[Federal Register Volume 83, Number 88 (Monday, May 7, 2018)]
[Proposed Rules]
[Pages 20164-20643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08705]



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Vol. 83

Monday,

No. 88

May 7, 2018

Part II

Book 2 of 2 Books

Pages 20163-20706





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 412, 413, 424, et al.



Medicare Program; Hospital Inpatient Prospective Payment Systems for 
Acute Care Hospitals and the Long[dash]Term Care Hospital Prospective 
Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; 
Proposed Quality Reporting Requirements for Specific Providers; 
Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive 
Programs (Promoting Interoperability Programs) Requirements for 
Eligible Hospitals, Critical Access Hospitals, and Eligible 
Professionals; Medicare Cost Reporting Requirements; and Physician 
Certification and Recertification of Claims; Proposed Rule

Federal Register / Vol. 83 , No. 88 / Monday, May 7, 2018 / Proposed 
Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 424, and 495

[CMS-1694-P]
RIN 0938-AT27


Medicare Program; Hospital Inpatient Prospective Payment Systems 
for Acute Care Hospitals and the Long[dash]Term Care Hospital 
Prospective Payment System and Proposed Policy Changes and Fiscal Year 
2019 Rates; Proposed Quality Reporting Requirements for Specific 
Providers; Proposed Medicare and Medicaid Electronic Health Record 
(EHR) Incentive Programs (Promoting Interoperability Programs) 
Requirements for Eligible Hospitals, Critical Access Hospitals, and 
Eligible Professionals; Medicare Cost Reporting Requirements; and 
Physician Certification and Recertification of Claims

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

ACTION: Proposed rule.

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SUMMARY: We are proposing to revise the Medicare hospital inpatient 
prospective payment systems (IPPS) for operating and capital-related 
costs of acute care hospitals to implement changes arising from our 
continuing experience with these systems for FY 2019. Some of these 
proposed changes implement certain statutory provisions contained in 
the 21st Century Cures Act and the Bipartisan Budget Act of 2018, and 
other legislation. We also are proposing to make changes relating to 
Medicare graduate medical education (GME) affiliation agreements for 
new urban teaching hospitals. In addition, we are proposing to provide 
the market basket update that would apply to the 
rate[dash]of[dash]increase limits for certain hospitals excluded from 
the IPPS that are paid on a reasonable cost basis subject to these 
limits for FY 2019. We are proposing to update the payment policies and 
the annual payment rates for the Medicare prospective payment system 
(PPS) for inpatient hospital services provided by long-term care 
hospitals (LTCHs) for FY 2019.
    In addition, we are proposing to establish new requirements or 
revise existing requirements for quality reporting by specific Medicare 
providers (acute care hospitals, PPS[dash]exempt cancer hospitals, and 
LTCHs). We also are proposing to establish new requirements or revise 
existing requirements for eligible professionals (EPs), eligible 
hospitals, and critical access hospitals (CAHs) participating in the 
Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs 
(now referred to as the Promoting Interoperability Programs). In 
addition, we are proposing changes to the requirements that apply to 
States operating Medicaid Promoting Interoperability Prrograms. We are 
proposing to update policies for the Hospital Value-Based Purchasing 
(VBP) Program, the Hospital Readmissions Reduction Program, and the 
Hospital-Acquired Condition (HAC) Reduction Program.
    We also are proposing to make changes relating to the required 
supporting documentation for an acceptable Medicare cost report 
submission and the supporting information for physician certification 
and recertification of claims.

DATES: Comment Period: To be assured consideration, comments must be 
received at one of the addresses provided in the ADDRESSES section, no 
later than 5 p.m. on June 25, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1694-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    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-1694-P, P.O. Box 8011, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1694-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786-4487, and 
Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRGs, 
Wage Index, New Medical Service and Technology Add-On Payments, 
Hospital Geographic Reclassifications, Graduate Medical Education, 
Capital Prospective Payment, Excluded Hospitals, Sole Community 
Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment 
Adjustment, Medicare[dash]Dependent Small Rural Hospital (MDH) Program, 
and Low-Volume Hospital Payment Adjustment Issues.
    Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and 
Emily Lipkin, (410) 786-3633, Long[dash]Term Care Hospital Prospective 
Payment System and MS-LTC-DRG Relative Weights Issues.
    Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital 
Demonstration Program Issues.
    Jeris Smith, (410) 786-0110, Frontier Community Health Integration 
Project Demonstration Issues.
    Cindy Tourison, (410) 786-1093, Hospital Readmissions Reduction 
Program--Readmission Measures for Hospitals Issues.
    James Poyer, (410) 786-2261, Hospital Readmissions Reduction 
Program--Administration Issues.
    Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition 
Reduction Program Issues.
    Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction 
Program--Measures Issues.
    Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261, 
Hospital Inpatient Quality Reporting and Hospital Value-Based 
Purchasing--Program Administration, Validation, and Reconsideration 
Issues.
    Reena Duseja, (410) 786-1999 and Cindy Tourison, (410) 786-1093, 
Hospital Inpatient Quality Reporting--Measures Issues Except Hospital 
Consumer Assessment of Healthcare Providers and Systems Issues; and 
Readmission Measures for Hospitals Issues.
    Kim Spalding Bush, (410) 786-3232, Hospital Value-Based Purchasing 
Efficiency Measures Issues.
    Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality 
Reporting--Hospital Consumer Assessment of Healthcare Providers and 
Systems Measures Issues.
    Joel Andress, (410) 786-5237 and Caitlin Cromer, (410) 786-3106, 
PPS-Exempt Cancer Hospital Quality Reporting Issues.
    Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data 
Reporting Issues.

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    Elizabeth Holland, (410) 786-1309, Promoting Interoperability 
Programs Clinical Quality Measure Related Issues.
    Kathleen Johnson, (410) 786-3295 and Steven Johnson (410) 786-3332, 
Promoting Interoperability Programs Nonclinical Quality Measure Related 
Issues.
    Kellie Shannon, (410) 786-0416, Acceptable Medicare Cost Report 
Submissions Issues.
    Thomas Kessler, (410) 786-1991, Physician Certification and 
Recertification of Claims.

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 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments.

Electronic Access

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

Tables Available Only Through the Internet on the CMS Website

    In the past, a majority of the tables referred to throughout this 
preamble and in the Addendum to the proposed rule and the final rule 
were published in the Federal Register as part of the annual proposed 
and final rules. However, beginning in FY 2012, the majority of the 
IPPS tables and LTCH PPS tables are no longer published in the Federal 
Register. Instead, these tables generally will be available only 
through the Internet. The IPPS tables for this proposed rule are 
available through the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the 
screen titled, ``FY 2019 IPPS Proposed Rule Home Page'' or ``Acute 
Inpatient--Files for Download''. The LTCH PPS tables for this FY 2019 
proposed rule are available through the Internet on the CMS website at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation 
Number CMS-1694-P. For further details on the contents of the tables 
referenced in this proposed rule, we refer readers to section VI. of 
the Addendum to this proposed rule.
    Readers who experience any problems accessing any of the tables 
that are posted on the CMS websites identified above should contact 
Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background
    A. Executive Summary
    B. Background Summary
    C. Summary of Provisions of Recent Legislation Proposed To Be 
Implemented in This Proposed Rule
    D. Summary of Provisions of This Proposed Rule
II. Proposed Changes to Medicare Severity Diagnosis-Related Group 
(MS-DRG) Classifications and Relative Weights
    A. Background
    B. MS-DRG Reclassifications
    C. Adoption of the MS-DRGs in FY 2008
    D. Proposed FY 2019 MS-DRG Documentation and Coding Adjustment
    E. Refinement of the MS-DRG Relative Weight Calculation
    F. Proposed Changes to Specific MS-DRG Classifications
    G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights
    H. Proposed Add-On Payments for New Services and Technologies 
for FY 2019
III. Proposed Changes to the Hospital Wage Index for Acute Care 
Hospitals
    A. Background
    B. Worksheet S-3 Wage Data for the Proposed FY 2019 Wage Index
    C. Verification of Worksheet S-3 Wage Data
    D. Method for Computing the Proposed FY 2019 Unadjusted Wage 
Index
    E. Proposed Occupational Mix Adjustment to the FY 2019 Wage 
Index
    F. Analysis and Implementation of the Proposed Occupational Mix 
Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage 
Index
    G. Proposed Application of the Rural, Imputed, and Frontier 
Floors
    H. Proposed FY 2019 Wage Index Tables
    I. Proposed Revisions to the Wage Index Based on Hospital 
Redesignations and Reclassifications
    J. Proposed Out-Migration Adjustment Based on Commuting Patterns 
of Hospital Employees
    K. Reclassification From Urban to Rural Under Section 
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103 and Proposed 
Change to Lock-In Date
    L. Process for Requests for Wage Index Data Corrections
    M. Proposed Labor-Related Share for the Proposed FY 2019 Wage 
Index
    N. Request for Public Comments on Wage Index Disparities
IV. Other Decisions and Proposed Changes to the IPPS for Operating 
System
    A. Proposed Changes to MS-DRGs Subject to Postacute Care 
Transfer Policy and MS-DRG Special Payment Policies (Sec.  412.4)
    B. Proposed Changes in the Inpatient Hospital Updates for FY 
2019 (Sec.  412.64(d))
    C. Rural Referral Centers (RRCs) Proposed Annual Updates to 
Case-Mix Index and Discharge Criteria (Sec.  412.96)
    D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.  
412.101)
    E. Indirect Medical Education (IME) Payment Adjustment Factor 
(Sec.  412.105)
    F. Proposed Payment Adjustment for Medicare Disproportionate 
Share Hospitals (DSHs) for FY 2019 (Sec.  412.106)
    G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small 
Rural Hospitals (MDHs) (Sec. Sec.  412.90, 412.92, and 412.108)
    H. Hospital Readmissions Reduction Program: Proposed Updates and 
Changes (Sec. Sec.  412.150 Through 412.154)
    I. Hospital Value-Based Purchasing (VBP) Program: Proposed 
Policy Changes
    J. Hospital-Acquired Condition (HAC) Reduction Program
    K. Payments for Indirect and Direct Graduate Medical Education 
Costs (Sec. Sec.  412.105 and 413.75 Through 413.83)
    L. Rural Community Hospital Demonstration Program
    M. Proposed Revision of Hospital Inpatient Admission Orders 
Documentation Requirements Under Medicare Part A
V. Proposed Changes to the IPPS for Capital-Related Costs
    A. Overview
    B. Additional Provisions
    C. Proposed Annual Update for FY 2019
VI. Proposed Changes for Hospitals Excluded From the IPPS
    A. Proposed Rate-of-Increase in Payments to Excluded Hospitals 
for FY 2019
    B. Proposed Changes to Regulations Governing Satellite 
Facilities
    C. Proposed Changes to Regulations Governing Excluded Units of 
Hospitals
    D. Critical Access Hospitals (CAHs)
VII. Proposed Changes to the Long-Term Care Hospital Prospective 
Payment System (LTCH PPS) for FY 2019
    A. Background of the LTCH PPS
    B. Proposed Medicare Severity Long-Term Care Diagnosis-Related 
Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2019
    C. Proposed Modifications to the Application of the Site Neutral 
Payment Rate (Sec.  412.522)
    D. Proposed Changes to the LTCH PPS Payment Rates and Other 
Proposed Changes to the LTCH PPS for FY 2019
    E. Proposed Elimination of the ``25-Percent Threshold Policy'' 
Adjustment (Sec.  412.538)
VIII. Quality Data Reporting Requirements for Specific Providers and 
Suppliers
    A. Hospital Inpatient Quality Reporting (IQR) Program
    B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
    C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    D. Proposed Changes to the Medicare and Medicaid EHR Incentive 
Programs (Now Referred to as the Medicare and Medicaid Promoting 
Interoperability Programs)

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IX. Proposed Revisions of the Supporting Documentation Required for 
Submission of an Acceptable Medicare Cost Report
X. Requirements for Hospitals To Make Public a List of Their 
Standard Charges via the Internet
XI. Proposed Revisions Regarding Physician Certification and 
Recertification of Claims
XII. Request for Information on Promoting Interoperability and 
Electronic Healthcare Information Exchange Through Possible 
Revisions to the CMS Patient Health and Safety Requirements for 
Hospitals and Other Medicare- and Medicaid-Participating Providers 
and Suppliers
XIII. MedPAC Recommendations
XIV. Other Required Information
    A. Publicly Available Data
    B. Collection of Information Requirements
    C. Response to Public Comments
Regulation Text
Addendum--Proposed Schedule of Proposed Standardized Amounts, Update 
Factors, Rate[dash]of[dash]Increase Percentages Effective With Cost 
Reporting Periods Beginning on or After October 1, 2018, and Payment 
Rates for LTCHs Effective for Discharges Occurring on or After 
October 1, 2018
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital 
Inpatient Operating Costs for Acute Care Hospitals for FY 2019
    A. Calculation of the Adjusted Standardized Amount
    B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
    C. Calculation of the Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital 
Inpatient Capital[dash]Related Costs for FY 2019
    A. Determination of Federal Hospital Inpatient 
Capital[dash]Related Prospective Payment Rate Update for FY 2019
    B. Calculation of the Inpatient Capital[dash]Related Prospective 
Payments for FY 2019
    C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals: 
Rate[dash]of[dash]Increase Percentages for FY 2019
V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 
2019
    A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019
    B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS 
for FY 2019
    C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs 
Located in Alaska and Hawaii
    D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO) 
Cases
    E. Proposed Update to the IPPS Comparable/Equivalent Amounts To 
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment 
Methodology
    F. Computing the Proposed Adjusted LTCH PPS Federal Prospective 
Payments for FY 2019
VI. Tables Referenced in This Proposed Rule Generally Available Only 
Through the Internet on the CMS Website
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Objectives of the IPPS and the LTCH PPS
    D. Limitations of Our Analysis
    E. Hospitals Included in and Excluded From the IPPS
    F. Effects on Hospitals and Hospital Units Excluded From the 
IPPS
    G. Quantitative Effects of the Proposed Policy Changes Under the 
IPPS for Operating Costs
    H. Effects of Other Proposed Policy Changes
    I. Effects of Proposed Changes in the Capital IPPS
    J. Effects of Proposed Payment Rate Changes and Policy Changes 
Under the LTCH PPS
    K. Effects of Proposed Requirements for Hospital Inpatient 
Quality Reporting (IQR) Program
    L. Effects of Proposed Requirements for the PPS-Exempt Cancer 
Hospital Quality Reporting (PCHQR) Program
    M. Effects of Proposed Requirements for the Long-Term Care 
Hospital Quality Reporting Program (LTCH QRP)
    N. Effects of Proposed Requirements Regarding the Promoting 
Interoperability Programs
    O. Alternatives Considered
    P. Reducing Regulation and Controlling Regulatory Costs
    Q. Overall Conclusion
    R. Regulatory Review Costs
II. Accounting Statements and Tables
    A. Acute Care Hospitals
    B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866
Appendix B--Recommendation of Update Factors for Operating Cost 
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2019
    A. Proposed FY 2019 Inpatient Hospital Update
    B. Proposed Update for SCHs and MDHs for FY 2019
    C. Proposed FY 2019 Puerto Rico Hospital Update
    D. Proposed Update for Hospitals Excluded From the IPPS for FY 
2019
    E. Proposed Update for LTCHs for FY 2019
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and 
Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority
    This proposed rule would make payment and policy changes under the 
Medicare inpatient prospective payment systems (IPPS) for operating and 
capital[dash]related costs of acute care hospitals as well as for 
certain hospitals and hospital units excluded from the IPPS. In 
addition, it would make payment and policy changes for inpatient 
hospital services provided by long-term care hospitals (LTCHs) under 
the long[dash]term care hospital prospective payment system (LTCH PPS). 
This proposed rule also would make policy changes to programs 
associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and 
LTCHs.
    We are proposing to establish new requirements and revise existing 
requirements for quality reporting by specific providers (acute care 
hospitals, PPS[dash]exempt cancer hospitals, and LTCHs) that are 
participating in Medicare. We also are proposing to establish new 
requirements and revise existing requirements for eligible 
professionals (EPs), eligible hospitals, and CAHs participating in the 
Medicare and Medicaid Promoting Interoperability Programs. We are 
proposing to update policies for the Hospital Value[dash]Based 
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, 
and the Hospital-Acquired Condition (HAC) Reduction Program.
    We also are proposing to make changes relating to the supporting 
documentation required for an acceptable Medicare cost report 
submission and the supporting information for physician certification 
and recertification of claims.
    Under various statutory authorities, we are proposing to make 
changes to the Medicare IPPS, to the LTCH PPS, and to other related 
payment methodologies and programs for FY 2019 and subsequent fiscal 
years. These statutory authorities include, but are not limited to, the 
following:
     Section 1886(d) of the Social Security Act (the Act), 
which sets forth a system of payment for the operating costs of acute 
care hospital inpatient stays under Medicare Part A (Hospital 
Insurance) based on prospectively set rates. Section 1886(g) of the Act 
requires that, instead of paying for capital-related costs of inpatient 
hospital services on a reasonable cost basis, the Secretary use a 
prospective payment system (PPS).
     Section 1886(d)(1)(B) of the Act, which specifies that 
certain hospitals and hospital units are excluded from the IPPS. These 
hospitals and units are: Rehabilitation hospitals and units; LTCHs; 
psychiatric hospitals and units; children's hospitals; cancer 
hospitals; extended neoplastic disease care hospitals, and hospitals 
located outside the 50 States, the District of Columbia, and Puerto 
Rico (that is, hospitals located in the U.S. Virgin Islands,

[[Page 20167]]

Guam, the Northern Mariana Islands, and American Samoa). Religious 
nonmedical health care institutions (RNHCIs) are also excluded from the 
IPPS.
     Sections 123(a) and (c) of the BBRA (Pub. L. 106[dash]113) 
and section 307(b)(1) of the BIPA (Pub. L. 106[dash]554) (as codified 
under section 1886(m)(1) of the Act), which provide for the development 
and implementation of a prospective payment system for payment for 
inpatient hospital services of LTCHs described in section 
1886(d)(1)(B)(iv) of the Act.
     Sections 1814(l), 1820, and 1834(g) of the Act, which 
specify that payments are made to critical access hospitals (CAHs) 
(that is, rural hospitals or facilities that meet certain statutory 
requirements) for inpatient and outpatient services and that these 
payments are generally based on 101 percent of reasonable cost.
     Section 1866(k) of the Act, as added by section 3005 of 
the Affordable Care Act, which establishes a quality reporting program 
for hospitals described in section 1886(d)(1)(B)(v) of the Act, 
referred to as ``PPS-exempt cancer hospitals.''
     Section 1886(a)(4) of the Act, which specifies that costs 
of approved educational activities are excluded from the operating 
costs of inpatient hospital services. Hospitals with approved graduate 
medical education (GME) programs are paid for the direct costs of GME 
in accordance with section 1886(h) of the Act.
     Section 1886(b)(3)(B)(viii) of the Act, which requires the 
Secretary to reduce the applicable percentage increase that would 
otherwise apply to the standardized amount applicable to a subsection 
(d) hospital for discharges occurring in a fiscal year if the hospital 
does not submit data on measures in a form and manner, and at a time, 
specified by the Secretary.
     Section 1886(o) of the Act, which requires the Secretary 
to establish a Hospital Value-Based Purchasing (VBP) Program under 
which value-based incentive payments are made in a fiscal year to 
hospitals meeting performance standards established for a performance 
period for such fiscal year.
     Section 1886(p) of the Act, as added by section 3008 of 
the Affordable Care Act, which establishes a Hospital-Acquired 
Condition (HAC) Reduction Program, under which payments to applicable 
hospitals are adjusted to provide an incentive to reduce hospital-
acquired conditions.
     Section 1886(q) of the Act, as added by section 3025 of 
the Affordable Care Act and amended by section 10309 of the Affordable 
Care Act and section 15002 of the 21st Century Cures Act, which 
establishes the ``Hospital Readmissions Reduction Program.'' Under the 
program, payments for discharges from an ``applicable hospital'' under 
section 1886(d) of the Act will be reduced to account for certain 
excess readmissions. Section 15002 of the 21st Century Cures Act 
requires the Secretary to compare cohorts of hospitals to each other in 
determining the extent of excess readmissions.
     Section 1886(r) of the Act, as added by section 3133 of 
the Affordable Care Act, which provides for a reduction to 
disproportionate share hospital (DSH) payments under section 
1886(d)(5)(F) of the Act and for a new uncompensated care payment to 
eligible hospitals. Specifically, section 1886(r) of the Act requires 
that, for fiscal year 2014 and each subsequent fiscal year, subsection 
(d) hospitals that would otherwise receive a DSH payment made under 
section 1886(d)(5)(F) of the Act will receive two separate payments: 
(1) 25 percent of the amount they previously would have received under 
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified 
amount''), and (2) an additional payment for the DSH hospital's 
proportion of uncompensated care, determined as the product of three 
factors. These three factors are: (1) 75 percent of the payments that 
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 
minus the percent change in the percent of individuals who are 
uninsured (minus 0.2 percentage point for FY 2018 through FY 2019); and 
(3) a hospital's uncompensated care amount relative to the 
uncompensated care amount of all DSH hospitals expressed as a 
percentage.
     Section 1886(m)(6) of the Act, as added by section 1206(c) 
of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 
(Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan 
Budget Act of 2018 (Pub. L. 115-123), which provided for the 
establishment of site neutral payment rate criteria under the LTCH PPS 
with implementation beginning in FY 2016, and provides for a 4-year 
transitional blended payment rate for discharges occurring in LTCH cost 
reporting periods beginning in FYs 2016 through 2019. Section 51005(b) 
of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B)(ii) 
by adding new clause (iv), which specifies that the IPPS comparable 
amount defined in subclause (I) shall be reduced by 4.6 percent for FYs 
2018 through 2026.
     Section 1886(m)(6) of the Act, as amended by section 15009 
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a 
temporary exception to the application of the site neutral payment rate 
under the LTCH PPS for certain spinal cord specialty hospitals for 
discharges in cost reporting periods beginning during FYs 2018 and 
2019.
     Section 1886(m)(6) of the Act, as amended by section 15010 
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a 
temporary exception to the application of the site neutral payment rate 
under the LTCH PPS for certain LTCHs with certain discharges with 
severe wounds occurring in cost reporting periods beginning during FY 
2018.
     Section 1886(m)(5)(D)(iv) of the Act, as added by section 
1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 
2013 (Pub. L. 113-67), which provides for the establishment of a 
functional status quality measure in the LTCH QRP for change in 
mobility among inpatients requiring ventilator support.
     Section 1899B of the Act, as added by section 2(a) of the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act, Pub. L. 113-185), which provides for the establishment of 
standardized data reporting for certain post-acute care providers, 
including LTCHs.
2. Improving Patient Outcomes and Reducing Burden Through Meaningful 
Measures
    Regulatory reform and reducing regulatory burden are high 
priorities for CMS. To reduce the regulatory burden on the healthcare 
industry, lower health care costs, and enhance patient care, in October 
2017, we launched the Meaningful Measures Initiative.\1\ This 
initiative is one component of our agency-wide Patients Over Paperwork 
Initiative,\2\ which is aimed at evaluating and streamlining 
regulations with a goal to reduce unnecessary cost and burden, increase 
efficiencies, and improve beneficiary experience. The Meaningful 
Measures Initiative is aimed at identifying the highest priority areas 
for quality measurement and quality improvement in order to assess the 
core quality of care issues that are most vital

[[Page 20168]]

to advancing our work to improve patient outcomes. The Meaningful 
Measures Initiative represents a new approach to quality measures that 
will foster operational efficiencies and will reduce costs, including 
collection and reporting burden while producing quality measurement 
that is more focused on meaningful outcomes.
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    \1\ Meaningful Measures webpage: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
    \2\ Remarks by Administrator Seema Verma at the Health Care 
Payment Learning and Action Network (LAN) Fall Summit, as prepared 
for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
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    The Meaningful Measures framework has the following objectives:
     Address high-impact measure areas that safeguard public 
health;
     Patient-centered and meaningful to patients;
     Outcome-based where possible;
     Fulfill each program's statutory requirements;
     Minimize the level of burden for health care providers 
(for example, through a preference for EHR-based measures where 
possible, such as electronic clinical quality measures; \3\
---------------------------------------------------------------------------

    \3\ Refer to section VIII.A.9.c.of the preamble of this proposed 
rule where we are seeking public comment on the potential future 
development and adoption of eCQMs.
---------------------------------------------------------------------------

     Significant opportunity for improvement;
     Address measure needs for population based payment through 
alternative payment models; and
     Align across programs and/or with other payers.
    In order to achieve these objectives, we have identified 19 
Meaningful Measures areas and mapped them to six overarching quality 
priorities as shown in the following table:

------------------------------------------------------------------------
            Quality priority                 Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm       Healthcare-Associated
 Caused in the Delivery of Care.          Infections
                                         Preventable Healthcare Harm
Strengthen Person and Family Engagement  Care is Personalized and
 as Partners in Their Care.               Aligned with Patient's Goals
                                         End of Life Care According to
                                          Preferences
                                         Patient's Experience of Care
                                         Patient Reported Functional
                                          Outcomes
Promote Effective Communication and      Medication Management
 Coordination of Care.                   Admissions and Readmissions to
                                          Hospitals
                                         Transfer of Health Information
                                          and Interoperability
Promote Effective Prevention and         Preventive Care
 Treatment of Chronic Disease.           Management of Chronic
                                          Conditions
                                         Prevention, Treatment, and
                                          Management of Mental Health
                                         Prevention and Treatment of
                                          Opioid and Substance Use
                                          Disorders
                                         Risk Adjusted Mortality
Work with Communities to Promote Best    Equity of Care
 Practices of Healthy Living.            Community Engagement
Make Care Affordable...................  Appropriate Use of Healthcare
                                         Patient-focused Episode of Care
                                         Risk Adjusted Total Cost of
                                          Care
------------------------------------------------------------------------

    By including Meaningful Measures in our programs, we believe that 
we can also address the following cross-cutting measure criteria:
     Eliminating disparities;
     Tracking measurable outcomes and impact;
     Safeguarding public health;
     Achieving cost savings;
     Improving access for rural communities; and
     Reducing burden.
    We believe that the Meaningful Measures Initiative will improve 
outcomes for patients, their families, and health care providers while 
reducing burden and costs for clinicians and providers as well as 
promoting operational efficiencies.
3. Summary of the Major Provisions
    Below we provide a summary of the major provisions in this proposed 
rule. In general, these major provisions are being proposed as part of 
the annual update to the payment policies and payment rates, consistent 
with the applicable statutory provisions. A general summary of the 
proposed changes included in this proposed rule is presented below in 
section I.D. of this preamble.
a. MS-DRG Documentation and Coding Adjustment
    Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. 
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require 
the Secretary to make a recoupment adjustment to the standardized 
amount of Medicare payments to acute care hospitals to account for 
changes in MS-DRG documentation and coding that do not reflect real 
changes in case-mix, totaling $11 billion over a 4-year period of FYs 
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments 
represented the amount of the increase in aggregate payments as a 
result of not completing the prospective adjustment authorized under 
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the 
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment 
we intended to make in FY 2018 with a 0.5 percent positive adjustment 
to the standardized amount of Medicare payments to acute care hospitals 
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) Therefore, for FY 2019, we are proposing to make an adjustment of 
+0.5 percent to the standardized amount.
b. Expansion of the Postacute Care Transfer Policy
    Section 53109 of the Bipartisan Budget Act of 2018 amended section 
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care 
by a hospice program as a qualified discharge, effective for discharges 
occurring on or after October 1, 2018. Accordingly, we are proposing to 
make conforming amendments to Sec.  412.4(c) of the regulation, 
effective for discharges on or after October 1, 2018, to specify that 
if a discharge is assigned to one of the MS-DRGs subject to the 
postacute care transfer policy and the individual is transferred to 
hospice care by a hospice program, the discharge would be subject to 
payment as a transfer case.
c. DSH Payment Adjustment and Additional Payment for Uncompensated Care
    Section 3133 of the Affordable Care Act modified the Medicare

[[Page 20169]]

disproportionate share hospital (DSH) payment methodology beginning in 
FY 2014. Under section 1886(r) of the Act, which was added by section 
3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25 
percent of the amount they previously would have received under the 
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of 
the Act. The remaining amount, equal to 75 percent of the amount that 
otherwise would have been paid as Medicare DSH payments, is paid as 
additional payments after the amount is reduced for changes in the 
percentage of individuals that are uninsured. Each Medicare DSH will 
receive an additional payment based on its share of the total amount of 
uncompensated care for all Medicare DSHs for a given time period.
    In this proposed rule, we are proposing to update our estimates of 
the three factors used to determine uncompensated care payments for FY 
2019. We are continuing to use uninsured estimates produced by CMS' 
Office of the Actuary (OACT) as part of the development of the National 
Health Expenditure Accounts (NHEA) in the calculation of Factor 2. We 
also are continuing to incorporate data from Worksheet S-10 in the 
calculation of hospitals' share of the aggregate amount of 
uncompensated care by combining data on uncompensated care costs from 
Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a 
hospital's share of low-income insured days for FY 2013 to determine 
Factor 3 for FY 2019. In addition, we are proposing to use only data 
regarding low-income insured days for FY 2013 to determine the amount 
of uncompensated care payments for Puerto Rico hospitals, Indian Health 
Service and Tribal hospitals, and all-inclusive rate providers. For 
this proposed rule, we also are proposing the following policies: (1) 
For providers with multiple cost reports beginning in the same fiscal 
year, to use the longest cost report and annualize Medicaid data and 
uncompensated care data if a hospital's cost report does not equal 12 
months of data; (2) in the rare case where a provider has multiple cost 
reports beginning in the same fiscal year, but one report also spans 
the entirety of the following fiscal year such that the hospital has no 
cost report for that fiscal year, the cost report that spans both 
fiscal years would be used for the latter fiscal year; and (3) to apply 
statistical trim methodologies to potentially aberrant cost-to-charge 
ratios (CCRs) and potentially aberrant uncompensated care costs 
reported on the Worksheet S-10.
d. Proposed Changes to the LTCH PPS
    In this proposed rule, we set forth proposed changes to the LTCH 
PPS Federal payment rates, factors, and other payment rate policies 
under the LTCH PPS for FY 2019. In addition, we are proposing to 
eliminate the 25-percent threshold policy, and under this proposal we 
would apply a one-time permanent adjustment of approximately -0.9 
percent to the LTCH PPS standard Federal payment rate to ensure this 
proposed elimination of the 25-percent threshold policy is budget 
neutral.
e. Reduction of Hospital Payments for Excess Readmissions
    We are proposing to make changes to policies for the Hospital 
Readmissions Reduction Program, which is established under section 
1886(q) of the Act, as added by section 3025 of the Affordable Care 
Act, as amended by section 10309 of the Affordable Care Act and further 
amended by section 15002 of the 21st Century Cures Act. The Hospital 
Readmissions Reduction Program requires a reduction to a hospital's 
base operating DRG payment to account for excess readmissions of 
selected applicable conditions. For FY 2018 and subsequent years, the 
reduction is based on a hospital's risk-adjusted readmission rate 
during a 3-year period for acute myocardial infarction (AMI), heart 
failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), 
total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary 
artery bypass graft (CABG). In this proposed rule, we are proposing to 
establish the applicable periods for FY 2019, FY 2020, and FY 2021. We 
are also proposing to codify the definitions of dual-eligible patients, 
the proportion of dual-eligibles, and the applicable period for dual-
eligibility.
f. Hospital Value-Based Purchasing (VBP) Program
    Section 1886(o) of the Act requires the Secretary to establish a 
Hospital VBP Program under which value-based incentive payments are 
made in a fiscal year to hospitals based on their performance on 
measures established for a performance period for such fiscal year. As 
part of agency-wide efforts under the Meaningful Measures Initiative to 
use a parsimonious set of the most meaningful measures for patients, 
clinicians, and providers in our quality programs and the Patients Over 
Paperwork Initiative to reduce costs and burden and program complexity 
as discussed in section I.A.2. of the preamble of this proposed rule, 
we are proposing to remove a total of 10 measures from the Hospital VBP 
Program, all of which would continue to be used in the Hospital IQR 
Program or the HAC Reduction Program, in order to reduce the costs and 
complexity of tracking these measures in multiple programs. We also are 
proposing to adopt measure removal factors for the Hospital VBP 
Program. Specifically, we are proposing to remove six measures 
beginning with the FY 2021 program year: (1) Elective Delivery (NQF 
#0469) (PC-01); (2) National Healthcare Safety Network (NHSN) Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); 
(3) National Healthcare Safety Network (NHSN) Central Line-Associated 
Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (4) 
American College of Surgeons-Centers for Disease Control and Prevention 
(ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) 
Outcome Measure (NQF #0753); (5) National Healthcare Safety Network 
(NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant 
Staphylococcus aureus Bacteremia (MRSA) Outcome Measure (NQF #1716); 
and (6) National Healthcare Safety Network (NHSN) Facility-wide 
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome 
Measure (NQF #1717). We are also proposing to remove four measures from 
the Hospital VBP Program effective with the effective date of the FY 
2019 IPPS/LTCH PPS final rule: (1) Patient Safety and Adverse Events 
(Composite) (NQF #0531) (PSI 90); (2) Hospital-Level, Risk-Standardized 
Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial 
Infarction (NQF #2431) (AMI Payment); (3) Hospital-Level, Risk-
Standardized Payment Associated With a 30-Day Episode-of-Care for Heart 
Failure (NQF #2436) (HF Payment); and (4) Hospital-Level, Risk-
Standardized Payment Associated With a 30-Day Episode-of-Care for 
Pneumonia (PN Payment) (NQF #2579). In addition, we are proposing to 
rename the Clinical Care domain as the Clinical Outcomes domain 
beginning with the FY 2020 program year; we are proposing to remove the 
Safety domain from the Hospital VBP Program, if our proposals to 
removal all of the measures in this domain are finalized, and to weight 
the three remaining domains as follows: Clinical Outcomes domain--50 
percent; Person and Community Engagement domain--25 percent; and 
Efficiency and Cost Reduction domain--25 percent.

