to 
expand the number of cases available for estimating rates across all 
facilities and to increase both the reliability of the measure score 
and the ability to discriminate performance across facilities. 
Furthermore, ASC facilities that have too few cases to reliably 
estimate a measure score (moderate reliability as discussed in the 
prior paragraph) would be treated in the same way as other facilities 
with too few cases and would not have their scores posted on Hospital 
Compare; their data would be replaced with a footnote. We discuss our 
Hospital Compare footnotes at: https://www.medicare.gov/hospitalcompare/data/Footnotes.html. However, these facilities will 
still receive confidential feedback reports/facility-specific reports 
providing valuable information about post-surgery events. We refer 
readers to section XIV.B.6.b.(7) of this final rule with comment period 
for more details about public reporting of this measure. We expect that 
smaller ASCs will still benefit from confidentially reviewing their 
measure results and individual patient-level outcomes in the facility-
specific report, as these data are currently largely unknown to ASCs 
and providers.
    Comment: One commenter requested that the dry run results be 
aggregated and made available in its entirety to the public for review 
and comment if the measure is finalized. The commenter also suggested 
that CMS conduct pilot testing for the measure with volunteer ASCs 
rather than conduct national dry runs.
    Response: We refer readers to section XIV.B.6.b.(7) of this final 
rule with comment period where we discuss our dry run. The intent of 
the dry run is to test production of the measure and for ASCs to 
familiarize themselves with the measure and provide feedback to us. The 
dry run will generate confidential feedback reports for ASCs on measure 
performance and risk-standardized hospital visit rates, among other 
data. We plan to perform a dry run of the measure prior to 
implementation. The confidential dry run results will not be publicly 
reported or used for payment determination. We believe a dry run will 
be more beneficial than pilot testing. The dry run will include all 
ASCs rather than just a subset of volunteer ASCs and will enable all 
ASCs to gain familiarity with the measure and processes, as well as 
provide feedback to CMS on both the measure itself and the reports. 
This will also enable CMS to learn about any unanticipated nuances 
associated with measure implementation.
    As proposed, we will not publicly report data for this measure 
until the CY 2022 payment determination and subsequent years. We do not 
believe publicly reporting data from the dry run is appropriate as we 
might still be working out unanticipated nuances; the data is 
preliminary and is therefore subject to change based on feedback 
provided by ASCs.
    Comment: A commenter noted that although CMS believes that there 
would not be any additional burden because ASCs are not required to 
submit additional data, reviewing claims detail reports and measure 
scores would be associated with additional burden for someone at ASCs, 
likely a clinician.
    Response: We thank the commenter for providing this input and 
acknowledge that this measure will be calculated completely from data 
already obtained from paid Medicare FFS claims submitted by ASCs, 
hospitals,

[[Page 59463]]

and physicians for billing purposes. Because claims data are used, 
there is no burden on the part of ASCs to submit additional data for 
measure calculation. We strongly suggest that facilities allocate time 
to review their feedback report, because they contain actionable 
information to identify performance gaps and further develop quality 
improvement strategies. However, we note that these activities do not 
represent burden related to program requirements.
    After consideration of the public comments we received, we are 
finalizing the proposal to adopt the ASC-17: Hospital Visits after 
Orthopedic Ambulatory Surgical Center Procedures measure in the ASCQR 
Program for the CY 2022 payment determination and subsequent years, as 
proposed.
c. Adoption of ASC-18: Hospital Visits After Urology Ambulatory 
Surgical Center Procedures Beginning With the CY 2022 Payment 
Determination
(1) Background
    As the number of urology procedures performed in ASCs increases, it 
is of increasing importance to report the quality of care provided to 
patients undergoing these procedures. One study found that urology 
procedures accounted for 4.8 percent of unanticipated admissions, and 
that urology surgery patients were almost twice as likely as 
orthopedics, plastic surgery, or neurosurgery to be admitted following 
surgery.\151\ Similarly, a recent study found outpatient urology 
surgery has an overall 3.7 percent readmission rate.\152\ A third study 
using a 5-percent national sample of Medicare beneficiaries ages 65 and 
older who underwent one of 22 common outpatient urologic procedures at 
ASCs from 1998 to 2006 found a 7.9 percent 30-day risk-adjusted rate of 
inpatient admission following surgery, with more frequent same-day 
admissions following outpatient surgery at ASCs than at hospitals.\153\
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    \151\ Fortier J. Unanticipated Admission after Ambulatory 
Surgery--A Prospective Study. Canadian Journal of Anaesthesia. 
1998;45(7):612-619.
    \152\ Rambachan A. Predictors of Readmission Following 
Outpatient Urological Surgery, Annals of the Royal College of 
Surgeons of England. Journal of Urology. 2014;192(1):183-188.
    \153\ Hollingsworth JM. Surgical Quality Among Medicare 
Beneficiaries Undergoing Outpatient Urological Surgery. The Journal 
of Urology. 2012;188(4):1274-1278.
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    Because urology surgery performed at an ASC is a significant 
predictive factor for unanticipated admissions compared to other 
procedures,\154\ we believe measuring and reporting 7-day unplanned 
hospital visits following urology procedures will incentivize ASCs to 
improve care and care transitions. Many of the reasons for hospital 
visits following surgery at an ASC are preventable; patients often 
present to the hospital following urology surgery for complications of 
medical care, including urinary tract infection, calculus of the 
ureter, urinary retention, hematuria, and septicemia.\155\ However, 
increased patient and staff education present opportunities to improve 
the success rate of urology surgeries in ASCs.\156\ Therefore, we 
believe tracking and reporting these events would facilitate efforts to 
lower the rate of preventable adverse events and to improve the quality 
of care following urology procedures performed at an ASC.
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    \154\ Fortier J. Unanticipated Admission after Ambulatory 
Surgery--A Prospective Study. Canadian Journal of Anaesthesia. 
1998;45(7):612-619.
    \155\ Paez A. Adverse Events and Readmissions after Day-Care 
Urological Surgery. International Brazilian Journal of Urology. 
2007;33(3):330-338.
    \156\ Ibid.
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(2) Overview of Measure
    We believe it is important to minimize adverse patient outcomes 
associated with urology ASC surgeries. Therefore, in the CY 2018 OPPS/
ASC proposed rule (82 FR 33695), we proposed to adopt the ASC-18: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
measure in the ASCQR Program for the CY 2022 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 
unplanned hospital visits (emergency department visits, observation 
stays, and unplanned inpatient admissions) following urology procedures 
at ASCs more visible to both ASCs and patients, and would incentivize 
ASCs to incorporate quality improvement activities to reduce these 
unplanned hospital visits. The measure also addresses the CMS National 
Quality Strategy domains of making care safer by reducing harm caused 
in the delivery of care and promoting effective communication and 
coordination of care.
    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 ASC-18: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
measure was included on a publicly available document entitled ``List 
of Measures under Consideration for December 1, 2016.'' \157\ The MAP 
reviewed this measure (MUC16-153) and recommended that this measure be 
refined and resubmitted prior to adoption by the ASCQR Program because, 
at the time of the MAP's review, this measure was still undergoing 
field testing. The Workgroup stated testing results should demonstrate 
reliability and validity at the facility level in the ambulatory 
surgical setting, and recommended this measure be submitted to NQF for 
review and endorsement.\158\
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    \157\ National Quality Forum. List of Measures under 
Consideration for December 1, 2016. National Quality Forum, Dec. 
2016. Available at: http://www.qualityforum.org/map/.
    \158\ National Quality Forum. 2016-2017 Spreadsheet of Final 
Recommendations to HHS and CMS, available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
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    Since the MAP's review and recommendation of `Refine and Resubmit' 
in 2016, we have completed testing for this measure and continued to 
refine this proposed measure in response to the MAP's recommendations. 
Results of continued development activities, including stakeholder 
feedback from the public comment period and pilot test findings will be 
presented to the MAP during the MAP feedback loop meeting in fall 2017. 
The proposed measure is consistent with the information submitted to 
the MAP, and the original MAP submission and our continued refinements 
support its scientific acceptability for use in quality reporting 
programs. Facility-level testing showed significant variation in 
unplanned hospital visits among ASCs after adjusting for case-mix 
differences, which suggests variation in quality of care. Our testing 
found moderate measure score reliability \159\ for this measure, which 
is consistent with existing measures of patient outcomes in the ASC 
setting, such as ASC-12: Facility Seven-Day Risk-Standardized Hospital 
Visit Rate after Outpatient Colonoscopy (described in the CY 2015 OPPS/
ASC final rule with comment period at 79 FR 66973). Validity testing 
demonstrated that the measure scores

[[Page 59464]]

identify differences in quality across facilities. Detailed testing 
results are available in the technical report for this measure, located 
at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
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    \159\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
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    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-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures measure is not currently NQF-endorsed. 
However, we intend to submit this measure for review and endorsement by 
the NQF once an appropriate measure endorsement project has a call for 
measures. We believe that this measure is appropriate for the 
measurement of quality care furnished by ASCs because urology 
procedures are becoming increasingly common in ASCs and, as discussed 
above, can signify unanticipated admissions after care provided in 
ASCs. Such visits are an unexpected and potentially preventable outcome 
for patients with a low anticipated perioperative risk. We also believe 
this measure depicts consensus among affected parties, as it was 
developed with stakeholder input from both a Technical Expert Panel 
convened by a contractor as well as the measure development public 
comment period.\160\ During the MAP and measure development processes, 
public commenters supported the measure's focus on assessing patient 
outcomes after urology ASC and agreed that the measure would be 
meaningful and improve quality of care. In addition, the ASC-18: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
measure addresses the MAP-identified priority measure area of surgical 
complications for the ASCQR Program.\161\ Therefore, we believe it is 
appropriate to incorporate this measure into the ASCQR Program measure 
set because collecting and publicly reporting this data will improve 
transparency, inform patients and providers, and foster quality 
improvement efforts.
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    \160\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Public Comment Summary 
Report: Development of Facility-Level Quality Measures of Unplanned 
Hospital Visits after Selected Ambulatory Surgical Center 
Procedures. Fall 2016. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/CallforPublicComment.html.
    \161\ National Quality Forum. ``MAP 2017 Considerations for 
Implementing Measures in Federal Programs: Hospitals.'' Report. 
2017. Available at: http://www.qualityforum.org/map/ under 
``Hospitals--Final Report.''
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(3) Data Sources
    This measure is claims-based and uses Part A and Part B Medicare 
administrative claims and Medicare enrollment data to calculate the 
measure.
    We proposed that the data collection period for the proposed ASC-
18: Hospital Visits after Urology Ambulatory Surgical Center Procedures 
measure would be the 2 calendar years ending 2 years prior to the 
applicable payment determination year. For example, for the CY 2022 
payment determination, the data collection period would be CY 2019 to 
2020. Because these measure data are collected via claims, ASCs will 
not need to submit any additional data directly to CMS. We refer 
readers to section XIV.D.4. of this final rule with comment period for 
a more detailed discussion of the requirements for data submitted via 
claims.
(4) Measure Calculations
    The measure outcome is all-cause, unplanned hospital visit 
occurring within seven days of the urology procedure performed at an 
ASC. For the purpose of this measure, ``hospital visits'' include 
emergency department visits, observation stays, and unplanned inpatient 
admissions. When there are two or more qualifying surgical procedures 
within a 7-day period, the measure considers all procedures as index 
procedures. However, the timeframe for outcome assessment is defined as 
the interval between procedures (including the day of the next 
procedure) and then 7 days after the last procedure.
    The facility-level score is a risk-standardized hospital visit 
rate, calculated by multiplying the ratio of the predicted to the 
expected number of postsurgical hospital visits among the given ASC's 
patients by the national observed hospital visit rate for all ASCs. For 
each ASC, the numerator of the ratio is the number of hospital visits 
predicted for the ASC's patients accounting for its observed rate, the 
number of the urology procedures performed at the ASCs, the case-mix, 
and the surgical complexity mix. The denominator of the ratio is the 
expected number of hospital visits given the ASC's case-mix and 
surgical complexity mix. A ratio of less than one indicates the ASC 
facility's patients were estimated as having fewer post-surgical visits 
than expected compared to ASCs with similar surgical complexity and 
patients; and a ratio of greater than one indicates the ASC facility's 
patients were estimated as having more visits than expected. The 
national observed hospital visit rate is the national unadjusted 
proportion of patients who had a hospital visit following a urology ASC 
surgery. For more information on measure calculations, we refer readers 
to: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
(5) Cohort
    The patient cohort for the proposed ASC-18: Hospital Visits after 
Urology Ambulatory Surgical Center Procedures measure includes all 
Medicare beneficiaries ages 65 and older undergoing outpatient urology 
procedures at an ASC who have 12 prior months of Medicare fee-for-
service Parts A and B enrollment. The target group of procedures are 
those that: (1) Are routinely performed at ASCs; (2) involve increased 
risk of post-surgery hospital visits; and (3) are routinely performed 
by urologists.
    Procedures included in the measure cohort are on Medicare's list of 
covered ambulatory surgical center (ASC) procedures.\162\ Medicare 
developed this

[[Page 59465]]

list to identify surgeries have a low to moderate risk profile. 
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.\163\ Medicare annually reviews and updates this list, and 
includes a transparent public comment submission and review process for 
addition and/or removal of procedures codes.\164\ The current list is 
accessible in the Downloads section at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/11_addenda_updates.html. In 
addition, to focus the measure only on the subset of surgeries on 
Medicare's list of covered ASC procedures that impose a meaningful risk 
of post-urology ASC surgery hospital visits, the measure includes only 
``major'' and ``minor'' procedures, as indicated by the MPFS global 
surgery indicator (GSI) values of 090 and 010, respectively, and 
therapeutic cystoscopy procedures. This list of GSI values is publicly 
available at: https://www.cms.gov/Medicare/Medicare-fee-for-service-payment/physicianfeesched/pfs-federal-regulation-notices-items/cms-1590-fc.html (download Addendum B). Moreover, to identify the subset of 
ASC procedures typically performed by urologists, we used the Clinical 
Classifications Software (CCS) developed by the Agency for Healthcare 
Research and Quality (AHRQ) and include in this measure procedures from 
two of AHRQ's categories, ``operations on the urinary system'' and 
``operations on the male genital organs.'' \165\ For more cohort 
details, we refer readers to the measure technical report located at: 
https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \162\ Centers for Medicare and Medicaid Services. ``Ambulatory 
Surgical Center (ASC) Payment: Addenda Updates.'' Available at: 
https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/11_addenda_updates.html.
    \163\ Ibid.
    \164\ Ibid.
    \165\ Healthcare Cost and Utilization Project. Clinical 
Classifications Software for Services and Procedures. Available at: 
https://www.hcup-us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp.
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    The measure excludes patients who survived at least 7 days 
following a urology procedure at an ASC, but were not continuously 
enrolled in Medicare fee-for-service Parts A and B in the 7 days after 
surgery. These patients are excluded to ensure all patients captured 
under this measure have full data available for outcome assessment. 
There are no additional inclusion or exclusion criteria for the 
proposed ASC-18 measure. Additional methodology and measure development 
details are available at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
(6) Risk Adjustment
    The statistical risk-adjustment model includes nine clinically 
relevant risk-adjustment variables that are strongly associated with 
risk of hospital visits within seven days following ASC urology 
surgery. The measure risk adjusts for age, six comorbidities, number of 
qualifying procedures, and work Relative Value Units (RVUs) to adjust 
for surgical complexity.\166\ Additional risk adjustment details are 
available in the technical report at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
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    \166\ 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.
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(7) Public Reporting
    As stated above, facility-level testing showed variation in 
unplanned hospital visits among ASCs after adjusting for case-mix 
differences, which suggests variation in quality of care and 
opportunities for quality improvement.\167\ Reliability testing showed 
fair measure score reliability.\168\ As expected, the reliability 
increased for ASCs with more patients; ASCs with at least 250 cases 
showed moderate reliability, consistent with other publicly reported 
Medicare claims-based, risk-adjusted outcome measures. In the CY 2018 
OPPS/ASC proposed rule (82 FR 33694), we noted that if this measure is 
adopted, we proposed to publicly report results only for facilities 
with sufficient case numbers to meet moderate reliability 
standards.\169\ CMS will determine the case size cutoff for meeting 
moderate reliability standards using the intraclass correlation (ICC) 
during the measure dry run (discussed below) by testing the reliability 
of the scores at different case sizes in the dry run data. However, we 
would also provide confidential performance data directly to smaller 
facilities which do not meet the criteria for sufficient case numbers 
for reliability considerations that would benefit from seeing their 
measure results and individual patient-level outcomes, as these data 
are currently largely unknown to ASCs and providers. The validity 
testing results demonstrated that the measure scores are valid and 
useful measures of ASC urology surgical quality of care and will 
provide ASCs with information that can be used to improve their quality 
of care. Detailed testing results are available in the technical report 
for this measure, located at: https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    \167\ Yale New Haven Health Services Corporation. Hospital 
Visits after Orthopedic Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
    \168\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
    \169\ Ibid.
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(8) Provision of Facility-Specific Information Prior to Public 
Reporting
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33694), we noted that 
if this proposed measure is finalized, but before the official data 
collection period or public reporting for the proposed ASC-18 measure, 
we intend to conduct a dry run. A dry run is a period of confidential 
feedback during which ASCs may review their dry-run measure results, 
and in addition, further familiarize themselves with the measure 
methodology, and ask questions. For the dry-run, we intend to use the 
most current 2-year set of complete claims (usually 12 months prior to 
the start date) available at the time of dry run. For example, if the 
dry run began in June 2018, the most current 2-year set of data 
available would likely be July 2015 to June 2017. Because we use paid, 
final action Medicare claims, ASCs would not need to submit any 
additional data for the dry run. The dry run would generate 
confidential feedback reports for ASCs, including patient-level data 
indicating whether the patient had a hospital visit and, if so, the 
type of visit (emergency department visit, observation stay, or 
unplanned inpatient admission), the admitting facility, and the 
principal discharge diagnosis. Further, the dry run would enable ASCs 
to see their risk-standardized hospital visit rate prior to the measure 
being implemented. General information about the dry run as well as 
confidential facility-specific reports would be made available for ASCs 
to review on their accounts at: http://www.qualitynet.org. We intend to 
continue to generate these reports for ASCs after we implement the 
measure so ASCs can use the information to identify performance gaps 
and develop quality improvement strategies.
    The confidential dry run results are not publicly reported and do 
not affect payment. We expect the dry run to take

[[Page 59466]]

approximately one month to conduct, during which facilities would be 
provided the confidential report and the opportunity to review their 
performance and provide feedback to us. However, after the dry run, 
measure results would have a payment impact and would be publicly 
reported beginning with the CY 2022 payment determination and for 
subsequent years as proposed. Although not previously stated in the CY 
2018 OPPS/ASC proposed rule (82 FR 33694), we note that the primary 
purpose of the records maintained in the National Claims History system 
of records (SOR) is for evaluating and studying the operation and 
effectiveness of the Medicare program, which aligns with the purposes 
of the ASCQR Program and a permissible use of beneficiary information. 
In addition, under 45 CFR 164.506(c)(4) of the HIPAA Privacy Rule, we 
may disclose protected health information to another covered entity, 
such as the ASCs, provided that both the ASC and CMS have or had a 
relationship with each individual who is the subject of the PHI being 
requested, the PHI pertains to such relationship, and the disclosure is 
for the purposes of conducting quality assessment and improvement 
activities listed in paragraph (1) or (2) of the definition of ``health 
care operations'' at 45 CFR 164.501. We believe that this provision is 
extensive enough to cover the uses that we would expect an ASC to make 
of the PHI.
    We invited public comment on our proposal to adopt the ASC-18: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
measure beginning with the CY 2022 payment determination as discussed 
above.
    Comment: A few commenters supported the proposed adoption of the 
ASC-18: Hospital Visits after Urology Ambulatory Surgical Center 
Procedures measure in the ASCQR Program. One of the commenters noted 
that the measure will provide patients with valuable data and address 
clinical areas critical to providers.
    Response: We thank the commenters for their support. We agree that 
measuring quality of care associated with urology procedures performed 
at ASCs is patient-centered and is an important clinical care area to 
evaluate.
    Comment: A few commenters believed that the measure should be 
refined and resubmitted prior to rulemaking, as suggested by the MAP. 
Several commenters noted or were concerned that the measure lacks NQF 
endorsement. A few commenters also suggested that CMS seek input from 
the MAP on the finalized measure prior to proposing for inclusion in 
the program.
    Response: Section 1833(h)(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 the NQF specifically. 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 the requirement that 
measures reflect consensus among affected parties can be achieved in 
other ways, including through the measure development process, broad 
acceptance and use of the measure, and public comments. As part of the 
measure development process, a national Technical Expert Panel (TEP), 
clinical experts, and stakeholders provided input at multiple points 
during development. We believe the ASC-18 measure meets these statutory 
requirements.
    We strive to adopt NQF-endorsed measures when possible. Although 
ASC-18 is not currently NQF-endorsed, our research and analysis 
conducted during development demonstrate that the measure is accurate, 
valid, and actionable. We refer readers to the technical report for 
more information about the measure and testing results: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Urology-ASC-Procedures_Measure-Technical-Report_052017.pdf. We 
will submit this measure, with complete evidence, specifications, and 
testing results, to NQF for endorsement when an appropriate NQF project 
has a call for the measure.
    In addition, in December 2016, the MAP Hospital Workgroup reviewed 
and classified the measure as ``Refine and Resubmit Prior to 
Rulemaking.'' \170\ We understand that the measure received this 
classification because: (1) The measure was still undergoing field 
testing at the time, and (2) the MAP also recommended that the measure 
be submitted to the NQF for review and endorsement. Between that 
initial MAP review in December 2016 and the CY 2018 OPPS/ASC proposed 
rule, we completed field testing and refined the measure.\171\ The 
final methodology report, which was presented in the proposed rule, 
included the final results of measure testing and completed measure 
specifications that occurred between the MAP's review in December 2016 
and CMS' proposal to adopt the measure in the ASCQR Program.\172\ We 
also intend to update the MAP at the next appropriate opportunity. As 
stated above, we also intend to submit the measure to the NQF for 
endorsement during the next appropriate call for measures.
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    \170\ Spreadsheet of MAP 2017 Final Recommendations. February 1, 
2017. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=84452.
    \171\ MAP 2017 Considerations for Implementing Measures in 
Federal Programs: Hospitals. Final Report. February 15, 2017. 
Available at: http://www.qualityforum.org/Publications/2017/02/2017_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
    \172\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Urology-ASC-Procedures_Measure-Technical-Report_052017.pdf.
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    Comment: A commenter expressed concern about the attribution of 
outcomes. Specifically, the commenter flagged eight of the top reasons 
for hospital visits within 7 days of urologic procedures that likely 
reflect routine follow-up rather than quality of care as intended by 
the measure. Another commenter suggested that CMS develop a numerator 
exclusion for unrelated hospital visits.
    Response: We acknowledge that the rate of hospital visits is not 
expected to be zero, since some patients will have visits for reasons 
unrelated to the procedure. In designing the measure, we narrowed the 
measure to include surgical procedures that: (1) Are routinely 
performed at ASCs; (2) involve increased risk of post-surgery hospital 
visits; and (3) are routinely performed by urologists. In addition, the 
measure is risk-adjusted for patient demographics, clinical 
characteristics, and surgical procedural complexity, so that facilities 
that experience more unrelated visits due to a generally higher-risk 
patient mix will not be disadvantaged. We refer readers to the methods 
section in the measure specifications for more information about the 
risk-adjustment methodology.
    In addition, we only measure the rate of unplanned hospital 
admissions; ED visits and observation stays are never considered 
planned.\173\ \174\ This approach removes from the outcome admissions 
that are not a signal of quality of care, because they represent:

[[Page 59467]]

(1) A condition or diagnosis that is considered to be always planned 
(such as transplants or maintenance chemotherapy); or (2) that are 
considered potentially planned (such as cardiovascular procedures) and 
are not accompanied by an acute diagnosis. The planned admission 
algorithm is based on CMS' widely-used Planned Readmission Algorithm 
v4.0.\175\ We refer readers to the measure methodology report at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/HospitalQualityInits/Measure-Methodology.html for more 
details.
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    \173\ Horwitz, Leora I., et al. ``Development and validation of 
an algorithm to identify planned readmissions from claims data.'' 
Journal of hospital medicine 10.10 (2015): 670-677.
    \174\ Ranasinghe, Isuru, et al. ``Differences in colonoscopy 
quality among facilities: development of a post-colonoscopy risk-
standardized rate of unplanned hospital visits.'' Gastroenterology 
150.1 (2016): 103-113.
    \175\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Urology-ASC-Procedures_Measure-Technical-Report_052017.pdf.
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    Regarding the commenter's concerns about the attribution of 
outcomes, and whether hospital visit within 7 days of ASC procedure is 
a sign of poor quality, we believe that the measure captures the full 
range of potentially serious adverse events related to urologic 
procedures performed at ASCs. We designed the outcome timeframe to 
encompass the first 7 days for capture of hospital visits (ED visits, 
observation stays, and unplanned admissions), because existing 
literature suggests that the vast majority of adverse events after an 
urology procedure occur within the first 7 days following the procedure 
\176\ \177\ and because the highest rates of hospital visits were 
observed in claims data within 7 days following the procedure. A 7-day 
timeframe helps to ensure that the measure will capture adverse events 
following the procedure, but will not capture events impacted by 
factors unrelated to the care patients received.\178\ We appreciate the 
commenter's careful review of the top hospital visit diagnoses within 
seven days of urologic procedures. We welcome specific examples of 
potentially planned admissions following outpatient urologic 
procedures.
---------------------------------------------------------------------------

    \176\ 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. 2004;139(1):67-72.
    \177\ Mattila K, Toivonen J, Janhunen L, Rosenberg PH, Hynynen 
M. Postdischarge symptoms after ambulatory surgery: First-week 
incidence, intensity, and risk factors. Anesthesia and Analgesia. 
2005;101(6):1643-1650.
    \178\ Parry, Nicola. ``7-Day Readmissions: Better Indicators of 
Patient Care.'' Medscape, 2016.
---------------------------------------------------------------------------

    In response to a commenter's suggestion that we develop a numerator 
exclusion for unrelated hospital visits, this measure was intentionally 
designed to broadly evaluate all-cause hospital visits to capture 
serious adverse events experience by patients after undergoing urologic 
ASC procedures, rather than a narrow set of identifiable complications, 
for many reasons. The outcome of all-cause hospital visits is 
consistent with a patient-centric view of care that is designed to 
prompt ASC providers to minimize the risk and reduce the need for a 
broad range of outcomes after undergoing urologic ASC procedures, 
including the risk of dehydration, nausea and vomiting, dizziness, and 
urinary retention. Measuring only hospital visits that are overtly 
related to a procedure, such as visits for pain and bleeding, would 
limit the measure's intended broad impact on quality improvement 
efforts. These are common problems that may or may not be related to a 
recent ASC procedure. Thus, the measure is structured so that 
facilities that most effectively minimize patient risk of these 
outcomes will perform better on the measure.
    Comment: A commenter suggested that CMS provide a detailed clinical 
review of all the measure results by several seasoned urologists to 
ensure the measure algorithm is appropriate.
    Response: In developing the measure, we incorporated significant 
input from various experts and stakeholders. In addition to the MUC and 
MAP processes described above, a multidisciplinary team of clinicians, 
health services researchers, and statisticians were informed, in part, 
by a national TEP consisting of patients, methodologists, researchers, 
and providers, including urologists who conducted a detailed clinical 
review of all the measure results to ensure the measure algorithm is 
appropriate. We also held a public comment period soliciting 
stakeholder input on the measure methodology, including the planned 
admission algorithm. However, we will continue to evaluate the measure, 
as our goal is to ensure that the measure accurately reflects the 
quality of care provided in ASCs.
    We appreciate the commenter's careful review of the top hospital 
visit diagnoses within seven days of urology procedures. We welcome 
specific examples of potentially planned admissions following 
outpatient urologic procedures.
    Comment: Several commenters were concerned that ASCs may not have 
actionable information generated from ASC-18. Specifically, some 
commenters did not support adoption of the measure, because measure 
score calculation relies on retrospective claims data. The commenters 
expressed concerns that the delay in providing data to facilities would 
provide limited usefulness for quality improvement or for consumers in 
choosing an ASC facility. Regarding a similar measure, ASC-12 Facility 
Risk-Standardized Visit Rate after Outpatient Colonoscopy, one 
commenter noted that in their members' experience with the confidential 
feedback reports, facilities were already aware of most of the visits 
in the claims detail report and did not review the reports unless the 
facilities were categorized as underperforming. The commenter also 
questioned the usefulness of the measure to make distinctions among 
facilities and to consumers, because the performance for the 
overwhelming majority of the ASCs would be no different than expected.
    Response: We acknowledge the commenters' concerns regarding the use 
of claims data for the ASC-18 measure; however, the measure would 
provide facilities with the most recently available, patient-level data 
to help guide quality improvement efforts that would also be low 
burden.
    Further, we believe that measures of hospital events following 
specific types of surgical procedures fully based on Medicare FFS 
claims recently adopted (for example, ASC-12: Facility 7-Day Risk 
Standardized Hospital Visit Rate after Outpatient Colonoscopy Measure) 
and including those newly finalized in this final rule that is, ASC-17: 
Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures 
and ASC-18: Hospital Visits after Urology Ambulatory Surgical Center 
Procedures) will better inform Medicare beneficiaries and other 
consumers about post-procedure complication rates. Existing ASC quality 
measures tend to focus on very rare, patient safety-related events. For 
example, ASC-3 counts cases in which a wrong site, wrong side, wrong 
patient, wrong procedure, or wrong implant event occurred (76 FR 
74499).\179\ Measures designed to capture more common adverse outcomes 
that patients experience, such as urinary retention, urinary tract 
infection, pain, and other complications prompting acute care hospital 
visits or admissions

[[Page 59468]]

are lacking at this time, and this is what this measure is intended to 
accomplish.
---------------------------------------------------------------------------

    \179\ Centers for Medicare & Medicaid Services. Ambulatory 
Surgical Center Quality Reporting Specifications Manual Release 
Notes Version: 6.0. 2016; Available at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
---------------------------------------------------------------------------

    While we appreciate the commenter's feedback that some ASCs were 
already aware of most of the visits in the claims detail report and did 
not review the reports unless the facilities were categorized as 
underperforming, that is not always the case. Providers at ASCs are 
more often unaware of patients' subsequent acute care visits given that 
separate providers (for example, emergency department physicians) tend 
to provide post-urological care when it is required.\180\ This measure 
is intended to bring greater awareness to a larger number of ASCs and 
patients, in addition to actionable information to lower the rate of 
preventable adverse events and to improve the quality of care following 
procedures performed at an ASC.
---------------------------------------------------------------------------

    \180\ Mezei G, Chung F. Return hospital visits and hospital 
readmissions after ambulatory surgery. Annals of Surgery. 
1999;230(5):721-727.
---------------------------------------------------------------------------

    Although the majority of ASCs would be expected to have risk-
standardized rates that would be classified as ``no different than the 
national rate'' on Hospital Compare, we believe that the measure will 
be able to make distinction among facilities and to consumers because 
the variation in risk-standardized hospital visit rates across ASCs 
nationally suggests that there is still room for quality improvement. 
Hospital Compare will also report facilities' risk-standardized rates, 
and facilities will receive confidential feedback reports to support 
quality improvement efforts. Furthermore, feedback from national TEP 
members showed that the ASC-18 measure, as specified, can be used to 
distinguish between better and worse quality facilities.\181\ This 
shows TEP agreement with the overall face validity of the measure.
---------------------------------------------------------------------------

    \181\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research and Evaluation (CORE). Measure Technical Report: 
Hospital Visits after Urology Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Urology-ASC-Procedures_Measure-Technical-Report_052017.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters expressed concerns about risk adjustment. 
A commenter noted that the measure is not risk adjusted to account for 
socioeconomic status and other factors beyond a hospitals' control. 
Another commenter expressed concern about including condition category 
(CC 82), Respirator dependence/tracheostomy status, on the list of 
condition categories that are not risk-adjusted if the condition occurs 
only at the time of the procedure. The commenter noted that this type 
of condition is not something that develops acutely within the 
timeframe of an ASC procedure, but rather is reflective of a more 
chronic patient condition.
    Response: We understand the important role that factors outside of 
an ASC's control, for example, socioeconomic and sociodemographic 
status, play in the care of patients. Although the risk-adjustment 
methodology does not stratify by social risk factors, it does account 
for risk by adjusting for risk factors associated with increased risk 
for hospital visits after surgery. In developing this measure, we 
evaluated the potential effects of risk adjusting for three 
socioeconomic status (SES) factors that are available in CMS claims 
(Medicaid dual-eligibility status, African-American race, and the AHRQ 
SES index). Our results show that adjusting for these three factors at 
the patient level do not change the measure scores. We assessed the 
relationship of SES to hospital visits at the patient and facility 
levels. Unadjusted and adjusted ASC-level risk-standardized hospital 
visit rates were highly correlated (Spearman correlation coefficients 
of nearly 1.0) when calculated with and without the addition of the 
three SES variables (Medicaid dual-eligibility status, African-American 
race, and the AHRQ SES index). This indicates that including SES 
variables in ASC-level risk-adjusted measure score will result in 
limited differences in measure results after accounting for other risk 
factors, such as age and comorbidities. We refer readers to the 
methodology in the measure specifications for more information about 
SES testing for this measure at: https://www.cms.gov/Medicare/Quality-
Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/
Measure-Methodology.html. We also refer readers to section XIV.B.2. of 
this final rule with comment period where we discuss social risk 
factors in the ASCQR Program in more detail.
    Furthermore, we appreciate the commenter's concern about including 
condition category (CC) 82 on the list of condition categories that are 
not risk-adjusted for if they occur only at the time of the 
procedure.\182\ Condition categories are used to classify diagnoses 
into clinically coherent groups.\183\ We consolidated like risk factors 
into candidate variables, which were the variables that we considered 
for the risk-adjustment model. We agree with the commenter for noting 
that CC 82 is unlikely to develop acutely during the timeframe of a 
procedure; we will review this group of codes and will consider 
revising the list of CCs that are not risk-adjusted for if the 
condition occurs at the time of the procedure. As explained above, this 
measure was reviewed using a consensus-driven approach, with input from 
a national TEP and surgeons, including urologists, providing care in 
the ASC setting. Potential candidate risk factors and condition 
categories were identified from related quality measures and the 
literature;184 185 186 a preliminary list of risk factors 
was developed and then revised based on national TEP and clinical 
expert review that included several urologists. These risk variables 
were further released and reviewed during the measure development 
public comment period prior to the selection of the final model.\187\ 
This consensus-based approach was used to achieve clinical face 
validity prior to the model selection.
---------------------------------------------------------------------------

    \182\ Ibid.
    \183\ HCUP CCS Fact Sheet. Healthcare Cost and Utilization 
Project (HCUP). January 2012. Agency for Healthcare Research and 
Quality, Rockville, MD. https://www.hcup-us.ahrq.gov/toolssoftware/ccs/ccsfactsheet.jsp.
    \184\ Crew JP, Turner KJ, Millar J, Cranston DW. Is day case 
surgery in urology associated with high admission rates? Annals of 
The Royal College of Surgeons of England. 1997;79(6):416-419.
    \185\ 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. 2004;139(1):67-72.
    \186\ Paez A, Redondo E, Linares A, Rios E, Vallejo J, Sanchez-
Castilla M. Adverse events and readmissions after day-case 
urological surgery. International Brazilian Journal of Urology. 
2007;33(3):330-338.
    \187\ Yale New Haven Health Services Corporation. Hospital 
Visits after Orthopedic Ambulatory Surgical Center Procedures 
(Version 1.0). May 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Version-10_Hospital-Visits_Orthopedic-ASC-Procedures_Measure-Technical-Report_052017.pdf.
---------------------------------------------------------------------------

    Comment: One commenter noted that low-volume situations tend to 
produce measure scores that lack reliability. The commenter noted that 
the measure is only ``fairly'' reliable and suggested the reliability 
for a measure intended for public reporting should be substantially 
reliable, or have an ICC of 0.61 to 0.80. Furthermore, the commenter 
noted that the measure also suffers from limited discriminatory power 
because the number of underperforming facilities is very small. The 
commenter urged CMS to ensure that the publicly reported scores are 
reliable.
    Response: We thank the commenter for their feedback about the 
measure reliability. We disagree with the commenter and believe that 
ASC-18 is

[[Page 59469]]

sufficiently reliable to be included in the ASCQR Program. Our 
calculated intraclass correlation coefficient (ICC),\188\ a measure of 
reliability or the degree to which the measure can produce accurate and 
consistent results across multiple measurements of the same entities in 
a time period, for this measure was 0.45, indicating ``moderate'' 
reliability.\189\ The NQF considers ICC values ranging from 0.01-0.20 
as ``slight'' reliability, 0.21-0.40 as ``fair'' reliability, 0.41 to 
0.60 as ``moderate'' reliability, and 0.61 to 0.80 as ``strong'' 
reliability.\190\ We disagree that the measure reliability should be 
``substantially'' reliable or have an ICC of 0.61 to 0.80, and believe 
the publicly reported scores will be sufficiently reliable. The results 
of reliability testing are consistent with existing measures of patient 
outcomes in the ambulatory surgery setting.\191\ Therefore, we believe 
the measure is sufficiently reliable.
---------------------------------------------------------------------------

    \188\ Landis J, Koch G. The measurement of observer agreement 
for categorical data, Biometrics 1977;33:159-174.
    \189\ The NQF considers ICC values ranging from 0.01-0.20 as 
``slight'' reliability, 0.21-0.40 as ``fair'' reliability, 0.41 to 
0.60 as ``moderate'' reliability, and 0.61 to 0.80 as ``strong'' 
reliability. Avalable at: http://www.qualityforum.org/Measuring_Performance/Improving_NQF_Process/Measure_Testing_Task_Force_Final_Report.aspx.
    \190\ Landis J, Koch G. The measurement of observer agreement 
for categorical data, Biometrics 1977;33:159-174.
    \191\ See the Risk-Standardized Hospital Visits within 7 Days 
After Hospital Outpatient Surgery Measure. For ICC score of 0.50: 
Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Hospital-Visits-after-Hospital-Outpatient-Surgery-Measure.pdf.
---------------------------------------------------------------------------

    Regarding the comment about lack of discriminatory power, we agree 
that the many small-volume ASCs will limit the ability to make 
distinctions in performance between facilities. ASCs with few cases in 
a given year limit our ability to capture variation in ASC-level 
measure scores because our modeling methodology is conservative and 
will estimate measure scores toward the national mean for facilities 
with small volumes. Specifically, hospitals with relatively few cases 
in the performance period may have a true rate that is worse/better 
than the national average. However, the model estimates their rate as 
close to the mean because their low volume does not provide enough 
information to accurately estimate a value near their true rate. As a 
result, the model may capture less variation than truly exits due to 
low case sizes. To improve the measure's ability to detect quality 
differences, we crafted our proposal to use 2 years of data for public 
reporting to expand the number of cases available for estimating rates 
across all facilities and to increase both the reliability of the 
measure score and the ability to discriminate performance across 
facilities. Furthermore, ASC facilities that have too few cases to 
reliably estimate a measure score (moderate reliability as discussed in 
the prior paragraph) would be treated in the same way as other 
facilities with too few cases and would not have their scores posted on 
Hospital Compare; their data would be replaced with a footnote. We 
discuss our Hospital Compare footnotes at: https://www.medicare.gov/hospitalcompare/data/Footnotes.html. However, these facilities will 
still receive confidential feedback reports/facility-specific reports 
providing valuable information about post-surgery events. We refer 
readers to section XIV.B.6.c.(7) of this final rule with comment period 
for more details about public reporting of this measure. We expect that 
smaller ASCs will still benefit from confidentially reviewing their 
measure results and individual patient-level outcomes in the facility-
specific report, as these data are currently largely unknown to ASCs 
and providers.
    Comment: One commenter requested that the dry run results be 
aggregated and made available in its entirety to the public for review 
and comment if the measure is finalized. The commenter also suggested 
that CMS conduct pilot testing for the measure with volunteer ASCs 
rather than conduct national dry runs. Another commenter suggested that 
CMS pilot test the measure prior to implementation to ensure that the 
measure adequately account for the nuances related to urologic surgery.
    Response: We refer readers to section XIV.B.6.c.(7) of this final 
rule with comment period where we discuss our dry run. The intent of 
the dry run is to test production of the measure and for ASCs to 
familiarize themselves with the measure and provide feedback to CMS. 
The dry run will generate confidential reports for ASCs on measure 
performance and risk-standardized hospital visit rates, among other 
data. We plan to perform a dry run of the measure prior to 
implementation. The confidential dry run results will not be publicly 
reported or used for payment determination. We believe a dry run will 
be more beneficial than pilot testing. The dry run will include all 
ASCs rather than just a subset of volunteer ASCs and will enable all 
ASCs to gain familiarity with the measure and processes, as well as 
provide feedback to CMS on both the measure itself and the reports. 
This will also enable CMS to learn about any unanticipated nuances 
associated with measure implementation.
    As proposed we will not publicly report data for this measure until 
the CY 2022 payment determination and subsequent years. We do not 
believe publicly reporting data from the dry run is appropriate as we 
might still be working out unanticipated nuances; the data is 
preliminary and is therefore subject to change based on feedback 
provided by ASCs.
    Comment: One commenter noted that although CMS believes that there 
would not be any additional burden because ASCs are not required to 
submit additional data, reviewing claims detail reports and measure 
scores would be associated with additional burden for someone at ASCs, 
likely a clinician.
    Response: We thank the commenter for providing this input and 
acknowledge that this measure will be calculated completely from data 
already obtained from paid Medicare FFS claims submitted by ASCs, 
hospitals, and physicians for billing purposes. Because claims data are 
used, there is no burden on the part of ASCs to submit additional data 
for measure calculation. We strongly suggest that facilities allocate 
time to review their feedback reports, because they contain actionable 
information to identify performance gaps and further develop quality 
improvement strategies. However, we note that these activities do not 
represent burden related to program requirements.
    Comment: One commenter expressed concern over the measure 
specifications, including the accuracy of background data on the number 
of unplanned hospital visits.
    Response: We interpret commenter to be referring to Table 4 in the 
ASC-18 Measure Technical Report published in May 2017 and located at: 
https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. In the 
technical report for this measure, the column labeled ``number of 
unplanned hospital visits'' was incorrectly labeled and should read 
``number of procedure performed.'' The remainder of the table is 
correct. We will address this discrepancy in future technical 
documentation. We thank the commenter for pointing out the 
inconsistency.
    After consideration of the public comments we received, we are 
finalizing the proposal to adopt the ASC-18: Hospital Visits after 
Urology Ambulatory Surgical Center Procedures measure in the ASCQR 
Program for the

[[Page 59470]]

CY 2022 payment determination and subsequent years, as proposed.
d. Summary of Previously Adopted Measures and Newly Finalized ASCQR 
Program Measures for the CY 2022 Payment Determination and Subsequent 
Years
    The measure set for the ASCQR Program CY 2022 payment determination 
and subsequent years is listed below.