[[Page 20170]]

g. Hospital-Acquired Condition (HAC) Reduction Program
    Section 1886(p) of the Act, as added under section 3008(a) of the 
Affordable Care Act, establishes an incentive to hospitals to reduce 
the incidence of hospital-acquired conditions by requiring the 
Secretary to make an adjustment to payments to applicable hospitals 
effective for discharges beginning on October 1, 2014. This 1-percent 
payment reduction applies to a hospital whose ranking in the worst-
performing quartile (25 percent) of all applicable hospitals, relative 
to the national average, of conditions acquired during the applicable 
period and on all of the hospital's discharges for the specified fiscal 
year. As part of our agency-wide Patients over Paperwork and Meaningful 
Measures Initiatives, discussed in section I.A.2. of the preamble of 
this proposed rule, we are proposing that the measures currently 
included in the HAC Reduction Program should be retained because the 
measures address a performance gap in patient safety and reducing harm 
caused in the delivery of care. In this proposed rule, we are proposing 
to: (1) Establish administrative policies to collect, validate, and 
publicly report NHSN healthcare-associated infection (HAI) quality 
measure data that facilitate a seamless transition, independent of the 
Hospital IQR Program, beginning with January 1, 2019 infectious events; 
(2) change the scoring methodology by removing domains and assigning 
equal weighting to each measure for which a hospital has a measure; and 
(3) establish the applicable period for FY 2021. In addition, we are 
seeking stakeholder comment regarding the potential future inclusion of 
additional measures, including eCQMs.
h. Hospital Inpatient Quality Reporting (IQR) Program
    Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) 
hospitals are required to report data on measures selected by the 
Secretary for a fiscal year in order to receive the full annual 
percentage increase that would otherwise apply to the standardized 
amount applicable to discharges occurring in that fiscal year.
    In this proposed rule, we are proposing several changes. As part of 
agency-wide efforts under the Meaningful Measures Initiative to use a 
parsimonious set of the most meaningful measures for patients and 
clinicians in our quality programs and the Patients Over Paperwork 
initiative to reduce burden, cost, and program complexity as discussed 
in section I.A.2. of the preamble of this proposed rule, we are 
proposing to add a new measure removal factor and to remove a total of 
39 measures from the Hospital IQR Program. For a full list of measures 
proposed for removal, we refer readers to section VIII.A.4.b. of the 
preamble of this proposed rule. Beginning with the CY 2018 reporting 
period/FY 2020 payment determination and subsequent years, we are 
proposing to remove 17 claims-based measures and two structural 
measures. Beginning with the CY 2019 reporting period/FY 2021 payment 
determination and subsequent years, we are proposing to remove eight 
chart-abstracted measures and two claims-based measures. Beginning with 
the CY 2020 reporting period/FY 2022 payment determination and 
subsequent years, we are proposing to remove one chart-abstracted 
measure, one claims[dash]based measure, and seven eCQMs from the 
Hospital IQR Program measure set. Beginning with the CY 2021 reporting 
period/FY 2023 payment determination, we are proposing to remove one 
claims-based measure.
    In addition, for the CY 2019 reporting period/FY 2021 payment 
determination, we are proposing to: (1) Require the same eCQM reporting 
requirements that were adopted for the CY 2018 reporting period/FY 2020 
payment determination (82 FR 38355 through 38361), such that hospitals 
submit one, self-selected calendar quarter of 2019 discharge data for 4 
eCQMs in the Hospital IQR Program measure set; and (2) require that 
hospitals use the 2015 Edition certification criteria for CEHRT. These 
proposals are in alignment with proposals or current established 
policies under the Medicare and Medicaid Promoting Interoperability 
Programs (previously known as the Medicare and Medicaid EHR Incentive 
Programs). In addition, we are seeking public comment on two measures 
for potential future inclusion in the Hospital IQR Program, as well as 
the potential future development and adoption of electronic clinical 
quality measures generally.
i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    The LTCH QRP is authorized by section 1886(m)(5) of the Act and 
applies to all hospitals certified by Medicare as long-term care 
hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2 
percentage points the annual update to the LTCH PPS standard Federal 
rate for discharges for an LTCH during a fiscal year if the LTCH fails 
to submit data in accordance with the LTCH QRP requirements specified 
for that fiscal year. As part of agency-wide efforts under the 
Meaningful Measures Initiative to use a parsimonious set of the most 
meaningful measures for patients and clinicians in our quality programs 
and the Patients Over Paperwork Initiative to reduce cost and burden 
and program complexity as discussed in section I.A.2. of the preamble 
of this proposed rule, we are proposing to remove three measures from 
the LTCH QRP. We also are proposing to adopt a new measure removal 
factor and are proposing to codify the measure removal factors in our 
regulations. In addition, we are proposing to update our regulations to 
change methods by which an LTCH is notified of noncompliance with the 
requirements of the LTCH QRP for a program year; and how CMS will 
notify an LTCH of a reconsideration decision.
4. Summary of Costs and Benefits
     Adjustment for MS-DRG Documentation and Coding Changes. 
Section 414 of the MACRA replaced the single positive adjustment we 
intended to make in FY 2018 once the recoupment required by section 631 
of the ATRA was complete with a 0.5 percent positive adjustment to the 
standardized amount of Medicare payments to acute care hospitals for 
FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) For FY 2019, we are proposing to make an adjustment of +0.5 
percent to the standardized amount consistent with the MACRA.
     Expansion of the Postacute Care Transfer Policy. Section 
53109 of the Bipartisan Budget Act of 2018 amended section 
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care 
by a hospice program as a qualified discharge, effective for discharges 
occurring on or after October 1, 2018. Accordingly, we are proposing to 
make conforming amendments to Sec.  412.4(c) of the regulation to 
specify that, effective for discharges on or after October 1, 2018, if 
a discharge is assigned to one of the MS-DRGs subject to the postacute 
care transfer policy and the individual is transferred to hospice care 
by a hospice program, the discharge would be subject to payment as a 
transfer case. We estimate that this statutory expansion to the 
postacute care transfer policy will reduce Medicare payments under the 
IPPS by approximately $240 million in FY 2019.
     Proposed Medicare DSH Payment Adjustment and Additional 
Payment for Uncompensated Care. Under section 1886(r) of the Act (as 
added by section 3133 of the Affordable Care Act), DSH payments to 
hospitals under section

[[Page 20171]]

1886(d)(5)(F) of the Act are reduced and an additional payment for 
uncompensated care is made to eligible hospitals beginning in FY 2014. 
Hospitals that receive Medicare DSH payments receive 25 percent of the 
amount they previously would have received under the statutory formula 
for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The 
remainder, equal to an estimate of 75 percent of what otherwise would 
have been paid as Medicare DSH payments, is the basis for determining 
the additional payments for uncompensated care after the amount is 
reduced for changes in the percentage of individuals that are uninsured 
and additional statutory adjustments. Each hospital that receives 
Medicare DSH payments will receive an additional payment for 
uncompensated care based on its share of the total uncompensated care 
amount reported by Medicare DSHs. The reduction to Medicare DSH 
payments is not budget neutral.
    For FY 2019, we are proposing to update our estimates of the three 
factors used to determine uncompensated care payments. We are 
continuing to use uninsured estimates produced by OACT as part of the 
development of the NHEA in the calculation of Factor 2. We also are 
continuing to incorporate data from Worksheet S-10 in the calculation 
of hospitals' share of the aggregate amount of uncompensated care by 
combining data on uncompensated care costs from Worksheet S-10 for FY 
2014 and FY 2015 with proxy data regarding a hospital's share of low-
income insured days for FY 2013 to determine Factor 3 for FY 2019. To 
determine the amount of uncompensated care for Puerto Rico hospitals, 
Indian Health Service and Tribal hospitals, and all-inclusive rate 
providers, we are proposing to use only the data regarding low-income 
insured days for FY 2013. In addition, in this proposed rule, we are 
proposing the following policies: (1) For providers with multiple cost 
reports beginning in the same fiscal year, to use the longest cost 
report and annualize Medicaid data and uncompensated care data if a 
hospital's cost report does not equal 12 months of data; (2) in the 
rare case where a provider has multiple cost reports beginning in the 
same fiscal year, but one report also spans the entirety of the 
following fiscal year such that the hospital has no cost report for 
that fiscal year, the cost report that spans both fiscal years would be 
used for the latter fiscal year; and (3) to apply statistical trim 
methodologies to potentially aberrant CCRs and potentially aberrant 
uncompensated care costs.
    We are projecting that proposed estimated Medicare DSH payments, 
and additional payments for uncompensated care made for FY 2019, would 
increase payments overall by approximately 1.3 percent as compared to 
the estimate of overall payments, including Medicare DSH payments and 
uncompensated care payments that will be distributed in FY 2018. The 
additional payments have redistributive effects based on a hospital's 
uncompensated care amount relative to the uncompensated care amount for 
all hospitals that are estimated to receive Medicare DSH payments, and 
the calculated payment amount is not directly tied to a hospital's 
number of discharges.
     Proposed Update to the LTCH PPS Payment Rates and Other 
Payment Policies. Based on the best available data for the 409 LTCHs in 
our database, we estimate that the proposed changes to the payment 
rates and factors that we are presenting in the preamble and Addendum 
of this proposed rule, which reflects the continuation of the 
transition of the statutory application of the site neutral payment 
rate, the update to the LTCH PPS standard Federal payment rate for FY 
2019, and the proposed one-time permanent adjustment of approximately-
0.9 percent to the LTCH PPS standard Federal payment rate to ensure 
this proposed elimination of the 25[dash]percent threshold policy is 
budget neutral would result in an estimated decrease in payments in FY 
2019 of approximately $5 million.
     Proposed Changes to the Hospital Readmissions Reduction 
Program. For FY 2019 and subsequent years, the reduction is based on a 
hospital's risk-adjusted readmission rate during a 3-year period for 
acute myocardial infarction (AMI), heart failure (HF), pneumonia, 
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft 
(CABG). Overall, in this proposed rule, we estimate that 2,610 
hospitals would have their base operating DRG payments reduced by their 
determined proposed proxy FY 2019 hospital-specific readmission 
adjustment. As a result, we estimate that the Hospital Readmissions 
Reduction Program would save approximately $566 million in FY 2019.
     Value-Based Incentive Payments under the Hospital VBP 
Program. We estimate that there will be no net financial impact to the 
Hospital VBP Program for the FY 2019 program year in the aggregate 
because, by law, the amount available for value[dash]based incentive 
payments under the program in a given year must be equal to the total 
amount of base operating MS-DRG payment amount reductions for that 
year, as estimated by the Secretary. The estimated amount of base 
operating MS-DRG payment amount reductions for the FY 2019 program year 
and, therefore, the estimated amount available for value-based 
incentive payments for FY 2019 discharges is approximately $1.9 
billion.
     Proposed Changes to the HAC Reduction Program. A 
hospital's Total HAC score and its ranking in comparison to other 
hospitals in any given year depend on several different factors. Any 
significant impact due to the proposed HAC Reduction Program changes 
for FY 2019, including which hospitals would receive the adjustment, 
would depend on actual experience.
    The proposed removal of NHSN HAI measures from the Hospital IQR 
Program and the subsequent cessation of its validation processes for 
NHSN HAI measures and proposed creation of a validation process for the 
HAC Reduction program represent no net change in reporting burden 
across CMS hospital quality programs. However, if our proposal to 
remove HAI chart-abstracted measures from the Hospital IQR Program is 
finalized, we anticipate a total burden shift of 43,200 hours and 
approximately $1.6 million as a result of no longer needing to validate 
those HAI measures under the Hospital IQR Program and beginning the 
validation process under the HAC Reduction Program.
     Proposed Changes to the Hospital Inpatient Quality 
Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that 
our proposed requirements for the Hospital IQR Program would result in 
the following changes to costs and burdens related to information 
collection for this program compared to previously adopted 
requirements: (1) A total collection of information burden reduction of 
1,046,071 hours and a total cost reduction of approximately $38.3 
million for the CY 2019 reporting period/FY 2021 payment determination, 
due to the proposed removal of ED-1, IMM-2, and VTE-6 measures; and (2) 
a total collection of information burden reduction of 901,200 hours and 
a total cost reduction of $33 million for the CY 2020 reporting period/
FY 2022 payment determination, due to: (a) The proposed removal of ED-
2, and (b) validation of the NHSN HAI measures no longer being 
conducted under the Hospital IQR Program once the HAC Reduction Program 
begins validating these measures, as proposed in the preamble

[[Page 20172]]

of this proposed rule for the HAC Reduction Program.
    Further, we anticipate that the proposed removal of 39 measures 
would result in a reduction in costs unrelated to information 
collection. For example, it may be costly for health care providers to 
track the confidential feedback, preview reports, and publicly reported 
information on a measure where we use the measure in more than one 
program. Also, when measures are in multiple programs, maintaining the 
specifications for those measures, as well as the tools we need to 
collect, validate, analyze, and publicly report the measure data may 
result in costs to CMS. In addition, beneficiaries may find it 
confusing to see public reporting on the same measure in different 
programs. We anticipate that our proposals will reduce the above-
described costs.
     Proposed Changes Related to the LTCH QRP. In this proposed 
rule, we are proposing to remove three measures from the LTCH QRP, two 
measures beginning with the FY 2020 LTCH QRP and one measure beginning 
with the FY 2021 LTCH QRP. We also are proposing a new quality measure 
removal factor for the LTCH QRP. We estimate that the impact of these 
proposed changes is a reduction in costs of approximately $1,148 per 
LTCH annually or approximately $482,469 for all LTCHs annually.

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
    Section 1886(d) of the Social Security Act (the Act) sets forth a 
system of payment for the operating costs of acute care hospital 
inpatient stays under Medicare Part A (Hospital Insurance) based on 
prospectively set rates. Section 1886(g) of the Act requires the 
Secretary to use a prospective payment system (PPS) to pay for the 
capital[dash]related costs of inpatient hospital services for these 
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for 
hospital inpatient operating and capital-related costs is made at 
predetermined, specific rates for each hospital discharge. Discharges 
are classified according to a list of diagnosis[dash]related groups 
(DRGs).
    The base payment rate is comprised of a standardized amount that is 
divided into a labor-related share and a nonlabor-related share. The 
labor-related share is adjusted by the wage index applicable to the 
area where the hospital is located. If the hospital is located in 
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the 
DRG relative weight.
    If the hospital treats a high percentage of certain low-income 
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the 
disproportionate share hospital (DSH) adjustment, provides for a 
percentage increase in Medicare payments to hospitals that qualify 
under either of two statutory formulas designed to identify hospitals 
that serve a disproportionate share of low-income patients. For 
qualifying hospitals, the amount of this adjustment varies based on the 
outcome of the statutory calculations. The Affordable Care Act revised 
the Medicare DSH payment methodology and provides for a new additional 
Medicare payment that considers the amount of uncompensated care 
beginning on October 1, 2013.
    If the hospital is training residents in an approved residency 
program(s), it receives a percentage add-on payment for each case paid 
under the IPPS, known as the indirect medical education (IME) 
adjustment. This percentage varies, depending on the ratio of residents 
to beds.
    Additional payments may be made for cases that involve new 
technologies or medical services that have been approved for special 
add-on payments. To qualify, a new technology or medical service must 
demonstrate that it is a substantial clinical improvement over 
technologies or services otherwise available, and that, absent an 
add[dash]on payment, it would be inadequately paid under the regular 
DRG payment.
    The costs incurred by the hospital for a case are evaluated to 
determine whether the hospital is eligible for an additional payment as 
an outlier case. This additional payment is designed to protect the 
hospital from large financial losses due to unusually expensive cases. 
Any eligible outlier payment is added to the DRG-adjusted base payment 
rate, plus any DSH, IME, and new technology or medical service add-on 
adjustments.
    Although payments to most hospitals under the IPPS are made on the 
basis of the standardized amounts, some categories of hospitals are 
paid in whole or in part based on their hospital-specific rate, which 
is determined from their costs in a base year. For example, sole 
community hospitals (SCHs) receive the higher of a 
hospital[dash]specific rate based on their costs in a base year (the 
highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal 
rate based on the standardized amount. SCHs are the sole source of care 
in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act 
defines an SCH as a hospital that is located more than 35 road miles 
from another hospital or that, by reason of factors such as isolated 
location, weather conditions, travel conditions, or absence of other 
like hospitals (as determined by the Secretary), is the sole source of 
hospital inpatient services reasonably available to Medicare 
beneficiaries. In addition, certain rural hospitals previously 
designated by the Secretary as essential access community hospitals are 
considered SCHs.
    Under current law, the Medicare-dependent, small rural hospital 
(MDH) program is effective through FY 2022. Through and including FY 
2006, an MDH received the higher of the Federal rate or the Federal 
rate plus 50 percent of the amount by which the Federal rate was 
exceeded by the higher of its FY 1982 or FY 1987 hospital[dash]specific 
rate. For discharges occurring on or after October 1, 2007, but before 
October 1, 2022, an MDH receives the higher of the Federal rate or the 
Federal rate plus 75 percent of the amount by which the Federal rate is 
exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-
specific rate. MDHs are a major source of care for Medicare 
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act 
defines an MDH as a hospital that is located in a rural area (or, as 
amended by the Bipartisan Budget Act of 2018, a hospital located in a 
State with no rural area that meets certain statutory criteria), has 
not more than 100 beds, is not an SCH, and has a high percentage of 
Medicare discharges (not less than 60 percent of its inpatient days or 
discharges in its cost reporting year beginning in FY 1987 or in two of 
its three most recently settled Medicare cost reporting years).
    Section 1886(g) of the Act requires the Secretary to pay for the 
capital-related costs of inpatient hospital services in accordance with 
a prospective payment system established by the Secretary. The basic 
methodology for determining capital prospective payments is set forth 
in our regulations at 42 CFR 412.308 and 412.312. Under the capital 
IPPS, payments are adjusted by the same DRG for the case as they are 
under the operating IPPS. Capital IPPS payments are also adjusted for 
IME and DSH, similar to the adjustments made under the operating IPPS. 
In addition, hospitals may receive outlier payments for those cases 
that have unusually high costs.
    The existing regulations governing payments to hospitals under the 
IPPS are located in 42 CFR part 412, subparts A through M.

[[Page 20173]]

2. Hospitals and Hospital Units Excluded From the IPPS
    Under section 1886(d)(1)(B) of the Act, as amended, certain 
hospitals and hospital units are excluded from the IPPS. These 
hospitals and units are: Inpatient rehabilitation facility (IRF) 
hospitals and units; long-term care hospitals (LTCHs); psychiatric 
hospitals and units; children's hospitals; cancer hospitals; extended 
neoplastic disease care hospitals, and hospitals located outside the 50 
States, the District of Columbia, and Puerto Rico (that is, hospitals 
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, 
and American Samoa). Religious nonmedical health care institutions 
(RNHCIs) are also excluded from the IPPS. Various sections of the 
Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, 
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced 
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the 
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act 
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs 
for IRF hospitals and units, LTCHs, and psychiatric hospitals and units 
(referred to as inpatient psychiatric facilities (IPFs)). (We note that 
the annual updates to the LTCH PPS are included along with the IPPS 
annual update in this document. Updates to the IRF PPS and IPF PPS are 
issued as separate documents.) Children's hospitals, cancer hospitals, 
hospitals located outside the 50 States, the District of Columbia, and 
Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, 
Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs 
continue to be paid solely under a reasonable cost-based system subject 
to a rate[dash]of[dash]increase ceiling on inpatient operating costs. 
Similarly, extended neoplastic disease care hospitals are paid on a 
reasonable cost basis subject to a rate[dash]of[dash]increase ceiling 
on inpatient operating costs.
    The existing regulations governing payments to excluded hospitals 
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
    The Medicare prospective payment system (PPS) for LTCHs applies to 
hospitals described in section 1886(d)(1)(B)(iv) of the Act effective 
for cost reporting periods beginning on or after October 1, 2002. The 
LTCH PPS was established under the authority of sections 123 of the 
BBRA and section 307(b) of the BIPA (as codified under section 
1886(m)(1) of the Act). During the 5-year (optional) transition period, 
a LTCH's payment under the PPS was based on an increasing proportion of 
the LTCH Federal rate with a corresponding decreasing proportion based 
on reasonable cost principles. Effective for cost reporting periods 
beginning on or after October 1, 2006 through September 30, 2016, all 
LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the 
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the 
site neutral payment rate under the LTCH PPS, which made the LTCH PPS a 
dual rate payment system beginning in FY 2016. Under this statute, 
based on a rolling effective date that is linked to the date on which a 
given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are 
generally paid for discharges at the site neutral payment rate unless 
the discharge meets the patient criteria for payment at the LTCH PPS 
standard Federal payment rate. The existing regulations governing 
payment under the LTCH PPS are located in 42 CFR part 412, subpart O. 
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS 
in the same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
    Under sections 1814(l), 1820, and 1834(g) of the Act, payments made 
to critical access hospitals (CAHs) (that is, rural hospitals or 
facilities that meet certain statutory requirements) for inpatient and 
outpatient services are generally based on 101 percent of reasonable 
cost. Reasonable cost is determined under the provisions of section 
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
    Under section 1886(a)(4) of the Act, costs of approved educational 
activities are excluded from the operating costs of inpatient hospital 
services. Hospitals with approved graduate medical education (GME) 
programs are paid for the direct costs of GME in accordance with 
section 1886(h) of the Act. The amount of payment for direct GME costs 
for a cost reporting period is based on the hospital's number of 
residents in that period and the hospital's costs per resident in a 
base year. The existing regulations governing payments to the various 
types of hospitals are located in 42 CFR part 413.

C. Summary of Provisions of Recent Legislation Proposed To Be 
Implemented in This Proposed Rule

1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
    The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced 
new payment rules in the LTCH PPS. Under section 1206 of this law, 
discharges in cost reporting periods beginning on or after October 1, 
2015 under the LTCH PPS will receive payment under a site neutral rate 
unless the discharge meets certain patient[dash]specific criteria. In 
this proposed rule, we are continuing to update certain policies that 
implemented provisions under section 1206 of the Pathway for SGR Reform 
Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185)
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a 
number of changes that affect the Long-Term Care Hospital Quality 
Reporting Program (LTCH QRP). In this proposed rule, we are proposing 
to continue to implement portions of section 1899B of the Act, as added 
by section 2(a) of the IMPACT Act, which, in part, requires LTCHs, 
among other postacute care providers, to report standardized patient 
assessment data, data on quality measures, and data on resource use and 
other measures.
3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10)
    Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive 
adjustment to the standardized amount of Medicare payments to acute 
care hospitals for FYs 2018 through 2023. These adjustments follow the 
recoupment adjustment to the standardized amounts under section 1886(d) 
of the Act based upon the Secretary's estimates for discharges 
occurring from FYs 2014 through 2017 to fully offset $11 billion, in 
accordance with section 631 of the ATRA. The FY 2018 adjustment was 
subsequently adjusted to 0.4588 percent by section 15005 of the 21st 
Century Cures Act.
4. The 21st Century Cures Act (Pub. L. 114-255)
    The 21st Century Cures Act (Pub. L. 114-255), enacted on December 
13, 2016, contained the following provision affecting payments under 
the Hospital Readmissions Reduction Program,

[[Page 20174]]

which we are proposing to continue to implement in this proposed rule:
     Section 15002, which amended section 1886(q)(3) of the Act 
by adding subparagraphs (D) and (E), which requires the Secretary to 
develop a methodology for calculating the excess readmissions 
adjustment factor for the Hospital Readmissions Reduction Program based 
on cohorts defined by the percentage of dual-eligible patients (that 
is, patients who are eligible for both Medicare and full-benefit 
Medicaid coverage) cared for by a hospital. In this proposed rule, we 
are proposing to continue to implement changes to the payment 
adjustment factor to assess penalties based on a hospital's performance 
relative to other hospitals treating a similar proportion of dual-
eligible patients.
5. The Bipartisan Budget Act of 2018 (Pub. L. 115-123)
    The Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on 
February 9, 2018, contains provisions affecting payments under the IPPS 
and the LTCH PPS, which we are proposing to implement or continue to 
implement in this proposed rule:
     Section 50204 amended section 1886(d)(12) of the Act to 
provide for certain temporary changes to the low-volume hospital 
payment adjustment policy for FYs 2018 through 2022. For FY 2018, this 
provision extends the qualifying criteria and payment adjustment 
formula that applied for FYs 2011 through 2017. For FYs 2019 through 
2022, this provision modifies the discharge criterion and payment 
adjustment formula. In FY 2023 and subsequent fiscal years, the 
qualifying criteria and payment adjustment revert to the requirements 
that were in effect for FYs 2005 through 2010.
     Section 50205 extends the MDH program through FY 2022. It 
also provides for an eligible hospital that is located in a State with 
no rural area to qualify for MDH status under an expanded definition if 
the hospital satisfies any of the statutory criteria at section 
1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act 
to be reclassified as rural.
     Section 51005(a) modified section 1886(m)(6) of the Act by 
extending the blended payment rate for site neutral payment rate LTCH 
discharges for cost reporting periods beginning in FY 2016 by an 
additional 2 years (FYs 2018 and 2019). In addition, section 51005(b) 
reduces the LTCH IPPS comparable per diem amount used in the site 
neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this 
proposed rule, we are proposing to make conforming changes to the 
existing regulations.
     Section 53109 modified section 1886(d)(5)(J) of the Act to 
require that, beginning in FY 2019, discharges to hospice care will 
also qualify as a postacute care transfer and be subject to payment 
adjustments.

D. Summary of the Provisions of This Proposed Rule

    In this proposed rule, we are setting forth proposed payment and 
policy changes to the Medicare IPPS for FY 2019 operating costs and for 
capital-related costs of acute care hospitals and certain hospitals and 
hospital units that are excluded from IPPS. In addition, we are setting 
forth proposed changes to the payment rates, factors, and other payment 
and policy-related changes to programs associated with payment rate 
policies under the LTCH PPS for FY 2019.
    Below is a general summary of the proposed changes included in this 
proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of 
Relative Weights
    In section II. of the preamble of this proposed rule, we include--
     Proposed changes to MS-DRG classifications based on our 
yearly review for FY 2019.
     Proposed adjustment to the standardized amounts under 
section 1886(d) of the Act for FY 2019 in accordance with the 
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section 
414 of the MACRA.
     Proposed recalibration of the MS-DRG relative weights.
     A discussion of the proposed FY 2019 status of new 
technologies approved for add-on payments for FY 2018 and a 
presentation of our evaluation and analysis of the FY 2019 applicants 
for add[dash]on payments for high-cost new medical services and 
technologies (including public input, as directed by Pub. L. 108-173, 
obtained in a town hall meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
    In section III. of the preamble to this proposed rule, we are 
proposing to make revisions to the wage index for acute care hospitals 
and the annual update of the wage data. Specific issues addressed 
include, but are not limited to, the following:
     The proposed FY 2019 wage index update using wage data 
from cost reporting periods beginning in FY 2015.
     Proposal regarding other wage-related costs in the wage 
index.
     Calculation of the proposed occupational mix adjustment 
for FY 2019 based on the 2016 Occupational Mix Survey.
     Analysis and implementation of the proposed FY 2019 
occupational mix adjustment to the wage index for acute care hospitals.
     Proposed application of the rural floor and the frontier 
State floor and the proposed expiration of the imputed floor.
     Proposals to codify policies regarding multicampus 
hospitals.
     Proposed revisions to the wage index for acute care 
hospitals based on hospital redesignations and reclassifications under 
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
     The proposed adjustment to the wage index for acute care 
hospitals for FY 2019 based on commuting patterns of hospital employees 
who reside in a county and work in a different area with a higher wage 
index.
     Determination of the labor-related share for the proposed 
FY 2019 wage index.
     Public comment solicitation on wage index disparities.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
    In section IV. of the preamble of this proposed rule, we discuss 
proposed changes or clarifications of a number of the provisions of the 
regulations in 42 CFR parts 412 and 413, including the following:
     Proposed changes to MS-DRGs subject to the postacute care 
transfer policy and special payment policy and implementation of the 
statutory changes to the postacute care transfer policy.
     Proposed changes to the inpatient hospital update for FY 
2019.
     Proposed changes related to the statutory changes to the 
low-volume hospital payment adjustment policy.
     Proposed updated national and regional case-mix values and 
discharges for purposes of determining RRC status.
     The statutorily required IME adjustment factor for FY 
2019.
     Proposed changes to the methodologies for determining 
Medicare DSH payments and the additional payments for uncompensated 
care.
     Proposed changes to the effective date of SCH and MDH 
classification status determinations.
     Proposed changes related to the extension of the MDH 
program.
     Proposed changes to the rules for payment adjustments 
under the Hospital Readmissions Reduction Program based on hospital 
readmission

[[Page 20175]]

measures and the process for hospital review and correction of those 
rates for FY 2019.
     Proposed changes to the requirements and provision of 
value-based incentive payments under the Hospital Value-Based 
Purchasing Program.
     Proposed requirements for payment adjustments to hospitals 
under the HAC Reduction Program for FY 2019.
     Proposed changes to Medicare GME affiliation agreements 
for new urban teaching hospitals.
     Discussion of and proposals relating to the implementation 
of the Rural Community Hospital Demonstration Program in FY 2019.
     Proposed revisions of the hospital inpatient admission 
orders documentation requirements.
4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs
    In section V. of the preamble to this proposed rule, we discuss the 
proposed payment policy requirements for capital[dash]related costs and 
capital payments to hospitals for FY 2019.
5. Proposed Changes to the Payment Rates for Certain Excluded 
Hospitals: Rate[dash]of[dash]Increase Percentages
    In section VI. of the preamble of this proposed rule, we discuss--
     Proposed changes to payments to certain excluded hospitals 
for FY 2019.
     Proposed changes to the regulations governing satellite 
facilities.
     Proposed changes to the regulations governing excluded 
units of hospitals.
     Proposed continued implementation of the Frontier 
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
    In section VII. of the preamble of the proposed rule, we set 
forth--
     Proposed changes to the LTCH PPS Federal payment rates, 
factors, and other payment rate policies under the LTCH PPS for FY 
2019.
     Proposed changes to the blended payment rate for site 
neutral payment rate cases.
     Proposed elimination of the 25-percent threshold policy.
7. Proposed Changes Relating to Quality Data Reporting for Specific 
Providers and Suppliers
    In section VIII. of the preamble of the proposed rule, we address--
     Proposed requirements for the Hospital Inpatient Quality 
Reporting (IQR) Program.
     Proposed changes to the requirements for the quality 
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
     Proposed changes to the requirements under the LTCH 
Quality Reporting Program (LTCH QRP).
     Proposed changes to requirements pertaining to the 
clinical quality measurement for eligible hospitals and CAHs 
participating in the Medicare and Medicaid Promoting Interoperability 
Programs.
8. Proposed Revision to the Supporting Documentation Requirements for 
an Acceptable Medicare Cost Report Submission
    In section IX. of the preamble of this proposed rule, we set forth 
proposed revisions to the supporting documentation required for an 
acceptable Medicare cost report submission.
9. Requirements for Hospitals To Make Public List of Standard Charges
    In section X. of the preamble of this proposed rule, we discuss our 
efforts to further improve the public accessibility of hospital 
standard charge information, effective January 1, 2019, in accordance 
with section 2718(e) of the Public Health Service Act.
10. Proposed Revisions Regarding Physician Certification and 
Recertification of Claims
    In section XI. of the preamble of this proposed rule, we set forth 
proposed revisions to the requirements for supporting information used 
for physician certification and recertification of claims.
11. Request for Information
    In section XII. of the preamble of this proposed rule, we include a 
request for information on possible establishment of CMS patient health 
and safety requirements for hospitals and other Medicare- and Medicaid-
participating providers and suppliers for interoperable electronic 
health records and systems for electronic health care information 
exchange.
12. Determining Prospective Payment Operating and Capital Rates and 
Rate[dash]of[dash]Increase Limits for Acute Care Hospitals
    In section V. of the Addendum to this proposed rule, we set forth 
proposed changes to the amounts and factors for determining the 
proposed FY 2019 prospective payment rates for operating costs and 
capital-related costs for acute care hospitals. We are proposing to 
establish the threshold amounts for outlier cases. In addition, we 
address the update factors for determining the 
rate[dash]of[dash]increase limits for cost reporting periods beginning 
in FY 2019 for certain hospitals excluded from the IPPS.
13. Determining Prospective Payment Rates for LTCHs
    In section V. of the Addendum to this proposed rule, we set forth 
proposed changes to the amounts and factors for determining the 
proposed FY 2019 LTCH PPS standard Federal payment rate and other 
factors used to determine LTCH PPS payments under both the LTCH PPS 
standard Federal payment rate and the site neutral payment rate in FY 
2019. We are proposing to establish the adjustments for wage levels, 
the labor[dash]related share, the cost-of-living adjustment, and high-
cost outliers, including the applicable fixed-loss amounts and the LTCH 
cost-to-charge ratios (CCRs) for both payment rates.
14. Impact Analysis
    In Appendix A of this proposed rule, we set forth an analysis of 
the impact that the proposed changes would have on affected acute care 
hospitals, CAHs, LTCHs, and PCHs.
15. Recommendation of Update Factors for Operating Cost Rates of 
Payment for Hospital Inpatient Services
    In Appendix B of this proposed rule, as required by sections 
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the 
appropriate percentage changes for FY 2019 for the following:
     A single average standardized amount for all areas for 
hospital inpatient services paid under the IPPS for operating costs of 
acute care hospitals (and hospital[dash]specific rates applicable to 
SCHs and MDHs).
     Target rate-of-increase limits to the allowable operating 
costs of hospital inpatient services furnished by certain hospitals 
excluded from the IPPS.
     The LTCH PPS standard Federal payment rate and the site 
neutral payment rate for hospital inpatient services provided for LTCH 
PPS discharges.
16. Discussion of Medicare Payment Advisory Commission Recommendations
    Under section 1805(b) of the Act, MedPAC is required to submit a 
report to Congress, no later than March 15 of each year, in which 
MedPAC reviews and makes recommendations on Medicare payment policies. 
MedPAC's March 2018 recommendations concerning hospital inpatient 
payment policies address the update factor for hospital inpatient 
operating costs and capital-related costs for hospitals under

[[Page 20176]]

the IPPS. We address these recommendations in Appendix B of this 
proposed rule. For further information relating specifically to the 
MedPAC March 2018 report or to obtain a copy of the report, contact 
MedPAC at (202) 220-3700 or visit MedPAC's website at: http://www.medpac.gov.

II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights

A. Background

    Section 1886(d) of the Act specifies that the Secretary shall 
establish a classification system (referred to as diagnosis-related 
groups (DRGs)) for inpatient discharges and adjust payments under the 
IPPS based on appropriate weighting factors assigned to each DRG. 
Therefore, under the IPPS, Medicare pays for inpatient hospital 
services on a rate per discharge basis that varies according to the DRG 
to which a beneficiary's stay is assigned. The formula used to 
calculate payment for a specific case multiplies an individual 
hospital's payment rate per case by the weight of the DRG to which the 
case is assigned. Each DRG weight represents the average resources 
required to care for cases in that particular DRG, relative to the 
average resources used to treat cases in all DRGs.
    Section 1886(d)(4)(C) of the Act requires that the Secretary adjust 
the DRG classifications and relative weights at least annually to 
account for changes in resource consumption. These adjustments are made 
to reflect changes in treatment patterns, technology, and any other 
factors that may change the relative use of hospital resources.

B. MS-DRG Reclassifications

    For general information about the MS-DRG system, including yearly 
reviews and changes to the MS-DRGs, we refer readers to the previous 
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 
43764 through 43766) and the FYs 2011 through 2018 IPPS/LTCH PPS final 
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 
56872; and 82 FR 38010 through 38085, respectively).

C. Adoption of the MS-DRGs in FY 2008

    For information on the adoption of the MS-DRGs in FY 2008, we refer 
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 
through 47189).

D. Proposed FY 2019 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding 
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and 
the Recoupment or Repayment Adjustment Authorized by Section 631 of the 
American Taxpayer Relief Act of 2012 (ATRA)
    In the FY 2008 IPPS final rule with comment period (72 FR 47140 
through 47189), we adopted the MS-DRG patient classification system for 
the IPPS, effective October 1, 2007, to better recognize severity of 
illness in Medicare payment rates for acute care hospitals. The 
adoption of the MS-DRG system resulted in the expansion of the number 
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number 
of MS-DRGs and more fully taking into account patient severity of 
illness in Medicare payment rates for acute care hospitals, MS-DRGs 
encourage hospitals to improve their documentation and coding of 
patient diagnoses.
    In the FY 2008 IPPS final rule with comment period (72 FR 47175 
through 47186), we indicated that the adoption of the MS-DRGs had the 
potential to lead to increases in aggregate payments without a 
corresponding increase in actual patient severity of illness due to the 
incentives for additional documentation and coding. In that final rule 
with comment period, we exercised our authority under section 
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget 
neutrality by adjusting the national standardized amount, to eliminate 
the estimated effect of changes in coding or classification that do not 
reflect real changes in case-mix. Our actuaries estimated that 
maintaining budget neutrality required an adjustment of -4.8 percentage 
points to the national standardized amount. We provided for phasing in 
this -4.8 percentage point adjustment over 3 years. Specifically, we 
established prospective documentation and coding adjustments of -1.2 
percentage points for FY 2008, -1.8 percentage points for FY 2009, and 
-1.8 percentage points for FY 2010.
    On September 29, 2007, Congress enacted the TMA [Transitional 
Medical Assistance], Abstinence Education, and QI [Qualifying 
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section 
7(a) of Public Law 110-90 reduced the documentation and coding 
adjustment made as a result of the MS-DRG system that we adopted in the 
FY 2008 IPPS final rule with comment period to -0.6 percentage point 
for FY 2008 and -0.9 percentage point for FY 2009.
    As discussed in prior year rulemakings, and most recently in the FY 
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we 
implemented a series of adjustments required under sections 7(b)(1)(A) 
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of 
FY 2008 and FY 2009 claims data. We completed these adjustments in FY 
2013, but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53274 through 53275) that delaying full implementation of the 
adjustment required under section 7(b)(1)(A) of Public Law 110-90 until 
FY 2013 resulted in payments in FY 2010 through FY 2012 being 
overstated, and that these overpayments could not be recovered under 
Public Law 110-90.
    In addition, as discussed in prior rulemakings and most recently in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), 
section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 
to require the Secretary to make a recoupment adjustment or adjustments 
totaling $11 billion by FY 2017. This adjustment represented the amount 
of the increase in aggregate payments as a result of not completing the 
prospective adjustment authorized under section 7(b)(1)(A) of Public 
Law 110-90 until FY 2013.
2. Adjustment Made for FY 2018 as Required Under Section 414 of Public 
Law 114-10 (MACRA) and Section 15005 of Public Law 114-255
    As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), 
once the recoupment required under section 631 of the ATRA was 
complete, we had anticipated making a single positive adjustment in FY 
2018 to offset the reductions required to recoup the $11 billion under 
section 631 of the ATRA. However, section 414 of the MACRA (which was 
enacted on April 16, 2015) replaced the single positive adjustment we 
intended to make in FY 2018 with a 0.5 percentage point positive 
adjustment for each of FYs 2018 through 2023. In the FY 2017 
rulemaking, we indicated that we would address the adjustments for FY 
2018 and later fiscal years in future rulemaking. Section 15005 of the 
21st Century Cures Act (Pub. L. 114-255), which was enacted on December 
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 
631 of the ATRA and section 414 of the MACRA, to reduce the adjustment 
for FY 2018 from a 0.5 percentage point to a 0.4588 percentage point. 
As we discussed in the FY 2018

[[Page 20177]]

rulemaking, we believe the directive under section 15005 of Public Law 
114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38009) for FY 2018, we implemented the required +0.4588 
percentage point adjustment to the standardized amount. This is a 
permanent adjustment to payment rates. While we did not address future 
adjustments required under section 414 of the MACRA and section 15005 
of Public Law 114-255 at that time, we stated that we expected to 
propose positive 0.5 percentage point adjustments to the standardized 
amounts for FYs 2019 through 2023.
3. Proposed Adjustment for FY 2019
    Consistent with the requirements of section 414 of the MACRA, we 
are proposing to implement a positive 0.5 percentage point adjustment 
to the standardized amount for FY 2019. This would be a permanent 
adjustment to payment rates. We plan to propose future adjustments 
required under section 414 of the MACRA for FYs 2020 through 2023 in 
future rulemaking.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background
    Beginning in FY 2007, we implemented relative weights for DRGs 
based on cost report data instead of charge information. We refer 
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed 
discussion of our final policy for calculating the cost[dash]based DRG 
relative weights and to the FY 2008 IPPS final rule with comment period 
(72 FR 47199) for information on how we blended relative weights based 
on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785 through 56787) for a detailed 
discussion of the history of changes to the number of cost centers used 
in calculating the DRG relative weights. Since FY 2014, we calculate 
the IPPS MS-DRG relative weights using 19 CCRs, which now include 
distinct CCRs for implantable devices, MRIs, CT scans, and cardiac 
catheterization.
2. Discussion of Policy for FY 2019
    Consistent with our established policy, we are calculating the 
proposed MS-DRG relative weights for FY 2019 using two data sources: 
The MedPAR file as the claims data source and the HCRIS as the cost 
report data source. We adjusted the charges from the claims to costs by 
applying the 19 national average CCRs developed from the cost reports. 
The description of the calculation of the proposed 19 CCRs and the 
proposed MS-DRG relative weights for FY 2019 is included in section 
II.G. of the preamble to this FY 2019 IPPS/LTCH PPS proposed rule. As 
we did with the FY 2018 IPPS/LTCH PPS final rule, for this proposed 
rule, we are providing the version of the HCRIS from which we 
calculated these proposed 19 CCRs on the CMS website 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 2019 IPPS Proposed Rule Home Page'' or ``Acute 
Inpatient Files for Download.''

F. Proposed Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for Proposed FY 
2019 MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of 
Diseases, 10th Revision (ICD-10)
    As of October 1, 2015, providers use the International 
Classification of Diseases, 10th Revision (ICD-10) coding system to 
report diagnoses and procedures for Medicare hospital inpatient 
services under the MS-DRG system instead of the ICD-9-CM coding system, 
which was used through September 30, 2015. The ICD-10 coding system 
includes the International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM) for diagnosis coding and the 
International Classification of Diseases, 10th Revision, Procedure 
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as 
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and 
Reporting. For a detailed discussion of the conversion of the MS-DRGs 
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56787 through 56789).
b. Basis for Proposed FY 2019 MS-DRG Updates
    CMS has previously encouraged input from our stakeholders 
concerning the annual IPPS updates when that input was made available 
to us by December 7 of the year prior to the next annual proposed rule 
update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38010), as we work with the public to examine the ICD-10 claims data 
used for updates to the ICD-10 MS DRGs, we would like to examine areas 
where the MS-DRGs can be improved, which will require additional time 
for us to review requests from the public to make specific updates, 
analyze claims data, and consider any proposed updates. Given the need 
for more time to carefully evaluate requests and propose updates, we 
changed the deadline to request updates to the MS-DRGs to November 1 of 
each year. This will provide an additional 5 weeks for the data 
analysis and review process. Interested parties had to submit any 
comments and suggestions for FY 2019 by November 1, 2017, and are 
encouraged to submit any comments and suggestions for FY 2020 by 
November 1, 2018 via the CMS MS-DRG Classification Change Request 
Mailbox located at: [email protected]. The comments 
that were submitted in a timely manner for FY 2019 are discussed in 
this section of the preamble of this proposed rule.
    Following are the changes that we are proposing to the MS-DRGs for 
FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule. We are inviting 
public comments on each of the MS-DRG classification proposed changes, 
as well as our proposals to maintain certain existing MS-DRG 
classifications discussed in this proposed rule. In some cases, we are 
proposing changes to the MS-DRG classifications based on our analysis 
of claims data and consultation with our clinical advisors. In other 
cases, we are proposing to maintain the existing MS-DRG classifications 
based on our analysis of claims data and consultation with our clinical 
advisors. For this FY 2019 IPPS/LTCH PPS proposed rule, our MS-DRG 
analysis was based on ICD-10 claims data from the September 2017 update 
of the FY 2017 MedPAR file, which contains hospital bills received 
through September 30, 2017, for discharges occurring through September 
30, 2017. In our discussion of the proposed MS-DRG reclassification 
changes, we refer to our analysis of claims data from the ``September 
2017 update of the FY 2017 MedPAR file.''
    As explained in previous rulemaking (76 FR 51487), in deciding 
whether to propose to make further modifications to the MS-DRGs for 
particular circumstances brought to our attention, we consider whether 
the resource consumption and clinical characteristics of the patients 
with a given set of conditions are significantly different than the 
remaining patients represented in the MS-DRG. We evaluate patient care 
costs using average costs and lengths of stay and rely on the judgment 
of our clinical advisors to determine whether patients are clinically 
distinct or similar to other patients represented in the MS-DRG. In 
evaluating resource costs, we consider both the absolute and percentage 
differences in average costs

[[Page 20178]]

between the cases we select for review and the remainder of cases in 
the MS-DRG. We also consider variation in costs within these groups; 
that is, whether observed average differences are consistent across 
patients or attributable to cases that are extreme in terms of costs or 
length of stay, or both. Further, we consider the number of patients 
who will have a given set of characteristics and generally prefer not 
to create a new MS-DRG unless it would include a substantial number of 
cases.
    In our examination of the claims data, we apply the following 
criteria established in FY 2008 (72 FR 47169) to determine if the 
creation of a new complication or comorbidity (CC) or major 
complication or comorbidity (MCC) subgroup within a base MS-DRG is 
warranted:
     A reduction in variance of costs of at least 3 percent;
     At least 5 percent of the patients in the MS-DRG fall 
within the CC or MCC subgroup;
     At least 500 cases are in the CC or MCC subgroup;
     There is at least a 20-percent difference in average costs 
between subgroups; and
     There is a $2,000 difference in average costs between 
subgroups.
    In order to warrant creation of a CC or MCC subgroup within a base 
MS-DRG, the subgroup must meet all five of the criteria.
2. Pre-MDC
a. Heart Transplant or Implant of Heart Assist System
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated 
our intent to review the ICD-10 logic for Pre-MDC MS-DRGs 001 and 002 
(Heart Transplant or Implant of Heart Assist System with and without 
MCC, respectively), as well as MS-DRG 215 (Other Heart Assist System 
Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures 
Except Pulsation Balloon with and without MCC, respectively) where 
procedures involving heart assist devices are currently assigned. We 
also encouraged the public to submit any comments on restructuring the 
MS-DRGs for heart assist system procedures to the CMS MS-DRG 
Classification Change Request Mailbox located at: 
[email protected] by November 1, 2017.
    The logic for Pre-MDC MS-DRGs 001 and 002 is comprised of two 
lists. The first list includes procedure codes identifying a heart 
transplant procedure, and the second list includes procedure codes 
identifying the implantation of a heart assist system. The list of 
procedure codes identifying the implantation of a heart assist system 
includes the following three codes.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02HA0QZ...................  Insertion of implantable heart assist system
                             into heart, open approach.
02HA3QZ...................  Insertion of implantable heart assist system
                             into heart, percutaneous approach.
02HA4QZ...................  Insertion of implantable heart assist system
                             into heart, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    In addition to these three procedure codes, there are also 33 pairs 
of code combinations or procedure code ``clusters'' that, when reported 
together, satisfy the logic for assignment to MS-DRGs 001 and 002. The 
code combinations are represented by two procedure codes and include 
either one code for the insertion of the device with one code for 
removal of the device or one code for the revision of the device with 
one code for the removal of the device. The 33 pairs of code 
combinations are listed below.

----------------------------------------------------------------------------------------------------------------
           Code                Code description                         Code                Code description
----------------------------------------------------------------------------------------------------------------
02HA0RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, open approach.
02HA0RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, open approach.
02HA0RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, open approach.                                        approach.
02HA0RZ..................  Insertion of short-term     with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart, open
                            approach.                                                    approach.
02HA0RZ..................  Insertion of short-term     with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart,
                            approach.                                                    percutaneous approach.
02HA0RZ..................  Insertion of short-term     with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02HA3RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            approach.
02HA3RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            approach.
02HA3RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            approach.
02HA4RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            endoscopic approach.

[[Page 20179]]

 
02HA4RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            endoscopic approach.
02HA4RZ..................  Insertion of short-term     with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart, open
                            percutaneous endoscopic                                      approach.
                            approach.
02HA4RZ..................  Insertion of short-term     with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart,
                            percutaneous endoscopic                                      percutaneous approach.
                            approach.
02HA4RZ..................  Insertion of short-term     with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart,
                            percutaneous endoscopic                                      percutaneous endoscopic
                            approach.                                                    approach.
02WA0QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart, open
                                                                                         approach.
02WA0QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart,
                                                                                         percutaneous approach.
02WA0QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart,
                                                                                         percutaneous endoscopic
                                                                                         approach.
02WA0RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart, open
                            approach.                                                    approach.
02WA0RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart,
                            approach.                                                    percutaneous approach.
02WA0RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02WA3QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            approach.                                                    approach.
02WA3QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous approach.
02WA3QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02WA3RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart, open
                            percutaneous approach.                                       approach.
02WA3RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous approach.                                       percutaneous approach.
02WA3RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous approach.                                       percutaneous endoscopic
                                                                                         approach.
02WA4QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            endoscopic approach.                                         approach.
02WA4QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            endoscopic approach.                                         percutaneous approach.
02WA4QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            endoscopic approach.                                         percutaneous endoscopic
                                                                                         approach.
02WA4RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart, open
                            percutaneous endoscopic                                      approach.
                            approach.
02WA4RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous endoscopic                                      percutaneous approach.
                            approach.
02WA4RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous endoscopic                                      percutaneous endoscopic
                            approach.                                                    approach.
----------------------------------------------------------------------------------------------------------------

    In response to our solicitation for public comments on 
restructuring the MS-DRGs for heart assist system procedures, 
commenters recommended that CMS maintain the current logic under the 
Pre-MDC MS-DRGs 001 and 002. Similar to the discussion in the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS-DRG 
215 (Other Heart Assist System Implant), the commenters provided 
examples of common clinical scenarios involving a left ventricular 
assist device (LVAD) and included the procedure codes that were 
reported under the ICD-9 based MS-DRGs in comparison to the procedure 
codes reported under the ICD-10 MS-DRGs, which are reflected in the 
following table.

[[Page 20180]]



----------------------------------------------------------------------------------------------------------------
                                    ICD-9-CM procedure
            Procedure                      code          ICD-9 MS-DRG       ICD-10-PCS codes       ICD-10 MS-DRG
----------------------------------------------------------------------------------------------------------------
New LVAD inserted................  37.66 (Insertion of      001 or 002  02WA0QZ (Insertion of         001 or 002
                                    implantable heart                    implantable heart
                                    assist system).                      assist system into
                                                                         heart, open approach).
                                                                        02WA3QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02WA4QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         endoscopic approach).
LVAD Exchange--existing LVAD is    37.63 (Repair of                215  02PA0QZ (Removal of           001 or 002
 removed and replaced with either   heart assist                         implantable heart
 new LVAD system or new LVAD pump.  system).                             assist system from
                                                                         heart, open approach).
                                                                        02PA3QZ (Removal of
                                                                         implantable heart
                                                                         assist system from
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02PA4QZ (Removal of
                                                                         implantable heart
                                                                         assist system from
                                                                         heart, percutaneous
                                                                         endoscopic approach)
                                                                         and.
                                                                        02WA0QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, open approach).
                                                                        02WA3QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02WA4QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         endoscopic approach).
LVAD revision and repair--         37.63 (Repair of                215  02WA0QZ (Revision of                 215
 existing LVAD is adjusted or       heart assist                         implantable heart
 repaired without removing the      system).                             assist system in heart,
 existing LVAD device.                                                   open approach).
                                                                        02WA3QZ (Revision of
                                                                         implantable heart
                                                                         assist system in heart,
                                                                         percutaneous approach).
                                                                        02WA4QZ (Revision of
                                                                         implantable heart
                                                                         assist system in heart,
                                                                         percutaneous endoscopic
                                                                         approach).
----------------------------------------------------------------------------------------------------------------

    The commenters noted that, for Pre-MDC MS-DRGs 001 and 002, the 
procedures involving the insertion of an implantable heart assist 
system, such as the insertion of a LVAD, and the procedures involving 
exchange of an LVAD (where an existing LVAD is removed and replaced 
with either a new LVAD or a new LVAD pump) demonstrate clinical 
similarities and utilize similar resources. Although the commenters 
recommended that CMS maintain the current logic under the Pre-MDC MS-
DRGs 001 and 002, they also recommended that CMS continue to monitor 
the data in these MS-DRGs for future consideration of distinctions (for 
example, different approaches and evolving technologies) that may 
impact the clinical and resource use of patients undergoing procedures 
utilizing heart assist devices. The commenters also requested that 
coding guidance be issued for assignment of the correct ICD-10-PCS 
procedure codes describing LVAD exchanges to encourage accurate 
reporting of these procedures.
    We agree with the commenters that we should continue to monitor the 
data in Pre-MDC MS-DRGs 001 and 002 for future consideration of 
distinctions (for example, different approaches and evolving 
technologies) that may impact the clinical and resource use of patients 
undergoing procedures utilizing heart assist devices. In response to 
the request that coding guidance be issued for assignment of the 
correct ICD-10-PCS procedure codes describing LVAD exchanges to 
encourage accurate reporting of these procedures, as we noted in the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued 
independently from payment policy. We also noted that, historically, we 
have not provided coding advice in rulemaking with respect to policy 
(82 FR 38045). We collaborate with the American Hospital Association 
(AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote 
proper coding. We recommend that the requestor and other interested 
parties submit any questions pertaining to correct coding for these 
technologies to the AHA.
    In response to the public comments we received on this topic, we 
are providing the results of our claims analysis from the September 
2017 update of the FY 2017 MedPAR file for cases in Pre-MDC MS-DRGs 001 
and 002. Our findings are shown in the following table.

                         MS-DRGs for Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660
MS-DRG 002--All cases...........................................             179            18.3          99,635
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 001, there were a total of 1,993 
cases with an average length of stay of 35.6 days and average costs of 
$185,660. For MS-DRG 002, there were a total of 179 cases with an 
average length of stay of 18.3 days and average costs of $99,635.
    We then examined claims data in Pre-MDC MS-DRGs 001 and 002 for 
cases that reported one of the three procedure codes identifying the 
implantation of a heart assist system such as the LVAD. Our findings 
are shown in the following table.

[[Page 20181]]



                         MS-DRGs for Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660
MS-DRG 001--Cases with procedure code 02HA0QZ (Insertion of                1,260            35.5         206,663
 implantable heart assist system into heart, open approach).....
MS-DRG 001--Cases with procedure code 02HA3QZ (Insertion of                    1               8          33,889
 implantable heart assist system into heart, percutaneous
 approach)......................................................
MS-DRG 001--Cases with procedure code 02HA4QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 002--All cases...........................................             179            18.3          99,635
MS-DRG 002--Cases with procedure code 02HA0QZ (Insertion of                   82            19.9         131,957
 implantable heart assist system into heart, open approach).....
MS-DRG 002--Cases with procedure code 02HA3QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 approach)......................................................
MS-DRG 002--Cases with procedure code 02HA4QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 001, there were a total of 1,260 
cases reporting procedure code 02HA0QZ (Insertion of implantable heart 
assist system into heart, open approach) with an average length of stay 
of 35.5 days and average costs of $206,663. There was one case that 
reported procedure code 02HA3QZ (Insertion of implantable heart assist 
system into heart, percutaneous approach) with an average length of 
stay of 8 days and average costs of $33,889. There were no cases 
reporting procedure code 02HA4QZ (Insertion of implantable heart assist 
system into heart, percutaneous endoscopic approach). For MS-DRG 002, 
there were a total of 82 cases reporting procedure code 02HA0QZ 
(Insertion of implantable heart assist system into heart, open 
approach) with an average length of stay of 19.9 days and average costs 
of $131,957. There were no cases reporting procedure codes 02HA3QZ 
(Insertion of implantable heart assist system into heart, percutaneous 
approach) or 02HA4QZ (Insertion of implantable heart assist system into 
heart, percutaneous endoscopic approach).
    We also examined the cases in MS-DRGs 001 and 002 that reported one 
of the possible 33 pairs of code combinations or clusters. Our findings 
are shown in the following 8 tables. The first table provides the total 
number of cases reporting a procedure code combination (or cluster) 
compared to all of the cases in the respective MS-DRG, followed by 
additional detailed tables showing the number of cases, average length 
of stay, and average costs for each specific code combination that was 
reported in the claims data.

                               Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                       MS-DRG 001 and 002                              cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660
MS-DRG 001--Cases with a procedure code combination (cluster)...             149            28.4         179,607
MS-DRG 002--All cases...........................................             179            18.3          99,635
MS-DRG 002--Cases with a procedure code combination (cluster)...               6             3.8          57,343
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RS (Insertion of               3            20.3        $121,919
 biventricular short-term external heart assist system into
 heart, open approach) with 02PA0RZ (Removal of short-term
 external heart assist system from heart, open approach)........
Cases with a procedure code combination of 02HA0RS (Insertion of               2              12         114,688
 biventricular short-term external heart assist system into
 heart, open approach) with 02PA3RZ (Removal of short-term
 external heart assist system from heart, percutaneous approach)
All cases reporting one or more of the above procedure code                    5              17         119,027
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


[[Page 20182]]


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of              30            55.6        $351,995
 short-term external heart assist system into heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of              19            29.8         191,163
 short-term external heart assist system into heart, open
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                   49            45.6         289,632
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of               1               4          48,212
 short-term external heart assist system into heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of               2             4.5          66,386
 short-term external heart assist system into heart, open
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                    3             4.3          60,328
 combinations in MS-DRG 002.....................................
All cases reporting one or more of the above procedure code                   52            43.3         276,403
 combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of               3            43.3        $233,330
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA0RZ (Removal of short-
 term external heart assist system from heart, open approach)...
Cases with a procedure code combination of 02HA3RS (Insertion of              24            14.8         113,955
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA3RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 approach)......................................................
Cases with a procedure code combination of 02HA3RS (Insertion of               1              44         153,284
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA4RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
All cases reporting one or more of the above procedure code                   28            18.9         128,150
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of               2               4         $30,954
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA3RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 approach)......................................................
All cases reporting one of the above procedure code combinations               2               4          30,954
 in MS-DRG 002..................................................
All cases reporting one or more of the above procedure code                   30            17.9         121,670
 combinations across both MS[dash]DRGs 001 and 002..............
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA4RZ (Insertion of               4            17.3        $154,885
 short-term external heart assist system into heart,
 percutaneous endoscopic approach) with 02PA3RZ (Removal of
 short-term external heart assist system from heart,
 percutaneous approach).........................................
Cases with a procedure code combination of 02HA4RZ (Insertion of               2            15.5          80,852
 short-term external heart assist system into heart, open
 approach) with 02PA4RZ (Removal of short-term external heart
 assist system from heart, percutaneous endoscopic approach)....
All cases reporting one or more of the above procedure code                    6            16.7         130,207
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


[[Page 20183]]


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA0QZ (Revision of                1             105        $516,557
 implantable heart assist system in heart, open approach) with
 02PA0RZ (Removal of short-term external heart assist system
 from heart, open approach).....................................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA0RZ (Revision of                2              40        $285,818
 short-term external heart assist system in heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02WA0RZ (Revision of                1              43         372,673
 short-term external heart assist system in heart, open
 approach) with 02PA03Z (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                    3              41         314,770
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of                2              24        $123,084
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02WA3RZ (Revision of               55            14.7         104,963
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                   57              15         105,599
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of                1               2         101,168
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                   58            14.8         105,522
 combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA4RZ (Revision of                1              10         112,698
 short-term external heart assist system in heart, percutaneous
 endoscopic approach) with 02PA0RZ (Removal of short-term
 external heart assist system from heart, open approach)........
----------------------------------------------------------------------------------------------------------------

    We did not find any cases reporting the following procedure code 
combinations (clusters) in the claims data.

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
02HA4RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            endoscopic approach.
02WA3QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            approach.                                                    approach.
02WA3QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous approach.

[[Page 20184]]

 
02WA3QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
----------------------------------------------------------------------------------------------------------------

    The data show that there are differences in the average length of 
stay and average costs for cases in Pre-MDC MS-DRGs 001 and 002 
according to the type of procedure (insertion, revision, or removal), 
the type of device (biventricular short-term external heart assist 
system, short-term external heart assist system or implantable heart 
assist system), and the approaches that were utilized (open, 
percutaneous, or percutaneous endoscopic). We agree with the 
commenters' recommendation to maintain the structure of Pre-MDC MS-DRGs 
001 and 002 for FY 2019 and will continue to analyze the claims data. 
We are inviting public comments on our decision to maintain the current 
structure of Pre[dash]MDC MS-DRGs 001 and 002 for FY 2019.
    Commenters also suggested that CMS maintain the current logic for 
MS-DRG 215 (Other Heart Assist System Implant), but they recommended 
that CMS continue to monitor the data in MS-DRG 215 for future 
consideration of distinctions (for example, different approaches and 
evolving technologies) that may impact the clinical and resource use of 
procedures utilizing heart assist devices. We also received a request 
to review claims data for procedures involving extracorporeal membrane 
oxygenation (ECMO) in combination with the insertion of a percutaneous 
short-term external heart assist device to determine if the current MS-
DRG assignment is appropriate.
    The logic for MS-DRG 215 is comprised of the procedure codes shown 
in the following table, for which we examined claims data in the 
September 2017 update of the FY 2017 MedPAR file in response to the 
commenters' requests. Our findings are shown in the following table.

                                                   MS-DRG 215
                                       [Other heart assist system implant]
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases.......................................................           3,428             8.7         $68,965
Cases with procedure code 02HA0RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative, open
 approach)......................................................
Cases with procedure code 02HA0RS (Insertion of biventricular                  9              10         118,361
 short-term external heart assist system into heart, open
 approach)......................................................
Cases with procedure code 02HA0RZ (Insertion of short-term                    66            11.5          99,107
 external heart assist system into heart, open approach)........
Cases with procedure code 02HA3RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative,
 percutaneous approach).........................................
Cases with procedure code 02HA3RS (Insertion of biventricular                117             7.2          64,302
 short-term external heart assist system into heart,
 percutaneous approach).........................................
Cases with procedure code 02HA3RZ (Insertion of short-term                 3,136             8.4          67,670
 external heart assist system into heart, percutaneous approach)
Cases with procedure code 02HA4RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative,
 percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RS (Insertion of biventricular                  1               2          43,988
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RZ (Insertion of short-term                    31             5.3          57,042
 external heart assist system into heart, percutaneous
 endoscopic approach)...........................................
Cases with procedure code 02WA0JZ (Revision of synthetic                       1              84         366,089
 substitute in heart, open approach)............................
Cases with procedure code 02WA0QZ (Revision of implantable heart              56            25.1         123,410
 assist system in heart, open approach).........................
Cases with procedure code 02WA0RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, open
 approach)......................................................
Cases with procedure code 02WA0RZ (Revision of short-term                      8            13.5          99,378
 external heart assist system in heart, open approach)..........
Cases with procedure code 02WA3QZ (Revision of implantable heart               0               0               0
 assist system in heart, percutaneous approach).................
Cases with procedure code 02WA3RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, percutaneous
 approach)......................................................
Cases with procedure code 02WA3RZ (Revision of short-term                     80              10          71,077
 external heart assist system in heart, percutaneous approach)..
Cases with procedure code 02WA4QZ (Revision of implantable heart               0               0               0
 assist system in heart, percutaneous endoscopic approach)......
Cases with procedure code 02WA4RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, percutaneous
 endoscopic approach)...........................................
Cases with procedure code 02WA4RZ (Revision of short-term                      0               0               0
 external heart assist system in heart, percutaneous endoscopic
 approach)......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 215, we found a total of 3,428 
cases with an average length of stay of 8.7 days and average costs of 
$68,965. For procedure codes describing the insertion of a 
biventricular short-term external heart

[[Page 20185]]

assist system with open, percutaneous or percutaneous endoscopic 
approaches, we found a total of 127 cases with an average length of 
stay ranging from 2 to 10 days and average costs ranging from $43,988 
to $118,361. For procedure codes describing the insertion of a short-
term external heart assist system with open, percutaneous or 
percutaneous endoscopic approaches, we found a total of 3,233 cases 
with an average length of stay ranging from 5.3 days to 11.5 days and 
average costs ranging from $57,042 to $99,107. For procedure codes 
describing the revision of a short-term external heart assist system 
with open or percutaneous approaches, we found a total of 88 cases with 
an average length of stay ranging from 10 to 13.5 days and average 
costs ranging from $71,077 to $99,378. We found 1 case reporting 
procedure code 02WA0JZ (Revision of synthetic substitute in heart, open 
approach), with an average length of stay of 84 days and average costs 
of $366,089. Lastly, we found 56 cases reporting procedure code 02WA0QZ 
(Revision of implantable heart assist system in heart, open approach) 
with an average length of stay of 25.1 days and average costs of 
$123,410.
    As the data show, there is a wide range in the average length of 
stay and the average costs for cases reporting procedures that involve 
a biventricular short-term external heart assist system versus a short-
term external heart assist system. There is an even greater range in 
the average length of stay and the average costs when comparing the 
revision of a short-term external heart assist system to the revision 
of a synthetic substitute in the heart or to the revision an 
implantable heart assist system.
    We agree with the commenters that continued monitoring of the data 
and further analysis is necessary prior to proposing any modifications 
to MS-DRG 215. As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38012), we are aware that the AHA published Coding Clinic advice that 
clarified coding and reporting for certain external heart assist 
devices due to the technology being approved for new indications. The 
current claims data do not yet reflect that updated guidance. We also 
note that there have been recent updates to the descriptions of the 
codes for heart assist devices in the past year. For example, the 
qualifier ``intraoperative'' was added effective October 1, 2017 (FY 
2018) to the procedure codes describing the insertion of short-term 
external heart assist system procedures to distinguish between 
procedures where the device was only used intraoperatively and was 
removed at the conclusion of the procedure versus procedures where the 
device was not removed at the conclusion of the procedure and for which 
that qualifier would not be reported. The current claims data do not 
yet reflect these new procedure codes, which are displayed in the 
following table and are assigned to MS-DRG 215.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02HA0RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             open approach.
02HA3RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             percutaneous approach.
02HA4RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             percutaneous endoscopic approach.
------------------------------------------------------------------------

    Our clinical advisors agree that additional claims data are needed 
for analysis prior to proposing any changes to MS-DRG 215. Therefore, 
we are proposing not to make any modifications to MS-DRG 215 for FY 
2019. We are inviting public comments on our proposal.
    As stated earlier in this section, we also received a request to 
review cases reporting the use of ECMO in combination with the 
insertion of a percutaneous short[dash]term external heart assist 
device. Under ICD-10-PCS, ECMO is identified with procedure code 
5A15223 (Extracorporeal membrane oxygenation, continuous) and the 
insertion of a percutaneous short-term external heart assist device is 
identified with procedure code 02HA3RZ (Insertion of short-term 
external heart assist system into heart, percutaneous approach). 
According to the commenter, when ECMO procedures are performed 
percutaneously, they are less invasive and less expensive than 
traditional ECMO. The commenter also noted that, currently under ICD-
10-PCS, there is not a specific procedure code to identify percutaneous 
ECMO, and providers are only able to report ICD-10-PCS procedure code 
5A15223, which may be inappropriately resulting in a higher paying MS-
DRG. Therefore, the commenter submitted a separate request to create a 
new ICD-10-PCS procedure code specifically for percutaneous ECMO which 
was discussed at the March 6-7, 2018 ICD-10 Coordination and 
Maintenance Committee Meeting. We refer readers to section II.F.18. of 
the preamble of this proposed rule for further information regarding 
this meeting and the discussion for a new procedure code.
    The requestor suggested that cases reporting a procedure code for 
ECMO in combination with the insertion of a percutaneous short-term 
external heart assist device could be reassigned from Pre-MDC MS-DRG 
003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or 
Principal Diagnosis Except Face, Mouth and Neck with Major O.R. 
Procedure) to MS-DRG 215. Our analysis involved examining cases in Pre-
MDC MS-DRG 003 in the September 2017 update of the FY 2017 MedPAR file 
for cases reporting ECMO with and without the insertion of a 
percutaneous short-term external heart assist device. Our findings are 
shown in the following table.