 ASCQR Program Measure Set With Previously and Newly Finalized Measures
       for the CY 2022 Payment Determination and Subsequent Years
------------------------------------------------------------------------
        ASC No.                 NQF No.               Measure name
------------------------------------------------------------------------
ASC-1.................  0263..................  Patient Burn.
ASC-2.................  0266..................  Patient Fall.
ASC-3.................  0267..................  Wrong Site, Wrong Side,
                                                 Wrong Patient, Wrong
                                                 Procedure, Wrong
                                                 Implant.
ASC-4.................  0265 [dagger].........  All-Cause Hospital
                                                 Transfer/Admission.
ASC-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................  None..................  Normothermia Outcome.
ASC-14................  None..................  Unplanned Anterior
                                                 Vitrectomy.
ASC-15a...............  None..................  OAS CAHPS--About
                                                 Facilities and Staff.**
ASC-15b...............  None..................  OAS CAHPS--Communication
                                                 About Procedure.**
ASC-15c...............  None..................  OAS CAHPS--Preparation
                                                 for Discharge and
                                                 Recovery.**
ASC-15d...............  None..................  OAS CAHPS--Overall
                                                 Rating of Facility.**
ASC-15e...............  None..................  OAS CAHPS--
                                                 Recommendation of
                                                 Facility.**
ASC-17................  None..................  Hospital Visits after
                                                 Orthopedic Ambulatory
                                                 Surgical Center
                                                 Procedures.***
ASC-18................  None..................  Hospital Visits after
                                                 Urology Ambulatory
                                                 Surgical Center
                                                 Procedures.***
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* 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).
** Measure finalized for delay beginning with CY 2018 reporting until
  further action in future rulemaking as discussed in section XIV.B.4.
  of this final rule with comment period.
*** New measure finalized for the CY 2022 payment determination and
  subsequent years.

7. ASCQR Program Measures and Topics for Future Consideration
    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68493 
through 68494), we set forth our considerations in the selection of 
ASCQR Program quality measures. We seek to develop a comprehensive set 
of quality measures to be available for widespread use for making 
informed decisions and quality improvement in the ASC setting (77 FR 
68496). We also seek to align these quality measures with the National 
Quality Strategy (NQS), the CMS Strategic Plan (which includes the CMS 
Quality Strategy), and our other quality reporting and value-based 
purchasing (VBP) programs, as appropriate. Accordingly, as we stated in 
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66979), in 
considering future ASCQR Program measures, we are focusing on the 
following NQS and CMS Quality Strategy measure domains: Make care safer 
by reducing harm caused in the delivery of care; strengthen person and 
family engagement as partners in their care; promote effective 
communication and coordination of care; promote effective prevention 
and treatment of chronic disease; work with communities to promote best 
practices of healthy living; and make care affordable.
    We invited public comment on one measure developed by the CDC for 
potential inclusion in the ASCQR Program in future rulemaking, the 
Ambulatory Breast Procedure Surgical Site Infection (SSI) Outcome 
measure (NQF #3025). This potential measure is discussed in more detail 
below.
    Healthcare-associated infections (HAIs) are a major cause of 
morbidity and mortality in healthcare settings in the United States, 
with the most recent prevalence surveys of HAIs estimating that 
approximately four percent of inpatients in acute care settings have 
developed at least one HAI, translating to 721,800 infections in 
648,000 patients in 2011.\192\ Surgical site infection (SSI) is one of 
the most common HAIs, comprising approximately 22 percent of all HAIs, 
and contribute greatly to the mortality and cost burden of HAIs.\193\ 
Breast SSIs represent a substantial proportion of SSIs overall in 
inpatient settings, and have one of the highest infection risks of any 
procedure type in outpatient settings.\194\ While SSI rates following 
breast procedures vary from one percent to over 30 percent depending on 
procedure type,\195\ the

[[Page 59471]]

trend in surgery transitioning to outpatient and ambulatory surgery 
settings due to advances in surgical techniques and economic incentives 
for ambulatory surgery make these events an outcome of interest for the 
ASCQR Program.
---------------------------------------------------------------------------

    \192\ Magill SS, Edwards JR, Bamberg W, Beldavs ZG, Dumyati G, 
Kainer MA. Multistate Point-Prevalence Survey of Health Care-
Associated Infections. NEJM. 2014;370:1198-1208.
    \193\ Ibid.
    \194\ This statement is based on an analysis of data reported to 
the National Healthcare Safety Network (NHSN). Out of 67,150 ASC 
procedures report to NHSN from 2010 to 2013, 30,787 (45.9 percent) 
were breast procedures. Out of the 142 surgical site infections 
reported from ASCs during the same time period, 78 (54.9 percent) 
were related to breast procedures, indicating an SSI risk of 0.25 
percent. This was the highest volume and SSI risk out of all 
outpatient ASC procedures reported in the timeframe.
    \195\ Vilar-Compte D, Jacquemin B, Robles-Vidal C, and Volkow P. 
Surgical Site Infections in Breast Surgery: Case-Control Study. 
World Journal of Surgery. 2004;28(3):242-246; Mannien J., Wille JC, 
Snoeren RL, van den Hof S. Impact of Postdischarge Surveillance on 
Surgical Site Infection Rates for Several Surgical Procedures: 
Results from the Nosocomial Surveillance Network in the Netherlands. 
Infection Control and Hospital Epidemiology. 2006;27:809-816; Vilar-
Compte D., Rosales S., Hernandez-Mello N, Maafs E and Volkow P. 
Surveillance, Control, and Prevention of Surgical Site Infections in 
Breast Cancer Surgery: A 5-year Experience. American Journal of 
Infection Control. 2009;37(8):674-679.
---------------------------------------------------------------------------

    Numerous individual studies and systematic reviews provide strong 
evidence that measurement and feedback of surgical site infections 
leads to lower SSI rates in the long term.\196\ Although standardized 
metrics have been developed to measure SSI rates for inpatient 
surgeries in the hospital setting,\197\ these have not yet been 
developed for outpatient surgeries in ASCs, which comprise a fast-
growing proportion of all surgeries performed in the United 
States.\198\ We believe this measure, if adopted in the future, could 
serve as a quantitative guide for ASCs, enabling them to benchmark SSI 
rates in their facilities against nationally aggregated data and set 
targets for improvement.
---------------------------------------------------------------------------

    \196\ Anderson DJ, Podgorny K, Berr[iacute]os-Torres S, et al. 
Strategies to Prevent Surgical Site Infections in Acute Care 
Hospitals: 2014 Update. Infection Control and Hospital Epidemiology. 
2014;35:605-627; Mangram AJ, Horan TC, Pearson ML, Silver LC, Jarvis 
WR. Guideline for Prevention of Surgical Site Infection. Hospital 
Infection Control Practices Advisory Committee. Infection Control 
and Hospital Epidemiology. 1999; 20:250-278; Gaynes R, Richards C, 
Edwards JR, et al. Feeding Back Surveillance Data to Prevent 
Hospital-Acquired Infections. Emerging Infectious Diseases. 
2001;7:295-298.
    \197\ Mu Y, et al. Improving Risk-Adjusted Measures of Surgical 
Site Infection for the National Healthcare Safety Network. Infection 
Control and Hospital Epidemiology. 2011;32(10):970-986.
    \198\ Ibid.
---------------------------------------------------------------------------

    This issue is of interest to the ASCQR Program because breast 
procedures are becoming increasingly common at ASCs.\199\ In addition, 
the Ambulatory Breast Procedure Surgical Site Infection Outcome measure 
addresses the MAP-identified measure gap area of surgical quality 
measures, including surgical site infection measures, for the ASCQR 
Program.\200\
---------------------------------------------------------------------------

    \199\ Cullen KA, Hall MJ, Golosinskiy A, Statistics NFcH. 
Ambulatory Surgery in the United States, 2006. National Health 
Statistics Report; 2009.
    \200\ National Quality Forum. ``MAP 2017 Considerations for 
Implementing Measures in Federal Programs: Hospitals.'' Report. 
2017. Available at: http://www.qualityforum.org/map/ under 
``Hospitals--Final Report.''
---------------------------------------------------------------------------

    The Ambulatory Breast Procedure Surgical Site Infection (SSI) 
Outcome measure was included on the 2016 MUC list \201\ and reviewed by 
the MAP. The MAP conditionally supported the measure (MUC16-155), 
noting the rapid shift of care to the ambulatory surgery setting and 
the need to ensure transparency about the safety of ambulatory surgery 
centers.\202\ The MAP further noted that this measure should be 
submitted for NQF review and endorsement.\203\ A summary of the MAP 
recommendations can be found at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593. We note that this measure 
received NQF endorsement in January 2017, and therefore satisfies the 
MAP's condition for support.\204\
---------------------------------------------------------------------------

    \201\ Available at: http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx, under ``2016 Measures Under 
Consideration List (PDF).''
    \202\ National Quality Forum. 2016-2017 Spreadsheet of Final 
Recommendations to HHS and CMS, available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    \203\ Ibid.
    \204\ National Quality Forum. Endorsed measure specification 
available at: http://www.qualityforum.org/QPS/3025.
---------------------------------------------------------------------------

    The Ambulatory Breast Procedure Surgical Site Infection Outcome 
measure is used to assess the risk-adjusted Standardized Infection 
Ratio (SIR) for all SSIs following breast procedures conducted at ASCs 
among adult patients and reported to the CDC's National Healthcare 
Safety Network. The measure compares the reported number of SSIs 
observed at an ASC with a predicted value based on nationally 
aggregated data. The numerator for this measure is all SSIs during the 
30-day and 90-day postoperative periods following breast procedures in 
ASCs. The term SSI as used in this measure is defined in accordance 
with the CDC NHSN's surveillance protocol as an infection, following a 
breast procedure, of either the skin, subcutaneous tissue and breast 
parenchyma at the incision site (superficial incisional SSI), deep soft 
tissues of the incision site (deep incisional SSI), or any part of the 
body deeper than the fascial/muscle layers that is opened or 
manipulated during the operative procedure (organ/space SSI).\205\ The 
denominator for this measure is all adult patients (defined as patients 
ages 18 to 108 years) undergoing breast procedures, as specified by the 
operative codes that comprise the breast procedure category of the NHSN 
Patient Safety Component Protocol, at an ASC. This measure cohort 
excludes hospital inpatient and outpatient departments, pediatric 
patients (patients younger than 18 years) and very elderly patients 
(older than 108 years), and brain-dead patients whose organs are being 
removed for donor purposes. The specifications for this measure for the 
ASC setting can be found at: http://www.qualityforum.org/QPS/ after 
searching ``Ambulatory Breast Procedure Surgical Site Infection Outcome 
Measure.''
---------------------------------------------------------------------------

    \205\ Centers for Disease Control and Prevention. ``Surgical 
Site Infection (SSI) Event. Available at: https://www.cdc.gov/nhsn/pdfs/pscmanual/9pscssicurrent.pdf.
---------------------------------------------------------------------------

    We invited public comment on the possible inclusion of this measure 
in the ASCQR Program measure set in the future.
    Comment: Several commenters supported the inclusion of the 
Ambulatory Breast Procedure Surgical Site Infection (SSI) Outcome 
measure (NQF #3025) in the ASCQR Program in future rulemaking, noting 
that the measure is fully developed, was tested in the ASC setting, and 
addresses an important area of care. One commenter recommended that CMS 
consider refining this and other measures so that data is collected at 
the NPI level, rather than by CCN. One commenter agreed that breast 
procedure SSI outcomes are a concern, but noted that significant 
development and testing may be required before the Ambulatory Breast 
Procedure Surgical Site Infection (SSI) Outcome measure (NQF #3025) is 
ready for implementation due to the difficulty of capturing data on 
whether an SSI has occurred. One commenter expressed concern that the 
measure could lead to unintended consequences related to the 
administration of perioperative antibiotics across breast procedures.
    Response: We thank commenters for their support and 
recommendations. We will consider the suggestions and concerns as we 
craft future policy. In addition, we note that our goal is to develop a 
parsimonious measure set made up of meaningful measures that fill 
important gaps with consideration of the impact on burden in the ASCQR 
Program.
8. Maintenance of Technical Specifications for Quality Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74513 through 74514), where we finalized our proposal to 
follow the same process for updating the ASCQR Program measures that we 
adopted for the Hospital OQR Program measures, including the 
subregulatory process for making updates to the adopted measures. In 
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68496 
through 68497), the CY 2014 OPPS/ASC final rule with comment period (78 
FR 75131), and the CY 2015 OPPS/ASC final rule with comment period (79 
FR 66981), we provided additional clarification regarding the ASCQR 
Program policy in the context of the previously finalized Hospital OQR 
Program policy, including the processes for addressing

[[Page 59472]]

nonsubstantive and substantive changes to adopted measures. In the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70531), we provided 
clarification regarding our decision to not display the technical 
specifications for the ASCQR Program on the CMS Web site, but stated 
that we will continue to display the technical specifications for the 
ASCQR Program on the QualityNet Web site. In addition, our policies 
regarding the maintenance of technical specifications for the ASCQR 
Program are codified at 42 CFR 416.325. We did not propose any changes 
to our policies regarding the maintenance of technical specifications 
for the ASCQR Program.
9. 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 the CY 2017 OPPS/ASC final rule with comment period, we 
formalized our current public display practices regarding timing of 
public display and the preview period by finalizing our proposals to 
publicly display data on the Hospital Compare Web site, or other CMS 
Web site as soon as practicable after measure data have been submitted 
to CMS; to generally provide ASCs with approximately 30 days to review 
their data before publicly reporting the data; and 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 (81 
FR 79819 through 79820). We did not propose any changes to these 
policies. However, we note that in section XIV.B.6.b. and c. of this 
final rule with comment period, we are finalizing two new measures: 
ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures, and ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures, beginning with the CY 2022 payment 
determination, and specific public reporting policies associated with 
these measures.

C. Administrative Requirements

1. Requirements Regarding QualityNet Account and Security Administrator
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75132 through 75133) for a detailed discussion of the 
QualityNet security administrator requirements, including setting up a 
QualityNet account, and the associated timelines, for the CY 2014 
payment determination and subsequent years. In the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70533), we codified the 
administrative requirements regarding maintenance of a QualityNet 
account and security administrator for the ASCQR Program at 42 CFR 
416.310(c)(1)(i). We refer readers to section XIV.D.3.b.1. of this 
final rule with comment period where we are finalizing our proposals to 
expand submission via the CMS online tool to also allow for batch data 
submission and make corresponding changes to the 42 CFR 
416.310(c)(1)(i).
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 70533 and 70534), we codified these requirements 
regarding participation status for the ASCQR Program at 42 CFR 416.305. 
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). We did not propose any changes to these 
requirements.
    We note that, in section XIV.B.3.b.(1) of this final rule with 
comment period, we are finalizing a proposal to remove one claims-based 
measure using QDCs, ASC-5: Prophylactic Intravenous (IV) Antibiotic 
Timing, beginning with the CY 2019 payment determination. The following 
previously finalized claims-based measures using QDCs will be collected 
for the CY 2020 payment determination and subsequent years:
     ASC-1: Patient Burn;
     ASC-2: Patient Fall;
     ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong 
Procedure, Wrong Implant; and
     ASC-4: Hospital Transfer/Admission.
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), the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70534 through 70535) as well as 42 CFR 
416.310(a)(3) and 42 CFR 416.305(c) for our policies about minimum 
threshold, minimum case volume, and data completeness for claims-based 
measures using QDCs. We did not propose any changes to these policies.
3. Requirements for Data Submitted via an Online Data Submission Tool
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74505 through 74509); CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75137 through 75140); CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66983 through 66986); CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70535 through 70536); CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79820 through 79822); and 42 CFR 
416.310(c) for our previously finalized policies for data submitted via 
an online data submission tool. For more information on data submission 
using QualityNet, we refer readers to: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228773314768. We note that we are finalizing proposals to remove two measures 
submitted via a CMS online data submission tool, ASC-6 and ASC-7, in 
section XIV.B.3.b.(2) and XIV.B.3.b.(3) of this final rule with comment 
period. We are not finalizing our proposal to adopt one measure 
submitted via a CMS online data submission tool, as described in 
section XIV.B.6.a. of this final rule with comment period.

[[Page 59473]]

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.
    We did not propose any changes to the reporting requirements for 
this measure.
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), CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70535 through 70536), CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79821 through 79822), and 42 CFR 
416.310(c)(1) 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 2018 OPPS/ASC proposed rule (82 FR 33701), we made 
one proposal to expand the method of data submission via a CMS online 
data submission tool.
(1) Batch Submission
    We did not propose any changes to our policies regarding data 
submitted via a CMS online data submission tool when data is entered 
for individual facilities. Currently, for individual facility data 
entry, users must have a QualityNet account and use one Hospital 
Quality Reporting (HQR) External File per facility that is uploaded 
into the QualityNet secure portal. However, using one HQR External File 
that only allows data entry for one facility can be burdensome for 
entities responsible for submitting such data for multiple facilities, 
such as multi-facility ASCs. Therefore, in an effort to streamline the 
process, we proposed to expand the CMS online tool to also allow for 
batch submission beginning with data submitted during CY 2018 for the 
CY 2020 payment determination and subsequent years.
    Batch submission is submission of data for multiple facilities 
simultaneously using a single, electronic file containing data from 
multiple facilities submitted via one agent QualityNet account. Under 
the batch submission process, ASC agents (for example, a corporate 
representative for a corporate entity consisting of multiple ASC 
facilities with separate NPIs) would be assigned a vendor ID and an 
ASC's representative would submit the Security Administrator (SA) form 
with the assigned vendor ID for the agent to establish their own 
QualityNet account. Once approved, the agent may submit data for any 
ASC associated with that ID, individually or in a batch, and access 
data reports for the same ASCs. Agents would only have access to data 
reports for facilities that have authorized them to have access. For 
batch submission, agents would be provided the HQR external file layout 
with which to upload their associated ASCs' data under the agents' 
QualityNet account. In order to submit batch data, agents would need to 
meet all QualityNet account requirements, such as establishing a 
QualityNet account and maintaining a QualityNet security administrator. 
Additional details regarding logistics of batch data submission would 
be included in future guidance in the Specifications Manual.
    In addition, we proposed to make corresponding changes to 42 CFR 
416.310(c)(1)(i) to reflect this proposal and replace the term ``ASCs'' 
with the phrase ``ASCs, and any agents submitting data on an ASC's 
behalf.''
    We invited public comment on our proposals, as discussed above, to: 
(1) Expand the CMS online tool to also allow for batch submission of 
measure data beginning with data submitted during CY 2018, and (2) make 
corresponding changes to modify 42 CFR 416.310(c)(1)(i) to reflect the 
aforementioned proposal.
    Comment: Several commenters supported the proposal to allow batch 
submission, noting that it will increase submission efficiency and 
decrease administrative burden. One commenter requested that the 
process for batch submission be determined in a timely fashion to allow 
ASCs to use this option prior to the 2018 data submission deadline.
    Response: We thank the commenters for their support and agree that 
batch submission will increase efficiency and decrease administrative 
burden. In addition, as noted above, we proposed to expand the CMS 
online tool to allow for batch submission beginning with data submitted 
during CY 2018 for the CY 2020 payment determination and subsequent 
years, such that the option will be available prior to the 2018 data 
submission deadline.
    After consideration of the public comments we received, we are 
finalizing our proposals to: (1) Expand the CMS online tool to also 
allow for batch submission of measure data beginning with data 
submitted during CY 2018, and (2) make corresponding changes to modify 
42 CFR 416.310(c)(1)(i).
(2) Measures Using the CMS Online Data Submission Tool for the CY 2020 
Payment Determination and Subsequent Years
    In sections XIV.B.3.b.(2) and XIV.B.3.b.(3) of this final rule with 
comment period, respectively, we are finalizing proposals to remove two 
measures collected via a CMS online data submission tool--ASC-6: Safe 
Survey Checklist Use and ASC-7: ASC Facility Volume Data on Selected 
Surgical Procedures--beginning with the CY 2019 payment determination. 
The following previously finalized measures will require data to be 
submitted via a CMS online data submission tool for the CY 2020 payment 
determination and subsequent years:
     ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up 
Interval for Normal Colonoscopy in Average Risk Patients;
     ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use; and
     ASC-11: Cataracts: Improvement in Patients' Visual 
Function within 90 Days Following Cataract Surgery.\206\
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    \206\ We note that the ASC-11 measure is 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).
---------------------------------------------------------------------------