                          ECMO and Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         Pre-MDC MS-DRG                                cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 003--All cases...........................................          14,383            29.5        $118,218
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal              1,786              19         119,340
 membrane oxygenation, continuous)..............................
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal                 94            11.4         110,874
 membrane oxygenation, continuous) and 02HA3RZ (Insertion of
 short-term external heart assist system into heart,
 percutaneous approach).........................................

[[Page 20186]]

 
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal                  1               1          64,319
 membrane oxygenation, continuous) and 02HA4RZ (Insertion of
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 14,383 cases with an 
average length of stay of 29.5 days and average costs of $118,218 in 
Pre-MDC MS-DRG 003. We found 1,786 cases reporting procedure code 
5A15223 (Extracorporeal membrane oxygenation, continuous) with an 
average length of stay of 19 days and average costs of $119,340. We 
found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion 
of short-term external heart assist system into heart, percutaneous 
approach) with an average length of stay of 11.4 days and average costs 
of $110,874. Lastly, we found 1 case reporting procedure code 5A15223 
and 02HA4RZ (Insertion of short-term external heart assist system into 
heart, percutaneous endoscopic approach) with an average length of stay 
of 1 day and average costs of $64,319.
    We also reviewed the cases in MS-DRG 215 for procedure codes 
02HA3RZ and 02HA4RZ. Our findings are shown in the following table.

                              Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 215--All cases...........................................           3,428             8.7         $68,965
MS-DRG 215--Cases with procedure code 02HA3RZ (Insertion of                3,136             8.4          67,670
 short-term external heart assist system into heart,
 percutaneous approach).........................................
MS-DRG 215--Cases with procedure code 02HA4RZ (Insertion of                   31             5.3          57,042
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 3,428 cases with an 
average length of stay of 8.7 days and average costs of $68,965. We 
found a total of 3,136 cases reporting procedure code 02HA3RZ with an 
average length of stay of 8.4 days and average costs of $67,670. We 
found a total of 31 cases reporting procedure code 02HA4RZ with an 
average length of stay of 5.3 days and average costs of $57,042.
    For Pre-MDC MS-DRG 003, while the average length of stay and 
average costs for cases where procedure code 5A15223 was reported with 
procedure code 02HA3RZ or procedure code 02HA4RZ are lower than the 
average length of stay and average costs for cases where procedure code 
5A15223 was reported alone, we are unable to determine from the data if 
those ECMO procedures were performed percutaneously in the absence of a 
unique code. In addition, the one case reporting procedure code 5A15223 
with 02HA4RZ only had a 1 day length of stay and it is unclear from the 
data what the circumstances of that case may have involved. For 
example, the patient may have been transferred or may have expired. 
Therefore, we are proposing to not reassign cases reporting procedure 
code 5A15223 when reported with procedure code 02HA3RZ or procedure 
code 02HA4RZ for FY 2019. Our clinical advisors agree that until there 
is a way to specifically identify percutaneous ECMO in the claims data 
to enable further analysis, a proposal at this time is not warranted. 
We are inviting public comments on our proposal.
    A commenter also suggested that CMS maintain the current logic for 
MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except 
Pulsation Balloon with and without MCC, respectively), but recommended 
that CMS continue to monitor the data in these MS-DRGs for future 
consideration of distinctions (for example, different approaches and 
evolving technologies) that may impact the clinical and resource use of 
procedures involving heart assist devices.
    The logic for heart assist system devices in MS-DRGs 268 and 269 is 
comprised of the procedure codes shown in the following table, for 
which we examined claims data in the September 2017 update of the FY 
2017 MedPAR file in response to the commenter's request. Our findings 
are shown in the following table.

                     MS-DRGs for Aortic and Heart Assist Procedures Except Pulsation Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 268--All cases...........................................           3,798             9.6         $49,122
MS-DRG 268--Cases with procedure code 02PA0QZ (Removal of                     16            23.4          79,850
 implantable heart assist system from heart, open approach).....
MS-DRG 268--Cases with procedure code 02PA0RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, open approach)..........................................
MS-DRG 268--Cases with procedure code 02PA0RZ (Removal of short-               0               0               0
 term external heart assist system from heart, open approach)...
MS-DRG 268--Cases with procedure code 02PA3QZ (Removal of                     28            10.5          31,797
 implantable heart assist system from heart, percutaneous
 approach)......................................................

[[Page 20187]]

 
MS-DRG 268--Cases with procedure code 02PA3RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous approach)..................................
MS-DRG 268--Cases with procedure code 02PA3RZ (Removal of short-              96            12.4          51,469
 term external heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 268--Cases with procedure code 02PA4QZ (Removal of                      5             7.8          37,592
 implantable heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 268--Cases with procedure code 02PA4RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous endoscopic approach).......................
MS-DRG 268--Cases with procedure code 02PA4RZ (Removal of short-               0               0               0
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 269--All cases...........................................          16,900             2.4          30,793
MS-DRG 269--Cases with procedure code 02PA0QZ (Removal of                     10               8          23,741
 implantable heart assist system from heart, open approach).....
MS-DRG 269--Cases with procedure code 02PA0RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, open approach)..........................................
MS-DRG 269--Cases with procedure code 02PA0RZ (Removal of short-               0               0               0
 term external heart assist system from heart, open approach)...
MS-DRG 269--Cases with procedure code 02PA3QZ (Removal of                      6               5          19,421
 implantable heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 269--Cases with procedure code 02PA3RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous approach)..................................
MS-DRG 269--Cases with procedure code 02PA3RZ (Removal of short-              11               4          25,719
 term external heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 269--Cases with procedure code 02PA4QZ (Removal of                      1               3          14,415
 implantable heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 269--Cases with procedure code 02PA4RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous endoscopic approach).......................
MS-DRG 269--Cases with procedure code 02PA4RZ (Removal of short-               0               0               0
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 268, there were a total of 3,798 
cases, with an average length of stay of 9.6 days and average costs of 
$49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal 
of implantable heart assist system from heart, open approach), with an 
average length of stay of 23.4 days and average costs of $79,850. There 
were no cases that reported procedure codes 02PA0RS (Removal of 
biventricular short-term external heart assist system from heart, open 
approach), 02PA0RZ (Removal of short-term external heart assist system 
from heart, open approach), 02PA3RS (Removal of biventricular short-
term external heart assist system from heart, percutaneous approach), 
02PA4RS (Removal of biventricular short-term external heart assist 
system from heart, percutaneous endoscopic approach) or 02PA4RZ 
(Removal of short-term external heart assist system from heart, 
percutaneous endoscopic approach). There were 28 cases reporting 
procedure code 02PA3QZ (Removal of implantable heart assist system from 
heart, percutaneous approach), with an average length of stay of 10.5 
days and average costs of $31,797. There were 96 cases reporting 
procedure code 02PA3RZ (Removal of short-term external heart assist 
system from heart, percutaneous approach), with an average length of 
stay of 12.4 days and average costs of $51,469. There were 5 cases 
reporting procedure code 02PA4QZ (Removal of implantable heart assist 
system from heart, percutaneous endoscopic approach), with an average 
length of stay of 7.8 days and average costs of $37,592. For MS-DRG 
269, there were a total of 16,900 cases, with an average length of stay 
of 2.4 days and average costs of $30,793. There were 10 cases reporting 
procedure code 02PA0QZ (Removal of implantable heart assist system from 
heart, open approach), with an average length of stay of 8 days and 
average costs of $23,741. There were no cases reporting procedure codes 
02PA0RS (Removal of biventricular short-term external heart assist 
system from heart, open approach), 02PA0RZ (Removal of short-term 
external heart assist system from heart, open approach), 02PA3RS 
(Removal of biventricular short-term external heart assist system from 
heart, percutaneous approach), 02PA4RS (Removal of biventricular short-
term external heart assist system from heart, percutaneous endoscopic 
approach) or 02PA4RZ (Removal of short-term external heart assist 
system from heart, percutaneous endoscopic approach). There were 6 
cases reporting procedure code 02PA3QZ (Removal of implantable heart 
assist system from heart, percutaneous approach), with an average 
length of stay of 5 days and average costs of $19,421. There were 11 
cases reporting procedure code 02PA3RZ (Removal of short-term external 
heart assist system from heart, percutaneous approach), with an average 
length of stay of 4 days and average costs of $25,719. There was 1 case 
reporting procedure code 02PA4QZ (Removal of implantable heart assist 
system from heart, percutaneous endoscopic approach), with an average 
length of stay of 3 days and average costs of $14,415.
    The data show that there are differences in the average length of 
stay and average costs for cases in MS-DRGs 268 and 269 according to 
the type of device (short-term external heart assist system or 
implantable heart assist system), and the approaches that were utilized 
(open, percutaneous, or percutaneous endoscopic). We agree with the 
recommendation to maintain the structure of MS-DRGs 268 and 269 for FY 
2019 and will continue to analyze the claims data for possible future 
updates. As such, we are proposing to not make any changes to the 
structure of MS-DRGs 268 and 269

[[Page 20188]]

for FY 2019. We are inviting public comments on our proposal.
b. Brachytherapy
    We received a request to create a new Pre-MDC MS-DRG for all 
procedures involving the CivaSheet[reg] technology, an implantable, 
planar brachytherapy source designed to enable delivery of radiation to 
the site of the cancer tumor excision or debulking, while protecting 
neighboring tissue. The requestor stated that physicians have used the 
CivaSheet[reg] technology for a number of indications, such as 
colorectal, gynecological, head and neck, soft tissue sarcomas and 
pancreatic cancer. The requestor noted that potential uses also include 
nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma. 
Currently, procedures involving the CivaSheet[reg] technology are 
reported using ICD-10-PCS Section D--Radiation Therapy codes, with the 
root operation ``Brachytherapy.'' These codes are non-O.R. codes and 
group to the MS-DRG to which the principal diagnosis is assigned.
    In response to this request, we have analyzed claims data from the 
September 2017 update of the FY 2017 MedPAR file for cases representing 
patients who received treatment that reported low dose rate (LDR) 
brachytherapy procedure codes across all MS-DRGs. We refer readers to 
Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes 
associated with this proposed rule, which is available via the Internet 
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. A detailed list of these 
procedure codes are shown in Table 6P.1. Our findings are reflected in 
the following table.

              Cases Reporting Low Dose Rate (LDR) Brachytherapy Procedure Codes Across All MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                      ICD-10-PCS procedures                            cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 129 (Major Head and Neck Procedures with CC/MCC or Major                1               7         $10,357
 Device)--Cases with procedure code D710BBZ (Low dose rate (LDR)
 brachytherapy of bone marrow using Palladium[dash]103 (Pd-103))
MS-DRG 724 (Malignancy, Male Reproductive System without CC/                   1               7          32,298
 MCC)--Cases with procedure code DV10BBZ (Low dose rate (LDR)
 brachytherapy of prostate using Palladium[dash]103 (Pd-103))...
MS-DRG 129--Cases with procedure code DW11BBZ (Low dose rate                   1               3          42,565
 (LDR) brachytherapy of head and neck using Palladium[dash]103
 (Pd-103))......................................................
MS-DRG 330 (Major Small and Large Bowel Procedures with CC)--                  1               8          74,190
 Cases with procedure code DW16BBZ (Low dose rate (LDR)
 brachytherapy of pelvic region using Palladium[dash]103 (Pd-
 103))..........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the immediately preceding table, we identified 4 cases 
reporting one of these LDR brachytherapy procedure codes across all MS-
DRGs, with an average length of stay of 6.3 days and average costs of 
$39,853. We believe that creating a new Pre-MDC MS-DRG based on such a 
small number of cases could lead to distortion in the relative payment 
weights for the Pre-MDC MS-DRG. Having a larger number of clinically 
cohesive cases within the Pre-MDC MS-DRG provides greater stability for 
annual updates to the relative payment weights. Therefore, we are not 
proposing to create a new Pre-MDC MS-DRG for procedures involving the 
CivaSheet[reg] technology for FY 2019. We are inviting public comments 
on our proposal to maintain the current MS[dash]DRG structure for 
procedures involving the CivaSheet[reg] technology.
c. Laryngectomy
    The logic for case assignment to Pre-MDC MS-DRGs 11, 12, and 13 
(Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and 
without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 
35 Definitions Manual, which is available via the Internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, is 
comprised of a list of procedure codes for laryngectomies, a list of 
procedure codes for tracheostomies, and a list of diagnosis codes for 
conditions involving the face, mouth, and neck. The procedure codes for 
laryngectomies are listed separately and are reported differently from 
the procedure codes listed for tracheostomies. The procedure codes 
listed for tracheostomies must be reported with a diagnosis code 
involving the face, mouth, or neck as a principal diagnosis to satisfy 
the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13. 
Alternatively, any principal diagnosis code reported with a procedure 
code from the list of procedure codes for laryngectomies will satisfy 
the logic for assignment to Pre[dash]MDC MS-DRG 11, 12, or 13.
    To improve the manner in which the logic for assignment is 
displayed in the ICD-10 MS-DRG Definitions Manual and to clarify how it 
is applied for grouping purposes, we are proposing to reorder the lists 
of the diagnosis and procedure codes. The list of principal diagnosis 
codes for face, mouth, and neck would be sequenced first, followed by 
the list of the tracheostomy procedure codes and, lastly, the list of 
laryngectomy procedure codes.
    We also are proposing to revise the titles of Pre-MDC MS-DRGs 11, 
12, and 13 from ``Tracheostomy for Face, Mouth and Neck Diagnoses with 
MCC, with CC and without CC/MCC, respectively'' to ``Tracheostomy for 
Face, Mouth and Neck Diagnoses or Laryngectomy with MCC'', 
``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with 
CC'', and ``Tracheostomy for Face, Mouth and Neck Diagnoses or 
Laryngectomy without CC/MCC'', respectively, to reflect that 
laryngectomy procedures may also be assigned to these MS-DRGs.
    We are inviting public comments on our proposals.
d. Chimeric Antigen Receptor (CAR) T-Cell Therapy
    Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene 
therapy in which a patient's own T-cells are genetically engineered in 
a laboratory and used to assist in the patient's treatment to attack 
certain cancerous cells. Blood is drawn from the patient and the T-
cells are separated. The laboratory then utilizes the CAR process to 
genetically engineer the T[dash]cells,

[[Page 20189]]

resulting in the addition of a chimeric antigen receptor that will bind 
to a certain protein on the patient's cancerous cells. The CAR 
T[dash]cells are then administered to the patient by infusion.
    Two CAR T[dash]cell therapy drugs received FDA approval in 2017. 
KYMRIAHTM (manufactured by Novartis Pharmaceuticals 
Corporation) was approved for the use in the treatment of patients up 
to 25 years of age with B-cell precursor acute lymphoblastic leukemia 
(ALL) that is refractory or in second or later relapse. 
YESCARTATM (manufactured by Kite Pharma, Inc.) was approved 
for use in the treatment of adult patients with relapsed or refractory 
large B-cell lymphoma and who have not responded to or who have 
relapsed after at least two other kinds of treatment.
    Procedures involving the CAR T[dash]cell therapy drugs are 
currently identified with ICD-10-PCS procedure codes XW033C3 
(Introduction of engineered autologous chimeric antigen receptor t-cell 
immunotherapy into peripheral vein, percutaneous approach, new 
technology group 3) and XW043C3 (Introduction of engineered autologous 
chimeric antigen receptor t-cell immunotherapy into central vein, 
percutaneous approach, new technology group 3), which both became 
effective October 1, 2017. Procedures described by these two ICD-10-PCS 
procedure codes are designated as non-O.R. procedures that have no 
impact on MS-DRG assignment.
    We have received many inquiries from the public regarding payment 
of CAR T[dash]cell therapy under the IPPS. Suggestions for the MS-DRG 
assignment for FY 2019 ranged from assigning ICD-10-PCS procedure codes 
XW033C3 and XW043C3 to an existing MS-DRG to the creation of a new MS-
DRG for CAR T[dash]cell therapy. In the context of the recommendation 
to create a new MS-DRG for FY 2019, we also received suggestions that 
payment should be established in a way that promotes comparability 
between the inpatient setting and outpatient setting.
    As part of our review of these suggestions, we examined the 
existing MS-DRGs to identify the MS-DRGs that represent cases most 
clinically similar to those cases in which the CAR T[dash]cell therapy 
procedures would be reported. The CAR T-cell procedures involve a type 
of autologous immunotherapy in which the patient's cells are 
genetically transformed and then returned to that patient after the 
patient undergoes cell depleting chemotherapy. Our clinical advisors 
believe that patients receiving treatment utilizing CAR T-cell therapy 
procedures would have similar clinical characteristics and 
comorbidities to those seen in cases representing patients receiving 
treatment for other hematopoietic carcinomas who are treated with 
autologous bone marrow transplant therapy that are currently assigned 
to MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC). 
Therefore, after consideration of the inquiries received as to how the 
IPPS can appropriately group cases reporting the use of CAR T-cell 
therapy, we are proposing to assign ICD-10-PCS procedure codes XW033C3 
and XW043C3 to Pre[dash]MDC MS-DRG 016 for FY 2019. In addition, we are 
proposing to revise the title of MS-DRG 016 from ``Autologous Bone 
Marrow Transplant with CC/MCC'' to ``Autologous Bone Marrow Transplant 
with CC/MCC or T-cell Immunotherapy.''
    However, we note that, as discussed in greater detail in section 
II.H.5.a. of the preamble of this proposed rule, the manufacturer of 
KYMRIAHTM and the manufacturer of YESCARTATM 
submitted applications for new technology add-on payments for FY 2019. 
We also recognize that many members of the public have noted that the 
combination of the new technology add-on payment applications, the 
extremely high[dash]cost of these CAR T-cell therapy drugs, and the 
potential for volume increases over time present unique challenges with 
respect to the MS-DRG assignment for procedures involving the 
utilization of CAR T-cell therapy drugs and cases representing patients 
receiving treatment involving CAR T-cell therapy. We believe that, in 
the context of these pending new technology add-on payment 
applications, there may also be merit in the alternative suggestion we 
received to create a new MS-DRG for procedures involving the 
utilization of CAR T-cell therapy drugs and cases representing patients 
receiving treatment involving CAR T-cell therapy to which we could 
assign ICD-10-PCS procedure codes XW033C3 and XW043C3, effective for 
discharges occurring in FY 2019. As noted in section II.H.5.a. of the 
preamble of this proposed rule, if a new MS-DRG were to be created then 
consistent with section 1886(d)(5)(K)(ix) of the Act there may no 
longer be a need for a new technology add-on payment under section 
1886(d)(5)(K)(ii)(III) of the Act.
    We are inviting public comments on our proposed approach of 
assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-
DRG 016 for FY 2019. We also are inviting public comments on 
alternative approaches, including in the context of the pending 
KYMRIAHTM and YESCARTATM new technology add-on 
payment applications, and the most appropriate way to establish payment 
for FY 2019 under any alternative approaches. Such payment alternatives 
may include using a CCR of 1.0 for charges associated with ICD-10-PCS 
procedure codes XW033C3 and XW043C3, given that many public inquirers 
believed that hospitals would be unlikely to set charges different from 
the costs for KYMRIAHTM and YESCARTATM CAR T-cell 
therapy drugs, as discussed further in section II.A.4.g.2. of the 
Addendum of this proposed rule. These payment alternatives, including 
payment under any potential new MS-DRG, also could take into account an 
appropriate portion of the average sales price (ASP) for these drugs, 
including in the context of the pending new technology add-on payment 
applications.
    We are inviting comments on how these payment alternatives would 
affect access to care, as well as how they affect incentives to 
encourage lower drug prices, which is a high priority for this 
Administration. In addition, we are considering approaches and 
authorities to encourage value-based care and lower drug prices. We 
solicit comments on how the payment methodology alternatives may 
intersect and affect future participation in any such alternative 
approaches.
    As stated in section II.F.1.b. of the preamble of this proposed 
rule, we described the criteria used to establish new MS-DRGs. In 
particular, we consider whether the resource consumption and clinical 
characteristics of the patients with a given set of conditions are 
significantly different than the remaining patients in the MS-DRG. We 
evaluate patient care costs using average costs and lengths of stay and 
rely on the judgment of our clinical advisors to decide whether 
patients are clinically distinct or similar to other patients in the 
MS-DRG. In evaluating resource costs, we consider both the absolute and 
percentage differences in average costs between the cases we select for 
review and the remainder of cases in the MS-DRG. We also consider 
whether observed average differences are consistent across patients or 
attributable to cases that were extreme in terms of costs or length of 
stay, or both. Further, we consider the number of patients who will 
have a given set of characteristics and generally prefer not to create 
a new MS-DRG unless it would include a substantial number of cases. 
Based on the principles typically used to establish a new MS-DRG, we 
are soliciting comments on how the administration of the CAR T-cell

[[Page 20190]]

therapy drugs and associated services meet the criteria for the 
creation of a new MS-DRG. Also, section 1886(d)(4)(C)(iii) of the Act 
specifies that, beginning in FY 1991, the annual DRG reclassification 
and recalibration of the relative weights must be made in a manner that 
ensures that aggregate payments to hospitals are not affected. Given 
that a new MS-DRG must be established in a budget neutral manner, we 
are concerned with the redistributive effects away from core hospital 
services over time toward specialized hospitals and how that may affect 
payment for these core services. Therefore, we are soliciting public 
comments on our concerns with the payment alternatives that we are 
considering for CAR T-cell therapy drugs and therapies.
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Epilepsy With Neurostimulator
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 
38019), based on a request we received and our review of the claims 
data, the advice of our clinical advisors, and consideration of public 
comments, we finalized our proposal to reassign all cases reporting a 
principal diagnosis of epilepsy and one of the following ICD-10-PCS 
code combinations, which capture cases involving neurostimulator 
generators inserted into the skull (including cases involving the use 
of the RNS(copyright) neurostimulator), to retitled MS-DRG 023 
(Craniotomy with Major Device Implant or Acute Complex Central Nervous 
System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant 
or Epilepsy with Neurostimulator), even if there is no MCC reported:
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H00MZ (Insertion of 
neurostimulator lead into brain, open approach);
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H03MZ (Insertion of 
neurostimulator lead into brain, percutaneous approach); and
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H04MZ (Insertion of 
neurostimulator lead into brain, percutaneous endoscopic approach).
    The finalized listing of epilepsy diagnosis codes (82 FR 38018 
through 38019) contained codes provided by the requestor (82 FR 38016), 
in addition to diagnosis codes organized in subcategories G40.A- and 
G40.B- as recommended by a commenter in response to the proposed rule 
(82 FR 38018) because the diagnosis codes organized in these 
subcategories also are representative of diagnoses of epilepsy.
    For FY 2019, we received a request to include two additional 
diagnosis codes organized in subcategory G40.1- in the listing of 
epilepsy diagnosis codes for cases assigned to MS-DRG 023 because these 
diagnosis codes also represent diagnoses of epilepsy. The two 
additional codes identified by the requestor are:
     G40.109 (Localization-related (focal) (partial) 
symptomatic epilepsy and epileptic syndromes with simple partial 
seizures, not intractable, without status epilepticus); and
     G40.111 (Localization-related (focal) (partial) 
symptomatic epilepsy and epileptic syndromes with simple partial 
seizures, intractable, with status epilepticus).
    We agree with the requestor that diagnosis codes G40.109 and 
G40.111 also are representative of epilepsy diagnoses and should be 
added to the listing of epilepsy diagnosis codes for cases assigned to 
MS-DRG 023 because they also capture a type of epilepsy. Our clinical 
advisors reviewed this issue and agree that adding the two additional 
epilepsy diagnosis codes is appropriate. Therefore, we are proposing to 
add ICD-10-CM diagnosis codes G40.109 and G40.111 to the listing of 
epilepsy diagnosis codes for cases assigned to MS-DRG 023, effective 
October 1, 2018.
    We are inviting public comments on our proposal.
b. Neurological Conditions With Mechanical Ventilation
    We received two separate, but related requests to create new MS-
DRGs for cases that identify patients who have been diagnosed with 
neurological conditions classified under MDC 1 (Diseases and Disorders 
of the Nervous System) and who require mechanical ventilation with and 
without a thrombolytic and in the absence of an O.R. procedure. The 
requestors suggested that CMS consider when mechanical ventilation is 
reported with a neurological condition for the ICD-10 MS-DRG GROUPER 
assignment logic, similar to the current logic for MS-DRGs 207 and 208 
(Respiratory System Diagnosis with Ventilator Support >96 Hours and 
<=96 Hours, respectively) under MDC 4 (Diseases and Disorders of the 
Respiratory System), which consider respiratory conditions that require 
mechanical ventilation and are assigned a higher relative weight.
    The requestors stated that patients with a principal diagnosis of 
respiratory failure requiring mechanical ventilation are currently 
assigned to MS-DRG 207 (Respiratory System Diagnoses with Ventilator 
Support >96 Hours), which has a relative weight of 5.4845, and to MS-
DRG 208 (Respiratory System Diagnoses with Ventilator Support <=96 
Hours), which has a relative weight of 2.3678. The requestors also 
stated that patients with a principal diagnosis of ischemic cerebral 
infarction who received a thrombolytic agent during the hospital stay 
and did not undergo an O.R. procedure are assigned to MS-DRGs 061, 062, 
and 063 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia 
with Thrombolytic Agent with MCC, with CC, and without CC/MCC, 
respectively) under MDC 1, while patients with a principal diagnosis of 
intracranial hemorrhage or ischemic cerebral infarction who did not 
receive a thrombolytic agent during the hospital stay and did not 
undergo an O.R. procedure are assigned to MS-DRGs 064, 065 and 66 
(Intracranial Hemorrhage or Cerebral Infarction with MCC, with CC or 
TPA in 24 Hours, and without CC/MCC, respectively) under MDC 1.
    The requestors provided the current FY 2018 relative weights for 
these MS-DRGs as shown in the following table.

------------------------------------------------------------------------
                                                             Relative
           MS-DRG                    MS-DRG title             weight
------------------------------------------------------------------------
MS-DRG 061..................  Ischemic Stroke,                    2.7979
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent with
                               MCC.
MS-DRG 062..................  Ischemic Stroke,                    l.9321
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent with
                               CC.
MS-DRG 063..................  Ischemic Stroke,                    l.6169
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent
                               without CC/MCC.
MS-DRG 064..................  Intracranial Hemorrhage or          l.7685
                               Cerebral Infarction with
                               MCC.
MS-DRG 065..................  Intracranial Hemorrhage or          1.0311
                               Cerebral Infarction with
                               CC or TPA in 24 hours.
MS-DRG 066..................  Intracranial Hemorrhage or           .7466
                               Cerebral Infarction with
                               MCC.
------------------------------------------------------------------------


[[Page 20191]]

    The requestors stated that although the ICD-10-CM Official 
Guidelines for Coding and Reporting allow sequencing of acute 
respiratory failure as the principal diagnosis when it is jointly 
responsible (with an acute neurologic event) for admission, which would 
result in assignment to MS-DRGs 207 or 208 when the patient requires 
mechanical ventilation, it would not be appropriate to sequence acute 
respiratory failure as the principal diagnosis when it is secondary to 
intracranial hemorrhage or ischemic cerebral infarction.
    The requestors also stated that reporting for other purposes, such 
as quality measures, clinical trials, and Joint Commission and State 
certification or survey cases, is based on the principal diagnosis, and 
it is important, from a quality of care perspective, that the 
intracranial hemorrhage or cerebral infarction codes continue to be 
sequenced as principal diagnosis. The requestors believed that cases of 
patients who present with cerebral infarction or cerebral hemorrhage 
and acute respiratory failure are currently in conflict for principal 
diagnosis sequencing because the cerebral infarction or cerebral 
hemorrhage code is needed as the principal diagnosis for quality 
reporting and other purposes. However, acute respiratory failure is 
needed as the principal diagnosis for purposes of appropriate payment 
under the MS-DRGs.
    The requestors stated that by creating new MS-DRGs for neurological 
conditions with mechanical ventilation, those patients who require 
mechanical ventilation for airway protection on admission and those 
patients who develop acute respiratory failure requiring mechanical 
ventilation after admission can be grouped to MS-DRGs that provide 
appropriate payment for the mechanical ventilation resources. The 
requestors suggested two new MS-DRGs, citing as support that new MS-
DRGs were created for patients with sepsis requiring mechanical 
ventilation greater than and less than 96 hours.
    As discussed earlier in this section, the requests we received were 
separate, but related requests. The first request was to specifically 
identify patients presenting with intracranial hemorrhage or cerebral 
infarction with mechanical ventilation and create two new MS-DRGs as 
follows:
     Suggested new MS-DRG XXX (Intracranial Hemorrhage or 
Cerebral Infarction with Mechanical Ventilation >96 Hours); and
     Suggested new MS-DRG XXX (Intracranial Hemorrhage or 
Cerebral Infarction with Mechanical Ventilation <=96 Hours).
    The second request was to consider any principal diagnosis under 
the current GROUPER logic for MDC 1 with mechanical ventilation and 
create two new MS-DRGs as follows:
     Suggested New MS-DRG XXX (Neurological System Diagnosis 
with Mechanical Ventilation 96+ Hours); and
     Suggested New MS-DRG XXX (Neurological System Diagnosis 
with Mechanical Ventilation <=96 Hours).
    Both requesters suggested that CMS use the three ICD-10-PCS codes 
identifying mechanical ventilation to assign cases to the respective 
suggested new MS-DRGs. The three ICD-10-PCS codes are shown in the 
following table.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
5A1935Z.............................  Respiratory ventilation, less than
                                       96 consecutive hours.
5A1945Z.............................  Respiratory ventilation, 24-96
                                       consecutive hours.
5A1955Z.............................  Respiratory ventilation, greater
                                       than 96 consecutive hours.
------------------------------------------------------------------------

    Below we discuss the different aspects of each request in more 
detail.
    The first request involved two aspects: (1) Analyzing patients 
diagnosed with cerebral infarction and required mechanical ventilation 
who received a thrombolytic (for example, TPA) and did not undergo an 
O.R. procedure; and (2) analyzing patients diagnosed with intracranial 
hemorrhage or ischemic cerebral infarction and required mechanical 
ventilation who did not receive a thrombolytic (for example, TPA) 
during the current episode of care and did not undergo an O.R. 
procedure.
    For the first subset of patients, we analyzed claims data from the 
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 061, 062, 
and 063 because cases that are assigned to these MS-DRGs specifically 
identify patients who were diagnosed with a cerebral infarction and 
received a thrombolytic. The 90 ICD-10-CM diagnosis codes that specify 
a cerebral infarction and were included in our analysis are listed in 
Table 6P.1a associated with this proposed rule (which is available via 
the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    The ICD-10-PCS procedure codes displayed in the following table 
describe use of a thrombolytic agent.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
3E03017.............................  Introduction of other thrombolytic
                                       into peripheral vein, open
                                       approach.
3E03317.............................  Introduction of other thrombolytic
                                       into peripheral vein,
                                       percutaneous approach.
3E04017.............................  Introduction of other thrombolytic
                                       into central vein, open approach.
3E04317.............................  Introduction of other thrombolytic
                                       into central vein, percutaneous
                                       approach.
3E05017.............................  Introduction of other thrombolytic
                                       into peripheral artery, open
                                       approach.
3E05317.............................  Introduction of other thrombolytic
                                       into peripheral artery,
                                       percutaneous approach.
3E06017.............................  Introduction of other thrombolytic
                                       into central artery, open
                                       approach.
3E06317.............................  Introduction of other thrombolytic
                                       into central artery, percutaneous
                                       approach.
3E08017.............................  Introduction of other thrombolytic
                                       into heart, open approach.
3E08317.............................  Introduction of other thrombolytic
                                       into heart, percutaneous
                                       approach.
------------------------------------------------------------------------

    We examined claims data in MS-DRGs 061, 062, and 063 and identified 
cases that reported mechanical ventilation of any duration with a 
principal diagnosis of cerebral infarction where a thrombolytic agent 
was administered and the patient did not undergo an O.R. procedure. Our

[[Page 20192]]

findings are shown in the following table.

                                  Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases...........................................           5,192             6.4         $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral                       166            12.8          41,691
 infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral                       378             7.5          26,368
 infarction and mechanical ventilation =24-96 hours.............
MS-DRG 061--Cases with principal diagnosis of cerebral                       214             4.9          19,795
 infarction and mechanical ventilation <24 hours................
MS-DRG 062--All cases...........................................           9,730             3.9          13,865
MS-DRG 062--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral                        10             5.3          19,817
 infarction and mechanical ventilation =24-96 hours.............
MS-DRG 062--Cases with principal diagnosis of cerebral                        23             3.8          14,026
 infarction and mechanical ventilation <24 hours................
MS-DRG 063--All cases...........................................           1,984             2.7          11,771
MS-DRG 063--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral                         3             2.7          14,588
 infarction and mechanical ventilation =24-96 hours.............
MS-DRG 063--Cases with principal diagnosis of cerebral                         5             2.0          11,195
 infarction and mechanical ventilation <24 hours................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 5,192 cases in MS-DRG 
061 with an average length of stay of 6.4 days and average costs of 
$20,097. There were a total of 758 cases reporting the use of 
mechanical ventilation in MS-DRG 061 with an average length of stay 
ranging from 4.9 days to 12.8 days and average costs ranging from 
$19,795 to $41,691. For MS-DRG 062, there were a total of 9,730 cases 
with an average length of stay of 3.9 days and average costs of 
$13,865. There were a total of 33 cases reporting the use of mechanical 
ventilation in MS-DRG 062 with an average length of stay ranging from 
3.8 days to 5.3 days and average costs ranging from $14,026 to $19,817. 
For MS[dash]DRG 063, there were a total of 1,984 cases with an average 
length of stay of 2.7 days and average costs of $11,771. There were a 
total of 8 cases reporting the use of mechanical ventilation in MS-DRG 
063 with an average length of stay ranging from 2.0 days to 2.7 days 
and average costs ranging from $11,195 to $14,588.
    We then compared the total number of cases in MS-DRGs 061, 062, and 
063 specifically reporting mechanical ventilation >96 hours with a 
principal diagnosis of cerebral infarction where a thrombolytic agent 
was administered and the patient did not undergo an O.R. procedure 
against the total number of cases reporting mechanical ventilation <=96 
hours with a principal diagnosis of cerebral infarction where a 
thrombolytic agent was administered and the patient did not undergo an 
O.R. procedure. Our findings are shown in the following table.

                                  Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases...........................................           5,192             6.4         $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral                       166            12.8          41,691
 infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral                       594             6.5          23,780
 infarction and mechanical ventilation <=96 hours...............
MS-DRG 062--All cases...........................................           9,730             3.9          13,865
MS-DRG 062--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral                        34             4.2          15,558
 infarction and mechanical ventilation <=96 hours...............
MS-DRG 063--All cases...........................................           1,984             2.7          11,771
MS-DRG 063--Cases with principal diagnosis of cerebral                         0             0.0              $0
 infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral                         8             2.3          12,467
 infarction and mechanical ventilation <=96 hours...............
----------------------------------------------------------------------------------------------------------------

    As shown in this table, the total number of cases reported in MS-
DRG 061 was 5,192, with an average length of stay of 6.4 days and 
average costs of $20,097. There were 166 cases that reported mechanical 
ventilation >96

[[Page 20193]]

hours, with an average length of stay of 12.8 days and average costs of 
$41,691. There were 594 cases that reported mechanical ventilation <=96 
hours, with an average length of stay of 6.5 days and average costs of 
$23,780.
    The total number of cases reported in MS-DRG 062 was 9,730, with an 
average length of stay of 3.9 days and average costs of $13,865. There 
were no cases identified in MS-DRG 062 where mechanical ventilation >96 
hours was reported. However, there were 34 cases that reported 
mechanical ventilation <=96 hours, with an average length of stay of 
4.2 days and average costs of $15,558.
    The total number of cases reported in MS-DRG 63 was 1,984 with an 
average length of stay of 2.7 days and average costs of $11,771. There 
were no cases identified in MS-DRG 063 where mechanical ventilation >96 
hours was reported. However, there were 8 cases that reported 
mechanical ventilation <=96 hours, with an average length of stay of 
2.3 days and average costs of $12,467.
    For the second subset of patients, we examined claims data for MS-
DRGs 064, 065, and 066. We identified cases reporting mechanical 
ventilation of any duration with a principal diagnosis of cerebral 
infarction or intracranial hemorrhage where a thrombolytic agent was 
not administered during the current hospital stay and the patient did 
not undergo an O.R. procedure. The 33 ICD-10-CM diagnosis codes that 
specify an intracranial hemorrhage and were included in our analysis 
are listed in Table 6P.1b associated with this proposed rule (which is 
available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    We also used the list of 90 ICD-10-CM diagnosis codes that specify 
a cerebral infarction listed in Table 6P.1a associated with this 
proposed rule for our analysis. We note that the GROUPER logic for case 
assignment to MS-DRG 065 includes that a thrombolytic agent (for 
example, TPA) was administered within 24 hours of the current hospital 
stay. The ICD-10-CM diagnosis code that describes this scenario is 
Z92.82 (Status post administration of tPA (rtPA) in a different 
facility within the last 24 hours prior to admission to current 
facility). We did not review the cases reporting that diagnosis code 
for our analysis. Our findings are shown in the following table.

                 Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases...........................................          76,513             6.0         $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral                     2,153            13.4          38,262
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     4,843             6.6          18,119
 infarction or intracranial hemorrhage and mechanical
 ventilation =24-96 hours.......................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     4,001             3.1           8,675
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................
MS-DRG 065--All cases...........................................         106,554             3.7           7,236
MS-DRG 065--Cases with principal diagnosis of cerebral                        22            10.2          20,759
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       127             4.2          12,688
 infarction or intracranial hemorrhage and mechanical
 ventilation =24-96 hours.......................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       301             2.1           6,145
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................
MS-DRG 066--All cases...........................................          34,689             2.5           5,321
MS-DRG 066--Cases with principal diagnosis of cerebral                         1             4.0           3,426
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral                        31             3.7          10,364
 infarction or intracranial hemorrhage and mechanical
 ventilation =24-96 hours.......................................
MS-DRG 066--Cases with principal diagnosis of cerebral                       163             1.4           4,148
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 064 was 76,513, with 
an average length of stay of 6.0 days and average costs of $12,574. 
There were a total of 10,997 cases reporting the use of mechanical 
ventilation in MS-DRG 064 with an average length of stay ranging from 
3.1 days to 13.4 days and average costs ranging from $8,675 to $38,262. 
For MS-DRG 065, there were a total of 106,554 cases with an average 
length of stay of 3.7 days and average costs of $7,236. There were a 
total of 450 cases reporting the use of mechanical ventilation in MS-
DRG 065 with an average length of stay ranging from 2.1 days to 10.2 
days and average costs ranging from $6,145 to $20,759. For MS-DRG 066, 
there were a total of 34,689 cases with an average length of stay of 
2.5 days and average costs of $5,321. There were a total of 195 cases 
reporting the use of mechanical ventilation in MS-DRG 066 with an 
average length of stay ranging from 1.4 days to 4.0 days and average 
costs ranging from $3,426 to $10,364.
    We then compared the total number of cases in MS-DRGs 064, 065, and 
066 specifically reporting mechanical ventilation >96 hours with a 
principal diagnosis of cerebral infarction or intracranial hemorrhage 
where a thrombolytic agent was not administered and the patient did not 
undergo an O.R. procedure against the total number of cases reporting 
mechanical ventilation <=96 hours with a principal diagnosis of 
cerebral infarction or intracranial hemorrhage where a thrombolytic 
agent was not administered and the patient did not undergo an O.R. 
procedure. Our findings are shown in the following table.

[[Page 20194]]



                 Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases...........................................          76,513             6.0         $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral                     2,153            13.4          38,262
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     8,794             4.9          13,704
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
MS-DRG 065--All cases...........................................         106,554             3.7           7,236
MS-DRG 065--Cases with principal diagnosis of cerebral                        22            10.2          20,759
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       428             2.7           8,086
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
MS-DRG 066--All cases...........................................          34,689             2.5           5,321
MS-DRG 066--Cases with principal diagnosis of cerebral                         1             4.0           3,426
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral                       194             1.8           5,141
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 064 was 76,513, with 
an average length of stay of 6.0 days and average costs of $12,574. 
There were 2,153 cases that reported mechanical ventilation >96 hours, 
with an average length of stay of 13.4 days and average costs of 
$38,262, and there were 8,794 cases that reported mechanical 
ventilation <=96 hours, with an average length of stay of 4.9 days and 
average costs of $13,704.
    The total number of cases reported in MS-DRG 65 was 106,554, with 
an average length of stay of 3.7 days and average costs of $7,236. 
There were 22 cases that reported mechanical ventilation >96 hours, 
with an average length of stay of 10.2 days and average costs of 
$20,759, and there were 428 cases that reported mechanical 
ventilation<=96 hours, with an average length of stay of 2.7 days and 
average costs of $8,086.
    The total number of cases reported in MS-DRG 66 was 34,689, with an 
average length of stay of 2.5 days and average costs of $5,321. There 
was one case that reported mechanical ventilation >96 hours, with an 
average length of stay of 4.0 days and average costs of $3,426, and 
there were 194 cases that reported mechanical ventilation <=96 hours, 
with an average length of stay of 1.8 days and average costs of $5,141.
    We also analyzed claims data for MS-DRGs 207 and 208. As shown in 
the following table, there were a total of 19,471cases found in MS-DRG 
207 with an average length of stay of 13.8 days and average costs of 
$38,124. For MS-DRG 208, there were a total of 55,802 cases found with 
an average length of stay of 6.7 days and average costs of $17,439.

                              Respiratory System Diagnosis With Ventilator Support
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 207--All cases...........................................          19,471            13.8         $38,124
MS-DRG 208--All cases...........................................          55,802             6.7          17,439
----------------------------------------------------------------------------------------------------------------

    Our analysis of claims data relating to the first request for MS-
DRGs 061, 062, 063, 064, 065, and 066 and consultation with our 
clinical advisors do not support creating new MS-DRGs for cases that 
identify patients diagnosed with cerebral infarction or intracranial 
hemorrhage who require mechanical ventilation with or without a 
thrombolytic and in the absence of an O.R. procedure.
    For the first subset of patients (in MS-DRGs 061, 062 and 063), our 
data findings for MS-DRG 061 demonstrate the 166 cases that reported 
mechanical ventilation >96 hours had a longer average length of stay 
(12.8 days versus 6.4 days) and higher average costs ($41,691 versus 
$20,097) compared to all the cases in MS-DRG 061. However, there were 
no cases that reported mechanical ventilation >96 hours for MS-DRG 062 
or MS-DRG 063. For the 594 cases that reported mechanical ventilation 
<=96 hours in MS[dash]DRG 061, the data show that the average length of 
stay was consistent with the average length of stay of all of the cases 
in MS-DRG 061 (6.5 days versus 6.4 days) and the average costs were 
also consistent with the average costs of all of the cases in 
MS[dash]DRG 061 ($23,780 versus $20,097). For the 34 cases that 
reported mechanical ventilation <=96 hours in MS-DRG 062, the data show 
that the average length of stay was consistent with the average length 
of stay of all of the cases in MS-DRG 062 (4.2 days versus 3.9 days) 
and the average costs were also consistent with the average costs of 
all of the cases in MS DRG 062 ($15,558 versus $13,865). Lastly, for 
the 8 cases that reported mechanical ventilation <=96 hours in MS-DRG 
063, the data show that the average length of stay was consistent with 
the average length of stay of all of the cases in MS-DRG 063 (2.3 days 
versus 2.7 days) and the average costs were also consistent with the 
average costs of all of the cases in MS DRG 063 ($12,467 versus 
$11,771).
    For the second subset of patients (in MS-DRGs 064, 065 and 066), 
the data findings for the 2,153 cases that reported mechanical 
ventilation >96 hours in MS-DRG 064 showed a longer average length of 
stay (13.4 days versus 6.0 days) and higher average costs ($38,262 
versus $12,574) compared to all of the cases in MS-DRG 064. However, 
the 2,153 cases represent only 2.8 percent of all the cases in MS-DRG

[[Page 20195]]

064. For the 22 cases that reported mechanical ventilation >96 hours in 
MS-DRG 065, the data showed a longer average length of stay (10.2 days 
versus 3.7 days) and higher average costs ($20,759 versus $7,236) 
compared to all of the cases in MS-DRG 065. However, the 22 cases 
represent only 0.02 percent of all the cases in MS-DRG 065. For the one 
case that reported mechanical ventilation >96 hours in MS-DRG 066, the 
data showed a longer average length of stay (4.0 days versus 2.5 days) 
and lower average costs ($3,426 versus $5,321) compared to all of the 
cases in MS-DRG 066. For the 8,794 cases that reported mechanical 
ventilation <=96 hours in MS-DRG 064, the data showed that the average 
length of stay was shorter than the average length of stay for all of 
the cases in MS-DRG 064 (4.9 days versus 6.0 days) and the average 
costs were consistent with the average costs of all of the cases in MS-
DRG 064 ($13,704 versus $12,574). For the 428 cases that reported 
mechanical ventilation <=96 hours in MS-DRG 065, the data showed that 
the average length of stay was shorter than the average length of stay 
for all of the cases in MS-DRG 065 (2.7 days versus 3.7 days) and the 
average costs were consistent with the average costs of all the cases 
in MS-DRG 065 ($8,086 versus $7,236). For the 194 cases that reported 
mechanical ventilation <=96 hours in MS-DRG 066, the data showed that 
the average length of stay was shorter than the average length of stay 
for all of the cases in MS-DRG 066 (1.8 days versus 2.5 days) and the 
average costs were less than the average costs of all of the cases in 
MS-DRG 066 ($5,141 versus $5,321).
    Based on the analysis described above, the current MS-DRG 
assignment for the cases in MS-DRGs 061, 062, 063, 064, 065 and 066 
that identify patients diagnosed with cerebral infarction or 
intracranial hemorrhage who require mechanical ventilation with or 
without a thrombolytic and in the absence of an O.R. procedure appears 
appropriate.
    Our clinical advisors also noted that patients requiring mechanical 
ventilation (in the absence of an O.R. procedure) are known to be more 
resource intensive and it would not be practical to create new MS-DRGs 
specifically for this subset of patients diagnosed with an acute 
neurologic event, given the various indications for which mechanical 
ventilation may be utilized. If we were to create new MS-DRGs for 
patients diagnosed with an intracranial hemorrhage or cerebral 
infarction who require mechanical ventilation, it would not address all 
of the other patients who also utilize mechanical ventilation 
resources. It would also necessitate further extensive analysis and 
evaluation for several other conditions that require mechanical 
ventilation across each of the 25 MDCs under the ICD-10 MS-DRGs.
    To evaluate the frequency in which the use of mechanical 
ventilation is reported for different clinical scenarios, we examined 
claims data across each of the 25 MDCs to determine the number of cases 
reporting the use of mechanical ventilation >96 hours. Our findings are 
shown in the table below.

                                Mechanical Ventilation >96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                               MDC                                     cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation >96 hours.................         127,626            18.4         $61,056
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with          13,668            18.3          61,234
 mechanical ventilation >96 hours...............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical               33            22.7          79,080
 ventilation >96 hours..........................................
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and                    602            20.3          62,625
 Throat)--Cases with mechanical ventilation >96 hours...........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases           27,793            16.6          48,869
 with mechanical ventilation >96 hours..........................
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases           16,923            20.7          84,565
 with mechanical ventilation >96 hours..........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases              6,401            22.4          73,759
 with mechanical ventilation >96 hours..........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and              1,803            24.5          80,477
 Pancreas)--Cases with mechanical ventilation >96 hours.........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and            2,780            22.3          83,271
 Connective Tissue)--Cases with mechanical ventilation >96 hours
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue               390            22.2          68,288
 and Breast)--Cases with mechanical ventilation >96 hours.......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and                  1,168            20.9          60,682
 Disorders)--Cases with mechanical ventilation >96 hours........
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)--          2,325            19.6          57,893
 Cases with mechanical ventilation >96 hours....................
MDC 12 (Diseases and Disorders of the Male Reproductive System)--             54            26.8          95,204
 Cases with mechanical ventilation >96 hours....................
MDC 13 (Diseases and Disorders of the Female Reproductive                     89            24.6          83,319
 System)--Cases with mechanical ventilation >96 hours...........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with                 22            17.4          56,981
 mechanical ventilation >96 hours...............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs,               468            20.1          68,658
 Immunologic Disorders)--Cases with mechanical ventilation >96
 hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly                    538            29.7          99,968
 Differentiated Neoplasms)--Cases with mechanical ventilation
 >96 hours......................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or                    48,176            17.3          55,022
 Unspecified Sites)--Cases with mechanical ventilation >96 hours
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical                 54            29.3          52,749
 ventilation >96 hours..........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental             312            20.5          47,637
 Disorders)--Cases with mechanical ventilation >96 hours........

[[Page 20196]]

 
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases            2,436            18.2          57,712
 with mechanical ventilation >96 hours..........................
MDC 22 (Burns)--Cases with mechanical ventilation >96 hours.....             242            34.8         188,704
MDC 23 (Factors Influencing Health Status and Other Contacts                  64            17.7          50,821
 with Health Services)--Cases with mechanical ventilation >96
 hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical                  922            17.6          72,358
 ventilation >96 hours..........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with                 363            19.1          56,688
 mechanical ventilation >96 hours...............................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, the top 5 MDCs with the largest number of 
cases reporting mechanical ventilation >96 hours are MDC 18, with 
48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC 
1, with 13,668 cases; and MDC 6, with 6,401 cases. We note that the 
claims data demonstrate that the average length of stay is consistent 
with what we would expect for cases reporting the use of mechanical 
ventilation >96 hours across each of the 25 MDCs. The top 5 MDCs with 
the highest average costs for cases reporting mechanical ventilation 
>96 hours were MDC 22, with average costs of $188,704; MDC 17, with 
average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5, 
with average costs of $84,565; and MDC 13, with average costs of 
$83,319. We note that the data for MDC 8 demonstrated similar results 
compared to MDC 13 with average costs of $83,271 for cases reporting 
mechanical ventilation >96 hours. In summary, the claims data reflect a 
wide variance with regard to the frequency and average costs for cases 
reporting the use of mechanical ventilation >96 hours.
    We also examined claims data across each of the 25 MDCs for the 
number of cases reporting the use of mechanical ventilation <=96 hours. 
Our findings are shown in the table below.

                                Mechanical Ventilation <=96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                               MDC                                     cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation <=96 hours................         266,583             8.5         $26,668
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with          29,896             7.4          22,838
 mechanical ventilation <=96 hours..............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical               60             8.4          29,708
 ventilation <=96 hours.........................................
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and                  1,397             9.8          29,479
 Throat)--Cases with mechanical ventilation <=96 hours..........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases           64,861             7.8          20,929
 with mechanical ventilation <=96 hours.........................
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases           45,147             8.8          35,818
 with mechanical ventilation <=96 hours.........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases             15,629            11.3          33,660
 with mechanical ventilation <=96 hours.........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and              4,678            10.5          31,565
 Pancreas)--Cases with mechanical ventilation <=96 hours........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and            7,140            10.4          40,183
 Connective Tissue)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue             1,036            10.7          26,809
 and Breast)--Cases with mechanical ventilation <=96 hours......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and                  3,591             9.0          23,863
 Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)--          5,506            10.2          27,951
 Cases with mechanical ventilation <=96 hours...................
MDC 12 (Diseases and Disorders of the Male Reproductive System)--            168            11.5          35,009
 Cases with mechanical ventilation <=96 hours...................
MDC 13 (Diseases and Disorders of the Female Reproductive                    310            10.8          32,382
 System)--Cases with mechanical ventilation <=96 hours..........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with                 55             7.6          21,785
 mechanical ventilation <=96 hours..............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs,             1,171             8.7          26,138
 Immunologic Disorders)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly                  1,178            15.3          46,335
 Differentiated Neoplasms)--Cases with mechanical ventilation
 <=96 hours.....................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or                    69,826             8.5          25,253
 Unspecified Sites)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical                264            10.4          18,805
 ventilation <=96 hours.........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental             918             8.3          19,376
 Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases           10,842             6.5          17,843
 with mechanical ventilation <=96 hours.........................

[[Page 20197]]

 
MDC 22 (Burns)--Cases with mechanical ventilation <=96 hours....             353             9.7          45,557
MDC 23 (Factors Influencing Health Status and Other Contacts                 307             6.6          16,159
 with Health Services)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical                1,709             8.8          36,475
 ventilation <=96 hours.........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with                 541            10.4          29,255
 mechanical ventilation <=96 hours..............................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, the top 5 MDCs with the largest number of 
cases reporting mechanical ventilation <=96 hours are MDC 18, with 
69,826 cases; MDC 4, with 64,861 cases; MDC 5, with 45,147 cases; MDC 
1, with 29,896 cases; and MDC 6, with 15,629 cases. We note that the 
claims data demonstrate that the average length of stay is consistent 
with what we would expect for cases reporting the use of mechanical 
ventilation <=96 hours across each of the 25 MDCs. The top 5 MDCs with 
the highest average costs for cases reporting mechanical ventilation 
<=96 hours are MDC 17, with average costs of $46,335; MDC 22, with 
average costs of $45,557; MDC 8, with average costs of $40,183; MDC 24, 
with average costs of $36,475; and MDC 5, with average costs of 
$35,818. Similar to the cases reporting mechanical ventilation >96 
hours, the claims data for cases reporting the use of mechanical 
ventilation <=96 hours also reflect a wide variance with regard to the 
frequency and average costs. Depending on the number of cases in each 
MS-DRG, it may be difficult to detect patterns of complexity and 
resource intensity.
    With respect to the requestor's statement that reporting for other 
purposes, such as quality measures, clinical trials, and Joint 
Commission and State certification or survey cases, is based on the 
principal diagnosis, and their belief that patients who present with 
cerebral infarction or cerebral hemorrhage and acute respiratory 
failure are currently in conflict for principal diagnosis sequencing 
because the cerebral infarction or cerebral hemorrhage code is needed 
as the principal diagnosis for quality reporting and other purposes 
(however, acute respiratory failure is needed as the principal 
diagnosis for purposes of appropriate payment under the MS-DRGs), we 
note that providers are required to assign the principal diagnosis 
according to the ICD-10-CM Official Guidelines for Coding and Reporting 
and these assignments are not based on factors such as quality measures 
or clinical trials indications. Furthermore, we do not base MS-DRG 
reclassification decisions on those factors. If the cerebral hemorrhage 
or ischemic cerebral infarction is the reason for admission to the 
hospital, the cerebral hemorrhage or ischemic cerebral infarction 
diagnosis code should be assigned as the principal diagnosis.
    We acknowledge that new MS-DRGs were created for cases of patients 
with sepsis requiring mechanical ventilation greater than and less than 
96 hours. However, those MS-DRGs (MS-DRG 575 (Septicemia with 
Mechanical Ventilation 96+ Hours Age >17) and MS-DRG 576 (Septicemia 
without Mechanical Ventilation 96+ Hours Age >17)) were created several 
years ago, in FY 2007 (71 FR 47938 through 47939) in response to public 
comments suggesting alternatives for the need to recognize the 
treatment for that subset of patients with severe sepsis who exhibit a 
greater degree of severity and resource consumption as septicemia is a 
systemic condition, and also as a preliminary step in the transition 
from the CMS DRGs to MS-DRGs.
    We believe that additional analysis and efforts toward a broader 
approach to refining the MS-DRGs for cases of patients requiring 
mechanical ventilation across the MDCs involves carefully examining the 
potential for instability in the relative weights and disrupting the 
integrity of the MS-DRG system based on the creation of separate 
MS[dash]DRGs involving small numbers of cases for various indications 
in which mechanical ventilation may be required.
    The second request focused on patients diagnosed with any 
neurological condition classified under MDC 1 requiring mechanical 
ventilation in the absence of an O.R. procedure and without having 
received a thrombolytic agent. Because the first request specifically 
involved analysis for the acute neurological conditions of cerebral 
infarction and intracranial hemorrhage under MDC 1 and our findings do 
not support creating new MS-DRGs for those specific conditions, we did 
not perform separate claims analysis for other conditions classified 
under MDC 1.
    Therefore, we are not proposing to create new MS-DRGs for cases 
that identify patients diagnosed with neurological conditions 
classified under MDC 1 who require mechanical ventilation with or 
without a thrombolytic and in the absence of an O.R. procedure. We are 
inviting public comments on our proposal.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Pacemaker Insertions
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through 
56809), we discussed a request to examine the ICD-10-PCS procedure code 
combinations that describe procedures involving pacemaker insertions to 
determine if some procedure code combinations were excluded from the 
Version 33 ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 
(Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/
MCC, respectively) under MDC 5. We finalized our proposal to modify the 
Version 34 ICD-10 MS-DRG GROUPER logic so the specified procedure code 
combinations were no longer required for assignment into those MS-DRGs. 
As a result, the logic for pacemaker insertion procedures was 
simplified by separating the procedure codes describing cardiac 
pacemaker device insertions into one list and separating the procedure 
codes describing cardiac pacemaker lead insertions into another list. 
Therefore, when any ICD-10-PCS procedure code describing the insertion 
of a pacemaker device is reported from that specific logic list with 
any ICD-10-PCS procedure code describing the insertion of a pacemaker 
lead from that specific logic list (81 FR 56804 through 56806), the 
case is assigned to MS-DRGs 242, 243, and 244 under MDC 5.
    We then discussed our examination of the Version 33 GROUPER logic 
for MS[dash]DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with 
and without MCC, respectively) because assignment of cases to these MS-
DRGs

[[Page 20198]]

also included qualifying ICD-10-PCS procedure code combinations 
involving pacemaker insertions (81 FR 56806 through 56808). 
Specifically, the logic for Version 33 ICD-10 MS-DRGs 258 and 259 
included ICD-10-PCS procedure code combinations describing the removal 
of pacemaker devices and the insertion of new pacemaker devices. We 
finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER 
logic for MS-DRGs 258 and 259 to establish that a case reporting any 
procedure code from the list of ICD-10-PCS procedure codes describing 
procedures involving pacemaker device insertions without any other 
procedure codes describing procedures involving pacemaker leads 
reported would be assigned to MS-DRGs 258 and 259 (81 FR 56806 through 
56807) under MDC 5. In addition, we pointed out that a limited number 
of ICD-10-PCS procedure codes describing pacemaker insertion are 
classified as non-operating room (non-O.R.) codes within the MS-DRGs 
and that the Version 34 ICD-10 MS-DRG GROUPER logic would continue to 
classify these procedure codes as non-O.R. codes. We noted that a case 
reporting any one of these non-O.R. procedure codes describing a 
pacemaker device insertion without any other procedure code involving a 
pacemaker lead would be assigned to MS-DRGs 258 and 259. Therefore, the 
listed procedure codes describing a pacemaker device insertion under 
MS-DRGs 258 and 259 are designated as non-O.R. affecting the MS-DRG.
    Lastly, we discussed our examination of the Version 33 GROUPER 
logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except 
Device Replacement with MCC, with CC, and without CC/MCC, 
respectively), and noted that cases assigned to these MS-DRGs also 
included lists of procedure code combinations describing procedures 
involving the removal of pacemaker leads and the insertion of new 
leads, in addition to lists of single procedure codes describing 
procedures involving the insertion of pacemaker leads, removal of 
cardiac devices, and revision of cardiac devices (81 FR 56808). We 
finalized our proposal to modify the ICD-10 MS-DRG GROUPER logic for 
MS-DRGs 260, 261, and 262 so that cases reporting any one of the listed 
ICD-10-PCS procedure codes describing procedures involving pacemakers 
and related procedures and associated devices are assigned to MS DRGs 
260, 261, and 262 under MDC 5. Therefore, the GROUPER logic that 
required a combination of procedure codes be reported for assignment 
into MS-DRGs 260, 261 and 262 under Version 33 was no longer required 
effective with discharges occurring on or after October 1, 2016 (FY 
2017) under Version 34 of the ICD-10 MS-DRGs.
    We note that while the discussion in the FY 2017 IPPS/LTCH PPS 
final rule focused on the MS-DRGs involving pacemaker procedures under 
MDC 5, similar GROUPER logic exists in Version 33 of the ICD-10 MS-DRGs 
under MDC 1 (Diseases and Disorders of the Nervous System) in MS-DRGs 
040, 041 and 042 (Peripheral, Cranial Nerve and Other Nervous System 
Procedures with MCC, with CC or Peripheral Neurostimulator and without 
CC/MCC, respectively) and MDC 21 (Injuries, Poisonings and Toxic 
Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures 
for Injuries with MCC, with CC, and without MCC, respectively) where 
procedure code combinations involving cardiac pacemaker device 
insertions or removals and cardiac pacemaker lead insertions or 
removals are required to be reported together for assignment into those 
MS-DRGs. We also note that, with the exception of when a principal 
diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes 
describing the insertion, removal, replacement, or revision of 
pacemaker devices are assigned to a medical MS-DRG in the absence of 
another O.R. procedure according to the GROUPER logic. We refer the 
reader to the ICD-10 MS-DRG Definitions Manual Version 33, which is 
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
complete documentation of the GROUPER logic that was in effect at that 
time for the Version 33 ICD-10 MS-DRGs discussed earlier.
    For FY 2019, we received a request to assign all procedures 
involving the insertion of pacemaker devices to surgical MS-DRGs, 
regardless of the principal diagnosis. The requestor recommended that 
procedures involving pacemaker insertion be grouped to surgical MS-DRGs 
within the MDC to which the principal diagnosis is assigned, or that 
they group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure 
Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, 
respectively). Currently, in Version 35 of the ICD-10 MS-DRGs, 
procedures involving pacemakers are assigned to MS-DRGs 040, 041, and 
042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with 
MCC, with CC or Peripheral Neurostimulator and without CC/MCC, 
respectively) under MDC 1 (Diseases and Disorders of the Nervous 
System), to MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker 
Implant with MCC, with CC, and without CC/MCC, respectively), MS-DRGs 
258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without 
MCC, respectively), and MS-DRGs 260, 261 and 262 (Cardiac Pacemaker 
Revision Except Device Replacement with MCC, with CC, and without CC/
MCC, respectively) under MDC 5 (Diseases and Disorders of the 
Circulatory System), and to MS-DRGs 907, 908, and 909 (Other O.R. 
Procedures for Injuries with MCC, with CC, and without CC/MCC, 
respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of 
Drugs), with all other unrelated principal diagnoses resulting in a 
medical MS-DRG assignment. According to the requestor, the medical MS-
DRGs do not provide adequate payment for the pacemaker device, 
specialized operating suites, time, skills, and other resources 
involved for pacemaker insertion procedures. Therefore, the requestor 
recommended that procedures involving pacemaker insertions be grouped 
to surgical MS-DRGs. We refer readers to the ICD-10 MS-DRG Definitions 
Manual Version 35, which is available via the Internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
complete documentation of the GROUPER logic for the MS-DRGs discussed 
earlier.
    The following procedure codes describe procedures involving the 
insertion of a cardiac rhythm related device which are classified as a 
type of pacemaker insertion under the ICD-10 MS-DRGs. These four codes 
are assigned to MS-DRGs 040, 041, and 042, as well as MS-DRGs 907, 908, 
and 909, and are designated as O.R. procedures.

[[Page 20199]]



------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0JH60PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH63PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH80PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JH83PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, percutaneous approach.
------------------------------------------------------------------------

    We examined cases from the September update of the FY 2017 MedPAR 
claims data for cases involving pacemaker insertion procedures 
reporting the above ICD-10-PCS codes in MS-DRGs 040, 041 and 042 under 
MDC 1. Our findings are shown in the following table.

                             Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 1                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 040--All cases...........................................           4,462            10.4         $26,877
MS-DRG 040--Cases with procedure code 0JH60PZ (Insertion of                   13            14.2          55,624
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH63PZ (Insertion of                    2             3.5          15,826
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 040--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 041--All cases...........................................           5,648             5.2          16,927
MS-DRG 041--Cases with procedure code 0JH60PZ (Insertion of                   12             6.4          22,498
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH63PZ (Insertion of                    4               5          17,238
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 041--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 042--All cases...........................................           2,154             3.1          13,730
MS-DRG 042--Cases with procedure code 0JH60PZ (Insertion of                    5               8          18,183
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 042--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
----------------------------------------------------------------------------------------------------------------

    The following table is a summary of the findings shown above from 
our review of MS-DRGs 040, 041 and 042 and the total number of cases 
reporting a pacemaker insertion procedure.

                       MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 1                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 040, 041, and 042--All cases............................          12,264             6.7         $19,986
MS-DRGs 040, 041, and 042--Cases with a pacemaker insertion                   36             9.1          32,906
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 12,264 cases in MS-DRGs 040, 041, and 042 with 
an average length of stay of 6.7 days and average costs of $19,986. We 
found a total of 36 cases in MS-DRGs 040, 041, and 042 reporting 
procedure codes describing the insertion of a pacemaker device with an 
average length of stay of 9.1 days and average costs of $32,906.
    We then examined cases involving pacemaker insertion procedures 
reporting those same four ICD-10-PCS procedure codes 0JH60PZ, 0JH63PZ, 
0JH80PZ and 0JH83PZ in MS-DRGs 907, 908, and 909 under MDC 21. Our 
findings are shown in the following table.