    We are not finalizing our proposal to adopt one new measure 
collected via a CMS online data submission tool, ASC-16: Toxic Anterior 
Segment Syndrome, beginning with the CY 2021 payment determination, as 
described in section XIV.B.6.a. of this final rule with comment period.
4. Requirements for Non-QDC Based, Claims-Based Measure Data
    We refer readers to the CY 2015 OPPS/ASC final rule with comment

[[Page 59474]]

period (79 FR 66985) and the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70536) for our previously adopted policies regarding data 
processing and collection periods for claims-based measures for the CY 
2018 payment determination and subsequent years. In addition, in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70536), we codified 
these policies at 42 CFR 416.310(b). We did not propose any changes to 
these requirements.
    We note that one previously finalized measure, ASC-12: Facility 7-
Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, 
will be collected via claims for the CY 2020 payment determination and 
subsequent years (79 FR 66970 through 66978). In addition, in sections 
XIV.B.6.b. and c., respectively, of this final rule with comment 
period, we are finalizing our proposals to adopt two new claims-based 
measures--ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical 
Center Procedures, and ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures--beginning with the CY 2022 payment 
determination.
5. Requirements for Data Submission for ASC-15a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-Based Measures
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79822 through 79824) for our previously finalized 
policies regarding survey administration and vendor requirements for 
the CY 2020 payment determination and subsequent years. In addition, we 
codified these policies at 42 CFR 416.310(e). However, in section 
XIV.B.4. of this final rule with comment period, we are finalizing a 
proposal to delay implementation of the ASC-15a-e: OAS CAHPS Survey-
based measures beginning with the CY 2020 payment determination (CY 
2018 data submission) until further action in future rulemaking and 
refer readers to that section for more details.
    As noted in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79815), some commenters suggested shortening 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 continue to consider the removal of two 
demographic questions--the ``gender'' and ``age'' questions--from the 
OAS CAHPS Survey in a future update.
    Comment: A few commenters supported removal of the gender and age 
questions from the survey.
    Response: We thank the commenters for their suggestions. We will 
take these comments under consideration as we craft policies for the 
OAS CAHPS Survey.
6. Extraordinary Circumstances Extensions or Exemptions for the CY 2019 
Payment Determination and Subsequent Years
a. Background
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53642 through 53643), the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75140 through 75141), the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79824 through 79825), and 42 CFR 416.310(d) 
for the ASCQR Program's policies for extraordinary circumstance 
extensions or exemptions (ECE) requests.\207\
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    \207\ 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.
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    Many of our quality reporting and value-based purchasing programs 
share a common process for requesting an exception from program 
reporting due to an extraordinary circumstance not within a provider's 
control. We refer readers to the Hospital IQR Program (76 FR 51615 
through 51652, 78 FR 50836 through 50837, 79 FR 50277, 81 FR 57181 
through 57182, and 42 CFR 412.140(c)(2)), the Hospital OQR Program (77 
FR 68489, 78 FR 75119 through 75120, 79 FR 66966, and 80 FR 70524), the 
IPFQR Program (77 FR 53659 through 53660 and 79 FR 45978), and the 
PCHQR Program (78 FR 50848), as well as the HAC Reduction Program (80 
FR 49542 through 49543) and the Hospital Readmissions Reduction Program 
(80 FR 49542 through 49543), for program-specific information about 
extraordinary circumstances exemption requests. As noted below, some of 
these policies were updated in the FY 2018 IPPS/LTCH PPS final rule.
    In reviewing the policies for these programs, we recognized that 
there are five areas in which these programs have variances regarding 
ECE requests. These are: (1) Allowing the facilities or hospitals to 
submit a form signed by the facility's or hospital's CEO versus CEO or 
designated personnel; (2) requiring the form be submitted within 30 
days following the date that the extraordinary circumstance occurred 
versus within 90 days following the date the extraordinary circumstance 
occurred; (3) inconsistency regarding specification of a timeline for 
us to provide our formal response notifying the facility or hospital of 
our decision; (4) inconsistency regarding specification of our 
authority to grant ECEs due to CMS data system issues; and (5) 
referring to the program as ``extraordinary extensions/exemptions'' 
versus as ``extraordinary circumstances exceptions.'' We believe 
addressing these five areas, as appropriate, can improve administrative 
efficiencies for affected facilities or hospitals. We note that, in the 
FY 2018 IPPS/LTCH PPS final rule, we examined our policies in these 
areas for the Hospital Readmissions Reduction Program, the HAC 
Reduction Program, the Hospital IQR Program, the PCHQR Program and the 
IPFQR Program (82 FR 38240, 38277, 38410, 38425 and 38473 through 
38474, respectively) and finalized proposals to address differences in 
these areas for those programs. In section XIII.D.8. of this final rule 
with comment period, we are also finalizing revisions to our ECE 
policies for the Hospital OQR Program.
    With the exception of the terminology used to describe these 
processes (item 5 above), the ASCQR Program is aligned with other 
quality reporting programs. As a result, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33702), we proposed to rename the process as the 
extraordinary circumstances exceptions (ECE) policy and make conforming 
changes to 42 CFR 416.310(d). These are discussed below.
b. ECE Policy Nomenclature
    We have observed that while all quality programs listed above have 
developed similar policies to provide exceptions from program 
requirements to facilities that have experienced extraordinary 
circumstances, such as natural disasters, these programs refer to these 
policies using inconsistent terminology. Some programs refer to these 
policies as ``extraordinary circumstances extensions/exemptions'' while 
others refer to the set of policies as ``extraordinary circumstances 
exceptions.'' Several programs (specifically, the Hospital VBP Program, 
the HAC Reduction Program, and the Hospital Readmissions Reduction 
Program) are not able to grant extensions to required data reporting 
timelines due to their reliance on data external to their program, and 
thus the term, ``extraordinary circumstances extensions/exemptions'' is 
not

[[Page 59475]]

applicable to all programs. However, all of the described programs are 
able to offer exceptions from their reporting requirements. Therefore, 
in an effort to align across CMS quality programs, we proposed to 
change the name of this policy from ``extraordinary circumstances 
extensions or exemption'' to ``extraordinary circumstances exceptions'' 
for the ASCQR Program, beginning January 1, 2018, and to revise Sec.  
416.310(d) of our regulations to reflect this change.
    We invited public comment on these proposals as discussed above.
    Comment: A few commenters supported the proposal to align the ECE 
policy with other quality reporting programs.
    Response: We thank commenters for their support.
    After consideration of the public comments we received, we are 
finalizing the proposals to rename the process as the extraordinary 
circumstances exceptions (ECE) policy and make conforming changes to 42 
CFR 416.310(d).
c. Timeline for CMS Response to ECE Requests
    We also note that we believe it is important for facilities to 
receive timely feedback regarding the status of ECE requests. We strive 
to complete our review of each ECE request as quickly as possible. 
However, we recognize that the number of requests we receive, and the 
complexity of the information provided impacts the actual timeframe to 
make ECE determinations. To improve transparency of our process, we 
believe it is appropriate to clarify that we will strive to complete 
our review of each request within 90 days of receipt.
7. ASCQR Program Reconsideration Procedures
    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), the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70537), and 42 CFR 416.330 for the ASCQR Program's 
reconsideration policy. 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 XVI.D.1. of the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68499) 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 in accordance with section 1833(i)(7)(A) of the Act and as 
discussed in the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68499), any annual increase shall 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 (77 FR 68500). 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'' (77 FR 68500). 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 (77 FR 68500).
    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 (77 FR 68500). 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 
(77 FR 68500).
    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 covered ASC surgical procedures) will be 
at the lower of the MPFS nonfacility PE RVU-based (or technical 
component) amount or the rate calculated according to the standard

[[Page 59476]]

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 (77 FR 68500). 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 (77 FR 68500). We believe that 
these adjustments continue to be equally applicable to payment for ASCs 
that do not meet the ASCQR Program requirements (77 FR 68500).
    In the CY 2015, CY 2016 and CY 2017 OPPS/ASC final rules with 
comment period (79 FR 66981 through 66982; 80 FR 70537 through 70538; 
and 81 FR 79825 through 79826, respectively), we did not make any other 
changes to these policies.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33702 through 33703), 
we did not propose any changes to these policies for CY 2018.

XV. 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 2018 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 ``1678-FC'' from the list of regulations. All 
OPPS Addenda to this final rule with comment period are contained in 
the zipped folder entitled ``2018 OPPS 1678-FC Addenda'' at the bottom 
of the page. To view the Addenda to this final rule with comment period 
pertaining to CY 2018 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 ``1678-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.''

XVI. 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 2018 OPPS/ASC proposed rule (82 FR 33705 through 33710), 
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
    The Hospital OQR Program is generally aligned with the CMS quality 
reporting program for hospital inpatient services known as the Hospital 
IQR Program (82 FR 20031 through 20075). We refer readers to the CY 
2011 through CY 2017 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; 80 FR 
70580 through 70582; and 81 FR 79862 through 79863, 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.
    In section XIII.B.4.c. of this final rule with comment period, we 
are finalizing the removal of six measures. Specifically, beginning 
with the CY 2020 payment determination, we are finalizing, as proposed, 
to remove: (1) OP-21: Median Time to Pain Management for Long Bone 
Fracture; and (2) OP-26: Hospital Outpatient Volume Data on Selected 
Outpatient Surgical Procedures. Also, while we proposed to remove: (1) 
OP-1: Median Time to Fibrinolysis, (2) OP-4: Aspirin at Arrival, (3) 
OP-20: Door to Diagnostic Evaluation by a Qualified Medical 
Professional, and (4) OP-25: Safe Surgery Checklist beginning with the 
CY 2021 payment determination, we are finalizing removal of these 
measures with modification so that removal begins with the CY 2020 
payment determination, one year earlier than proposed. To summarize, 
the following measures will be removed for the CY 2020 payment 
determination: (1) OP-1: Median Time to Fibrinolysis; (2) OP-4: Aspirin 
at Arrival; (3) OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional; (4) OP-21: Median Time to Pain Management for 
Long Bone Fracture; (5) OP-25: Safe Surgery Checklist; and (6) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. We expect these finalized proposals will reduce the burden 
of reporting for the Hospital OQR Program, as discussed in more detail 
below. We note that we discuss only the changes in burden resulting 
from the provisions in this final rule with comment period.
    In section XIII.B.10.b. of this final rule with comment period, we 
are finalizing our proposal, with modification, to publicly report OP-
18c using data

[[Page 59477]]

beginning with patient encounters during the third quarter of CY 2017. 
However, we do not expect our modifications to affect the burden 
estimates made in the CY 2018 OPPS/ASC proposed rule (82 FR 33705 
through 33708), as discussed below.
    In section XIII.B.5. of this final rule with comment period, we are 
finalizing our proposal to delay the OP-37a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures beginning with the CY 2020 
payment determination (CY 2018 data collection period) until further 
notice in future rulemaking.
    In addition, in this final rule with comment period, beginning with 
the CY 2020 payment determination, we are finalizing our proposals: (1) 
To codify at Sec.  419.46(e) our previously finalized process for 
targeting hospitals for validation of chart-abstracted measures 
(section XIII.D.7.b. of this final rule with comment period); (2) to 
formalize the educational review process and use it to correct 
incorrect validation results for chart-abstracted measures (section 
XIII.D.7.c. of this final rule with comment period); (3) to align the 
first quarter for which hospitals must submit data for all hospitals 
that did not participate in the previous year's Hospital OQR Program, 
and make corresponding revisions at 42 CFR 419.46(c)(3) (section 
XIII.D.1. of this final rule with comment period); and (4) to align the 
naming of the Extraordinary Circumstances Exceptions (ECE) policy and 
make conforming changes to the CFR (section XIII.D.8.a. of this final 
rule with comment period). We are not finalizing our proposal to change 
the NOP submission deadlines such that hospitals are required to submit 
the NOP any time prior to registering on the QualityNet Web site and to 
make conforming revisions at 42 CFR 419.46(a) (section XIII.C.2.b. of 
this final rule with comment period). We do not believe that these 
changes will affect our burden estimates, as further discussed below.
2. Newly Finalized Change in Hourly Labor Cost for Burden Calculation 
for the Hospital OQR Program
    In previous rules (80 FR 70581), we estimated that a hospital pays 
an individual approximately $30 per hour to abstract and submit 
clinical data. We previously did not specify whether our wage estimate 
of $30 included overhead and fringe benefit costs. However, although we 
did not specify that this estimate included fringe benefit costs, in 
previous rules (80 FR 70581), we used $30 to calculate the total cost 
to hospitals to pay for staff that abstract and submit clinical data. 
In CY 2018 OPPS/ASC proposed rule (82 FR 33705), we proposed a new cost 
to hospitals and specified that this cost included both wage and 
overhead and fringe benefit costs. Specifically, we proposed to 
estimate that reporting data for the Hospital OQR Program can be 
accomplished by staff with a median hourly wage of $18.29 per 
hour.\208\ This labor rate is based on the Bureau of Labor Statistics 
(BLS) median hourly 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.\209\ Acting as an independent agency, the BLS provides 
objective information for not only the government, but also for the 
public.\210\ The BLS describes medical records and health information 
technicians as those responsible for processing and maintaining health 
information data.\211\ Therefore, we believe is reasonable to assume 
that these individuals would be tasked with abstracting clinical data 
for the Hospital OQR Program measures.
---------------------------------------------------------------------------

    \208\ BLS Occupational Employment Statistics; May 2016. 
Available at: https://www.bls.gov/oes/current/oes292071.htm.
    \209\ http://www.bls.gov/bls/infohome.htm.
    \210\ Ibid.
    \211\ BLS Occupational Employment Statistics; May 2016. 
Available at: https://www.bls.gov/oes/current/oes292071.htm.
---------------------------------------------------------------------------

    We also proposed to calculate the cost of overhead, including 
fringe benefits, 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 and because 
methods of estimating these costs vary widely from study to study. 
Nonetheless, we believe that doubling the hourly wage rate ($18.29 x 2 
= $36.58) to estimate total cost is a reasonably accurate estimation 
method. Accordingly, we calculate cost burden to hospitals using a wage 
plus benefits estimate of $36.58 throughout the discussion below for 
the Hospital OQR Program.
    We invited public comment on these proposals.
    Comment: One commenter expressed concern that a medical records and 
health information technician with a wage of $18.29 per hour is not 
appropriate to complete chart-abstraction and requested that we not 
reduce the estimated hourly wage rate from previous years.
    Response: We note that we believe the wage for a medical records 
and health information technician is appropriate for use in this 
program, because such a technician is described as an individual who 
compiles, processes, and maintains medical records of hospital and 
clinic patients in a manner consistent with medical, administrative, 
ethical, legal, and regulatory requirements of the health care 
system.\212\ We previously estimated a total cost to hospitals of $30 
per hour (80 FR 70581), though we have not previously specified whether 
that rate included overhead and fringe benefits as well as wage. We 
note that our current calculations result in a higher estimate of total 
hourly cost for hospitals, as we proposed to use a median hourly wage 
of $18.29 per hour and double it to account for overhead and fringe 
benefits ($18.29 x 2 = $36.58), resulting in a higher hourly cost to 
hospitals of $36.58 per hour (compared to $30 per hour) to estimate 
burden in the Hospital OQR Program.
---------------------------------------------------------------------------

    \212\ Ibid.
---------------------------------------------------------------------------

    After consideration of the public comment we received, we are 
finalizing our estimates, as presented in the proposed rule to: (1) 
Estimate that reporting data for the Hospital OQR Program can be 
accomplished by staff with a median hourly wage of $18.29 per hour, and 
(2) calculate the cost of overhead, including fringe benefits, at 100 
percent of the mean hourly wage. These result in a wage plus benefits 
estimate of $36.58 for the Hospital OQR Program.
3. Estimated Burden Due to Newly Finalized Proposal To Delay OP-37a-e: 
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare 
Providers and Systems (OAS CAHPS) Survey-Based Measures Beginning With 
the CY 2020 Payment Determination
    As described in section XIII.B.5. of this final rule with comment 
period, we are finalizing our proposal to delay OP-37a-e: Outpatient 
and Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures beginning with the CY 2020 
payment determination (CY 2018 data collection period). As we stated in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79863), the 
information collection requirements associated with the five 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 final rule with comment period (81 FR 79863), 
we did not provide an independent estimate of the burden associated 
with OAS CAHPS Survey based measures for the Hospital

[[Page 59478]]

OQR Program. Similarly, our finalized proposal to delay implementation 
of these measures does not affect our current burden estimates.
4. Estimated Burden Due to Proposal to Publicly Report OP-18c: Median 
Time From Emergency Department Arrival to Emergency Department 
Departure for Discharged Emergency Department Patients--Psychiatric/
Mental Health Patients
    In section XIII.B.10.b. of this final rule with comment period, we 
are finalizing, with modifications, our proposal to publicly report 
18c: Median Time from Emergency Department Arrival to Emergency 
Department Departure for Discharged Emergency Department Patients--
Psychiatric/Mental Health Patients beginning with patient encounters 
from the third quarter of 2017. As noted in that section, the data 
required for public reporting of OP-18c are already collected as part 
of the existing Hospital OQR Program requirements. Accordingly, we did 
not estimate changes to burden due to this proposal, and we do not 
expect the modifications we are finalizing to affect burden.
5. Estimated Burden Due to Newly Finalized Proposals for the CY 2020 
Payment Determination and Subsequent Years
a. Burden Due to Measure Removals
    In section XIII.B.4.c. of this final rule with comment period, we 
are finalizing the removal of six measures from the Hospital OQR 
Program. Specifically, beginning with the CY 2020 payment 
determination, we are finalizing, as proposed, to remove: (1) OP-21: 
Median Time to Pain Management for Long Bone Fracture; and (2) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. Also, while we proposed to remove: (1) OP-1: Median Time to 
Fibrinolysis, (2) OP-4: Aspirin at Arrival, (3) OP-20: Door to 
Diagnostic Evaluation by a Qualified Medical Professional, and (4) OP-
25: Safe Surgery Checklist beginning with the CY 2021 payment 
determination, we are finalizing removal of these measures with 
modification so that removal begins with the CY 2020 payment 
determination, one year earlier than proposed. In summary, we are 
finalizing removal of six measures beginning with the CY 2020 payment 
determination. We note that we have modified our estimates from the 
proposed rule (82 FR 33673) in order to streamline our discussion in 
light of the modification.
    Specifically, we are finalizing the removal of four chart-
abstracted measures ((1) OP-1: Median Time to Fibrinolysis; (2) OP-4: 
Aspirin at Arrival; (3) OP-20: Door to Diagnostic Evaluation by a 
Qualified Medical Professional; and (4) OP-21: Median Time to Pain 
Management for Long Bone Fracture) and two web-based measures ((1) OP-
25: Safe Surgery Checklist Use; and (2) OP-26: Hospital Outpatient 
Volume Data on Selected Outpatient Surgical Procedures). In total, we 
expect these finalized proposals will reduce burden by 457,490 hours 
and $16.7 million for the CY 2020 payment determination. These 
estimates are described in detail below.
    We calculated the burden reduction associated with the removal of 
chart-abstracted measures by considering the time per case to report 
chart-abstracted measures (submitted using a web-based tool) as well as 
the number of cases per hospital and the number of participating 
hospitals. In the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70582), we estimated the burden to collect chart-abstracted data for 
a single web-based measure, including OP-21, to be 2.92 minutes. In 
this final rule with comment period, we estimate that 3,300 outpatient 
hospitals report data under the Hospital OQR Program. Based on the most 
recent data from CY 2015 reporting, we also estimate that 947 cases are 
reported per hospital for each chart-abstracted measure. We note that 
although OP-1: Median Time to Fibrinolysis is a chart-abstracted 
measure, we do not expect removing this measure will reduce burden, as 
the data collected for this measure is required to calculate another 
program measure in the AMI measure set (OP-2: Fibrinolytic Therapy 
Received Within 30 Minutes of ED Arrival) and, therefore, will continue 
to be collected as an underlying part of OP-2 even though we are 
finalizing the proposal to remove OP-1. Accordingly, there is no change 
in burden associated with the finalized removal of this measure 
included in our calculations below.
    Accordingly, we estimate a total burden reduction of 138.3 hours 
per outpatient hospital due to the removal of chart-abstracted measures 
(2.92 minutes per measure/60 minutes per hour x 3 measure x 947 cases 
per hospital). In total, across 3,300 outpatient hospitals, we estimate 
a burden reduction of 456,390 hours (138.3 hours per hospital x 3,300 
hospitals) and $16,694,746 (456,390 total hours x $36.58 per hour) for 
the CY 2020 payment determination due to the finalized removal of (1) 
OP-1: Median Time to Fibrinolysis; (2) OP-4: Aspirin at Arrival; (3) 
OP-20: Door to Diagnostic Evaluation by a Qualified Medical 
Professional; and (4) OP-21: Median Time to Pain Management for Long 
Bone Fracture.
    We calculated the burden reduction associated with the finalized 
removal of two web-based measures (OP-25: Safe Surgery Checklist Use 
and OP-26: Hospital Outpatient Volume Data on Selected Outpatient 
Surgical Procedures) by considering the time per measure to report web-
based measures as well as the number of participating hospitals. As we 
previously stated in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70582), we estimate that hospitals spend approximately 10 
minutes per measure to report web-based measures and that 3,300 
outpatient hospitals report data under the Hospital OQR Program. 
Accordingly, for the CY 2020 payment determination, we estimate a total 
burden reduction of 1,100 hours across 3,300 outpatient hospitals due 
to the removal of two web-based measures (10 minutes per measure/60 
minutes per hour x 2 measures x 3,300 hospitals). We further estimate a 
cost reduction of $40,238 due to this finalized proposal (1,100 total 
hours x $36.58 per hour).
    In total, we expect these finalized proposals will reduce burden by 
457,490 hours (456,390 + 1,100) and $16,734,984 ($16,694,746 + $40,238) 
for the CY 2020 payment determination.
b. Burden Due to Updates to Previously Finalized Chart-Abstracted 
Measure Validation Procedures and the Educational Review Process
    We previously estimated the burden associated with validation of 
chart-abstracted measures in the CY 2013 and CY 2014 OPPS/ASC final 
rules with comment period (77 FR 68531 and 78 FR 75172, respectively). 
In section XIII.D.7.a. of this final rule with comment period, we are 
providing clarification on our procedures for validation of chart-
abstracted measures to note that the 50 poorest performing outlier 
hospitals will be targeted for validation. We do not expect this 
clarification to affect burden because it does not alter the number of 
hospitals selected for validation or the requirements for those 
hospitals that are selected.
    In addition, in section XIII.D.7.c. of this final rule with comment 
period, we are finalizing our proposal to formalize the process of 
allowing hospitals to use an educational review process to correct 
incorrect validation results for the first three quarters of validation 
for chart-abstracted measures. We also are finalizing our proposal to 
update the process to specify that if the results of an educational 
review indicate that we