[[Page 20200]]



                      MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRG in MDC 21                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 907--All cases...........................................           7,405            10.1         $28,997
MS-DRG 907--Cases with procedure code 0JH60PZ (Insertion of                    7            11.1          60,141
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 908--All cases...........................................           8,519             5.2          14,282
MS-DRG 908--Cases with procedure code 0JH60PZ (Insertion of                    4             3.8          35,678
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 909--All cases...........................................           3,224             3.1           9,688
MS-DRG 909--Cases with procedure code 0JH60PZ (Insertion of                    2               2          42,688
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
----------------------------------------------------------------------------------------------------------------

    We note that there were no cases found where procedure codes 
0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS-DRGs 907, 908 and 909 
under MDC 21 and, therefore, they are not displayed in the table.
    The following table is a summary of the findings shown above from 
our review of MS-DRGs 907, 908, and 909 and the total number of cases 
reporting a pacemaker insertion procedure.

                      MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRG in MDC 21                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 907, 908 and 909--All cases.............................          19,148             6.7         $19,199
MS-DRGs 907, 908 and 909--Cases with a pacemaker insertion                    13             7.5          49,929
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 19,148 cases in MS-DRGs 907, 908, and 909 with 
an average length of stay of 6.7 days and average costs of $19,199. We 
found a total of 13 cases in MS-DRGs 907, 908, and 909 reporting 
pacemaker insertion procedures with an average length of stay of 7.5 
days and average costs of $49,929.
    We also examined cases involving pacemaker insertion procedures 
reporting the following procedure codes that are assigned to MS-DRGs 
242, 243, and 244 under MDC 5.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0JH604Z...................  Insertion of pacemaker, single chamber into
                             chest subcutaneous tissue and fascia, open
                             approach.
0JH605Z...................  Insertion of pacemaker, single chamber rate
                             responsive into chest subcutaneous tissue
                             and fascia, open approach.
0JH606Z...................  Insertion of pacemaker, dual chamber into
                             chest subcutaneous tissue and fascia, open
                             approach.
0JH607Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into chest
                             subcutaneous tissue and fascia, open
                             approach.
0JH60PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH634Z...................  Insertion of pacemaker, single chamber into
                             chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH635Z...................  Insertion of pacemaker, single chamber rate
                             responsive into chest subcutaneous tissue
                             and fascia, percutaneous approach.
0JH636Z...................  Insertion of pacemaker, dual chamber into
                             chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH637Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into chest
                             subcutaneous tissue and fascia,
                             percutaneous approach.
0JH63PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH804Z...................  Insertion of pacemaker, single chamber into
                             abdomen subcutaneous tissue and fascia,
                             open approach.
0JH805Z...................  Insertion of pacemaker, single chamber rate
                             responsive into abdomen subcutaneous tissue
                             and fascia, open approach.
0JH806Z...................  Insertion of pacemaker, dual chamber into
                             abdomen subcutaneous tissue and fascia,
                             open approach.
0JH807Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into abdomen
                             subcutaneous tissue and fascia, open
                             approach.
0JH80PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JH834Z...................  Insertion of pacemaker, single chamber into
                             abdomen subcutaneous tissue and fascia,
                             percutaneous approach.
0JH835Z...................  Insertion of pacemaker, single chamber rate
                             responsive into abdomen subcutaneous tissue
                             and fascia, percutaneous approach.
0JH836Z...................  Insertion of pacemaker, dual chamber into
                             abdomen subcutaneous tissue and fascia,
                             percutaneous approach.
0JH837Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into abdomen
                             subcutaneous tissue and fascia,
                             percutaneous approach.
0JH83PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, percutaneous approach.
------------------------------------------------------------------------

    Our data findings are shown in the following table. We note that 
procedure codes displayed with an asterisk (*) in the table are 
designated as non-O.R. procedures affecting the MS-DRG.

[[Page 20201]]



                             Cases Involving Pacemaker Insertion Procedures in MDC 5
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 5                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 242--All cases...........................................          18,205             6.9         $26,414
MS-DRG 242--Cases with procedure code 0JH604Z* (Insertion of               2,518             7.7          25,004
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH605Z* (Insertion of                 306             7.7          24,454
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH606Z* (Insertion of              13,323             6.7          25,497
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH607Z (Insertion of                1,528             8.1          37,060
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH60PZ (Insertion of                    5            16.6          59,334
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 242--Cases with procedure code 0JH634Z* (Insertion of                  65             8.5          26,789
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 242--Cases with procedure code 0JH635Z* (Insertion of                  10               7          35,104
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH636Z* (Insertion of                 313             6.4          23,699
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 242--Cases with procedure code 0JH637Z (Insertion of                   82             7.1          35,382
 cardiac resynchronization pacemaker pulse generator into chest
 Subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH63PZ (Insertion of                    2            12.5          32,405
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 242--Cases with procedure code 0JH804Z* (Insertion of                  25            14.4          43,080
 pacemaker, single chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH805Z* (Insertion of                   2               4          26,949
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH806Z* (Insertion of                  50             6.8          25,306
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH807Z (Insertion of                    5            21.2          67,908
 cardiac resynchronization pacemaker pulse generator into
 abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 242--Cases with procedure code 0JH836Z (Insertion of                    1               5          36,111
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--All cases...........................................          24,586               4          18,669
MS-DRG 243--Cases with procedure code 0JH604Z* (Insertion of               2,537             4.7          17,118
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH605Z* (Insertion of                 271             4.4          17,268
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH606Z* (Insertion of              19,921             3.9          18,306
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH607Z (Insertion of                1,236             4.4          28,658
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH60PZ (Insertion of                    6             4.2          20,994
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH634Z* (Insertion of                  55             5.2          16,784
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH635Z* (Insertion of                  15             4.1          17,938
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH636Z* (Insertion of                 431             3.7          16,164
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH637Z (Insertion of                   58               5          28,926
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH63PZ (Insertion of                    3             8.3          23,717
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 243--Cases with procedure code 0JH804Z* (Insertion of                  10             8.2          20,871
 pacemaker, single chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH805Z* (Insertion of                   1               4          15,739
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH806Z* (Insertion of                  57             4.4          18,787
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH807Z (Insertion of                    3               4          19,653
 cardiac resynchronization pacemaker pulse generator into
 abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 243--Cases with procedure code 0JH80PZ (Insertion of                    1               7          16,224
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH836Z* (Insertion of                   1               2          14,005
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 244--All cases...........................................          15,974             2.7          15,670
MS-DRG 244--Cases with procedure code 0JH604Z* (Insertion of               1,045             3.2          14,541
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................

[[Page 20202]]

 
MS-DRG 244--Cases with procedure code 0JH605Z* (Insertion of                 127               3          13,208
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH606Z* (Insertion of              14,092             2.7          15,596
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH607Z (Insertion of                  303             2.8          26,221
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH60PZ (Insertion of                    2             4.5           9,248
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 244--Cases with procedure code 0JH634Z* (Insertion of                  32             2.8          11,525
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 244--Cases with procedure code 0JH635Z* (Insertion of                   1               2          30,100
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH636Z* (Insertion of                 320             2.6          13,670
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 244--Cases with procedure code 0JH637Z (Insertion of                   20             2.7          19,218
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH63PZ (Insertion of                    1               3          12,120
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 244--Cases with procedure code 0JH805Z* (Insertion of                   1               1          21,604
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH806Z* (Insertion of                  36             3.2          16,492
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH836Z* (Insertion of                   1               3          12,160
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
----------------------------------------------------------------------------------------------------------------

    The following table is a summary of the findings shown above from 
our review of MS-DRGs 242, 243, and 244 and the total number of cases 
reporting a pacemaker insertion procedure.

                             Cases Involving Pacemaker Insertion Procedures in MDC 5
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 5                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 242, 243 and 244--All cases.............................          58,765             4.6         $20,253
MS-DRGs 242, 243, and 244--Cases with a pacemaker insertion             * 58,822             4.6          20,270
 procedure......................................................
----------------------------------------------------------------------------------------------------------------
* The figure is not adjusted for cases reporting more than one pacemaker insertion procedure code. The figure
  represents the frequency in which the number of pacemaker insertion procedures was reported.

    We found a total of 58,765 cases in MS-DRGs 242, 243, and 244 with 
an average length of stay of 4.6 days and average costs of $20,253. We 
found a total of 58,822 cases reporting pacemaker insertion procedures 
in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days 
and average costs of $20,270. We note that the analysis performed is by 
procedure code, and because multiple pacemaker insertion procedures may 
be reported on a single claim, the total number of these pacemaker 
insertion procedure cases exceeds the total number of all cases found 
across MS-DRGs 242, 243, and 244 (58,822 procedures versus 58,765 
cases).
    We then analyzed claims for cases reporting a procedure code 
describing (1) the insertion of a pacemaker device only, (2) the 
insertion of a pacemaker lead only, and (3) both the insertion of a 
pacemaker device and a pacemaker lead across all the MDCs except MDC 5 
to determine the number of cases currently grouping to medical MS-DRGs 
and the potential impact of these cases moving into the surgical 
unrelated MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated 
to Principal Diagnosis with MCC, with CC and without CC/MCC, 
respectively). Our findings are shown in the following table.

                                Pacemaker Insertion Procedures in Medical MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                      All MDCs except MDC 5                            cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device....................           2,747             9.5         $29,389
Procedures for insertion of pacemaker lead......................           2,831             9.4          29,240
Procedures for insertion of pacemaker device with insertion of             2,709             9.4          29,297
 pacemaker lead.................................................
----------------------------------------------------------------------------------------------------------------


[[Page 20203]]

    We found a total of 2,747 cases reporting the insertion of a 
pacemaker device in 177 medical MS-DRGs with an average length of stay 
of 9.5 days and average costs of $29,389 across all the MDCs except MDC 
5. We found a total of 2,831 cases reporting the insertion of a 
pacemaker lead in 175 medical MS-DRGs with an average length of stay of 
9.4 days and average costs of $29,240 across all the MDCs except MDC 5. 
We found a total of 2,709 cases reporting both the insertion of a 
pacemaker device and the insertion of a pacemaker lead in 170 medical 
MS-DRGs with an average length of stay of 9.4 days and average costs of 
$29,297 across all the MDCs except MDC 5.
    We also analyzed claims for cases reporting a procedure code 
describing the insertion of a pacemaker device with a procedure code 
describing the insertion of a pacemaker lead in all the surgical MS-
DRGs across all the MDCs except MDC 5. Our findings are shown in the 
following table.

                                Pacemaker Insertion Procedures in Medical MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                    All MDCs except MDC 5                      Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device with insertion             3,667             12.8          $48,856
 of pacemaker lead...........................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 3,667 cases reporting the insertion of a 
pacemaker device and the insertion of a pacemaker lead in 194 surgical 
MS-DRGs with an average length of stay of 12.8 days and average costs 
of $48,856 across all the MDCs except MDC 5.
    For cases where the insertion of a pacemaker device, the insertion 
of a pacemaker lead or the insertion of both a pacemaker device and 
lead were reported on a claim grouping to a medical MS-DRG, the average 
length of stay and average costs were generally higher for these cases 
when compared to the average length of stay and average costs for all 
the cases in their assigned MS-DRGs. For example, we found 113 cases 
reporting both the insertion of a pacemaker device and lead in MS-DRG 
378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1 
days and average costs of $23,711. The average length of stay for all 
cases in MS-DRG 378 was 3.6 days and the average cost for all cases in 
MS-DRG 378 was $7,190. The average length of stay for cases reporting 
both the insertion of a pacemaker device and lead were twice as long as 
the average length of stay for all the cases in MS-DRG 378 (7.1 days 
versus 3.6 days). In addition, the average costs for the cases 
reporting both the insertion of a pacemaker device and lead were 
approximately $16,500 higher than the average costs of all the cases in 
MS-DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c 
associated with this proposed rule (which is available via the internet 
on the CMS website) for the detailed report of our findings across the 
other medical MS-DRGs. We note that the average costs and average 
length of stay for cases reporting the insertion of a pacemaker device, 
the insertion of a pacemaker lead or the insertion of both a pacemaker 
device and lead are reflected in Columns D and E, while the average 
costs and average length of stay for all cases in the respective MS-DRG 
are reflected in Columns I and J.
    The claims data results from our analysis of this request showed 
that if we were to support restructuring the GROUPER logic so that 
pacemaker insertion procedures that include a combination of the 
insertion of the pacemaker device with the insertion of the pacemaker 
lead are designated as an O.R. procedure across all the MDCs, we would 
expect approximately 2,709 cases to move or ``shift'' from the medical 
MS-DRGs where they are currently grouping into the surgical unrelated 
MS-DRGs 981, 982, and 983.
    Our clinical advisors reviewed the data results and recommended 
that pacemaker insertion procedures involving a complete pacemaker 
system (insertion of pacemaker device combined with insertion of 
pacemaker lead) warrant classification into surgical MS-DRGs because 
the patients receiving these devices demonstrate greater treatment 
difficulty and utilization of resources when compared to procedures 
that involve the insertion of only the pacemaker device or the 
insertion of only the pacemaker lead. We note that the request we 
addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 
through 24984) was to determine if some procedure code combinations 
were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, 
and 244. We proposed and, upon considering public comments received, 
finalized an alternate approach that we believed to be less 
complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56806) that we would continue to monitor the MS-DRGs for pacemaker 
insertion procedures as we receive ICD-10 claims data. Upon further 
review, we believe that recreating the procedure code combinations for 
pacemaker insertion procedures would allow for the grouping of these 
procedures to the surgical MS-DRGs, which we believe is warranted to 
better recognize the resources and complexity of performing these 
procedures. Therefore, we are proposing to recreate pairs of procedure 
code combinations involving both the insertion of a pacemaker device 
with the insertion of a pacemaker lead to act as procedure code 
combination pairs or ``clusters'' in the GROUPER logic that are 
designated as O.R. procedures outside of MDC 5 when reported together. 
We are inviting public comments on our proposal.
    We also are proposing to designate all the procedure codes 
describing the insertion of a pacemaker device or the insertion of a 
pacemaker lead as non-O.R. procedures when reported as a single, 
individual stand-alone code based on the recommendation of our clinical 
advisors as noted earlier in this section and consistent with how these 
procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER 
logic. We are inviting public comments on our proposal.
    We refer readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f 
associated with this proposed rule (which is available via the internet 
on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for (1) a complete 
list of the proposed procedure code combinations or ``pairs''; (2) a 
complete list of the procedure codes describing the insertion of a 
pacemaker device; and (3) a complete list of the procedure codes 
describing the insertion of a pacemaker lead. We are inviting public 
comments on our lists of procedure codes that we are proposing to 
include for restructuring the ICD-10 MS-DRG GROUPER logic for pacemaker 
insertion procedures.
    In addition, we are proposing to maintain the current GROUPER logic 
for MS-DRGs 258 and 259 (Cardiac

[[Page 20204]]

Pacemaker Device Replacement with MCC and without MCC, respectively) 
where the listed procedure codes as shown in the ICD-10 MS-DRG 
Definitions Manual Version 35, which is available via the internet on 
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, 
describing a pacemaker device insertion, continue to be designated as 
``non-O.R. affecting the MS-DRG'' because they are reported when a 
pacemaker device requires replacement and have a corresponding 
diagnosis from MDC 5. Also, we are proposing to maintain the current 
GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision 
Except Device Replacement with MCC, with CC, and without CC/MCC, 
respectively) so that cases reporting any one of the listed ICD-10-PCS 
procedure codes as shown in the ICD-10 MS-DRG Definitions Manual 
Version 35 describing procedures involving pacemakers and related 
procedures and associated devices will continue to be assigned to those 
MS-DRGs under MDC 5 because they are reported when a pacemaker device 
requires revision and they have a corresponding circulatory system 
diagnosis. We are inviting public comments on our proposal.
    We note that, while the requestor did not include the following 
procedure codes in its request, these codes are also currently 
designated as O.R. procedure codes and are assigned to MS-DRGs 260, 
261, and 262 under MDC 5.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02PA0MZ...................  Removal of cardiac lead from heart, open
                             approach.
02PA3MZ...................  Removal of cardiac lead from heart,
                             percutaneous approach.
02PA4MZ...................  Removal of cardiac lead from heart,
                             percutaneous endoscopic approach.
02WA0MZ...................  Revision of cardiac lead in heart, open
                             approach.
02WA3MZ...................  Revision of cardiac lead in heart,
                             percutaneous approach.
02WA4MZ...................  Revision of cardiac lead in heart,
                             percutaneous endoscopic approach.
0JPT0PZ...................  Removal of cardiac rhythm related device
                             from trunk subcutaneous tissue and fascia,
                             open approach.
0JPT3PZ...................  Removal of cardiac rhythm related device
                             from trunk subcutaneous tissue and fascia,
                             percutaneous approach.
0JWT0PZ...................  Revision of cardiac rhythm related device in
                             trunk subcutaneous tissue and fascia, open
                             approach.
0JWT3PZ...................  Revision of cardiac rhythm related device in
                             trunk subcutaneous tissue and fascia,
                             percutaneous approach.
------------------------------------------------------------------------

    We are soliciting public comments on whether these procedure codes 
describing the removal or revision of a cardiac lead and removal or 
revision of a cardiac rhythm related (pacemaker) device should also be 
designated as non-O.R. procedure codes for FY 2019 when reported as a 
single, individual stand-alone code with a principal diagnosis outside 
of MDC 5 for consistency in the classification among these devices.
    We also note that, while the requestor did not include the 
following procedure codes in its request, the codes in the following 
table became effective October 1, 2016 (FY 2017) and also describe 
procedures involving the insertion of a pacemaker. Specifically, the 
following list includes procedure codes that describe an intracardiac 
or ``leadless'' pacemaker. These procedure codes are designated as O.R. 
procedure codes and are currently assigned to MS-DRGs 228 and 229 
(Other Cardiothoracic Procedures with MCC and without MCC, 
respectively) under MDC 5.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02H40NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, open approach.
02H43NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous approach.
02H44NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous endoscopic
                             approach.
02H60NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, open approach.
02H63NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, percutaneous approach.
02H64NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, percutaneous endoscopic
                             approach.
02H70NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, open approach.
02H73NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, percutaneous approach.
02H74NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, percutaneous endoscopic
                             approach.
02HK0NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, open approach.
02HK3NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, percutaneous approach.
02HK4NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, percutaneous endoscopic
                             approach.
02HL0NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, open approach.
02HL3NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, percutaneous Approach.
02HL4NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, percutaneous endoscopic
                             approach.
02WA0NZ...................  Revision of intracardiac pacemaker in heart,
                             open approach.
02WA3NZ...................  Revision of intracardiac pacemaker in heart,
                             percutaneous approach.
02WA4NZ...................  Revision of intracardiac pacemaker in heart,
                             percutaneous endoscopic approach.
02WAXNZ...................  Revision of intracardiac pacemaker in heart,
                             external approach.
02H40NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, open approach.
02H43NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous approach.
------------------------------------------------------------------------

    We examined claims data for procedures involving an intracardiac 
pacemaker reporting any of the above codes across all MS-DRGs. Our 
findings are shown in the following table.

[[Page 20205]]



                                        Intracardiac Pacemaker Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                      Across all MS-DRGs                       Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for intracardiac pacemaker........................           1,190              8.6          $38,576
----------------------------------------------------------------------------------------------------------------

    We found 1,190 cases reporting a procedure involving an 
intracardiac pacemaker with an average length of stay of 8.6 days and 
average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in 
MS-DRGs under MDC 5. We also found that the 153 cases that grouped to 
MS-DRGs outside of MDC 5 grouped to surgical MS-DRGs; therefore, 
another O.R. procedure was also reported on the claim. However, we are 
soliciting public comments on whether these procedure codes describing 
the insertion and revision of intracardiac pacemakers should also be 
considered for classification into all surgical unrelated MS-DRGs 
outside of MDC 5 for FY 2019.
b. Drug-Coated Balloons in Endovascular Procedures
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we 
discontinued new technology add[dash]on payments for the LUTONIX[reg] 
and IN.PACTTM AdmiralTM drug-coated balloon (DCB) 
technologies, effective for FY 2018, because the technology no longer 
met the newness criterion for new technology add-on payments. For FY 
2019, we received a request to reassign cases that utilize a drug-
coated balloon in the performance of an endovascular procedure 
involving the treatment of superficial femoral arteries for peripheral 
arterial disease from the lower severity level MS-DRG 254 (Other 
Vascular Procedures without CC/MCC) and MS-DRG 253 (Other Vascular 
Procedures with CC) to the highest severity level MS-DRG 252 (Other 
Vascular Procedures with MCC). We also received a request to revise the 
title of MS-DRG 252 to ``Other Vascular Procedures with MCC or Drug-
Coated Balloon Implant''.
    There are currently 36 ICD-10-PCS procedure codes that describe the 
performance of endovascular procedures involving treatment of the 
superficial femoral arteries that utilize a drug-coated balloon, which 
are listed in the following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
047K041...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047K0D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047K0Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, open approach.
047K341...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047K3D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047K3Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, percutaneous approach.
047K441...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047K4D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047K4Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047L041...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047L0D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047L0Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, open approach.
047L341...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047L3D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047L3Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, percutaneous approach.
047L441...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047L4D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047L4Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047M041...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047M0D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047M0Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, open approach.
047M341...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047M3D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047M3Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, percutaneous approach.
047M441...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047M4D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047M4Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, percutaneous
                             endoscopic approach.
047N041...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047N0D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047N0Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, open approach.
047N341...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047N3D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047N3Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, percutaneous approach.
047N441...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047N4D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047N4Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------


[[Page 20206]]

    The requestor performed its own analysis of claims data and 
expressed concern that it found that the average costs of cases using a 
drug-coated balloon in the performance of percutaneous endovascular 
procedures involving treatment of patients who have been diagnosed with 
peripheral arterial disease are significantly higher than the average 
costs of all of the cases in the MS-DRGs where these procedures are 
currently assigned. The requestor also expressed concern that payments 
may no longer be adequate because the new technology add-on payments 
have been discontinued and may affect patient access to these 
procedures.
    We first examined claims data from the September 2017 update of the 
FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD-10-PCS 
procedure codes listed in the immediately preceding table that describe 
the use of a drug-coated balloon in the performance of endovascular 
procedures in MS-DRGs 252, 253, and 254. Our findings are shown in the 
following table.

                       MS-DRGs for Other Vascular Procedures With Drug[dash]Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 252--All cases...........................................          33,583             7.6         $23,906
MS-DRG 252--Cases with drug-coated balloon......................             870             8.8          30,912
MS-DRG 253--All cases...........................................          25,714             5.4          18,986
MS-DRG 253--Cases with drug-coated balloon......................           1,532             5.4          23,051
MS-DRG 254--All cases...........................................          12,344             2.8          13,287
MS-DRG 254--Cases with drug-coated balloon......................             488             2.4          17,445
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 33,583 cases in MS-
DRG 252, with an average length of stay of 7.6 days and average costs 
of $23,906. There were 870 cases in MS-DRG 252 reporting the use of a 
drug-coated balloon in the performance of an endovascular procedure, 
with an average length of stay of 8.8 days and average costs of 
$30,912. The total number of cases in MS-DRG 253 was 25,714, with an 
average length of stay of 5.4 days and average costs of $18,986. There 
were 1,532 cases in MS-DRG 253 reporting the use of a DCB in the 
performance of an endovascular procedure, with an average length of 
stay of 5.4 days and average costs of $23,051. The total number of 
cases in MS-DRG 254 was 12,344, with an average length of stay of 2.8 
days and average costs of $13,287. There were 488 cases in MS-DRG 254 
reporting the use of a DCB in the performance of an endovascular 
procedure, with an average length of stay of 2.4 days and average costs 
of $17,445.
    The results of our data analysis show that there is not a very high 
volume of cases reporting the use of a drug-coated balloon in the 
performance of endovascular procedures compared to all of the cases in 
the assigned MS-DRGs. The data results also show that the average 
length of stay for cases reporting the use of a drug[dash]coated 
balloon in the performance of endovascular procedures in MS-DRGs 253 
and 254 is lower compared to the average length of stay for all of the 
cases in the assigned MS-DRGs, while the average length of stay for 
cases reporting the use of a drug-coated balloon in the performance of 
endovascular procedures in MS-DRG 252 is slightly higher compared to 
all of the cases in MS-DRG 252 (8.8 days versus 7.6 days). Lastly, the 
data results showed that the average costs for cases reporting the use 
of a drug-coated balloon in the performance of percutaneous 
endovascular procedures were higher compared to all of the cases in the 
assigned MS-DRGs. Specifically, for MS-DRG 252, the average costs for 
cases reporting the use of a DCB in the performance of endovascular 
procedures were $30,912 versus the average costs of $23,906 for all 
cases in MS-DRG 252, a difference of $7,006. For MS-DRG 253, the 
average costs for cases reporting the use of a drug-coated balloon in 
the performance of endovascular procedures were $23,051 versus the 
average costs of $18,986 for all cases in MS-DRG 253, a difference of 
$4,065. For MS-DRG 254, the average costs for cases reporting the use 
of a drug-coated balloon in the performance of endovascular procedures 
were $17,445 versus the average costs of $13,287 for all cases in MS-
DRG 254, a difference of $4,158.
    The following table is a summary of the findings discussed above 
from our review of MS-DRGs 252, 253 and 254 and the total number of 
cases that used a drug[dash]coated balloon in the performance of the 
procedure across MS-DRGs 252, 253, and 254.

                    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average Length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 252, 253, and 254--All cases............................          71,641             6.0         $20,310
MS-DRGs 252, 253, and 254--Cases with drug-coated balloon.......           2,890             6.0          24,569
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 71,641 cases across 
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days 
and average costs of $20,310. There were a total of 2,890 cases across 
MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon in 
the performance of the procedure, with an average length of stay of 6.0 
days and average costs of $24,569. The data analysis showed that cases 
reporting the use of a drug-coated balloon in the performance of the 
procedure across MS-DRGs 252, 253 and 254 have similar lengths of stay 
(6.0 days) compared to the average length of stay for all of the cases 
in MS-DRGs 252, 253, and 254. The data results also showed that the 
cases reporting the use of a drug-coated balloon in the performance of 
the procedure across

[[Page 20207]]

these MS-DRGs have higher average costs ($24,569 versus $20,310) 
compared to the average costs for all of the cases across these MS-
DRGs.
    The results of our claims data analysis and the advice from our 
clinical advisors do not support reassigning cases reporting the use of 
a drug-coated balloon in the performance of these procedures from the 
lower severity level MS-DRGs 253 and 254 to the highest severity level 
MS-DRG 252 at this time. If we were to reassign cases that utilize a 
drug-coated balloon in the performance of these types of procedures 
from MS-DRG 254 to MS-DRG 252, the cases would result in overpayment 
and also would have a shorter length of stay compared to all of the 
cases in MS-DRG 252. While the cases reporting the use of a drug-coated 
balloon in the performance of these procedures are higher compared to 
the average costs for all cases in their assigned MS-DRGs, it is not by 
a significant amount. We believe that as use of a drug-coated balloon 
becomes more common, the costs will be reflected in the data. Our 
clinical advisors also agreed that it would not be clinically 
appropriate to reassign cases for patients from the lowest severity 
level (without CC/MCC) MS-DRG to the highest severity level (with MCC) 
MS-DRG in the absence of additional data to better determine the 
resource utilization for this subset of patients. Therefore, for these 
reasons, we are proposing to not reassign cases reporting the use of a 
drug-coated balloon in the performance of endovascular procedures from 
MS-DRGs 253 and 254 to MS-DRG 252. We are inviting public comments on 
our proposal.
    We note that because 24 of the 36 ICD-10-PCS procedure codes 
describing the use of a drug-coated balloon in the performance of 
endovascular procedures also include the use of an intraluminal device, 
we conducted further analysis to determine the number of cases 
reporting an intraluminal device with the use of a drug-coated balloon 
in the performance of the procedure versus the number of cases 
reporting the use of a drug[dash]coated balloon alone. We analyzed the 
number of cases across MS-DRGs 252, 253, and 254 reporting: (1) The use 
of an intraluminal device (stent) with use of a drug-coated balloon in 
the performance of the procedure; (2) the use of a drug-eluting 
intraluminal device (stent) with the use of a drug-coated balloon in 
the performance of the procedure; and (3) the use of a drug-coated 
balloon only in the performance of the procedure. Our findings are 
shown in the following table.

                    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 252, 253 and 254--All cases.............................          71,641             6.0         $20,310
MS-DRGs 252, 253 and 254--Cases with intraluminal device with                522             6.0          28,418
 drug-coated balloon............................................
MS-DRGs 252, 253 and 254--Cases with drug-eluting intraluminal               447             6.0          26,098
 device with drug-coated balloon................................
MS-DRGs 252, 253 and 254--Cases with drug-coated balloon only...           2,705             6.1          24,553
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 71,641 cases across 
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days 
and average costs of $20,310. There were 522 cases across MS-DRGs 252, 
253, and 254 reporting the use of an intraluminal device with use of a 
drug-coated balloon in the performance of the procedure, with an 
average length of stay of 6.0 days and average costs of $28,418. There 
were 447 cases across MS-DRGs 252, 253, and 254 reporting the use of a 
drug[dash]eluting intraluminal device with use of a drug-coated balloon 
in the performance of the procedure, with an average length of stay of 
6.0 days and average costs of $26,098. Lastly, there were 2,705 cases 
across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated 
balloon alone in the performance of the procedure, with an average 
length of stay of 6.1 days and average costs of $24,553.
    The data showed that the 2,705 cases in MS-DRGs 252, 253, and 254 
reporting the use of a drug-coated balloon alone in the performance of 
the procedure have lower average costs compared to the 969 cases in MS-
DRGs 252, 253, and 254 reporting the use of an intraluminal device (522 
cases) or a drug-eluting intraluminal device (447 cases) with a drug-
coated balloon in the performance of the procedure ($24,553 versus 
$28,418 and $26,098, respectively). The data also showed that the cases 
reporting the use of a drug-coated balloon alone in the performance of 
the procedure have a comparable average length of stay compared to the 
cases reporting the use of an intraluminal device or a drug-eluting 
intraluminal device with a drug-coated balloon in the performance of 
the procedure (6.1 days versus 6.0 days).
    In summary, we believe that further analysis of endovascular 
procedures involving the treatment of superficial femoral arteries for 
peripheral arterial disease that utilize a drug-coated balloon in the 
performance of the procedure would be advantageous. As additional 
claims data become available, we will be able to more fully evaluate 
the differences in cases where a procedure utilizes a drug-coated 
balloon alone in the performance of the procedure versus cases where a 
procedure utilizes an intraluminal device or a drug-eluting 
intraluminal device in addition to a drug-coated balloon in the 
performance of the procedure.
5. MDC 6 (Diseases and Disorders of the Digestive System)
a. Benign Lipomatous Neoplasm of Kidney
    We received a request to reassign ICD-10-CM diagnosis code D17.71 
(Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and 
Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of 
the Kidney and Urinary Tract). The requestor stated that this diagnosis 
code is used to describe a kidney neoplasm and believed that because 
the ICD-10-CM code is specific to the kidney, a more appropriate 
assignment would be under MDC 11. In FY 2015, under the ICD-9-CM 
classification, there was not a specific diagnosis code for a benign 
lipomatous neoplasm of the kidney. The only diagnosis code available 
was ICD-9-CM diagnosis code 214.3 (Lipoma of intra[dash]abdominal 
organs), which was assigned to MS-DRGs 393, 394, and 395 (Other 
Digestive System Diagnoses with MCC, with CC, and without CC/MCC, 
respectively) under MDC 6. Therefore, when we converted from the ICD-9 
based MS[dash]DRGs to the ICD[dash]10 MS[dash]DRGs, there was not a 
specific code available that identified the kidney from which to

[[Page 20208]]

replicate. As a result, ICD-10-CM diagnosis code D17.71 was assigned to 
those same MS-DRGs (MS-DRGs 393, 394, and 395) under MDC 6.
    While reviewing the MS-DRG classification of ICD-10-CM diagnosis 
code D17.71, we also reviewed the MS-DRG classification of another 
diagnosis code organized in subcategory D17.7, ICD-10-CM diagnosis code 
D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD-
10-CM diagnosis code D17.72 is currently assigned under MDC 09 
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to 
MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, 
respectively). Similar to the replication issue with ICD-10-CM 
diagnosis code D17.71, with ICD-10-CM diagnosis code D17.72, under the 
ICD-9-CM classification, there was not a specific diagnosis code to 
identify a benign lipomatous neoplasm of genitourinary organ. The only 
diagnosis code available was ICD-9-CM diagnosis code 214.8 (Lipoma of 
other specified sites), which was assigned to MS-DRGs 606 and 607 under 
MDC 09. Therefore, when we converted from the ICD-9 based MS[dash]DRGs 
to the ICD-10 MS[dash]DRGs, there was not a specific code available 
that identified another genitourinary organ (other than the kidney) 
from which to replicate. As a result, ICD-10-CM diagnosis code D17.72 
was assigned to those same MS-DRGs (MS-DRGs 606 and 607) under MDC 9.
    We are proposing to reassign ICD-10-CM diagnosis code D17.71 from 
MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, 
with CC, and without CC/MCC, respectively) under MDC 06 to MS-DRGs 686, 
687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, with CC, and 
without CC/MCC, respectively) under MDC 11 because this diagnosis code 
is used to describe a kidney neoplasm. We also are proposing to 
reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under 
MDC 09 to MS-DRGs 686, 687, and 688 under MDC 11 because this diagnosis 
code is used to describe other types of neoplasms classified to the 
genitourinary tract that do not have a specific code identifying the 
site. Our clinical advisors agree that the conditions described by the 
ICD-10-CM diagnosis codes provide specific anatomic detail involving 
the kidney and genitourinary tract and, therefore, if reclassified 
under this proposed MDC and reassigned to these MS-DRGs, would improve 
the clinical coherence of the patients assigned to these groups.
    We are inviting public comments on our proposals.
b. Bowel Procedures
    We received a request to reassign the following 8 ICD-10-PCS 
procedure codes that describe repositioning of the colon and takedown 
of end colostomy from MS-DRGs 344, 345, and 346 (Minor Small and Large 
Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) 
to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures 
with MCC, with CC, and without CC/MCC, respectively):

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DSK0ZZ...................  Reposition ascending colon, open approach.
0DKL4ZZ...................  Reposition ascending colon, percutaneous
                             endoscopic approach.
0DSL0ZZ...................  Reposition transverse colon, open approach.
0DSL4ZZ...................  Reposition transverse colon, percutaneous
                             endoscopic approach.
0DSM0ZZ...................  Reposition descending colon, open approach.
0DSM4ZZ...................  Reposition descending colon, percutaneous
                             endoscopic approach.
0DSN0ZZ...................  Reposition sigmoid colon, open approach.
0DSN4ZZ...................  Reposition sigmoid colon, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

    The requestor indicated that the resources required for procedures 
identifying repositioning of specified segments of the large bowel are 
more closely aligned with other procedures that group to MS-DRGs 329, 
330, and 331, such as repositioning of the large intestine (unspecified 
segment).
    We analyzed the claims data from the September 2017 update of the 
FY 2017 Med PAR file for MS-DRGs 344, 345 and 346 for all cases 
reporting the 8 ICD[dash]10-PCS procedure codes listed in the table 
above. Our findings are shown in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 344--All cases...........................................           1,452             9.5         $20,609
MS-DRG 344--All cases with a specific large bowel reposition                  52             9.6          23,409
 procedure......................................................
MS-DRG 345--All cases...........................................           2,674             5.6          11,552
MS-DRG 345--All cases with a specific large bowel reposition....             246               6          14,915
MS-DRG 346--All cases...........................................             990             3.8           8,977
MS-DRG 346--All cases with a specific large bowel reposition                 223             4.5          12,279
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    The data showed that the average length of stay and average costs 
for cases that reported a specific large bowel reposition procedure 
were generally consistent with the average length of stay and average 
costs for all of the cases in their assigned MS-DRG.
    We then examined the claims data in the September 2017 update of 
the FY 2017 MedPAR file for MS-DRGs 329, 330 and 331. Our findings are 
shown in the following table.