[[Page 59479]]

incorrectly scored a hospital's medical records selected for 
validation, the corrected quarterly validation score will be used to 
compute the hospital's final validation score at the end of the 
calendar year. Under this policy, the educational review request 
process remains the same for the CY 2020 payment determination and 
subsequent years, except that revised scores identified through an 
educational review will be used to correct a hospital's validation 
score. As a result, we do not expect this policy to affect the burden 
experienced by hospitals, as our changes to this policy result in a 
change in the way we address educational review requests and not a 
change to the process hospitals must follow to request an education 
review.
    As we stated in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75171), we believe there is a burden associated with successful 
participation in the Hospital OQR Program, where successful 
participation results in a full annual payment update (APU) for a 
particular payment determination. This burden includes, but is not 
limited to, maintaining familiarity with the Hospital OQR Program 
requirements, which includes checking feedback reports to indicate a 
facility's current status or performance (78 FR 75171). The overall 
administrative burden was estimated at 42 hours per hospital (78 FR 
75171). As stated above, we do not believe this burden will change with 
the finalization of our policy to update the educational review process 
to include corrections because no additional activity on the part of 
hospitals is required.
c. Burden Due to Proposal To Update to NOP Submission Deadline
    We previously estimated the burden associated with Hospital OQR 
Program participation and requirements in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75171). In section XIII.C.2. of this 
final rule with comment period, we are not finalizing our proposal to 
revise the NOP submission deadlines such that hospitals are required to 
submit the NOP any time prior to registering on the QualityNet Web 
site. We estimated that this proposal would have a negligible effect on 
the time and cost of completing the participation requirements. As a 
result, our decision not to finalize the proposal to revise the NOP 
submission deadline does not impact our burden estimates.
d. Burden Due To Aligning the First Quarter for Which Hospitals Must 
Submit Data for All Hospitals That Did Not Participate in the Previous 
Year's Hospital OQR Program
    In section XIII.D.1 of this final rule with comment period, we are 
finalizing our proposals to align the timeline specifying the initial 
quarter for which hospitals must submit data for all hospitals that did 
not participate in the previous year's Hospital OQR Program, rather 
than specifying different timelines for hospitals with Medicare 
acceptance dates before versus after January 1 of the year prior to an 
affected annual payment update. Although this finalized proposal alters 
the timeline for hospitals to begin submitting data for the Hospital 
OQR Program, it does not alter program requirements. As a result, we do 
not anticipate that this proposal will affect burden.
e. Burden Due to Updates to the Previously Finalized ECE Policy
    We previously estimated the burden associated with general and 
administrative Hospital OQR Program requirements in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 75171). In section XIII.D.8. 
of this final rule with comment period, we discuss our finalized 
alignment of the naming of this exception policy and finalized proposal 
to update 42 CFR 419.46(d) to reflect our current ECE policies. We also 
are clarifying the timing of our response to ECE requests. Because we 
do not seek any new or additional information in our finalized ECE 
proposals, we believe the updates will have no effect on burden for 
hospitals.

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, CY 2016, and CY 2017 OPPS/
ASC final rules with comment periods (77 FR 68532 through 68533; 78 FR 
75172 through 75174; 79 FR 67015 through 67016; 80 FR 70582 through 
70584; and 81 FR 79863 through 79865, 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 will result from the newly finalized provisions in this final rule 
with comment period.
    In section XIV.B.3.b. of this final rule with comment period, we 
are finalizing our proposals, beginning with the CY 2019 payment 
determination, to remove three measures (ASC-5: Prophylactic 
Intravenous (IV) Antibiotic Timing, ASC-6: Safe Surgery Checklist Use, 
and ASC-7: Ambulatory Surgical Center Facility Volume Data on Selected 
Ambulatory Surgical Center Surgical Procedures) from the ASCQR Program 
measure set. In section XIV.B.6.a. of this final rule with comment 
period, we are not finalizing our proposal, beginning with the CY 2021 
payment determination, to adopt one new measure, ASC-16: Toxic Anterior 
Segment Syndrome. In section XIV.B.6.b. and c. of this final rule with 
comment period, we are finalizing our proposals, beginning with the CY 
2022 payment determination, to adopt two new measures collected via 
claims (ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical 
Center Procedures and ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures). We expect these finalized proposals will 
reduce the overall burden of reporting data for the ASCQR Program, as 
discussed below.
    In this final rule with comment period, we also are finalizing our 
proposals: (1) To delay ASC-15a-e: OAS CAHPS survey-based measures 
beginning with the CY 2020 payment determination (CY 2018 data 
collection) (section XIV.B.4. of this final rule with comment period); 
(2) to expand the CMS online tool to also allow for batch submission 
beginning with data submitted during CY 2018 and to make corresponding 
revisions to the CFR (section XIV.D.3.b. of this final rule with 
comment period); and, (3) to align the naming of the Extraordinary 
Circumstances Exceptions (ECE) policy beginning with CY 2018 and to 
make conforming changes to the CFR (section XIV.D.6.b. of this final 
rule with comment period). As discussed below, we do not expect these 
finalized proposals to affect our burden estimates.
2. Newly Finalized Change in Hourly Labor Cost for 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 
proposal to utilize an updated standard hourly labor cost for data 
reporting activities.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79863

[[Page 59480]]

through 79864), we finalized our proposal to use the hourly labor cost 
of $32.84 (hourly wage plus fringe and overhead, discussed in more 
detail below) in estimating the labor costs associated with abstracting 
clinical data. This labor rate was based on the Bureau of Labor 
Statistics (BLS) median hourly wage for a medical records and health 
information technician of $16.42 per hour.\213\ The BLS is the 
principal Federal agency responsible for measuring labor market 
activity, working conditions, and price changes in the economy.\214\ 
Acting as an independent agency, the BLS provides objective information 
for not only the government, but also for the public.\215\ The BLS 
describes medical records and health information technicians as those 
responsible for processing and maintaining health information 
data.\216\ Therefore, we believe it is reasonable to assume that these 
individuals will be tasked with abstracting clinical data for ASCQR 
Program measures.
---------------------------------------------------------------------------

    \213\ Available at: http://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
    \214\ Available at: http://www.bls.gov/bls/infohome.htm.
    \215\ Ibid.
    \216\ BLS Occupational Employment Statistics; May 2016. 
Available at: https://www.bls.gov/oes/current/oes292071.htm.
---------------------------------------------------------------------------

    The BLS recently released updated wage estimates for Medical 
Records and Health Information Technicians. These updates increased the 
median hourly wage from $16.42 per hour to $18.29 per hour.\217\ 
Applying the same 100 percent overhead cost estimate finalized in the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79863 through 
79864) to estimate the elements assigned as ``indirect'' or 
``overhead'' costs, we estimate an updated total hourly cost to ASCs of 
$36.58. Therefore, we proposed to apply an updated hourly labor cost of 
$36.58 ($18.29 base salary + $18.29 fringe and overhead) to our burden 
calculations for chart abstraction.
---------------------------------------------------------------------------

    \217\ Available at: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

    We invited public comment on this proposal. We did not receive any 
public comments and are finalizing our proposal to apply an updated 
hourly labor cost of $36.58 ($18.29 base salary + $18.29 fringe and 
overhead) to our burden calculations for chart abstraction.
3. Estimated Burden of Newly Finalized ASCQR Program Proposals 
Beginning With CY 2018
    In section XIV.B.4. of this final rule with comment period, we are 
finalizing our proposal to delay ASC-15a-e: OAS CAHPS Survey-based 
measures beginning with the CY 2020 payment determination (CY 2018 data 
collection) until further notice in future rulemaking. As described in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79864), the 
information collection requirements associated with the five 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, we did not provide an independent estimate of the burden 
associated with OAS CAHPS Survey administration for the ASCQR Program 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79864). 
Similarly, our finalized proposal to delay reporting on these measures 
does not affect our current burden estimates.
    In section XIV.D.3. of this final rule with comment period, we are 
finalizing our proposals to expand the CMS online tool to also allow 
for batch submission beginning with data submitted during the CY 2018 
reporting period and to make corresponding revisions to the CFR. We 
expect this finalized proposal to increase the efficiency of data 
submission via the CMS online tool. However, the finalized proposal 
does not change our data reporting requirements, and therefore, we do 
not expect a change in the burden experienced by ASCs.
    In section XIV.D.6. of this final rule with comment period, we are 
finalizing our proposals to align the naming of the Extraordinary 
Circumstances Exceptions (ECE) policy beginning with CY 2018 and to 
make conforming changes to the CFR. We are also clarifying the timing 
of our response to ECE requests. Because we do not seek any new or 
additional information in our ECE finalized proposals, we believe the 
updates will have no effect on burden for hospitals.
4. Estimated Burden of Newly Finalized ASCQR Program Proposals for the 
CY 2019 Payment Determination
    In section XIV.B.3.b. of this final rule with comment period, we 
are finalizing our proposals, beginning with the CY 2019 payment 
determination, to remove three measures from the ASCQR Program. These 
measures include one claims-based measure (ASC-5: Prophylactic 
Intravenous (IV) Antibiotic Timing) and two collected via a CMS online 
data submission tool (ASC-6: Safe Surgery Checklist Use and ASC-7: 
Ambulatory Surgical Center Facility Volume Data on Selected Ambulatory 
Surgical Center Surgical Procedures).
    Data for ASC-5 is submitted via CMS claims using Quality Data 
Codes, which impose only a nominal burden on providers because these 
claims are already submitted for the purposes of payment. Therefore, we 
estimate a nominal reduction in burden associated with our finalized 
proposal to remove the ASC-5 measure from the ASCQR Program measure set 
beginning with the CY 2019 payment determination.
    We believe 3,937 ASCs will experience a reduction in burden 
associated with our finalized proposals to remove ASC-6 and ASC-7 from 
the ASCQR Program measure set. In the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75173), we finalized our estimates that each 
participating ASC will spend 10 minutes per measure per year to collect 
and submit the required data for the ASC-6 and ASC-7 measures, making 
the total estimated annual burden associated with each of these 
measures 657 hours (3,937 ASCs x 0.167 hours per ASC) and $24,033 (657 
hours x $36.58 per hour). Therefore, we estimate a total reduction in 
burden of 1,314 (657 hours x 2 measures) hours and $48,066 (1,314 hours 
x $36.58 per hour) for all ASCs as a result of our finalized proposals 
to remove ASC-6 and ASC-7 from the ASCQR Program measure set. The 
reduction in burden associated with these requirements is available for 
review and comment under OMB Control Number 0938-1270.
5. Estimated Burden of ASCQR Program for the CY 2021 Payment 
Determination
    In section XIV.B.6.a. of this final rule with comment period, we 
are not finalizing our proposal to adopt one new measure collected via 
a CMS online data submission tool, ASC-16: Toxic Anterior Segment 
Syndrome, beginning with the CY 2021 payment determination. Therefore, 
the initially estimated burden from the CY 2018 OPPS/ASC proposed rule 
(82 FR 33709) does not apply.
6. Estimated Burden of ASCQR Program Newly Finalized Proposals for the 
CY 2022 Payment Determination
    In section XIV.B.6.b. and c. of this final rule with comment 
period, we are finalizing our proposals, beginning with the CY 2022 
payment determination, to adopt two measures collected via claims: (1) 
ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures; and (2) ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures. Data used to calculate scores for these 
measures is collected via Part A and Part B Medicare administrative 
claims and Medicare

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enrollment data, and therefore does not require ASCs to report any 
additional data. Because these measures do not require ASCs to submit 
any additional data, we do not believe there will be any additional 
burden associated with these proposals.

XVII. 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.

XVIII. 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), the Congressional 
Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing 
Regulation and Controlling Regulatory Costs (January 30, 2017). This 
section of this final rule with comment period contains the impact and 
other economic analyses for the provisions that we are making for CY 
2018.
    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 Congressional Review Act. 
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 2018 
OPPS/ASC proposed rule (82 FR 33710), 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 2018. 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, 2016, through and including December 
31, 2016, and processed through June 30, 2017, and updated cost report 
information.
    This final rule with comment period also is necessary to make 
updates to the ASC payment rates for CY 2018, 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 2018. 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.
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 2018, compared to CY 2017, due only 
to the changes to OPPS finalized in this final rule with comment 
period, will be approximately $690 million. Taking into account our 
estimated changes in enrollment, utilization, and case-mix for CY 2018, 
we estimate that the OPPS expenditures, including beneficiary cost-
sharing, for CY 2018 will be approximately $69.9 billion; approximately 
$5.8 billion higher than estimated OPPS expenditures 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 88 displays the distributional impact of the CY 2018 
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 2017) will increase total OPPS payments by 1.3 
percent in CY 2018. 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 2017 and CY 
2018, 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 
1.4 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 2018 compared to CY 2017 to be approximately 
$130 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

[[Page 59482]]

ability, presents the costs and benefits of this portion of this final 
rule with comment period. Table 89 and 90 of this final rule with 
comment period display the redistributive impact of the CY 2018 changes 
regarding ASC payments, grouped by specialty area and then grouped by 
procedures with the greatest ASC expenditures, respectively.
4. Regulatory Review Costs
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule with 
comment period, we should estimate the cost associated with regulatory 
review. Due to the uncertainty involved with accurately quantifying the 
number of entities that will review the rule, we assume that the total 
number of unique commenters on this year's proposed rule will be the 
number of reviewers of this final rule with comment period. We 
acknowledge that this assumption may understate or overstate the costs 
of reviewing this rule. It is possible that not all commenters reviewed 
this year's proposed rule in detail, and it is also possible that some 
reviewers chose not to comment on the proposed rule. For these reasons, 
we believe that the number of past commenters would be a fair estimate 
of the number of reviewers of this final rule with comment period. In 
the CY 2018 OPPS/ASC proposed rule (82 FR 33711), we welcomed any 
comments on the approach in estimating the number of entities that will 
review the proposed rule. However, we did not receive any comments on 
our approach.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule with 
comment period, and therefore for the purposes of our estimate, we 
assume that each reviewer reads approximately 50 percent of the rule. 
In the CY 2018 OPPS/ASC proposed rule, we also sought public comments 
on this assumption, but we did not receive any comments.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $105.16 per hour, including overhead and fringe benefits 
(https://www.bls.gov/oes/2016/may/naics4_621100.htm). Assuming an 
average reading speed, we estimate that it will take approximately 8 
hours for the staff to review half of this final rule with comment 
period. For each facility that reviews the rule, the estimated cost is 
$841.28 (8 hours x $105.16). Therefore, we estimate that the total cost 
of reviewing this regulation is $2,851,939 ($841.28 x 3,390 reviewers).
5. 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 2018 policy changes on various hospital groups. We post on 
the CMS Web site our hospital-specific estimated payments for CY 2018 
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-1678-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 88 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 2018 OPPS/ASC proposed rule, 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 to Part B Drug Payment on 340B 
Eligible Hospitals Paid Under the OPPS
    In section V.B.7. of this final rule with comment period, we 
discuss our finalized policies to reduce the payment for nonpass-
through, separately payable drugs purchased by certain 340B-
participating hospitals through the 340B Program. Rural SCHs, 
children's hospitals, and PPS-exempt cancer hospitals are excepted from 
this payment policy in CY 2018. Specifically, in this final rule with 
comment period, for CY 2018, for hospitals paid under the OPPS (other 
than those that are excepted for CY 2018), we are paying for separately 
payable drugs and biologicals that are obtained with a 340B discount, 
excluding those on pass-through payment status and vaccines, at ASP 
minus 22.5 percent instead of ASP+6 percent. For context, based on CY 
2016 claims data, the total OPPS Part B drug payment is approximately 
$10.2 billion.
    We recognize that it may be difficult to determine precisely what 
the impact on Medicare spending will be because OPPS claims data do not 
currently indicate if the drug being provided was purchased with a 340B 
discount. Furthermore, a list of outpatient drugs covered under the 
340B program is not publicly available. Accordingly, for purposes of 
estimating the impact for this final rule with comment period, as we 
did in the CY 2018 OPPS/ASC proposed rule, we assumed that all 
applicable drugs purchased by hospitals eligible to participate in the 
340B Program were purchased at a discounted price under the 340B 
program. While we recognize that certain newly covered entities do not 
have access to 340B drug pricing for designated orphan drugs, we 
believe that our CY 2018 policy to except newly covered entity types 
such as rural SCHs, PPS-exempt cancer hospitals, and children's 
hospitals, largely mitigates the 340B drug spend attributable to orphan 
drugs and therefore does not dramatically affect our final estimate. In 
addition, for this final rule with comment period, we utilized the HRSA 
covered entity database to identify 340B participating hospitals and 
cross-checked these providers with the CY 2018 OPPS facility impact 
public use file to determine which 340B hospitals are paid under the 
OPPS. The HRSA covered entity database is available via the Internet at 
https://340bopais.hrsa.gov/coveredentitysearch. Using this database, we 
found 1,338 OPPS hospitals in the 340B program (compared to the 954 
estimated for the proposed rule). Of these, 270 were rural SCHs, 47 
were children's hospitals, and 3 were PPS-exempt cancer hospitals. We 
did not assume changes in the quantity of 340B purchased drugs provided 
by hospitals participating in the 340B program (thereby affecting unit 
volume) or