[[Page 20209]]



 
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 329, 330, and 331--All cases............................         112,388             8.4         $21,382
MS-DRG 329--All cases...........................................          33,640            13.3          34,015
MS-DRG 330--All cases...........................................          52,644             7.3          17,896
MS-DRG 331--All cases...........................................          26,104             4.1          12,132
----------------------------------------------------------------------------------------------------------------

    As shown in this table, across MS-DRGs 329, 330, and 331, we found 
a total of 112,388 cases, with an average length of stay of 8.4 days 
and average costs of $21,382. The results of our analysis indicate that 
the resources required for cases reporting the specific large bowel 
repositioning procedures are more aligned with those resources required 
for all cases assigned to MS-DRGs 344, 345, and 346, with the average 
costs being lower than the average costs for all cases assigned to MS-
DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8 
specific bowel repositioning procedures are best aligned with those in 
MS-DRGs 344, 345, and 346. Therefore, we are proposing to maintain the 
current assignment of the 8 specific bowel repositioning procedures in 
MS[dash]DRGs 344, 345, and 346 for FY 2019. We are inviting public 
comments on this proposal.
    In conducting our analysis of MS-DRGs 329, 330, and 331, we also 
examined the subset of cases reporting one of the bowel procedures 
listed in the following table as the only O.R. procedure.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DQK0ZZ...................  Repair ascending colon, open approach.
0DQK4ZZ...................  Repair ascending colon, percutaneous
                             endoscopic approach.
0DQL0ZZ...................  Repair transverse colon, open approach.
0DQL4ZZ...................  Repair transverse colon, percutaneous
                             endoscopic approach.
0DQM0ZZ...................  Repair descending colon, open approach.
0DQM4ZZ...................  Repair descending colon, percutaneous
                             endoscopic approach.
0DQN0ZZ...................  Repair sigmoid colon, open approach.
0DQN4ZZ...................  Repair sigmoid colon, percutaneous
                             endoscopic approach.
0DSB0ZZ...................  Reposition ileum, open approach.
0DSB4ZZ...................  Reposition ileum, percutaneous endoscopic
                             approach.
0DSE0ZZ...................  Reposition large intestine, open approach.
0DSE4ZZ...................  Reposition large intestine, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

    This approach can be useful in determining whether resource use is 
truly associated with a particular procedure or whether the procedure 
frequently occurs in cases with other procedures with higher than 
average resource use. As shown in the following table, we identified 
398 cases reporting a bowel procedure as the only O.R. procedure, with 
an average length of stay of 6.3 days and average costs of $13,595 
across MS-DRGs 329, 330, and 331, compared to the overall average 
length of stay of 8.4 days and average costs of $21,382 for all cases 
in MS-DRGs 329, 330, and 331.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 329, 330 and 331--All cases.............................         112,388             8.4         $21,382
MS-DRGs 329, 330 and 331--All cases with a bowel procedure as                398             6.3          13,595
 only O.R. procedure............................................
MS-DRG 329--All cases...........................................          33,640            13.3          34,015
MS-DRG 329--Cases with a bowel procedure as only O.R. procedure.              86             8.3          19,309
MS-DRG 330--All cases...........................................          52,644             7.3          17,896
MS-DRG 330--Cases with a bowel procedure as only O.R. procedure.             183             6.9          13,617
MS-DRG 331--All cases...........................................          26,104             4.1          12,132
MS-DRG 331--Cases with a bowel procedure as only O.R. procedure.             129             4.3           9,754
----------------------------------------------------------------------------------------------------------------

    The resources required for these cases are more aligned with the 
resources required for cases assigned to MS-DRGs 344, 345, and 346 than 
with the resources required for cases assigned to MS-DRGs 329, 330, and 
331. Our clinical advisors also agreed that these cases are more 
clinically aligned with cases in MS-DRGs 344, 345, and 346, as they are 
minor procedures relative to the major bowel procedures assigned to MS-
DRGs 329, 330, and 331. Therefore, we are proposing to reassign the 12 
ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 
to MS-DRGs 344, 345, and 346. We are inviting public comments on this 
proposal.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and 
Connective Tissue): Spinal Fusion
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced 
our plans to review the ICD-10 logic for the MS-DRGs where procedures 
involving spinal fusion are currently assigned for FY 2019. After 
publication of the FY 2018 IPPS/LTCH PPS final rule, we

[[Page 20210]]

received a comment suggesting that CMS publish findings from this 
review and discuss possible future actions. The commenter agreed that 
it is important to be able to fully evaluate the MS-DRGs to which all 
spinal fusion procedures are currently assigned with additional claims 
data, particularly considering the 33 clinically invalid codes that 
were identified through the rulemaking process (82 FR 38034 through 
38035) and the 87 codes identified from the upper and lower joint 
fusion tables in the ICD-10-PCS classification and discussed at the 
September 12, 2017 ICD-10 Coordination and Maintenance Committee that 
were proposed to be deleted effective October 1, 2018 (FY 2019). The 
agenda and handouts from that meeting can be obtained from the CMS 
website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.
    According to the commenter, deleting the 33 procedure codes 
describing clinically invalid spinal fusion procedures for FY 2018 
partially resolves the issue for data used in setting the FY 2020 
payment rates. However, the commenter also noted that the problem will 
not be fully resolved until the FY 2019 claims are available for FY 
2021 ratesetting (due to the 87 codes identified at the ICD-10 
Coordination and Maintenance Committee meeting for deletion effective 
October 1, 2018 (FY 2019)).
    The commenter noted that it analyzed claims data from the FY 2016 
MedPAR data set and was surprised to discover a significant number of 
discharges reporting 1 of the 87 clinically invalid codes that were 
identified and discussed by the ICD-10 Coordination and Maintenance 
Committee among the following spinal fusion MS-DRGs.

 
------------------------------------------------------------------------
          MS-DRG                             Description
------------------------------------------------------------------------
453.......................  Combined Anterior/Posterior Spinal Fusion
                             with MCC.
454.......................  Combined Anterior/Posterior Spinal Fusion
                             with CC.
455.......................  Combined Anterior/Posterior Spinal Fusion
                             without CC/MCC.
456.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions with MCC.
457.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions with CC.
458.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions without CC/MCC.
459.......................  Spinal Fusion Except Cervical with MCC.
460.......................  Spinal Fusion Except Cervical without MCC.
471.......................  Cervical Spinal Fusion with MCC.
472.......................  Cervical Spinal Fusion with CC.
473.......................  Cervical Spinal Fusion without CC/MCC.
------------------------------------------------------------------------

    In addition, the commenter noted that it also identified a number 
of discharges for the 33 clinically invalid codes we identified in the 
FY 2018 IPPS/LTCH PPS final rule in the same MS-DRGs listed above. 
According to the commenter, its findings of these invalid spinal fusion 
procedure codes in the FY 2016 claims data comprise approximately 30 
percent of all discharges for spinal fusion procedures.
    The commenter expressed its appreciation that CMS is making efforts 
to address coding inaccuracies within the classification and suggested 
that CMS publish findings from its own review of spinal fusion coding 
issues in those MS-DRGs where cases reporting spinal fusion procedures 
are currently assigned and include a discussion of possible future 
actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter 
believed that such an approach would allow time for stakeholder input 
on any possible proposals along with time for the invalid codes to be 
worked out of the datasets. The commenter also noted that publishing 
CMS' findings will put the agency, as well as the public, in a better 
position to address any potential payment issues for these services 
beginning in FY 2021.
    We thank the commenter for acknowledging the steps we have taken in 
our efforts to address coding inaccuracies within the classification as 
we continue to refine the ICD-10 MS-DRGs. We are not proposing any 
changes to the MS-DRGs involving spinal fusion procedures for FY 2019. 
However, in response to the commenter's suggestion and findings, we are 
providing the results from our analysis of the September 2017 update of 
the FY 2017 MedPAR claims data for the MS-DRGs involving spinal fusion 
procedures.
    We note that while the commenter stated that 87 codes were 
identified from the upper and lower joint fusion tables in the ICD-10-
PCS classification and discussed at the September 12, 2017 ICD-10 
Coordination and Maintenance Committee meeting to be deleted effective 
October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified 
in the meeting materials, as shown in Table 6P.1g associated with this 
proposed rule (which is available via the Internet on the CMS website 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    As shown in Table 6P.1g associated with this proposed rule, the 99 
procedure codes describe spinal fusion procedures that have device 
value ``Z'' representing No Device for the 6th character in the code. 
Because a spinal fusion procedure always requires some type of device 
(for example, instrumentation with bone graft or bone graft alone) to 
facilitate the fusion of vertebral bones, these codes are considered 
clinically invalid and were proposed for deletion at the September 12, 
2017 ICD-10 Coordination and Maintenance Committee meeting. We received 
public comments in support of the proposal to delete the 99 codes 
describing a spinal fusion without a device, in addition to receiving 
support for the deletion of other procedure codes describing fusion of 
body sites other than the spine. A total of 213 procedure codes 
describing fusion of a specific body part with device value ``Z'' No 
Device are being deleted effective October 1, 2018 (FY 2019) as shown 
in Table 6D.--Invalid Procedure Codes associated with this proposed 
rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting any of the clinically invalid 
spinal fusion procedures with device value ``Z'' No Device in MS-DRGs 
028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or 
Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC) 
under

[[Page 20211]]

MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 
473 under MDC 8 (that are listed and shown earlier in this section). 
Our findings are shown in the following tables.

                                            Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 028--All cases...........................................           1,927            11.7         $37,524
MS-DRG 028--Cases with invalid spinal fusion procedures.........             132              13          52,034
MS-DRG 029--All cases...........................................           3,426             5.7          22,525
MS-DRG 029--Cases with invalid spinal fusion procedures.........             171             7.4          33,668
MS-DRG 030--All cases...........................................           1,578               3          15,984
MS-DRG 030--Cases with invalid spinal fusion procedures.........              52             2.6          22,471
MS-DRG 453--All cases...........................................           2,891             9.5          70,005
MS-DRG 453--Cases with invalid spinal fusion procedures.........             823            10.1          84,829
MS-DRG 454--All cases...........................................          12,288             4.7          47,334
MS-DRG 454--Cases with invalid spinal fusion procedures.........           2,473             5.4          59,814
MS-DRG 455--All cases...........................................          12,751               3          37,440
MS-DRG 455--Cases with invalid spinal fusion procedures.........           2,332             3.2          45,888
MS-DRG 456--All cases...........................................           1,439            11.5          66,447
MS-DRG 456--Cases with invalid spinal fusion procedures.........             404            12.5          71,385
MS-DRG 457--All cases...........................................           3,644               6          48,595
MS-DRG 457--Cases with invalid spinal fusion procedures.........             960             6.7          53,298
MS-DRG 458--All cases...........................................           1,368             3.6          37,804
MS-DRG 458--Cases with invalid spinal fusion procedures.........             244             4.1          43,182
MS-DRG 459--All cases...........................................           4,904             7.8          43,862
MS-DRG 459--Cases with invalid spinal fusion procedures.........             726               9          49,387
MS-DRG 460--All cases...........................................          59,459             3.4          29,870
MS-DRG 460--Cases with invalid spinal fusion procedures.........           5,311             3.9          31,936
MS-DRG 471--All cases...........................................           3,568             8.4          36,272
MS-DRG 471--Cases with invalid spinal fusion procedures.........             389             9.9          43,014
MS-DRG 472--All cases...........................................          15,414             3.2          21,836
MS-DRG 472--Cases with invalid spinal fusion procedures.........           1,270               4          25,780
MS-DRG 473--All cases...........................................          18,095             1.8          17,694
MS-DRG 473--Cases with invalid spinal fusion procedures.........           1,185             2.3          19,503
----------------------------------------------------------------------------------------------------------------


                                   Summary Table for Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460,           142,752             3.9         $31,788
 471, 472, and 473--All cases...................................
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460,            16,472             5.1          42,929
 471, 472, and 473--Cases with invalid spinal fusion procedures.
----------------------------------------------------------------------------------------------------------------

    As shown in this summary table, we found a total of 142,752 cases 
in MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 
472, and 473 with an average length of stay of 3.9 days and average 
costs of $31,788. We found a total of 16,472 cases reporting a 
procedure code for an invalid spinal fusion procedure with device value 
``Z'' No Device across MS-DRGs 028, 029, and 030 under MDC 1 and MS-
DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under 
MDC 8, with an average length of stay of 5.1 days and average costs of 
$42,929. The results of the data analysis demonstrate that these 
invalid spinal fusion procedures represent approximately 12 percent of 
all discharges across the spinal fusion MS-DRGs. Because these 
procedure codes describe clinically invalid procedures, we would not 
expect these codes to be reported on any claims data. It is unclear why 
providers assigned procedure codes for spinal fusion procedures with 
the device value ``Z'' No Device. Our analysis did not examine whether 
these claims were isolated to a specific provider or whether this 
inaccurate reporting was widespread among a number of providers.
    With regard to possible future action, we will continue to monitor 
the claims data for resolution of the coding issues previously 
identified. Because the procedure codes that we analyzed and presented 
findings for in this FY 2019 IPPS/LTCH PPS proposed rule are no longer 
in the classification effective October 1, 2018 (FY 2019), the claims 
data that we examine for FY 2020 may still contain claims with the 
invalid codes. As such, we will continue to collaborate with the AHA as 
one of the four Cooperating Parties through the AHA's Coding Clinic for 
ICD-10-CM/PCS and provide further education on spinal fusion procedures 
and the proper reporting of the ICD-10-PCS spinal fusion procedure 
codes. We agree with the commenter that until these coding inaccuracies 
are no longer reflected in the claims data, it would be premature to 
propose any MS-DRG modifications for spinal fusion procedures. Possible 
MS-DRG modifications may include taking into account the approach that 
was utilized in performing the spinal fusion procedure (for example, 
open versus percutaneous).
    For the reasons described, stated earlier in our discussion, we are 
proposing to not make any changes to the spinal fusion MS-DRGs for FY 
2019.

[[Page 20212]]

We are inviting public comments on our proposal.
7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and 
Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus 
(MSRA) Infection
    We received a request to reassign ICD-10-CM diagnosis codes 
reported with a primary diagnosis of cellulitis and a secondary 
diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus 
infection as the cause of diseases classified elsewhere) or A49.02 
(Methicillin resistant Staphylococcus aureus infection, unspecified 
site). Currently, these cases are assigned to MS-DRG 602 (Cellulitis 
with MCC) and MS-DRG 603 (Cellulitis without MCC) in MDC 9. The 
requestor believed that cases of cellulitis with MSRA infection should 
be reassigned to MS-DRG 867 (Other Infectious and Parasitic Diseases 
Diagnoses with MCC) because MS-DRGs 602 and 603 include cases that do 
not accurately reflect the severity of illness or risk of mortality for 
patients diagnosed with cellulitis and MRSA. The requestor acknowledged 
that the organism is not to be coded before the localized infection, 
but stated in its request that patients diagnosed with cellulitis and 
MRSA are entirely different from patients diagnosed only with 
cellulitis. The requestor stated that there is a genuine threat to life 
or limb in these cases. The requestor further stated that, with the 
opioid crisis and the frequency of MRSA infection among this 
population, cases of cellulitis with MRSA should be identified with a 
specific combination code and assigned to MS-DRG 867.
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for all cases assigned to MS-DRGs 602 and 603 and 
subsets of these cases reporting a primary ICD-10-CM diagnosis of 
cellulitis and a secondary diagnosis code of B95.62 or A49.02. Our 
findings are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 602--All cases...........................................          26,244             5.8         $10,034
MS-DRG 603--All cases...........................................         104,491             3.9           6,128
MS-DRGs 602 and 603--Cases reported with a primary diagnosis of            5,364             5.3           8,245
 cellulitis and a secondary diagnosis of B95.62.................
MS-DRGs 602 and 603--Cases reported with a primary diagnosis of              309             5.4           8,832
 cellulitis and a secondary diagnosis of A49.02.................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we examined the subsets of cases in MS-DRGs 
602 and 603 reported with a primary diagnosis of cellulitis and a 
secondary diagnosis code B95.62 or A49.02. Both of these subsets of 
cases had an average length of stay that was comparable to the average 
length of stay for all cases in MS-DRG 602 and greater than the average 
length of stay for all cases in MS-DRG 603, and average costs that were 
lower than the average costs of all cases in MS-DRG 602 and higher than 
the average costs of all cases in MS-DRG 603. As we have discussed in 
prior rulemaking (77 FR 53309), it is a fundamental principle of an 
averaged payment system that half of the procedures in a group will 
have above average costs. It is expected that there will be higher cost 
and lower cost subsets, especially when a subset has low numbers.
    To examine the request to reassign ICD-10-CM diagnosis codes 
reported with a primary diagnosis of cellulitis and a secondary 
diagnosis code of B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRG 
867 (which would typically involve also reassigning those cases to the 
two other severity level MS-DRGs 868 and 869 (Other Infectious and 
Parasitic Diseases Diagnoses with CC and Other Infectious and Parasitic 
Diseases Diagnoses without CC/MCC, respectively)), we then analyzed the 
data for all cases in MS-DRGs 867, 868 and 869. The results of our 
analysis are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 867-All cases............................................           2,653             7.5         $14,762
MS-DRG 868-All cases............................................           2,096             4.4           7,532
MS-DRG 869-All cases............................................             499             3.3           5,624
----------------------------------------------------------------------------------------------------------------

    We compared the average length of stay and average costs for MS-
DRGs 867, 868, and 869 to the average length of stay and average costs 
for the subsets of cases in MS-DRGs 602 and 603 reported with a primary 
diagnosis of cellulitis and a secondary diagnosis code of B95.62 or 
A49.02. We found that the average length of stay for these subsets of 
cases was shorter and the average costs were lower than those for all 
cases in MS-DRG 867, but that the average length of stay and average 
costs were higher than those for all cases in MS-DRG 868 and MS-DRG 
869. Our findings from the analysis of claims data do not support 
reassigning cellulitis cases reported with ICD-10-CM diagnosis code 
B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRGs 867, 868 and 869. 
Our clinical advisors noted that when a primary diagnosis of cellulitis 
is accompanied by a secondary diagnosis of B95.62 or A49.02 in MS-DRGs 
602 or 603, the combination of these primary and secondary diagnoses is 
the reason for the hospitalization, and the level of acuity of these 
subsets of patients is similar to other patients in MS-DRGs 602 and 
603. Therefore, these cases are more clinically aligned with all cases 
in MS-DRGs 602 and 603. For these reasons, we are not proposing to 
reassign cellulitis cases reported with ICD-10-CM diagnosis code of 
B95.62 or A49.02 to MS-DRG 867, 868, or 869 for FY 2019. We are 
inviting public comments on our proposal to maintain the current MS-DRG 
assignment for ICD-10-CM codes B95.62 and A49.02 when reported as 
secondary diagnoses with a primary diagnosis of cellulitis.
8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and 
Disorders): Acute Intermittent Porphyria
    We received a request to revise the MS-DRG classification for cases 
of

[[Page 20213]]

patients diagnosed with porphyria and reported with ICD-10-CM diagnosis 
code E80.21 (Acute intermittent (hepatic) porphyria) to recognize the 
resource requirements in caring for these patients, to ensure 
appropriate payment for these cases, and to preserve patient access to 
necessary treatments. Porphyria is defined as a group of rare disorders 
(``porphyrias'') that interfere with the production of hemoglobin that 
is needed for red blood cells. While some of these disorders are 
genetic (inborn) and others are acquired, they all result in the 
abnormal accumulation of hemoglobin building blocks, called porphyrins, 
which can be deposited in the tissues where they particularly interfere 
with the functioning of the nervous system and the skin. Treatment for 
patients suffering from disorders of porphyrin metabolism consists of 
an intravenous injection of Panhematin[reg] (hemin for injection). ICD-
10-CM diagnosis code E80.21 is currently assigned to MS-DRG 642 (Inborn 
and Other Disorders of Metabolism). (We note that this issue has been 
discussed previously in the FY 2013 IPPS/LTCH PPS proposed and final 
rules (77 FR 27904 through 27905 and 77 FR 53311 through 53313, 
respectively) and the FY 2015 IPPS/LTCH PPS proposed and final rules 
(79 FR 28016 and 79 FR 49901, respectively).)
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for cases assigned to MS-DRG 642. Our findings are 
shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 642--All cases...........................................           1,801             4.3          $9,157
MS-DRG 642--Cases reporting diagnosis code E80.21 as principal               183             5.6          19,244
 diagnosis......................................................
MS-DRG 642--Cases not reporting diagnosis code E80.21 as                   1,618             4.1           8,016
 principal diagnosis............................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, cases reporting diagnosis code E80.21 as 
the principal diagnosis in MS-DRG 642 had higher average costs and 
longer average lengths of stay compared to the average costs and 
lengths of stay for all other cases in MS-DRG 642.
    To examine the request to reassign cases with ICD-10-CM diagnosis 
code E80.21 as the principal diagnosis, we analyzed claims data for all 
cases in MS-DRGs for endocrine disorders, including MS-DRG 643 
(Endocrine Disorders with MCC), MS[dash]DRG 644 (Endocrine Disorders 
with CC), and MS-DRG 645 (Endocrine Disorders without CC/MCC). The 
results of our analysis are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 643--All cases...........................................           9,337             6.3         $11,268
MS-DRG 644--All cases...........................................          11,306             4.2           7,154
MS-DRG 645--All cases...........................................           4,297             3.2           5,406
----------------------------------------------------------------------------------------------------------------

    The data results showed that the average length of stay for the 
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the 
principal diagnosis in MS-DRG 642 is lower than the average length of 
stay for all cases in MS-DRG 643, but higher than the average length of 
stay for all cases in MS-DRGs 644 and 645. The average costs for the 
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the 
principal diagnosis in MS-DRG 642 are much higher than the average 
costs for all cases in MS-DRGs 643, 644, and 645. However, after 
considering these findings in the context of the current MS-DRG 
structure, we were unable to identify an MS-DRG that would more closely 
parallel these cases with respect to average costs and length of stay 
that would also be clinically aligned. Our clinical advisors believe 
that, in the current MS-DRG structure, the clinical characteristics of 
patients in these cases are most closely aligned with the clinical 
characteristics of patients in all cases in MS-DRG 642. Moreover, given 
the small number of porphyria cases, we do not believe there is 
justification for creating a new MS-DRG. Basing a new MS-DRG on such a 
small number of cases could lead to distortions in the relative payment 
weights for the MS-DRG because several expensive cases could impact the 
overall relative payment weight. Having larger clinical cohesive groups 
within an MS-DRG provides greater stability for annual updates to the 
relative payment weights. In summary, we are not proposing to revise 
the MS-DRG classification for porphyria cases. We are inviting public 
comments on our proposal to maintain porphyria cases in MS-DRG 642.
9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): 
Admit for Renal Dialysis
    We received a request to review the codes assigned to MS-DRG 685 
(Admit for Renal Dialysis) to determine if the MS-DRG should be 
deleted, or if it should remain as a valid MS-DRG. Currently, the ICD-
10-CM diagnosis codes shown in the table below are assigned to MS-DRG 
685:

------------------------------------------------------------------------
      ICD-10-CM code                      ICD-CM code title
------------------------------------------------------------------------
Z49.01....................  Encounter for fitting and adjustment of
                             extracorporeal dialysis catheter.
Z49.02....................  Encounter for fitting and adjustment of
                             peritoneal dialysis catheter.
Z49.31....................  Encounter for adequacy testing for
                             hemodialysis.
Z49.32....................  Encounter for adequacy testing for
                             peritoneal dialysis.
------------------------------------------------------------------------


[[Page 20214]]

    The requestor stated that, under ICD-9-CM, diagnosis code V56.0 
(Encounter for extracorporeal dialysis) was reported as the principal 
diagnosis to identify patients who were admitted for an encounter for 
dialysis. However, under ICD-10-CM, there is no comparable code in 
which to replicate such a diagnosis. The requestor noted that, while 
patients continue to be admitted under inpatient status (under certain 
circumstances) for dialysis services, there is no existing ICD-10-CM 
diagnosis code within the classification that specifically identifies a 
patient being admitted for an encounter for dialysis services.
    The requestor also noted that three of the four ICD-10-CM diagnosis 
codes currently assigned to MS-DRG 685 are on the ``Unacceptable 
Principal Diagnosis'' edit code list in the Medicare Code Editor (MCE). 
Therefore, these codes are not allowed to be reported as a principal 
diagnosis for an inpatient admission.
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting ICD-10-CM diagnosis codes Z49.01, 
Z49.02, Z49.31, and Z49.32. Our findings are shown in the following 
table.

                                       Admit for Renal Dialysis Encounter
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 685--All cases...........................................              78               4          $8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.01.....              78               4           8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.02.....               0               0               0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.31.....               0               0               0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.32.....               0               0               0
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, for MS-DRG 685, there were a total of 
78 cases reporting ICD-10-CM diagnosis code Z49.01, with an average 
length of stay of 4 days and average costs of $8,871. There were no 
cases reporting ICD-10-CM diagnosis code Z49.02, Z49.31, or Z49.32.
    Our clinical advisors reviewed the clinical issues, as well as the 
claims data for MS-DRG 685. Based on their review of the data analysis, 
our clinical advisors recommended that MS-DRG 685 be deleted and ICD-
10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned. 
Historically, patients were admitted as inpatients to receive 
hemodialysis services. However, over time, that practice has shifted to 
outpatient and ambulatory settings. Because of this change in medical 
practice, we do not believe that it is appropriate to maintain a 
vestigial MS-DRG, particularly due to the fact that the transition to 
ICD-10 has resulted in three out of four codes that map to the MS-DRG 
being precluded from being used as principal diagnosis codes on the 
claim. In addition, our clinical advisors believe that reassigning the 
ICD-10-CM diagnosis codes from MS-DRG 685 to MS-DRGs 698, 699, and 700 
(Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and 
without CC\MCC, respectively) is clinically appropriate because the 
reassignment will result in an accurate MS-DRG assignment of a specific 
case or inpatient service and encounter based on acceptable principal 
diagnosis codes under these MS-DRGs.
    Therefore, for FY 2019, because there is no existing ICD-10-CM 
diagnosis code within the classification system that specifically 
identifies a patient being admitted for an encounter for dialysis 
services and three of the four ICD-10-CM diagnosis codes, Z49.02, 
Z49.31, and Z49.32, currently assigned to MS-DRG 685 are on the 
Unacceptable Principal Diagnosis edit code list in the Medicare Code 
Editor (MCE), we are proposing to delete MS-DRG 685 and reassign ICD-
10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 
685 to MS-DRGs 698, 699, and 700.
    We are inviting public comments on our proposals.
10. MDC 14 (Pregnancy, Childbirth and the Puerperium)
    In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final 
rule (82 FR 38036 through 38037), we noted that the MS-DRG logic 
involving a vaginal delivery under MDC 14 is technically complex as a 
result of the requirements that must be met to satisfy assignment to 
the affected MS-DRGs. As a result, we solicited public comments on 
further refinement to the following four MS-DRGs related to vaginal 
delivery: MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C); 
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization 
and/or D&C); MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis); 
and MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). In 
addition, we sought public comments on further refinements to the 
conditions defined as a complicating diagnosis in MS-DRG 774 and MS-DRG 
781 (Other Antepartum Diagnoses with Medical Complications). We 
indicated that we would review public comments received in response to 
the solicitation as we continued to evaluate these MS-DRGs under MDC 14 
and, if warranted, we would propose refinements for FY 2019. Commenters 
were instructed to direct comments for consideration to the CMS MS-DRG 
Classification Change Request Mailbox located at 
[email protected] by November 1, 2017.
    In response to our solicitation for public comments on the MS-DRGs 
related to vaginal delivery, one commenter recommended that CMS convene 
a workgroup that would include hospital staff and physicians to 
systematically review the MDC 14 MS-DRGs and to identify which 
conditions should appropriately be considered complicating diagnoses. 
As an interim step, this commenter recommended that CMS consider the 
following suggestions as a result of its own evaluation of MS-DRGs 767, 
774 and 775.
    For MS-DRG 767, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the 
GROUPER logic and provided the rationale for why the commenter 
suggested removing each code.

[[Page 20215]]



                       Suggestions for MS-DRG 767
            [Vaginal delivery with sterilization and/or D&C]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 767
------------------------------------------------------------------------
O66.41..................  Failed attempted        This code indicates
                           vaginal birth after     that the attempt at
                           previous cesarean       vaginal delivery has
                           delivery.               failed.
O71.00..................  Rupture of uterus       This code indicates
                           before onset of         that the uterus has
                           labor, unspecified      ruptured before onset
                           trimester.              of labor and
                                                   therefore, a vaginal
                                                   delivery would not be
                                                   possible.
O82.....................  Encounter for cesarean  This code indicates
                           delivery without        the encounter is for
                           indication.             a cesarean delivery.
O75.82..................  Onset (spontaneous) of  This code indicates
                           labor after 37 weeks    this is a cesarean
                           of gestation but        delivery.
                           before 39 completed
                           weeks, with delivery
                           by (planned) C-
                           section.
------------------------------------------------------------------------


                       Suggestions for MS-DRG 767
            [Vaginal delivery with sterilization and/or D&C]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-PCS code         Code description      code from MS-DRG 767
------------------------------------------------------------------------
10A07Z6.................  Abortion of products    This code indicates
                           of conception,          the procedure to be
                           vacuum, via natural     an abortion rather
                           or artificial opening.  than a vaginal
                                                   delivery.
------------------------------------------------------------------------

    For MS-DRG 774, the commenter recommended that the following ICD-
10-CM diagnosis codes be removed from the GROUPER logic and provided 
the rationale for why the commenter suggested removing each code.

                       Suggestions for MS-DRG 774
             [Vaginal delivery with Complicating Diagnoses]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 774
------------------------------------------------------------------------
O66.41..................  Failed attempted        This code indicates
                           vaginal birth after     that the attempt at
                           previous cesarean       vaginal delivery has
                           delivery.               failed.
O71.00..................  Rupture of uterus       This code indicates
                           before onset of         that the uterus has
                           labor, unspecified      ruptured before onset
                           trimester.              of labor and
                                                   therefore, a vaginal
                                                   delivery would not be
                                                   possible.
O75.82..................  Onset (spontaneous) of  This code indicates
                           labor after 37 weeks    this is a planned
                           of gestation but        cesarean delivery.
                           before 39 completed
                           weeks, with delivery
                           by (planned) C-
                           section.
O82.....................  Encounter for cesarean  This code indicates
                           delivery without        the encounter is for
                           indication.             a cesarean delivery.
O80.....................  Encounter for full-     According to the
                           term uncomplicated      Official Guidelines
                           delivery.               for Coding and
                                                   Reporting, ``Code O80
                                                   should be assigned
                                                   when a woman is
                                                   admitted for a full
                                                   term normal delivery
                                                   and delivers a
                                                   single, healthy
                                                   infant without any
                                                   complications
                                                   antepartum, during
                                                   the delivery, or
                                                   postpartum during the
                                                   delivery episode.''
------------------------------------------------------------------------

    For MS-DRG 775, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the 
GROUPER logic and provided the rationale for why the commenter 
suggested removing each code.

                       Suggestions for MS-DRG 775
            [Vaginal delivery without complicating diagnoses]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 775
------------------------------------------------------------------------
O66.41..................  Failed attempted        This code indicates
                           vaginal birth after     that the attempt at
                           previous cesarean       vaginal delivery has
                           delivery.               failed.
O69.4XX0................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, not             vasa previa always
                           applicable or           results in C-section.
                           unspecified.            Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.