[[Page 59483]]

changes in the number of hospitals participating in the 340B program 
that may occur due to the payment reduction.
    While we acknowledge that there are some limitations in Medicare's 
ability to prospectively calculate a precise estimate for purposes of 
this final rule with comment period, we note that each hospital has the 
ability to calculate how this policy will change its Medicare payments 
for separately payable drugs in CY 2018. Specifically, each hospital 
that is not participating in the 340B program or that is excepted from 
the policy to pay for drugs acquired under the 340B Program at ASP 
minus 22.5 percent in CY 2018 will know that its Medicare payments for 
drugs will be unaffected by this finalized policy; whereas each 
hospital participating in the 340B Program has access to 340B ceiling 
prices (and subceiling prices if it participates in the Prime Vendor 
Program), knows the volume of 340B drugs that it has historically 
billed to Medicare, and can generally project the specific covered 340B 
drugs (and volume thereof) for which it expects to bill Medicare in CY 
2018. Accordingly, a hospital participating in the 340B Program is able 
to estimate the difference in payment that it will receive if Medicare 
pays ASP minus 22.5 percent instead of ASP+6 percent for 340B drugs.
    Using the list of participating 340B providers (derived from the 
HRSA database) and updated CY 2016 claims data available for this final 
rule with comment period for the applicable separately payable drugs 
and biologicals, excluding those on pass-through payment status and 
vaccines, billed by hospitals eligible to participate in the 340B 
Program, except for those hospital types that are excepted from this 
policy in CY 2018, we estimate that OPPS payments for separately 
payable drugs, including beneficiary copayments, will decrease by 
approximately $1.6 billion under this finalized policy, which reflects 
an additional estimated reduction of $700 million over the proposed 
rule estimate of $900 million. If PPS-exempt cancer hospitals, 
children's hospitals, and rural SCHs had not been excluded from the 
reduced drug payment in CY 2018, drug payments to PPS-exempt cancer 
hospitals would have been reduced by approximately $29 million, to 
children's hospitals by approximately $2 million, and to rural SCHs by 
approximately $199 million--this would have resulted in a total savings 
estimate of approximately $1.8 billion. Because we are implementing 
this payment reduction in a budget neutral manner within the OPPS, the 
reduced payments for separately payable drugs purchased through the 
340B Program will increase payment rates for other non-drug items and 
services paid under the OPPS by an offsetting aggregate amount.
    Because data on drugs that are purchased with a 340B discount are 
not publicly available, we do not believe it is possible to more 
accurately estimate the amount of the aggregate payment reduction and 
the offsetting amount of the adjustment that is necessary to ensure 
budget neutrality through higher payment rates for other services. 
Furthermore, there are potential offsetting factors, including possible 
changes in provider behavior and overall market changes that would 
likely lower the impact of the payment reduction. As a result, we may 
need to make an adjustment in future years to revise the conversion 
factor once we have received more accurate data on drugs purchased with 
a 340B discount within the OPPS, similar to the adjustment we made for 
clinical diagnostic laboratory test packaging policy in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70352 through 70357).
    In this final rule, we project that reducing payment for 340B drugs 
to ASP minus 22.5 percent will increase OPPS payment rates for non-drug 
items and services by approximately 3.2 percent in CY 2018. The 
estimated impacts of this policy are displayed in Table 88 below. We 
note that the payment rates included in Addendum A and Addendum B of 
this final rule with comment period do not reflect the reduced payments 
for drugs purchased under the 340B Program; however, they do include 
the increase to payments rates for non-drug items and services due to 
the corresponding increase in the conversion factor. In the proposed 
rule (82 FR 33712), we reminded commenters that this estimate could 
change in the final rule based on a number of factors, including other 
policies that are adopted in the final rule and the availability of 
updated data and/or method of assessing the impact in the final rule. 
We sought public comment on our estimate and stated that we were 
especially interested in whether commenters believe there are other 
publicly available data sources or proxies that can be used for 
determining which drugs billed by hospitals paid under the OPPS were 
acquired under the 340B Program.
    We proposed that the reduced payments for separately payable drugs 
and biologicals purchased under the 340B Program would be included in 
the budget neutrality adjustments, under the requirements in section 
1833(t)(9)(B) of the Act, and that the budget neutral weight scalar 
would not be applied in determining payments for these separately paid 
drugs and biologicals purchased under the 340B Program.
    In addition, we solicited public comment on whether we should apply 
all or part of the savings generated by this payment reduction to 
increase payments for specific services paid under the OPPS, or under 
Part B generally, in CY 2018, rather than simply increasing the 
conversion factor. In particular, we sought public comment on whether 
and how the offsetting increase could be targeted to hospitals that 
treat a large share of indigent patients, especially those patients who 
are uninsured. Finally, we sought public comment on whether the 
redistribution of savings associated with the proposal would result in 
unnecessary increases in the volume of covered services paid under the 
OPPS that should be adjusted in accordance with section 1833(t)(2)(F) 
of the Act.
    Comment: Several commenters stated that if the 340B drug payment 
policy was finalized, the funds should be redistributed across the 
OPPS, as has been the case for the application of budget neutrality in 
the past. One commenter supported CMS' proposal to implement the 
savings attributed to the 340B payment reduction in a budget neutral 
manner within the OPPS. Commenters noted that the budget neutrality 
requirement upon which CMS relied in the proposed rule at section 
1833(t)(9)(B) of the Act has historically been interpreted by CMS as 
requiring budget neutrality within the OPPS. Commenters strongly urged 
CMS to follow its longstanding interpretation of section 1833(t)(9)(B) 
of the Act and offset the full amount of the aggregate 340B payment 
reduction through offsetting payment increases within the OPPS.
    MedPAC reiterated its March 2016 recommendation that that payments 
be distributed in proportion to the amount of uncompensated care that 
hospitals provide, ``to make sure that dollars in the uncompensated 
care pool actually go to the hospitals providing the most uncompensated 
care.'' MedPAC commented that the 340B Program is not well targeted to 
hospitals that provide high levels of uncompensated care and noted that 
40 percent of 340B hospitals provide less than the median level of 
uncompensated care. MedPAC stated that it believed that legislation 
would be needed to direct the savings to the uncompensated care pool 
because current law would require that the savings be retained within 
the OPPS to

[[Page 59484]]

make it budget neutral. However, MedPAC encouraged CMS to request that 
Congress enact the legislation necessary to allow CMS to implement its 
recommendation. MedPAC further noted that legislation would also allow 
CMS to apply the policy to all separately payable drugs, including 
those that are separately payable as a result of their pass-through 
status.
    Response: We thank the commenters for their feedback. After 
consideration of the public comments we received, we are finalizing our 
proposal to fully redistribute the savings associated with adoption of 
the alternative payment methodology for drugs acquired under the 340B 
Program within the OPPS to non-drug items and services. That is, we 
will redistribute $1.6 billion dollars in estimated lower payment for 
OPPS drugs by increasing the conversion factor for all OPPS non-drug 
items and services by 3.2 percent. We may revisit how the funds should 
be targeted in the future.
    Comment: Some commenters challenged the accuracy of the $900 
million estimate CMS calculated in the proposed rule. According to 
these commenters, their analysis of the proposal would have an 
estimated impact in the range of $1.2 billion to $1.65 billion. As a 
result, these commenters asserted that if the proposed payment 
reductions are applied in a budget neutral manner within the OPPS 
through an offsetting increase in the conversion factor, their analysis 
showed that payments for non-drug APCs would increase across hospitals 
by about 3.7 percent (in contrast to CMS's estimate of 1.4 percent) 
based on the proposed rule data. Moreover, based on their analysis, the 
commenters believed the redistribution of the savings would result in a 
net decrease in payments to 340B hospitals of approximately 2.6 
percent, or approximately $800 million--funding that they stated was 
intended to support the congressionally-mandated mission of 340B 
hospitals--not be redistributed to other hospitals that do not 
participate in the 340B Program.
    Response: We stated in the proposed rule that the estimate of the 
340B payment reductions would likely change in the final rule based on 
updated data, revised assumptions, and final policies. For this final 
rule with comment period, as discussed in detail earlier, we used 
updated CY 2016 claims data and an updated list of 340B eligible 
providers to calculate an estimated impact of $1.6 billion based on the 
final policy. As shown in Table 88 below this reflects a reduction of 
about $1.5 billion to urban hospitals and $86 million to rural 
hospitals. We are redistributing the savings from this payment 
reduction in a budget neutral manner within the OPPS through an 
offsetting increase in the conversion factor. This increase to the 
conversion factor increases all OPPS non-drug payment rates to all 
providers under the OPPS by 3.2 percent. With respect to comments on 
the redistribution of the 340B savings to non-340B participating 
hospitals, we note that 340B hospitals will also receive the conversion 
factor increase.
    Comment: In response to the comment solicitation on whether the 
savings generated by the reduced payment on 340B drugs should be used 
to increase payments for specific services paid under the OPPS or under 
Part B generally in CY 2018, commenters generally objected to the 
notion that CMS has authority to redistribute savings outside of OPPS. 
One commenter stated that CMS did not provide any analysis or 
justification to support a reading that section 1833(t)(9)(B) of the 
Act establishes a budget neutrality concept for the Medicare Part B 
Trust Fund. Another commenter stated that CMS should not redistribute 
the savings gained by the 340B proposal based on Medicare DSH metrics 
(that is, insured low-income days) because such metrics are not well 
correlated with uncompensated care costs. This commenter also expressed 
concern regarding the suitability of using uncompensated care as a 
metric ``to identify hospitals that provide the most help to needy 
patients because it includes bad debt as well as charity care.'' The 
commenter stated that bad debt is the amount that hospitals billed but 
did not collect, and therefore is not a measure of hospital assistance 
to the poor. Several commenters challenged the logic of reducing 340B 
payments to participating 340B hospitals, only to return the savings to 
the very same hospitals.
    Response: We appreciate the feedback. Because the OPPS is a budget 
neutral payment system, historically CMS has maintained budget 
neutrality through offsetting estimated payment decreases/increases 
within the OPPS, such as by increasing/decreasing the conversion factor 
by an equal offsetting amount. We have articulated the policy 
justification for reducing drug payment to ASP minus 22.5 percent for 
340B-acquired drugs in section V.B.7. of this final rule with comment 
period and are redistributing the resulting dollars within the OPPS to 
maintain budget neutrality for CY 2018. Therefore, we are finalizing 
our proposal to redistribute the estimated reduction in payment for 
340B-acquired drugs and biologicals by increasing the conversion 
factor, and we are not targeting the savings to specific services paid 
under the OPPS or under Part B generally. We continue to be interested 
in exploring ways that funds from a subsequent proposal could be 
targeted in future years to hospitals that serve a high share of low-
income or uninsured patients.
    Comment: Many commenters noted that CMS' proposal to redistribute 
the savings that result from the 340B reduction in a budget neutral 
manner within the OPPS would increase beneficiary copayments on non-
drug services. Accordingly, the commenters stated that most patients 
would not directly receive the benefit of the 340B copayment reduction 
even if reduced payments for 340B drugs lower coinsurance amounts for 
these drugs. The commenters stated the proposal will likely increase 
costs for uninsured patients because 340B hospitals provide a 
disproportionate amount of care to that population and participating 
340B hospitals may no longer be able to provide ``discounts to low-
income patients'' or other uncompensated care. One commenter suggested 
that CMS, with stakeholder input, develop an outpatient hospital 
charity care metric that could be used to redistribute the 340B savings 
based on the level of outpatient charity care provided by the hospital.
    Response: We appreciate the stakeholders' concerns. We believe that 
reducing payments on 340B purchased drugs to better align with hospital 
acquisition costs directly lowers drug costs for those beneficiaries 
who receive a covered outpatient drug from a 340B participating 
hospital. Further, to the extent that studies have found that 340B 
participating hospitals tend to use more high costs drugs, we believe 
that this 340B payment policy helps address drug pricing in the 
hospital outpatient setting by lessening the incentive for unnecessary 
utilization of costly drugs. In addition, even though many 
beneficiaries have supplemental coverage, those plans make coinsurance 
payments on behalf of beneficiaries. Thus, to the extent this policy 
lessens the coinsurance amount such supplemental plans would have to 
make, we would expect the price of such plans could decrease or 
otherwise reflect these lower costs in the future.
    In summary, to maintain budget neutrality within the OPPS, the 
estimated $1.6 billion in reduced drug payments from adoption of this 
final 340B payment methodology will be redistributed in an equal 
offsetting

[[Page 59485]]

amount to all hospitals paid under the OPPS through increasing the 
payment rates by 3.2 percent for nondrug items and services furnished 
by all hospitals paid under the OPPS for CY 2018.
(3) Estimated Effects of OPPS Changes on Hospitals
    Table 88 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 88, 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 2018, we are paying CMHCs for partial 
hospitalization services under APC 5853 (Partial Hospitalization for 
CMHCs), and we are paying hospitals for partial hospitalization 
services under 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 2018 is 2.7 percent 
(82 FR 38177). 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 0.6 percentage point for FY 
2018 (which is also the MFP adjustment for FY 2018 in the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38177 through 38178)), and sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act further reduce the 
market basket percentage increase by 0.75 percentage point, resulting 
in the OPD fee schedule increase factor of 1.35 percent. We are using 
the OPD fee schedule increase factor of 1.35 percent in the calculation 
of the CY 2018 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 2018 estimates in Table 88.
    To illustrate the impact of the CY 2018 changes, our analysis 
begins with a baseline simulation model that uses the CY 2017 relative 
payment weights, the FY 2017 final IPPS wage indexes that include 
reclassifications, and the final CY 2017 conversion factor. Table 88 
shows the estimated redistribution of the increase or decrease in 
payments for CY 2018 over CY 2017 payments to hospitals and CMHCs as a 
result of the following factors: the impact of the APC reconfiguration 
and recalibration changes between CY 2017 and CY 2018 (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 1.35 percent OPD fee schedule increase factor update to the 
conversion factor; and the estimated impact taking into account all 
payments for CY 2018 relative to all payments for CY 2017, including 
the impact of changes in estimated outlier payments, the frontier State 
wage adjustment, and changes to the pass-through payment estimate 
(Column 6).
    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 2018. 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 2018 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 2017 and CY 2018 by various groups of hospitals, which CMS 
cannot forecast.
    In CY 2016, we excluded all molecular pathology laboratory tests 
from our packaging policy, and in CY 2017, we expanded the laboratory 
packaging exception to apply to all advanced diagnostic laboratory 
tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the 
Act. For CY 2018, we sought public comments on whether laboratories 
(instead of hospitals) should be permitted to bill Medicare directly 
for molecular pathology tests and ADLTs that meet the criteria of 
section 1834A(d)(5)(A) of the Act (and are granted ADLT status by CMS), 
that are ordered less than 14 days following the date of a hospital 
outpatient's discharge from the hospital outpatient department.
    The laboratory date of service (DOS) issue is discussed in section 
X.F. of this final rule with comment period. Because there are 
currently no laboratory tests designated as ADLTs and because the 
payment rate for laboratory tests excluded from our packaging policy 
billed by a hospital would have been the applicable rate for the 
laboratory test under the CLFS, any aspect of this discussion that is 
finalized in this final rule with comment period will not result in a 
net costs or savings to the program. Accordingly, section X.F. of this 
final rule with comment period is not included in the impact table in 
the regulatory impact analysis.
    Overall, we estimate that the rates for CY 2018 will increase 
Medicare OPPS payments by an estimated 1.4 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 1.5 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 88 shows the total number of 
facilities (3,878), including designated cancer and children's 
hospitals and CMHCs, for which we were able to use CY 2016 hospital 
outpatient and CMHC claims data to model CY 2017 and CY 2018 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 2017 or CY 2018 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.

[[Page 59486]]

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 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 (3,765), excluding the hold-
harmless cancer and children's hospitals and CMHCs, on the second line 
of the table. We excluded cancer and children's hospitals because 
section 1833(t)(7)(D) of the Act permanently holds harmless cancer 
hospitals and children's hospitals to their ``pre-BBA amount'' as 
specified under the terms of the statute, and therefore, we removed 
them from our impact analyses. We show the isolated impact on the 49 
CMHCs at the bottom of the impact table and discuss that impact 
separately below.
Column 2: APC Recalibration--All 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 an 
increase of 0.1 percent, with the impact ranging from an increase of 
0.1 percent to no change, depending on the number of beds. Rural 
hospitals will experience a decrease of 0.3 percent, with the impact 
ranging from a decrease of 0.2 percent to a decrease of 0.5 percent, 
depending on the number of beds. Major teaching hospitals will 
experience an increase of 0.1 percent.
Column 3: Wage Indexes and the Effect of the Provider Adjustments
    Column 3 demonstrates the combined budget neutral impact of the APC 
recalibration; the updates for the wage indexes with the FY 2018 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 2017 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 6. 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 2018, 
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 2018 
scaled weights and a CY 2017 conversion factor that included a budget 
neutrality adjustment for the effect of the changes to the wage indexes 
between CY 2017 and CY 2018. The FY 2018 wage policy results in modest 
redistributions.
    There is a slight increase of less than 0.1 in Column 3 for the CY 
2018 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 2018 of 0.88, compared to the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79869) payment-to-cost 
ratio target of 0.91. We note that, in accordance with section 16002 of 
the 21st Century Cures Act, we are applying a budget neutrality factor 
calculated as if the cancer hospital adjustment target payment-to-cost 
ratio was 0.89, not the 0.88 target payment-to-cost ratio we are 
applying in section II.F. of this final rule with comment period.
Column 4: Effect of the Reduced Payment for 340B Drugs
    Column 4 demonstrates the total payment effect of the finalized 
reduction in payment for drugs purchased under the 340B Program from 
ASP+6 percent to ASP minus 22.5 percent. This column includes both the 
reduced payment for 340B acquired drugs and the increase to the 
conversion factor for budget neutrality purposes, which increases 
payment for all non-drug services. For rural sole community hospitals, 
this column shows a 2.6 percent increase, reflecting a 0.0 percent 
increase for drugs (because these providers are exempt from these 
reductions) and a 3.2 percent increase for non-drug services.
Column 5: All Budget Neutrality Changes Combined With the Market Basket 
Update
    Column 5 demonstrates the combined impact of all of the changes 
previously described and the update to the conversion factor of 1.35 
percent. Overall, these changes will increase payments to urban 
hospitals by 1.2 percent and to rural hospitals by 2.5 percent. Urban 
hospitals will receive an increase in line with the 1.3 percent overall 
increase for all facilities after the update is applied to the proposed 
budget neutrality adjustments. The increase for classes of rural 
hospitals is more variable with sole community hospitals receiving a 
3.9 percent increase and other rural hospitals receiving an increase of 
0.8 percent.
Column 6: All Changes for CY 2018
    Column 6 depicts the full impact of the CY 2018 policies on each 
hospital group by including the effect of all of the changes for CY 
2018 and comparing them to all estimated payments in CY 2017. Column 6 
shows the combined budget neutral effects of Columns 2 through 4; 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 2017 update (and assumed, for 
modeling purposes, to be the same number for CY 2018), we included 33 
hospitals in our model because they had both CY 2016 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
of the changes for CY 2018 will increase payments to all facilities by 
1.4 percent for CY 2018. We modeled the independent effect of all of 
the changes in Column 6 using the final relative payment weights for CY 
2017 and the final relative payment weights for CY 2018. We used the 
final conversion factor for CY 2017 of $75.001 and the final CY 2018 
conversion factor of $78.636 discussed in section II.B. of this final 
rule with comment period.
    Column 6 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the

[[Page 59487]]

FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) of 4.6 percent (1.04574) 
to increase individual costs on the CY 2016 claims, and we used the 
most recent overall CCR in the July 2017 Outpatient Provider-Specific 
File (OPSF) to estimate outlier payments for CY 2017. Using the CY 2016 
claims and a 4.6 percent charge inflation factor, we currently estimate 
that outlier payments for CY 2017, using a multiple threshold of 1.75 
and a fixed-dollar threshold of $3,825 will be approximately 1.11 
percent of total payments. The estimated current outlier payments of 
1.11 percent are incorporated in the comparison in Column 6. We used 
the same set of claims and a charge inflation factor of 9.4 percent 
(1.09357) and the CCRs in the July 2017 OPSF, with an adjustment of 
0.985569, to reflect relative changes in cost and charge inflation 
between CY 2016 and CY 2018, to model the CY 2018 outliers at 1.0 
percent of estimated total payments using a multiple threshold of 1.75 
and a fixed-dollar threshold of $4,150. The charge inflation and CCR 
inflation factors are discussed in detail in the FY 2018 IPPS/LTCH PPS 
final rule (82 FR 38527).
    Overall, we estimate that facilities will experience an increase of 
1.4 percent under this final rule with comment period in CY 2018 
relative to total spending in CY 2017. This projected increase (shown 
in Column 6) of Table 88 reflects the 1.35 percent OPD fee schedule 
increase factor, plus 0.2 percent for the change in the pass-through 
estimate between CY 2017 and CY 2018, minus a decrease of 0.11 percent 
for the difference in estimated outlier payments between CY 2017 (1.11 
percent) and CY 2018 (1.0 percent). We estimate that the combined 
effect of all of the changes for CY 2018 will increase payments to 
urban hospitals by 1.3 percent. Overall, we estimate that rural 
hospitals will experience a 2.7 percent increase as a result of the 
combined effects of all of the changes for CY 2018.
    Among hospitals by teaching status, we estimate that the impacts 
resulting from the combined effects of all changes will include a 
decrease of 0.9 percent for major teaching hospitals and an increase of 
2.9 percent for nonteaching hospitals. Minor teaching hospitals will 
experience an estimated increase of 1.7 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
will experience an increase of 1.3 percent, proprietary hospitals will 
experience an increase of 4.5 percent, and governmental hospitals will 
experience no change.

                        Table 88--Estimated Impact of the CY 2018 CHanges for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            All budget
                                                                                                                              neutral
                                                                                APC       New wage index                      changes
                                                             Number of     recalibration   and provider        340B       (combined cols    All changes
                                                             hospitals     (all changes)    adjustments     adjustment      2-4)  with
                                                                                                                           market basket
                                                                                                                              update
                                                                     (1)             (2)             (3)             (4)             (5)             (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *........................................           3,878             0.0             0.0             0.0             1.3             1.4
ALL HOSPITALS (excludes hospitals permanently held                 3,765             0.0             0.1            -0.1             1.4             1.5
 harmless and CMHCs)....................................
URBAN HOSPITALS:                                                   2,951             0.1             0.1            -0.3             1.2             1.3
    LARGE URBAN (GT 1 MILL.)............................           1,589             0.1             0.0            -0.2             1.2             1.3
    OTHER URBAN (LE 1 MILL.)............................           1,362             0.0             0.2            -0.3             1.3             1.4
RURAL HOSPITALS:                                                     814            -0.3             0.0             1.4             2.5             2.7
    SOLE COMMUNITY......................................             372            -0.2             0.1             2.6             3.9             4.1
    OTHER RURAL.........................................             442            -0.4            -0.2             0.0             0.8             0.9
BEDS (URBAN):
    0-99 BEDS...........................................           1,021             0.0             0.0             1.9             3.3             3.4
    100-199 BEDS........................................             850             0.0             0.2             1.2             2.8             2.9
    200-299 BEDS........................................             468             0.1             0.1             0.5             2.0             2.1
    300-499 BEDS........................................             399             0.1             0.0            -0.4             1.1             1.2
    500 + BEDS..........................................             213             0.0             0.1            -2.2            -0.7            -0.6
BEDS (RURAL):
    0-49 BEDS...........................................             333            -0.5            -0.2             2.1             2.7             2.9
    50-100 BEDS.........................................             297            -0.2            -0.2             1.9             2.8             3.0
    101-149 BEDS........................................              97            -0.3             0.1             1.1             2.3             2.5
    150-199 BEDS........................................              49            -0.2             0.1             0.7             1.9             2.1
    200 + BEDS..........................................              38            -0.3             0.4             0.8             2.4             2.5
REGION (URBAN):
    NEW ENGLAND.........................................             144             0.2             0.4            -0.3             1.7             1.7
    MIDDLE ATLANTIC.....................................             348             0.1            -0.2            -0.1             1.2             1.3
    SOUTH ATLANTIC......................................             463             0.0             0.3            -0.4             1.3             1.4
    EAST NORTH CENT.....................................             471             0.0             0.1            -0.2             1.3             1.4
    EAST SOUTH CENT.....................................             178            -0.1            -0.1            -1.6            -0.4            -0.3
    WEST NORTH CENT.....................................             191             0.0             0.5            -0.6             1.3             1.4
    WEST SOUTH CENT.....................................             513             0.0             0.3             0.9             2.5             2.6
    MOUNTAIN............................................             211             0.3            -0.9            -0.2             0.5             0.8
    PACIFIC.............................................             383             0.1             0.0            -0.6             0.8             0.9
    PUERTO RICO.........................................              49            -0.2             0.2             2.9             4.3             4.4
REGION (RURAL):
    NEW ENGLAND.........................................              21             0.1             1.5             1.2             4.2             4.2

[[Page 59488]]

 
    MIDDLE ATLANTIC.....................................              53             0.0            -0.5             1.8             2.6             2.7
    SOUTH ATLANTIC......................................             124            -0.4            -0.6             0.7             1.1             1.2
    EAST NORTH CENT.....................................             122            -0.2             0.0             1.5             2.7             2.8
    EAST SOUTH CENT.....................................             155            -0.6            -0.1             0.0             0.7             0.8
    WEST NORTH CENT.....................................              98            -0.1             0.2             2.4             3.9             4.1
    WEST SOUTH CENT.....................................             161            -0.6             0.3             2.6             3.6             3.7
    MOUNTAIN............................................              56             0.0            -0.3             1.9             3.0             3.3
    PACIFIC.............................................              24            -0.1             0.1             1.7             3.0             3.1
TEACHING STATUS:
    NON-TEACHING........................................           2,655             0.0             0.1             1.3             2.8             2.9
    MINOR...............................................             761             0.1             0.1             0.1             1.6             1.7
    MAJOR...............................................             349             0.1             0.0            -2.4            -1.0            -0.9
DSH PATIENT PERCENT:
    0...................................................              10             0.0             0.2             3.2             4.8             4.9
    GT 0-0.10...........................................             272             0.2            -0.1             2.8             4.4             4.5
    0.10-0.16...........................................             263             0.1             0.0             2.7             4.3             4.4
    0.16-0.23...........................................             572             0.1             0.3             2.6             4.4             4.5
    0.23-0.35...........................................           1,132             0.0             0.1            -0.4             1.0             1.2
    GE 0.35.............................................             935             0.0             0.0            -2.2            -0.9            -0.8
    DSH NOT AVAILABLE **................................             581            -2.0             0.1             2.0             1.4             1.5
URBAN TEACHING/DSH:
    TEACHING & DSH......................................           1,002             0.1             0.0            -1.1             0.3             0.4
    NO TEACHING/DSH.....................................           1,386             0.1             0.2             1.3             3.0             3.1
    NO TEACHING/NO DSH..................................              10             0.0             0.2             3.2             4.8             4.9
    DSH NOT AVAILABLE **................................             553            -2.0             0.1             1.9             1.4             1.5
TYPE OF OWNERSHIP:
    VOLUNTARY...........................................           1,979             0.0             0.0            -0.3             1.2             1.3
    PROPRIETARY.........................................           1,293             0.1             0.1             2.7             4.4             4.5
    GOVERNMENT..........................................             493            -0.1             0.2            -1.6            -0.1             0.0
CMHCs...................................................              49            12.5             0.2             3.2            17.8            17.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all CY 2018 OPPS policies and compares those to the CY 2017 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2018 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 1.0008 because the target payment-to-cost ratio changes from 0.91 in CY 2017 to 0.89 in CY
  2018 and is further reduced by 1 percentage point to 0.88 in accordance with the 21st Century Cures Act. However, this reduction does not affect the
  budget neutrality adjustment consistent with statute.
Column (4) shows the impact of the 340B drug payment reductions and the corresponding increase in non-drug payments.
Column (5) shows the impact of all budget neutrality adjustments and the addition of the 1.35 percent OPD fee schedule update factor (2.7 percent
  reduced by 0.6 percentage points for the productivity adjustment and further reduced by 0.75 percentage point as required by law).
Column (6) shows the additional adjustments to the conversion factor resulting from the frontier adjustment, a change in the pass-through estimate, and
  adding estimated outlier payments.
* These 3,878 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.

(4) Estimated Effects of OPPS Changes on CMHCs
    The last line of Table 88 demonstrates the isolated impact on 
CMHCs, which furnish only partial hospitalization services under the 
OPPS. In CY 2017, CMHCs are paid under 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 2016 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 17.2 
percent increase in payments from CY 2017 (shown in Column 6). 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 2018 
wage index values will result in a small increase of 0.2 percent to 
CMHCs. Column 5 shows that combining this OPD fee schedule increase 
factor, along with changes in APC policy for CY 2018 and the FY 2018 
wage index updates, will result in an estimated increase of 17.8 
percent. Column 6 shows that adding the changes in outlier and pass-
though payments will result in a total 17.2 percent increase in payment 
for CMHCs. This reflects all changes to CMHCs for CY 2018.

[[Page 59489]]

(5) 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 2018. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including the CY 2018 comprehensive APC payment policy 
discussed in section II.A.2.e. of this final rule with comment period.
(6) 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.
(7) Estimated Effects of OPPS Changes on the Medicare and Medicaid 
Programs
    The effect on the Medicare program is expected to be an increase of 
$690 million in program payments for OPPS services furnished in CY 
2018. 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 XVIII.A.4.a.(4) of this final 
rule with comment period.
(8) 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.
 Alternatives considered for the enforcement instruction for 
the supervision of outpatient therapeutic services in critical access 
hospitals (CAHs) and certain small rural hospitals
    We considered whether to address enforcement of the direct 
supervision requirement for outpatient therapeutic services in CAHs and 
small, rural hospitals with fewer than 100 beds by extending the notice 
of nonenforcement while we further develop our policies. There are 
grounds for applying the same supervision requirements to CAHs as to 
all other hospitals. One of these grounds is that hospital outpatient 
services are furnished ``incident to'' physicians' services, and we 
believe that the incident to rules apply equally to critical access and 
other types of hospitals. We also believe that Medicare should purchase 
the same basic level of quality and safe outpatient care for all 
beneficiaries, whether from a CAH, a small rural hospital, or other 
hospitals. At the same time, we acknowledge that in order to ensure the 
same level of outpatient care is furnished in CAHs and small rural 
hospitals as other hospitals, we need to continue the national 
discussion about what constitutes the appropriate supervision for a 
given service. We also need to acknowledge the challenges CAHs and 
small, rural hospitals have in recruiting and retaining physicians and 
qualified non-physician practitioners.
    Therefore, we are extending the notice of nonenforcement for CAHs 
and small rural hospitals with fewer than 100 beds for CY 2018 and CY 
2019, to give all parties time to submit specific services to be 
considered for a reduced minimum supervision standard. We believe that 
the policies in this final rule with comment period will address 
industry concerns while maintaining an adequate level of safety and 
quality of care in the hospital outpatient services that Medicare 
purchases.
 Alternatives Considered for the Methodology for Assigning Skin 
Substitutes to High or Low Cost Groups
    We refer readers to section V.B.1.d. of this final rule with 
comment period for a discussion of our proposal to assign any skin 
substitute product that was assigned to the high cost group in CY 2017 
to the high cost group in CY 2018, regardless of whether the product's 
mean unit cost (MUC) or the product's per day cost (PDC) exceeds or 
falls below the overall CY 2018 MUC or PDC threshold. We will continue 
to assign products that exceed either the overall CY 2018 MUC or PDC 
threshold to the high cost group. We also considered, but did not 
propose or finalize, retaining our methodology from CY 2017 and 
assigning skin substitutes to the high cost group based on whether an 
individual product's MUC or PDC exceeded the overall CY 2018 MUC or PDC 
threshold based on calculations done for either the proposed rule or 
this final rule with comment period.
b. Estimated Effects of CY 2018 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 2018 ASC relative payment weights by scaling the CY 2018 
OPPS relative payment weights by the ASC scalar of 0.8990. The 
estimated effects of the updated relative payment weights on payment 
rates are varied and are reflected in the estimated payments displayed 
in Tables 89 and 90 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 2018 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 2018 ASC conversion factor by adjusting the 
CY 2017 ASC conversion factor by 1.0007 to account for changes in the 
pre-floor and pre-reclassified hospital wage indexes between CY 2017 
and CY 2018 and by applying the CY 2018 MFP-adjusted CPI-U update 
factor of 1.2 percent (projected CPI-U update of 1.7 percent minus a 
projected productivity adjustment of 0.5 percentage point). The CY 2018 
ASC conversion factor is $45.575.
(1) Limitations of Our Analysis
    Presented here are the projected effects of the changes for CY 2018 
on Medicare payment to ASCs. A key limitation of our analysis is our 
inability to predict changes in ASC service-mix between CY 2016 and CY 
2018 with precision. We believe that the net effect

[[Page 59490]]

on Medicare expenditures resulting from the CY 2018 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 a wide range 
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 2018 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 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 2018 updates to the ASC payment system on Medicare 
payments to ASCs, assuming the same mix of services as reflected in our 
CY 2016 claims data. Table 89 depicts the estimated aggregate percent 
change in payment by surgical specialty or ancillary items and services 
group by comparing estimated CY 2017 payments to estimated CY 2018 
payments, and Table 90 shows a comparison of estimated CY 2017 payments 
to estimated CY 2018 payments for procedures that we estimate will 
receive the most Medicare payment in CY 2017.
    Table 89 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 89.
     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 2017 ASC Payments were calculated 
using CY 2016 ASC utilization (the most recent full year of ASC 
utilization) and CY 2017 ASC payment rates. The surgical specialty and 
ancillary items and services groups are displayed in descending order 
based on estimated CY 2017 ASC payments.
     Column 3--Estimated CY 2018 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 2018 
compared to CY 2017.
    As seen in Table 89, 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 1-percent increase in 
aggregate payment amounts for eye and ocular adnexa procedures, a 2-
percent increase in aggregate payment amounts for digestive system 
procedures, 1-percent increase in aggregate payment amounts for nervous 
system procedures, a 3-percent increase in aggregate payment amounts 
for musculoskeletal system procedures, a 1-percent increase in 
aggregate payment amounts for genitourinary system procedures, and a 5-
percent increase in aggregate payment amounts for integumentary system 
procedures.
    Also displayed in Table 89 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 decrease by 
44 percent for CY 2018.

   Table 89--Estimated Impact of the CY 2018 Update to the ASC Payment
    System on Aggregate CY 2018 Medicare Program Payments by Surgical
             Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated  CY
                                             2017 ASC      Estimated  CY
        Surgical specialty group           payments (in    2018  percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $4,460               1
Eye and ocular adnexa...................           1,688               1
Digestive system........................             852               2
Nervous system..........................             849               1
Musculoskeletal system..................             530               3
Genitourinary system....................             186               1
Integumentary system....................             141               5
Ancillary items and services............              55             -44
------------------------------------------------------------------------

    Table 90 below shows the estimated impact of the updates to the 
revised ASC payment system on aggregate ASC payments for selected 
surgical procedures during CY 2018. The table displays 30 of the 
procedures receiving the greatest estimated CY 2017 aggregate Medicare 
payments to ASCs. The HCPCS codes are sorted in descending order by 
estimated CY 2017 program payment.
     Column 1--CPT/HCPCS code.
     Column 2--Short Descriptor of the HCPCS code.

[[Page 59491]]

     Column 3--Estimated CY 2017 ASC Payments were calculated 
using CY 2016 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2017 ASC payment rates. The estimated CY 2017 
payments are expressed in millions of dollars.
     Column 4--Estimated CY 2018 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2017 and 
the estimated payment for CY 2018 based on the update.

   Table 90--Estimated Impact of the CY 2018 Update to the ASC Payment
          System on Aggregate Payments for Selected Procedures
------------------------------------------------------------------------
                                           Estimated  CY
                                             2017  ASC     Estimated  CY
  CPT/HCPCS code      Short descriptor     payment  (in    2018  percent
                                             millions)        change
(1)                 (2).................             (3)             (4)
------------------------------------------------------------------------
66984.............  Cataract surg w/iol           $1,172               1
                     1 stage.
45380.............  Colonoscopy and                  216               3
                     biopsy.
43239.............  Egd biopsy single/               178               2
                     multiple.
63685.............  Insrt/redo spine n               151              -1
                     generator.
45385.............  Colonoscopy w/lesion             146               3
                     removal.
63650.............  Implant                          118               4
                     neuroelectrodes.
64483.............  Inj foramen epidural              99               1
                     l/s.
66982.............  Cataract surgery                  94               1
                     complex.
0191T.............  Insert ant segment                86               1
                     drain int.
66821.............  After cataract laser              69               0
                     surgery.
64635.............  Destroy lumb/sac                  68               0
                     facet jnt.
29827.............  Arthroscop rotator                61               3
                     cuff repr.
64493.............  Inj paravert f jnt l/             60               1
                     s 1 lev.
64590.............  Insrt/redo pn/gastr               50               2
                     stimul.
G0105.............  Colorectal scrn; hi               45               3
                     risk ind.
62323.............  Njx interlaminar                  45               3
                     lmbr/sac.
45378.............  Diagnostic                        44               3
                     colonoscopy.
G0121.............  Colon ca scrn not hi              42               3
                     rsk ind.
64721.............  Carpal tunnel                     34              -1
                     surgery.
15823.............  Revision of upper                 32               6
                     eyelid.
29881.............  Knee arthroscopy/                 30               5
                     surgery.
29880.............  Knee arthroscopy/                 26               5
                     surgery.
67042.............  Vit for macular hole              25               1
28285.............  Repair of hammertoe.              24               5
52000.............  Cystoscopy..........              23              -1
26055.............  Incise finger tendon              23               6
                     sheath.
43235.............  Egd diagnostic brush              23               2
                     wash.
64561.............  Implant                           22               6
                     neuroelectrodes.
50590.............  Fragmenting of                    21               1
                     kidney stone.
67904.............  Repair eyelid defect              20               2
------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Policies on Beneficiaries
    We estimate that the CY 2018 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 
2018. 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 2018, 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/omb/circulars_a004_a-4#a), we have prepared two accounting statements to 
illustrate the impacts of this final rule with comment period. The 
first accounting statement, Table 91 below, illustrates the

[[Page 59492]]

classification of expenditures for the CY 2018 estimated hospital OPPS 
incurred benefit impacts associated with the CY 2018 OPD fee schedule 
increase. The second accounting statement, Table 92 below, illustrates 
the classification of expenditures associated with the 1.2 percent CY 
2018 update to the ASC payment system, based on the provisions of this 
final rule with comment period and the baseline spending estimates for 
ASCs. Lastly, the tables classify most estimated impacts as transfers.

     Table 91--Accounting Statement: CY 2018 Estimated Hospital OPPS
 Transfers From CY 2017 to CY 2018 Associated With the CY 2018 Hospital
                  Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $690 million.
From Whom to Whom......................  Federal Government to
                                          outpatient hospitals and other
                                          providers who receive payment
                                          under the hospital OPPS.
                                        --------------------------------
    Total..............................  $690 million.
------------------------------------------------------------------------


  Table 92--Accounting Statement: Classification of Estimated Transfers
  From CY 2017 to CY 2018 as a Result of the CY 2018 Update to the ASC
                             Payment System
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $40 million.
From Whom to Whom......................  Federal Government to Medicare
                                          Providers and Suppliers.
                                        --------------------------------
    Total..............................  $40 million.
------------------------------------------------------------------------

d. Effects of Requirements for the Hospital OQR Program

(1) Background
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79874), for the previously estimated effects of changes 
to the Hospital OQR Program for the CY 2018, CY 2019, and CY 2020 
payment determinations. Of the 3,228 hospitals that met eligibility 
requirements for the CY 2017 payment determination, we determined that 
87 hospitals did not meet the requirements to receive the full OPD fee 
schedule increase factor. Most of these hospitals (66 of the 87), chose 
not to participate in the Hospital OQR Program for the CY 2017 payment 
determination. We estimate that approximately 100 hospitals will not 
receive the full OPD fee schedule increase factor for the CY 2018 
payment determination and subsequent years.
    In section XIII.B.4.c. of this final rule with comment period, we 
are finalizing the removal of six measures. Specifically, beginning 
with the CY 2020 payment determination, we are finalizing, as proposed, 
to remove: (1) OP-21: Median Time to Pain Management for Long Bone 
Fracture; and (2) OP-26: Hospital Outpatient Volume Data on Selected 
Outpatient Surgical Procedures. Also, while we proposed to remove: (1) 
OP-1: Median Time to Fibrinolysis, (2) OP-4: Aspirin at Arrival, (3) 
OP-20: Door to Diagnostic Evaluation by a Qualified Medical 
Professional, and (4) OP-25: Safe Surgery Checklist beginning with the 
CY 2021 payment determination, we are finalizing removal of these 
measures with modification so that removal begins with the CY 2020 
payment determination, one year earlier than proposed. To summarize, 
the following measures will be removed for the CY 2020 payment 
determination: (1) OP-1: Median Time to Fibrinolysis; (2) OP-4: Aspirin 
at Arrival; (3) OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional; (4) OP-21: Median Time to Pain Management for 
Long Bone Fracture; (5) OP-25: Safe Surgery Checklist; and (6) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. We expect these finalized proposals will reduce the burden 
of reporting for the Hospital OQR Program, as discussed in more detail 
below.
    In section XIII.B.10.b. of this final rule with comment period, we 
are finalizing, with modifications, our proposal to publicly report OP-
18c using data beginning with patient encounters during the third 
quarter of 2017. However, we do not expect our modifications to affect 
the burden estimates made in the CY 2018 OPPS/ASC proposed rule (82 FR 
33705 through 33708), as discussed below.
    In section XIII.B.5. of this final rule with comment period, we are 
finalizing our proposal to delay the OP-37a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures beginning with the CY 2020 
payment determination (CY 2018 data collection period) until further 
notice in future rulemaking.
    In addition, in this final rule with comment period, beginning with 
the CY 2020 payment determination, we are finalizing our proposals: (1) 
To codify at Sec.  419.46(e) our previously finalized process for 
targeting hospitals for validation of chart-abstracted measures 
(section XIII.D.7.b. of this final rule with comment period); (2) to 
formalize the educational review process and use it to correct 
incorrect validation results for chart-abstracted measures (section 
XIII.D.7.c. of this final rule with comment period); (3) to align the 
first quarter for which hospitals must submit data for all hospitals 
that did not participate in the previous year's Hospital OQR Program, 
and make corresponding revisions at 42 CFR 419.46(c)(3) (section 
XIII.D.1. of this final rule with comment period); and (4) to align the 
naming of the Extraordinary Circumstances Exceptions (ECE) policy and 
make conforming changes to the CFR (section XIII.D.8.a. of this final 
rule with comment period). We are not finalizing our proposals to 
change the NOP submission deadlines such that hospitals are required to 
submit the NOP any time prior to registering on the QualityNet Web site 
and to make conforming revisions at 42 CFR 419.46(a) (section 
XIII.C.2.b. of this final rule with comment period). We do not believe 
that these changes will affect our burden estimates, as further 
discussed below.

[[Page 59493]]

(2) Estimated Impact of Newly Finalized Proposal To Delay OP-37a-e: 
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare 
Providers and Systems (OAS CAHPS) Survey-Based Measures Beginning With 
the CY 2020 Payment Determination
    As described in section XIII.B.5. of this final rule with comment 
period, we are finalizing our proposal to delay OP-37a-e: Outpatient 
and Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-based measures beginning with the CY 2020 
payment determination (CY 2018 data collection period). As stated in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79863), the 
information collection requirements associated with the five 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 final rule with comment period (81 FR 79863), 
we did not provide an independent estimate of the burden associated 
with OAS CAHPS Survey based measures for the Hospital OQR Program. 
Similarly, our finalized proposal to delay implementation of these 
measures does not affect our current burden estimates.
(3) Estimated Impact of Proposal to Publicly Report OP-18c: Median Time 
From Emergency Department Arrival to Emergency Department Departure for 
Discharged Emergency Department Patients--Psychiatric/Mental Health 
Patients
    In section XIII.B.10.b. of this final rule with comment period, we 
are finalizing, with modifications, our proposal to publicly report 
18c: Median Time from Emergency Department Arrival to Emergency 
Department Departure for Discharged Emergency Department Patients--
Psychiatric/Mental Health Patients beginning with patient encounters 
from the third quarter of 2017. As noted in that section, the data 
required for public reporting of OP-18c is already collected as part of 
the existing Hospital OQR Program requirements. Accordingly, we did not 
estimate changes to burden due to this proposal and we do not expect 
the modifications we are finalizing to affect burden.
(4) Estimated Impact of Newly Finalized Proposals for the CY 2020 
Payment Determination and Subsequent Years
(a) Impact of Measure Removals
    In section XIII.B.4.c. of this final rule with comment period, we 
are finalizing our proposals to remove six measures from the Hospital 
OQR Program. Specifically, beginning with the CY 2020 payment 
determination, we are finalizing, as proposed, to remove: (1) OP-21: 
Median Time to Pain Management for Long Bone Fracture; and (2) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. Also, while we proposed to remove: (1) OP 1: Median Time to 
Fibrinolysis, (2) OP-4: Aspirin at Arrival, (3) OP-20: Door to 
Diagnostic Evaluation by a Qualified Medical Professional, and (4) OP-
25: Safe Surgery Checklist beginning with the CY 2021 payment 
determination, we are finalizing removal of these measures with 
modification so that removal begins with the CY 2020 payment 
determination, one year earlier than proposed. In summary, we are 
finalizing removal of six measures beginning with the CY 2020 payment 
determination. We note that we have modified our estimates from the 
proposed rule (82 FR 33673) in order to streamline our discussion in 
light of the modification.
    Specifically, we are finalizing the removal of four chart-
abstracted measures ((1) OP-1: Median Time to Fibrinolysis; (2) OP-4: 
Aspirin at Arrival; (3) OP-20: Door to Diagnostic Evaluation by a 
Qualified Medical Professional; and (4) OP-21: Median Time to Pain 
Management for Long Bone Fracture) and two web-based measures ((1) OP-
25: Safe Surgery Checklist Use; and (2) OP-26: Hospital Outpatient 
Volume Data on Selected Outpatient Surgical Procedures). As described 
in section XVI.B. of this final rule with comment period, we expect 
these measure removals to reduce burden by 457,490 hours and $16.7 
million for the CY 2020 payment determination.
(b) Impact of Updates to Previously Finalized Chart-Abstracted Measure 
Validation Procedures and the Educational Review Process
    In section XIII.D.7.a. of this final rule with comment period, we 
provide clarification on our procedures for validation of chart-
abstracted measures to note that the 50 poorest performing outlier 
hospitals will be targeted for validation. We do not expect this 
clarification to affect burden because it does not alter the number of 
hospitals selected for validation or the requirements for those 
hospitals that are selected.
    In addition, in section XIII.D.7.c. of this final rule with comment 
period, we are finalizing our proposal to formalize the process of 
allowing hospitals to use an educational review process to correct 
incorrect validation results for the first three quarters of validation 
for chart-abstracted measures. We are also finalizing our proposal to 
update the process to specify that if the results of an educational 
review indicate that we incorrectly scored a hospital's medical records 
selected for validation, the corrected quarterly validation score will 
be used to compute the hospital's final validation score at the end of 
the calendar year. Under this finalized policy, the educational review 
request process remains the same for the CY 2020 payment determination 
and subsequent years, except that revised scores identified through an 
educational review will be used to correct a hospital's validation 
score. As a result, we do not expect this policy to affect the burden 
experienced by hospitals, as our changes to this policy result in a 
change in the way we address educational review requests and not a 
change to the process hospitals must follow to request an education 
review. As we stated in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75171), we believe there is a burden associated with 
successful participation in the Hospital OQR Program, where successful 
participation results in a full annual payment update (APU) for a 
particular payment determination. This burden includes, but is not 
limited to, maintaining familiarity with the Hospital OQR Program 
requirements, which includes checking feedback reports to indicate a 
facility's current status or performance (78 FR 75171). The overall 
administrative burden was estimated at 42 hours per hospital (78 FR 
75171). As stated above, we do not believe this burden will change with 
the finalization of our policy to update the educational review process 
to include corrections.
(c) Impact of Proposed Update to NOP Submission Deadline
    In section XIII.C.2. of this final rule with comment period, we are 
not finalizing our proposal to revise the NOP submission deadlines such 
that hospitals are required to submit the NOP any time prior to 
registering on the QualityNet Web site. We estimated that this proposal 
would have a negligible effect on the time and cost of completing the 
participation requirements. As a result, our decision not to finalize 
the proposal to revise the NOP submission deadline does not affect our 
burden estimates.

[[Page 59494]]

(d) Impact of Aligning the First Quarter for Which Hospitals Must 
Submit Data for All Hospitals That Did Not Participate in the Previous 
Year's Hospital OQR Program
    In section XIII.D.1 of this final rule with comment period, we are 
finalizing our proposal to align the timeline specifying the initial 
quarter for which hospitals must submit data for all hospitals that did 
not participate in the previous year's Hospital OQR Program, rather 
than specifying different timelines for hospitals with Medicare 
acceptance dates before versus after January 1 of the year prior to an 
affected annual payment update. Although this finalized proposal alters 
the timeline for hospitals to begin submitting data for the Hospital 
OQR Program, it does not alter program requirements. As a result, we do 
not anticipate that this policy will affect burden.
(e) Impact of Updates to the Previously Finalized ECE Policy
    We previously estimated the burden associated with general and 
administrative Hospital OQR Program requirements in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 75171). In section XIII.D.8. 
of this final rule with comment period, we discuss our finalized 
alignment of the naming of this exception policy and finalized proposal 
to update 42 CFR 419.46(d) to reflect our current ECE policies. We are 
also clarifying the timing of our response to ECE requests. Because we 
do not seek any new or additional information in our finalized ECE 
proposals, we believe the updates will have no effect on burden for 
hospitals.
    We refer readers to section XVI.B. of this final rule with comment 
period (information collection requirements) for a detailed discussion 
of the burden of the requirements for submitting data to the Hospital 
OQR Program.
e. Effects of Proposed Requirements for the ASCQR Program
1. Background
    In section XIV. of this final rule with comment period, we discuss 
our proposals to adopt policies affecting the ASCQR Program. For the CY 
2017 payment determination, of the 3,937 ASCs that met eligibility 
requirements for the ASCQR Program, 209 ASCs did not meet the 
requirements to receive the full annual payment update. We note that, 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79874), 
we used the CY 2016 payment determination numbers as a baseline, and 
estimated that approximately 200 ASCs will not receive the full annual 
payment update in CY 2018 due to failure to meet the ASCQR Program 
requirements (CY 2017 and CY 2018 payment determination information 
were not yet available).
    In section XIV.B.3.b. of this final rule with comment period, we 
are finalizing our proposals, beginning with the CY 2019 payment 
determination, to remove three measures (ASC-5: Prophylactic 
Intravenous (IV) Antibiotic Timing, ASC-6: Safe Surgery Checklist Use, 
and ASC-7: Ambulatory Surgical Center Facility Volume Data on Selected 
Ambulatory Surgical Center Surgical Procedures) from the ASCQR Program 
measure set. In section XIV.B.6.a. of this final rule with comment 
period, we are not finalizing our proposal, beginning with the CY 2021 
payment determination, to adopt one new measure, ASC-16: Toxic Anterior 
Segment Syndrome. In section XIV.B.6.b. and c. of this final rule with 
comment period, we are finalizing our proposals, beginning with the CY 
2022 payment determination, to adopt two new measures collected via 
claims (ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical 
Center Procedures and ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures). We expect these finalized proposals will 
reduce the overall burden of reporting data for the ASCQR Program, as 
discussed below.
    In this final rule with comment period, we are also finalizing our 
proposals: (1) To delay ASC-15a-e: OAS CAHPS survey-based measures 
beginning with the CY 2020 payment determination (CY 2018 data 
collection) (section XIV.B.4. of this final rule with comment period); 
(2) to expand the CMS online tool to also allow for batch submission 
beginning with data submitted during CY 2018 and to make corresponding 
revisions to the CFR (section XIV.D.3.b. of this final rule with 
comment period); and, (3) to align the naming of the Extraordinary 
Circumstances Exceptions (ECE) policy beginning with CY 2018 and to 
make conforming changes to the CFR (section XIV.D.6.b. of this final 
rule with comment period). As discussed below, we do not expect these 
finalized proposals to affect our burden estimates.
2. Estimated Burden of Newly Finalized ASCQR Program Proposals 
Beginning With CY 2018
    In section XIV.B.4. of this final rule with comment period, we are 
finalizing our proposal to delay ASC-15a-e: OAS CAHPS Survey-based 
measures beginning with the CY 2020 payment determination (CY 2018 data 
collection) until further notice in future rulemaking. As described in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79864), the 
information collection requirements associated with the five 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, we did not provide an independent estimate of the burden 
associated with OAS CAHPS Survey administration for the ASCQR Program 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79864). 
Similarly, our finalized proposal to delay reporting on these measures 
does not affect our current burden estimates.
    For CY 2018, we are finalizing two additional policies. First, in 
section XIV.D.3.b. of this final rule with comment period, we are 
finalizing our proposal to expand the CMS online tool to also allow for 
batch submission beginning with data submitted during CY 2018 and to 
make corresponding revisions to the CFR. Second, in section XIV.D.6. of 
this final rule with comment period, we discuss our intent to align the 
naming of this exception policy and update 42 CFR 416.310(d) to reflect 
our current ECE policies. We are also clarifying the timing of CMS' 
response to ECE requests. Because none of these policies change the 
reporting requirements of the ASCQR Program or require ASCs to submit 
any new or additional information, we believe the updates will have no 
effect on burden for ASCs.
3. Estimated Burden of Newly Finalized ASCQR Program Proposals for the 
CY 2019 Payment Determination
    In section XIV.B.3.b. of this final rule with comment period, we 
are finalizing our proposals to remove one claims-based measure (ASC-5: 
Prophylactic Intravenous (IV) Antibiotic Timing \218\) and two measures 
collected via a CMS online data submission tool (ASC-6: Safe Surgery 
Checklist Use and ASC-7: ASC Facility Volume Data on Selected ASC 
Surgical Procedures) from the ASCQR Program measure set beginning with 
the CY 2019 payment determination. As discussed in section XVI.C.4. of 
this final rule with comment period, data for ASC-5 is submitted via

[[Page 59495]]

CMS claims using Quality Data Codes, which impose only a nominal burden 
on providers because these claims are already submitted for the 
purposes of payment. Therefore, we estimate a nominal reduction in 
burden associated with our finalized proposal to remove the ASC-5 
measure from the ASCQR Program measure set beginning with the CY 2019 
payment determination. As also discussed in section XVI.C.4. of this 
final rule with comment period, we estimate the proposals to remove 
ASC-6 and ASC-7 from the ASCQR Program measure set will reduce ASCs' 
data collection and submission burden by approximately 657 hours (3,937 
ASCs x 0.167 hours per ASC) and $24,033 (657 hours x $36.58 per hour) 
per measure, or a total burden reduction of 1,314 (657 hours x 2 
measures) and $48,066 (1,314 hours x $36.58 per hour) across all ASCs.
---------------------------------------------------------------------------

    \218\ As discussed in section XVI.C.4. of this final rule with 
comment period, data for ASC-5 is submitted via CMS claims using 
Quality Data Codes, which impose only a nominal burden on providers 
because these claims are already submitted for the purposes of 
payment. We therefore estimate a nominal reduction in burden 
associated with our finalized proposal to remove the ASC-5 measure 
from the ASCQR Program measure set beginning with the CY 2019 
payment determination.
---------------------------------------------------------------------------

    We did not propose to add any quality measures to the ASCQR measure 
set for the CY 2020 payment determination, and we do not 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 
section XIV.B.5. of this final rule with comment period for a list of 
these measures.) Therefore, we do not believe that these policies will 
increase the number of ASCs that do not receive a full annual payment 
update for the CY 2020 payment determination.
4. Estimated Burden of ASCQR Program for the CY 2021 Payment 
Determination
    In section XIV.B.6.a. of this final rule with comment period, we 
are not finalizing our proposal to adopt one new measure collected via 
a CMS online data submission tool, ASC-16: Toxic Anterior Segment 
Syndrome. Therefore, the initially estimated burden from the CY 2018 
OPPS/ASC proposed rule (82 FR 33721) does not apply.
5. Estimated Burden of ASCQR Program Newly Finalized Proposals for the 
CY 2022 Payment Determination
    In sections XIV.B.6.b. and c. of this final rule with comment 
period, we are finalizing our proposals, beginning with the CY 2022 
payment determination, to adopt two measures collected via claims: (1) 
ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center 
Procedures; and (2) ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures. Data used to calculate scores for these 
measures is collected via Part A and Part B Medicare administrative 
claims and Medicare enrollment data, and therefore does not require 
ASCs to report any additional data. Because these measures do not 
require ASCs to submit any additional data, we do not believe there 
will be any additional burden associated with these proposals.
    We refer readers to the information collection requirements in 
section XVI.C. of this final rule with comment period for a detailed 
discussion of the financial and hourly burden of the ASCQR Program's 
current and proposed requirements.

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 626 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 $148 million. This final rule with 
comment period does not mandate any requirements for State, local, or 
tribal governments, or for the private sector.

D. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment, or otherwise 
promulgates, a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs associated with at 
least two prior regulations. OMB's guidance, issued on April 5, 2017, 
explains that ``In general, Federal spending regulatory actions that 
cause only income transfers between taxpayers and program beneficiaries 
(e.g., regulations associated with . . . Medicare spending) are 
considered `transfer rules' and are not covered by EO 13771. However, 
in some cases, such regulatory actions may impose requirements apart 
from transfers, or transfers may distort markets causing 
inefficiencies. In those cases, the actions would need to be offset to 
the extent they impose more than de minimis costs.'' As shown in the 
previous discussion of Regulatory Review Costs under section XVIII.A.4. 
of this final rule with comment period, we estimate that total 
regulatory review costs on the affected entities will be approximately 
$2.8 million. As discussed in section XVI. of this final rule with 
comment period, we estimate that this rule leads to paperwork cost 
savings of approximately $16.8 million per year on an ongoing basis. It 
has been determined that this final rule with comment period is a 
deregulatory action for the purposes of Executive Order 13771.

E. 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 2018. 
Table 88 demonstrates the estimated distributional impact of the OPPS 
budget neutrality requirements

[[Page 59496]]

that will result in a 1.4 percent increase in payments for all services 
paid under the OPPS in CY 2018, 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 2018.
    The updates to the ASC payment system for CY 2018 will affect each 
of the approximately 5,500 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 89 demonstrates the estimated distributional 
impact among ASC surgical specialties of the MFP-adjusted CPI-U update 
factor of 1.2 percent for CY 2018.

XIX. 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 88 of this final rule with comment period, we 
estimate that OPPS payments to governmental hospitals (including State 
and local governmental hospitals) will experience no change 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 
requirements.

42 CFR Part 416

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

42 CFR Part 419

    Hospitals, Medicare, 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:

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

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

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


0
2. Section 414.510 is amended by adding paragraph (b)(5) to read as 
follows:


Sec.  414.510  Laboratory date of service for clinical laboratory and 
pathology specimens.

* * * * *
    (b) * * *
    (5) In the case of a molecular pathology test or a test designated 
by CMS as an ADLT under paragraph (1) of the definition of an advanced 
diagnostic laboratory test in Sec.  414.502, the date of service of the 
test must be the date the test was performed only if--
    (i) The test was performed following a hospital outpatient's 
discharge from the hospital outpatient department;
    (ii) The specimen was collected from a hospital outpatient during 
an encounter (as both are defined in Sec.  410.2 of this chapter);
    (iii) It was medically appropriate to have collected the sample 
from the hospital outpatient during the hospital outpatient encounter;
    (iv) The results of the test do not guide treatment provided during 
the hospital outpatient encounter; and
    (v) The test was reasonable and medically necessary for the 
treatment of an illness.

PART 416--AMBULATORY SURGICAL SERVICES

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

    Authority:  Secs. 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
4. Section 416.310 is amended by revising paragraphs (c)(1)(i) and (d) 
to read as follows:


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

* * * * *
    (c) * * *
    (1) * * *
    (i) QualityNet account for web-based measures. ASCs, and any agents 
submitting data on an ASC's behalf, must maintain a QualityNet account 
in order to submit quality measure data to the QualityNet Web site for 
all web-based measures submitted via a CMS online data submission tool. 
A QualityNet security administrator is necessary to set up such an 
account for the purpose of submitting this information.
* * * * *
    (d) Extraordinary circumstances exceptions. CMS may grant an 
exception with respect to quality data reporting requirements in the 
event of extraordinary circumstances beyond the control of the 
hospital, such as when an act of nature affects an entire region or if 
CMS determines that a systemic problem with one of its data collection 
systems directly affected the ability of the hospitals to submit data. 
CMS may grant an exception as follows:
    (1) Upon request of the ASC. Specific requirements for submission 
of a request for an exception are available on the QualityNet Web site; 
or
    (2) At the discretion of CMS. CMS may grant exceptions to ASCs that 
have not requested them when CMS determines that an extraordinary 
circumstance has occurred.
* * * * *

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

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


[[Page 59497]]


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


0
6. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(9) to 
read as follows:


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

* * * * *
    (b) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (9) For calendar year 2018, a multiproductivity adjustment (as 
determined by CMS) and 0.75 percentage point.
* * * * *

0
7. Section 419.46 is amended--
0
a. In paragraph (a)(1) by removing the phrase ``Web site'' and adding 
in its place the term ``website''.
0
b. In paragraphs (b) and (c)(2) by removing the phrase ``Web site'' and 
adding in its place the term ``website''.
0
c. By revising paragraphs (c)(3)(i) and (ii) and (d).
0
d. By adding paragraph (e)(3).
0
e. In paragraphs (f)(1) and (g)(2) by removing the phrase ``Web site'' 
and adding in its place the term ``website'' wherever it appears.
    The revisions and additions read as follow:


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

* * * * *
    (c) * * *
    (3) * * *
    (i) Hospitals that did not participate in the previous year's 
Hospital OQR Program must initially submit data beginning with 
encounters occurring during the first calendar quarter of the year 
prior to the affected annual payment update.
    (ii) Hospitals that did not participate in the previous year's 
Hospital OQR Program must follow data submission deadlines as specified 
in paragraph (c)(2) of this section.
* * * * *
    (d) Exception. CMS may grant an exception to one or more data 
submission deadlines and requirements in the event of extraordinary 
circumstances beyond the control of the hospital, such as when an act 
of nature affects an entire region or locale or a systemic problem with 
one of CMS' data collection systems directly or indirectly affects data 
submission. CMS may grant an exception as follows:
    (1) Upon request by the hospital. Specific requirements for 
submission of a request for an exception are available on the 
QualityNet Web site.
    (2) At the discretion of CMS. CMS may grant exceptions to hospitals 
that have not requested them when CMS determines that an extraordinary 
circumstance has occurred.
    (e) * * *
    (3) CMS will select a random sample of 450 hospitals for validation 
purposes, and will select an additional 50 hospitals for validation 
purposes based on the following criteria:
    (i) The hospital fails the validation requirement that applies to 
the previous year's payment determination; or
    (ii) The hospital has an outlier value for a measure based on the 
data it submits. An ``outlier value'' is a measure value that is 
greater than 5 standard deviations from the mean of the measure values 
for other hospitals, and indicates a poor score.
* * * * *

0
8. Section 419.71 is added to read as follows:


Sec.  419.71  Payment reduction for certain X-ray imaging services.

    (a) Definition. For purposes of this section, the term ``computed 
radiography technology'' means cassette-based imaging which utilizes an 
imaging plate to create the image involved.
    (b) Payment reduction for film X-ray imaging services. For an 
imaging service that is an X-ray taken using film and that is furnished 
during 2017 or a subsequent year, the payment amount for such service 
(including the X-ray component of a packaged service) is reduced by 20 
percent.
    (c) Payment reduction for computed radiography imaging services. 
The payment amount for an imaging service that is an X-ray taken using 
computed radiography technology (including the X-ray component of a 
packaged service) is reduced by--
    (1) 7 percent, for such services furnished in CY 2018, 2019, 2020, 
2021, or 2022.
    (2) 10 percent, for such services furnished in CY 2023 or a 
subsequent calendar year.
    (d) Application without regard to budget neutrality. The reductions 
taken under this section are not considered adjustments under section 
1833(t)(2)(E) of the Act and are not implemented in a budget neutral 
manner.

    Dated: October 26, 2017.
Seema Verma,
Administrator, Centers for Medicare and Medicaid Services.
    Dated: October 30, 2017.
Eric D. Hargan,
Acting Secretary, Department of Health and Human Services.

    Editorial Note:  Rule document 2017-23932 was originally 
published on pages 52356 through 52637 in the issue of Monday, 
November 13, 2017. In that publication, a section of the document 
was omitted due to a printing error. The corrected document is 
published here in its entirety.

[FR Doc. R1-2017-23932 Filed 11-1-17; 4:15 pm]
 BILLING CODE 1301-00-D