[[Page 20216]]

 
O69.4XX2................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, fetus 2.        vasa previa always
                                                   results in C-section.
                                                   Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.
O69.4XX3................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, fetus 3.        vasa previa always
                                                   results in C-section.
                                                   Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.
O69.4XX4................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, fetus 4.        vasa previa always
                                                   results in C-section.
                                                   Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.
O69.4XX5................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, fetus 5.        vasa previa always
                                                   results in C-section.
                                                   Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.
O69.4XX9................  Labor and delivery      According to the
                           complicated by vasa     physicians consulted,
                           previa, other fetus.    vasa previa always
                                                   results in C-section.
                                                   Research indicates
                                                   that when vasa previa
                                                   is diagnosed, C-
                                                   section before labor
                                                   begins can save the
                                                   baby's life.
O71.00..................  Rupture of uterus       This code indicates
                           before onset of         that the uterus has
                           labor, unspecified      ruptured before onset
                           trimester.              of labor and
                                                   therefore, a vaginal
                                                   delivery would not be
                                                   possible.
O82.....................  Encounter for cesarean  This code indicates
                           delivery without        the encounter is for
                           indication.             a cesarean delivery.
------------------------------------------------------------------------


                       Suggestions for MS-DRG 775
            [Vaginal delivery without Complicating Diagnosis]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 775
------------------------------------------------------------------------
10A07Z6.................  Abortion of Products    This code indicates
                           of Conception,          the procedure to be
                           Vacuum, Via Natural     an abortion rather
                           or Artificial Opening.  than a vaginal
                                                   delivery.
------------------------------------------------------------------------

    Another commenter agreed that the MS-DRG logic for a vaginal 
delivery under MDC 14 is technically complex and provided examples to 
illustrate these facts. For instance, the commenter noted that the 
GROUPER logic code lists appear redundant with several of the same 
codes listed for different MS-DRGs and that the GROUPER logic code list 
for a vaginal delivery in MS-DRG 774 is comprised of diagnosis codes 
while the GROUPER logic code list for a vaginal delivery in MS-DRG 775 
is comprised of procedure codes. The commenter also noted that several 
of the ICD-10-CM diagnosis codes shown in the table below that became 
effective with discharges on and after October 1, 2016 (FY 2017) or 
October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic 
code lists for MS-DRGs 781 and 774.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
O11.4.....................  Pre-existing hypertension with pre-
                             eclampsia, complicating childbirth.
O11.5.....................  Pre-existing hypertension with pre-
                             eclampsia, complicating the puerperium.
012.04....................  Gestational edema, complicating childbirth.
012.05....................  Gestational edema, complicating the
                             puerperium.
012.14....................  Gestational proteinuria, complicating
                             childbirth.
012.15....................  Gestational proteinuria, complicating the
                             puerperium.
012.24....................  Gestational edema with proteinuria,
                             complicating childbirth.
012.25....................  Gestational edema with proteinuria,
                             complicating the puerperium.
O13.4.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating childbirth.
O13.5.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating the puerperium.
O14.04....................  Mild to moderate pre-eclampsia, complicating
                             childbirth.
O14.05....................  Mild to moderate pre-eclampsia, complicating
                             the puerperium.
O14.14....................  Severe pre-eclampsia, complicating
                             childbirth.
O14.15....................  Severe pre-eclampsia, complicating the
                             puerperium.
O14.24....................  HELLP syndrome, complicating childbirth.
O14.25....................  HELLP syndrome, complicating the puerperium.
O14.94....................  Unspecified pre-eclampsia, complicating
                             childbirth.
O14.95....................  Unspecified pre-eclampsia, complicating the
                             puerperium.
O15.00....................  Eclampsia complicating pregnancy,
                             unspecified trimester.

[[Page 20217]]

 
O15.02....................  Eclampsia complicating pregnancy, second
                             trimester.
O15.03....................  Eclampsia complicating pregnancy, third
                             trimester.
O15.1.....................  Eclampsia complicating labor.
O15.2.....................  Eclampsia complicating puerperium, second
                             trimester.
O16.4.....................  Unspecified maternal hypertension,
                             complicating childbirth.
O16.5.....................  Unspecified maternal hypertension,
                             complicating the puerperium.
O24.415...................  Gestational diabetes mellitus in pregnancy,
                             controlled by oral hypoglycemic drugs.
O24.425...................  Gestational diabetes mellitus in childbirth,
                             controlled by oral hypoglycemic drugs.
O24.435...................  Gestational diabetes mellitus in puerperium,
                             controlled by oral hypoglycemic drugs.
O44.20....................  Partial placenta previa NOS or without
                             hemorrhage, unspecified trimester.
O44.21....................  Partial placenta previa NOS or without
                             hemorrhage, first trimester.
O44.22....................  Partial placenta previa NOS or without
                             hemorrhage, second trimester.
O44.23....................  Partial placenta previa NOS or without
                             hemorrhage, third trimester.
O44.30....................  Partial placenta previa with hemorrhage,
                             unspecified trimester.
O44.31....................  Partial placenta previa with hemorrhage,
                             first trimester.
O44.32....................  Partial placenta previa with hemorrhage,
                             second trimester.
O44.33....................  Partial placenta previa with hemorrhage,
                             third trimester.
O44.40....................  Low lying placenta NOS or without
                             hemorrhage, unspecified trimester.
O44.41....................  Low lying placenta NOS or without
                             hemorrhage, first trimester.
O44.42....................  Low lying placenta NOS or without
                             hemorrhage, second trimester.
O44.43....................  Low lying placenta NOS or without
                             hemorrhage, third trimester.
O44.50....................  Low lying placenta with hemorrhage,
                             unspecified trimester.
O44.51....................  Low lying placenta with hemorrhage, first
                             trimester.
O44.52....................  Low lying placenta with hemorrhage, second
                             trimester.
O44.53....................  Low lying placenta with hemorrhage, third
                             trimester.
O70.20....................  Third degree perineal laceration during
                             delivery, unspecified.
O70.21....................  Third degree perineal laceration during
                             delivery, IIIa.
O70.22....................  Third degree perineal laceration during
                             delivery, IIIb.
O70.23....................  Third degree perineal laceration during
                             delivery, IIIc.
O86.11....................  Cervicitis following delivery.
O86.12....................  Endometritis following delivery.
O86.13....................  Vaginitis following delivery.
O86.19....................  Other infection of genital tract following
                             delivery.
O86.20....................  Urinary tract infection following delivery,
                             unspecified.
O86.21....................  Infection of kidney following delivery.
O86.22....................  Infection of bladder following delivery.
O86.29....................  Other urinary tract infection following
                             delivery.
O86.81....................  Puerperal septic thrombophlebitis.
O86.89....................  Other specified puerperal infections.
------------------------------------------------------------------------

    Lastly, the commenter stated that the list of ICD-10-PCS procedure 
codes appears comprehensive, but indicated that inpatient coding is not 
their expertise. We note that it was not clear which list of procedure 
codes the commenter was specifically referencing. The commenter did not 
provide a list of any procedure codes for CMS to review or reference a 
specific MS-DRG in its comment.
    Another commenter expressed concern that ICD-10-PCS procedure codes 
10D17Z9 (Manual extraction of products of conception, retained, via 
natural or artificial opening) and 10D18Z9 (Manual extraction of 
products of conception, retained, via natural or artificial opening 
endoscopic) are not assigned to the appropriate MS-DRG. ICD-10-PCS 
procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a 
retained placenta and are currently assigned to MS-DRG 767 (Vaginal 
Delivery with Sterilization and/or D&C). According to the commenter, a 
patient that has a vaginal delivery with manual removal of a retained 
placenta is not having a sterilization or D&C procedure. The commenter 
noted that, under ICD-9-CM, a vaginal delivery with manual removal of 
retained placenta grouped to MS-DRG 774 (Vaginal Delivery with 
Complicating Diagnosis) or MS-DRG 775 (Vaginal Delivery without 
Complicating Diagnosis). The commenter suggested CMS review these 
procedure codes for appropriate MS-DRG assignment under the ICD-10 MS-
DRGs.
    We thank the commenters and appreciate the recommendations and 
suggestions provided in response to our solicitation for comments on 
the GROUPER logic for the MS-DRGs involving a vaginal delivery or 
complicating diagnosis under MDC 14. With regard to the commenter who 
recommended that we convene a workgroup that would include hospital 
staff and physicians to systematically review the MDC 14 MS-DRGs and to 
identify which conditions should appropriately be considered 
complicating diagnoses, we note that we formed an internal workgroup 
comprised of clinical advisors that included physicians, coding 
specialists, and other IPPS policy staff that assisted in our review of 
the GROUPER logic for a vaginal delivery and complicating diagnoses. We 
also received clinical input from 3M/Health Information Systems (HIS) 
staff, which, under contract with CMS, is responsible for updating and 
maintaining the GROUPER program. We note that our analysis involved 
other MS-DRGs under MDC 14, in addition to those for which we 
specifically solicited public comments. As one of the other commenters 
correctly pointed out, there is redundancy, with several of the same 
codes listed for different MS-DRGs. Below we provide a summary of our 
internal analysis with responses to the commenters' recommendations and 
suggestions incorporated into the applicable sections. We refer readers 
to the ICD-10 MS-DRG Version 35 Definitions Manual located via the 
Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-
Fee-

[[Page 20218]]

for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-
Items/FY2018-IPPS-Final-Rule-Data-
Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
documentation of the GROUPER logic associated with the MDC 14 MS-DRGs 
to assist in the review of our discussion that follows.
    We started our evaluation of the GROUPER logic for the MS-DRGs 
under MDC 14 by first reviewing the current concepts that exist. For 
example, there are ``groups'' for cesarean section procedures, vaginal 
delivery procedures, and abortions. There also are groups where no 
delivery occurs, and lastly, there are groups for after the delivery 
occurs, or the ``postpartum'' period. These groups are then further 
subdivided based on the presence or absence of complicating conditions 
or the presence of another procedure. We examined how we could simplify 
some of the older, complex GROUPER logic and remain consistent with the 
structure of other ICD-10 MS-DRGs. We identified the following MS-DRGs 
for closer review, in addition to MS-DRG 767, MS-DRG 768, MS-DRG 774, 
MS-DRG 775 and MS-DRG 781.

------------------------------------------------------------------------
          MS-DRG                             Description
------------------------------------------------------------------------
MS-DRG 765................  Cesarean Section with CC/MCC.
MS-DRG 766................  Cesarean Section without CC/MCC.
MS-DRG 769................  Postpartum and Post Abortion Diagnoses with
                             O.R. Procedure.
MS-DRG 770................  Abortion with D&C, Aspiration Curettage or
                             Hysterotomy.
MS-DRG 776................  Postpartum and Post Abortion Diagnoses
                             without O.R. Procedure.
MS-DRG 777................  Ectopic Pregnancy.
MS-DRG 778................  Threatened Abortion.
MS-DRG 779................  Abortion without D&C.
MS-DRG 780................  False Labor.
MS-DRG 782................  Other Antepartum Diagnoses without Medical
                             Complications.
------------------------------------------------------------------------

    The first issue we reviewed was the GROUPER logic for complicating 
conditions (MS-DRGs 774 and 781). Because one of the main objectives in 
our transition to the MS-DRGs was to better recognize the severity of 
illness of a patient, we believed we could structure the vaginal 
delivery and other MDC 14 MS-DRGs in a similar way. Therefore, we began 
working with the concept of vaginal delivery ``with MCC, with CC and 
without CC/MCC'' to replace the older, ``complicating conditions'' 
logic.
    Next, we compared the additional GROUPER logic that exists between 
the vaginal delivery and the cesarean section MS-DRGs (MS-DRGs 765, 
766, 767, 774, and 775). Currently, the vaginal delivery MS-DRGs take 
into account a sterilization procedure; however, the cesarean section 
MS-DRGs do not. Because a patient can have a sterilization procedure 
performed along with a cesarean section procedure, we adopted a working 
concept of ``cesarean section with and without sterilization with MCC, 
with CC and without CC/MCC'', as well as ``vaginal delivery with and 
without sterilization with MCC, with CC and without CC/MCC''.
    We then reviewed the GROUPER logic for the MS-DRGs involving 
abortion and where no delivery occurs (MS-DRGs 770, 777, 778, 779, 780, 
and 782). We believed that we could consolidate the groups in which no 
delivery occurs.
    Finally, we considered the GROUPER logic for the MS-DRGs related to 
the postpartum period (MS-DRGs 769 and 776) and determined that the 
structure of these MS-DRGs did not appear to require modification.
    After we established those initial working concepts for the MS-DRGs 
discussed above, we examined the list of the ICD-10-PCS procedure codes 
that comprise the sterilization procedure GROUPER logic for the vaginal 
delivery MS-DRG 767. We identified the two manual extraction of 
placenta codes that the commenter had brought to our attention (ICD-10-
PCS codes 10D17Z9 and 10D18Z9). We also identified two additional 
procedure codes, ICD-10-PCS codes 10D17ZZ (Extraction of products of 
conception, retained, via natural or artificial opening) and 10D18ZZ 
(Extraction of products of conception, retained, via natural or 
artificial opening endoscopic) in the list that are not sterilization 
procedures. Two of the four procedure codes describe manual extraction 
(removal) of retained placenta and the other two procedure codes 
describe dilation and curettage procedures. We then identified four 
more procedure codes in the list that do not describe sterilization 
procedures. ICD-10-PCS procedure codes 0UDB7ZX (Extraction of 
endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ 
(Extraction of endometrium, via natural or artificial opening), 0UDB8ZX 
(Extraction of endometrium, via natural or artificial opening 
endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via 
natural or artificial opening endoscopic) describe dilation and 
curettage procedures that can be performed for diagnostic or 
therapeutic purposes. We believe that these ICD-10-PCS procedure codes 
would be more appropriately assigned to MDC 13 (Diseases and Disorders 
of the Female Reproductive System) in MS-DRGs 744 and 745 (D&C, 
Conization, Laparascopy and Tubal Interruption with and without CC/MCC, 
respectively) and, therefore, removed them from our working list of 
sterilization and/or D&C procedures. Because the GROUPER logic for MS-
DRG 767 includes both sterilization and/or D&C, we agreed that all the 
other procedure codes currently included under that logic list of 
sterilization procedures should remain, with the exception of the two 
identified by the commenter. Therefore, we agree with the commenter 
that the manual extraction of retained placenta procedure codes should 
be reassigned to a more clinically appropriate vaginal delivery MS-DRG 
because they are not describing sterilization procedures.
    Our attention then turned to other MDC 14 GROUPER logic code lists 
starting with the ``CC for C-section'' list under MS-DRGs 765 and 766 
(Cesarean Section with and without CC/MCC, respectively). As noted 
earlier in this section, in conducting our review, we considered how we 
could utilize the severity level concept (with MCC, with CC, and 
without CC/MCC) where applicable. Consistent with this approach, we 
removed the ``CC for C-section'' logic from these MS-DRGs as part of 
our working concept and efforts to refine MDC 14. We determined it 
would be less complicated to simply allow the existing ICD-10 
MS[dash]DRG CC and MCC code list logic to apply for these MS-DRGs. 
Next, we reviewed the logic code lists for ``Malpresentation'' and 
``Twins'' and concluded that this logic was not necessary for the 
cesarean section MS-DRGs because these are

[[Page 20219]]

describing antepartum conditions and it is the procedure of the 
cesarean section that determines whether or not a patient would be 
classified to these MS-DRGs. Therefore, those code lists were also 
removed for purposes of our working concept. With regard to the 
``Operating Room Procedure'' code list, we agreed there should be no 
changes. However, we note that the title to ICD-10-PCS procedure code 
10D00Z0 (Extraction of products of conception, classical, open 
approach) is being revised effective October 1, 2018, to replace the 
term ``classical'' with ``high'' and ICD-10-PCS procedure code 10D00Z1 
(Extraction of products of conception, low cervical, open approach) is 
being revised to replace the term ``low cervical'' to ``low''. These 
revisions are also shown in Table 6F--Revised Procedure Code Titles 
available via the Internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    Next, we reviewed the ``Delivery Procedure'' and ``Delivery 
Outcome'' GROUPER logic code lists for the vaginal delivery MS-DRGs 
767, 768, 774, and 775. We identified ICD-10-PCS procedure code 10A0726 
(Abortion of products of conception, vacuum, via natural or artificial 
opening) and ICD-10-PCS procedure code 10S07ZZ (Reposition products of 
conception, via natural or artificial opening) under the ``Delivery 
Procedure'' code list as procedure codes that should not be included 
because ICD-10-PCS procedure code 10A07Z6 describes an abortion 
procedure and ICD-10-PCS procedure code 10S07ZZ describes repositioning 
of the fetus and does not indicate a delivery took place. We also note 
that, as described earlier in this discussion, a commenter recommended 
that ICD-10-PCS procedure code 10A07Z6 be removed from the GROUPER 
logic specifically for MS-DRGs 767 and 775. Therefore, we removed these 
two procedure codes from the logic code list for ``Delivery Procedure'' 
in MS-DRGs 767, 768, 774, and 775. We agreed with the commenter that 
ICD-10-PCS procedure code 10A07Z6 would be more appropriately assigned 
to one of the Abortion MS-DRGs. For the remaining procedures currently 
included in the ``Delivery Procedure'' code list we considered which 
procedures would be expected to be performed during the course of a 
standard, uncomplicated delivery episode versus those that would 
reasonably be expected to require additional resources outside of the 
delivery room. The list of procedure codes we reviewed is shown in the 
following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DQP7ZZ...................  Repair rectum, via natural or artificial
                             opening.
0DQQ0ZZ...................  Repair anus, open approach.
0DQQ3ZZ...................  Repair anus, percutaneous approach.
0DQQ4ZZ...................  Repair anus, percutaneous endoscopic
                             approach.
0DQQ7ZZ...................  Repair anus, via natural or artificial
                             opening.
0DQQ8ZZ...................  Repair anus, via natural or artificial
                             opening endoscopic.
0DQR0ZZ...................  Repair anal sphincter, open approach.
0DQR3ZZ...................  Repair anal sphincter, percutaneous
                             approach.
0DQR4ZZ...................  Repair anal sphincter, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

While we acknowledge that these procedures may be performed to treat 
obstetrical lacerations as discussed in prior rulemaking (81 FR 56853), 
we also believe that these procedures would reasonably be expected to 
require a separate operative episode and would not be performed 
immediately at the time of the delivery. Therefore, we removed those 
procedure codes describing repair of the rectum, anus, and anal 
sphincter shown in the table above from our working concept list of 
procedures to consider for a vaginal delivery. Our review of the list 
of diagnosis codes for the ``Delivery Outcome'' as a secondary 
diagnosis did not prompt any changes. We agreed that the current list 
of diagnosis codes continues to appear appropriate for describing the 
outcome of a delivery.
    As the purpose of our analysis and this review was to clarify what 
constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic for 
the vaginal delivery MS-DRGs, we believed it was appropriate to expect 
that a procedure code describing the vaginal delivery or extraction of 
``products of conception'' procedure and a diagnosis code describing 
the delivery outcome should be reported on every claim in which a 
vaginal delivery occurs. This is also consistent with Section 
I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and 
Reporting, which states ``A code from category Z37, Outcome of 
delivery, should be included on every maternal record when a delivery 
has occurred. These codes are not to be used on subsequent records or 
on the newborn record.'' Therefore, we adopted the working concept 
that, regardless of the principal diagnosis, if there is a procedure 
code describing the vaginal delivery or extraction of ``products of 
conception'' procedure and a diagnosis code describing the delivery 
outcome, this logic would result in assignment to a vaginal delivery 
MS-DRG. We note that, as a result of this working concept, there would 
no longer be a need to maintain the ``third condition'' list under MS-
DRG 774. In addition, as noted earlier in this discussion, because we 
were working with the concept of vaginal delivery ``with MCC, with CC, 
and without CC/MCC'' to replace the older, ``complicating conditions'' 
logic, there would no longer be a need to maintain the ``second 
condition'' list of complicating diagnosis under MS-DRG 774.
    We then reviewed the GROUPER logic code list of ``Or Other O.R. 
procedures'' (MS-DRG 768) to determine if any changes to these lists 
were warranted. Similar to our analysis of the procedures listed under 
the ``Delivery Procedure'' logic code list, our examination of the 
procedures currently described in the ``Or Other O.R. procedures'' 
procedure code list also considered which procedures would be expected 
to be performed during the course of a standard, uncomplicated delivery 
episode versus those that would reasonably be expected to require 
additional resources outside of the delivery room. Our analysis of all 
the procedures resulted in the working concept to allow all O.R. 
procedures to be applicable for assignment to MS-DRG 768, with the 
exception of the procedure codes for sterilization and/or D&C and ICD-
10-PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach) 
and 0UJM0ZZ (Inspection of vulva, open approach),

[[Page 20220]]

which we determined would be reasonably expected to be performed during 
a standard delivery episode and, therefore, assigned to MS-DRG 774 or 
MS-DRG 775. We also note that, this working concept for MS-DRG 768 
would eliminate vaginal delivery cases with an O.R. procedure grouping 
to the unrelated MS[dash]DRGs because all O.R. procedures would be 
included in the GROUPER logic procedure code list for ``Or Other O.R. 
Procedures''.
    The next set of MS-DRGs we examined more closely included MS-DRGs 
777, 778, 780, 781, and 782. We believed that, because the conditions 
in these MS-DRGs are all describing antepartum related conditions, we 
could group the conditions together clinically. Diagnoses described as 
occurring during pregnancy and diagnoses specifying a trimester or 
maternal care in the absence of a delivery procedure reported were 
considered antepartum conditions. We also believed we could better 
classify these groups of patients based on the presence or absence of a 
procedure. Therefore, we worked with the concept of ``antepartum 
diagnoses with and without O.R. procedure''.
    As noted earlier in the discussion, we adopted a working concept of 
``cesarean section with and without sterilization with MCC, with CC, 
and without CC/MCC.'' This concept is illustrated in the following 
table and includes our suggested modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 2 MS-DRGs:
  MS-DRG 765 (Cesarean Section with CC/MCC).
  MS-DRG 766 (Cesarean Section without CC/MCC).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Cesarean Section with Sterilization with MCC).
  MS-DRG XXX (Cesarean Section with Sterilization with CC).
  MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).
  MS-DRG XXX (Cesarean Section without Sterilization with MCC).
  MS-DRG XXX (Cesarean Section without Sterilization with CC).
  MS-DRG XXX (Cesarean Section without Sterilization without CC/MCC).
------------------------------------------------------------------------

    As shown in the table, we suggest deleting MS-DRGs 765 and 766. We 
also suggest creating 6 new MS-DRGs that are subdivided by a 3-way 
severity level split that includes ``with Sterilization'' and ``without 
Sterilization''.
    We also adopted a working concept of ``vaginal delivery with and 
without sterilization with MCC, with CC, and without CC/MCC''. This 
concept is illustrated in the following table and includes our 
suggested modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 3 MS-DRGs:
  MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C).
  MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis).
  MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with MCC).
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC).
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/MCC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with CC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/
   MCC).
------------------------------------------------------------------------

    As shown in the table, we suggest deleting MS-DRGs 767, 774, and 
775. We also suggest creating 6 new MS-DRGs that are subdivided by a 3-
way severity level split that includes ``with Sterilization/D&C'' and 
``without Sterilization/D&C''.
    In addition, as indicated above, we believed that we could 
consolidate the groups in which no delivery occurs. We believe that 
consolidating MS-DRGs where clinically coherent conditions exist is 
consistent with our approach to MS-DRG reclassification and our 
continued refinement efforts. This concept is illustrated in the 
following table and includes our suggested modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 5 MS-DRGs:
  MS-DRG 777 (Ectopic Pregnancy).
  MS-DRG 778 (Threatened Abortion).
  MS-DRG 780 (False Labor).
  MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications).
  MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with MCC).
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with CC).
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure without CC/
   MCC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
   MCC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
   CC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure without
   CC/MCC).
------------------------------------------------------------------------

    As shown in the table, we suggest deleting MS-DRGs 777, 778, 780, 
781, and 782. We also suggest creating 6 new MS-DRGs that are 
subdivided by a 3-way severity level split that includes ``with O.R. 
Procedure'' and ``without O.R. Procedure''.
    Once we established each of these fundamental concepts from a 
clinical perspective, we were able to analyze the data to determine if 
our initial suggested modifications were supported.
    To analyze our suggested modifications for the cesarean section and 
vaginal delivery MS-DRGs, we examined the claims data from the 
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 765, 766, 
767, 768, 774, and 775.

                           MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 765 (Cesarean Section with CC/MCC)--All cases............           3,494             4.6          $8,929
MS-DRG 766 (Cesarean Section without CC/MCC)--All cases.........           1,974             3.1           6,488
MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C)--All             351             3.2           7,886
 cases..........................................................
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except                       17             6.2          26,164
 Sterilization and/or D&C)--All cases...........................
MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis)--All             1,650             3.3           6,046
 cases..........................................................
MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis)--             4,676             2.4           4,769
 All cases......................................................
----------------------------------------------------------------------------------------------------------------


[[Page 20221]]

    As shown in the table, there were a total of 3,494 cases in MS-DRG 
765, with an average length of stay of 4.6 days and average costs of 
$8,929. For MS-DRG 766, there were a total of 1,974 cases, with an 
average length of stay of 3.1 days and average costs of $6,488. For MS-
DRG 767, there were a total of 351 cases, with an average length of 
stay of 3.2 days and average costs of $ 7,886. For MS-DRG 768, there 
were a total of 17 cases, with an average length of stay of 6.2 days 
and average costs of $26,164. For MS-DRG 774, there were a total of 
1,650 cases, with an average length of stay of 3.3 days and average 
costs of $6,046. Lastly, for MS-DRG 775, there were a total of 4,676 
cases, with an average length of stay of 2.4 days and average costs of 
$4,769.
    To compare and analyze the impact of our suggested modifications, 
we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. The 
following table reflects our findings for the suggested Cesarean 
Section MS-DRGs with a 3-way severity level split.

                                     Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average Length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 783 (Cesarean Section with Sterilization with MCC).......             178             6.4         $12,977
MS-DRG 784 (Cesarean Section with Sterilization with CC)........             511             4.1           8,042
MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC).             475             3.0           6,259
MS-DRG 786 (Cesarean Section without Sterilization with MCC)....             707             5.9          11,515
MS-DRG 787 (Cesarean Section without Sterilization with CC).....           1,887             4.2           7,990
MS-DRG 788 (Cesarean Section without Sterilization without CC/             1,710             3.3           6,663
 MCC)...........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 178 cases for the 
cesarean section with sterilization with MCC group, with an average 
length of stay of 6.4 days and average costs of $12,977. There were a 
total of 511 cases for the cesarean section with sterilization with CC 
group, with an average length of stay of 4.1 days and average costs of 
$8,042. There were a total of 475 cases for the cesarean section with 
sterilization without CC/MCC group, with an average length of stay of 
3.0 days and average costs of $6,259. For the cesarean section without 
sterilization with MCC group there were a total of 707 cases, with an 
average length of stay of 5.9 days and average costs of $11,515. There 
were a total of 1,887 cases for the cesarean section without 
sterilization with CC group, with an average length of stay of 4.2 days 
and average costs of $7,990. Lastly, there were a total of 1,710 cases 
for the cesarean section without sterilization without CC/MCC group, 
with an average length of stay of 3.3 days and average costs of $6,663.
    The following table reflects our findings for the suggested Vaginal 
Delivery MS-DRGs with a 3-way severity level split.

                                     Suggested MS-DRGs for Vaginal Delivery
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC)...              25             6.7         $11,421
MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC)....              63             2.4           6,065
MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/              126             2.3           6,697
 MCC)...........................................................
MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC)             406             5.0           9,605
MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC).           1,952             2.9           5,506
MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without             4,105             2.3           4,601
 CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 25 cases for the 
vaginal delivery with sterilization/D&C with MCC group, with an average 
length of stay of 6.7 days and average costs of $11,421. There were a 
total of 63 cases for the vaginal delivery with sterilization/D&C with 
CC group, with an average length of stay of 2.4 days and average costs 
of $6,065. There were a total of 126 cases for vaginal delivery with 
sterilization/D&C without CC/MCC group, with an average length of stay 
of 2.3 days and average costs of $6,697. There were a total of 406 
cases for the vaginal delivery without sterilization/D&C with MCC 
group, with an average length of stay of 5.0 days and average costs of 
$9,605. There were a total of 1,952 cases for the vaginal delivery 
without sterilization/D&C with CC group, with an average length of stay 
of 2.9 days and average costs of $5,506. There were a total of 4,105 
cases for the vaginal delivery without sterilization/D&C without CC/MCC 
group, with an average length of stay of 2.3 days and average costs of 
$4,601.
    We then reviewed the claims data from the September 2017 update of 
the FY 2017 MedPAR file for MS-DRGs 777, 778, 780, 781, and 782. Our 
findings are shown in the following table.

                           MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 777 (Ectopic Pregnancy)--All cases.......................              72             1.9          $7,149
MS-DRG 778 (Threatened Abortion)--All cases.....................             205             2.7           4,001

[[Page 20222]]

 
MS-DRG 780 (False Labor)--All cases.............................              41             2.1           3,045
MS-DRG 781 (Other Antepartum Diagnoses with Medical                        2,333             3.7           5,817
 Complications)--All cases......................................
MS-DRG 782 (Other Antepartum Diagnoses without Medical                        70             2.1           3,381
 Complications)--All cases......................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 72 cases in MS-DRG 
777, with an average length of stay of 1.9 days and average costs of 
$7,149. For MS-DRG 778, there were a total of 205 cases, with an 
average length of stay of 2.7 days and average costs of $4,001. For MS-
DRG 780, there were a total of 41 cases, with an average length of stay 
of 2.1 days and average costs of $3,045. For MS-DRG 781, there were a 
total of 2,333 cases, with an average length of stay of 3.7 days and 
average costs of $5,817. Lastly, for MS-DRG 782, there were a total of 
70 cases, with an average length of stay of 2.1 days and average costs 
of $3,381.
    To compare and analyze the impact of deleting those 5 MS-DRGs and 
creating 6 new MS-DRGs, we ran a simulation using the Version 35 ICD-10 
MS-DRG GROUPER. Our findings below represent what we found and would 
expect under the suggested modifications. The following table reflects 
the MS-DRGs for the suggested Other Antepartum Diagnoses MS-DRGs with a 
3-way severity level split.

                                Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with               60             5.1         $13,117
 MCC)...........................................................
MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with               66             4.2          10,483
 CC)............................................................
MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure                    44             1.7           5,904
 without CC/MCC)................................................
MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure                786             4.3           7,248
 with MCC)......................................................
MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure                910             3.5           4,994
 with CC).......................................................
MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure                855             2.7           3,843
 without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

    Our analysis of claims data from the September 2017 update of the 
FY 2017 MedPAR file recognized that when the criteria to create 
subgroups were applied for the 3-way severity level splits for the 
suggested MS-DRGs, those criteria were not met in all instances. For 
example, the criteria that there are at least 500 cases in the MCC or 
CC group was not met for the suggested Vaginal Delivery with 
Sterilization/D&C 3[dash]way severity level split or the suggested 
Other Antepartum Diagnoses with O.R. Procedure 3[dash]way severity 
level split.
    However, as we have noted in prior rulemaking (72 FR 47152), we 
cannot adopt the same approach to refine the maternity and newborn MS-
DRGs because of the extremely low volume of Medicare patients there are 
in these DRGs. While there is not a high volume of these cases 
represented in the Medicare data, and while we generally advise that 
other payers should develop MS-DRGs to address the needs of their 
patients, we believe that our suggested 3[dash]way severity level 
splits would address the complexity of the current MDC 14 GROUPER logic 
for a vaginal delivery and takes into account the new and different 
clinical concepts that exist under ICD-10 for this subset of patients 
while also maintaining the existing MS-DRG structure for identifying 
severity of illness, utilization of resources and complexity of 
service.
    However, as an alternative option, we also performed analysis for a 
2-way severity level split for the suggested MS-DRGs. Our findings are 
shown in the following tables.

                                     Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Cesarean Section with Sterilization with CC/MCC)....             689             4.7          $9,317
MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).             475             3.0           6,259
MS-DRG XXX (Cesarean Section without Sterilization with MCC)....           2,594             4.7           8,951
MS-DRG XXX (Cesarean Section without Sterilization without CC/             1,710             3.3           6,663
 MCC)...........................................................
----------------------------------------------------------------------------------------------------------------


                                     Suggested MS-DRGs for Vaginal Delivery
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC/MCC)              88             3.6          $7,586
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/              126             2.3           6,697
 MCC)...........................................................
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC)           2,358             3.2           6,212

[[Page 20223]]

 
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without             4,105             2.3           4,601
 CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------


                                Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with              126             4.7         $11,737
 MCC)...........................................................
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure                    44             1.7           5,904
 without CC/MCC)................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure              1,696             3.9           6,039
 with MCC)......................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure                855             2.7           3,843
 without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

    Similar to the analysis performed for the 3-way severity level 
split, we acknowledge that when the criteria to create subgroups was 
applied for the alternative 2[dash]way severity level splits for the 
suggested MS-DRGs, those criteria were not met in all instances. For 
example, the suggested Vaginal Delivery with Sterilization/D&C and the 
Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way 
severity level splits did not meet the criteria for 500 or more cases 
in the MCC or CC group.
    Based on our review, which included support from our clinical 
advisors, and the analysis of claims data described above, we are 
proposing the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs 
(as shown below). This proposal is based on the approach described 
above, which involves consolidating specific conditions and concepts 
into the structure of existing logic and making additional 
modifications, such as adding severity levels, as part of our 
refinement efforts for the ICD-10 MS-DRGs. Our proposals are intended 
to address the vaginal delivery ``complicating diagnosis'' logic and 
antepartum diagnoses with ``medical complications'' logic with the 
proposed addition of the existing and familiar severity level concept 
(with MCC, with CC, and without CC/MCC) to the MDC 14 MS-DRGs to 
provide the ability to distinguish the varying resource requirements 
for this subset of patients and allow the opportunity to make more 
meaningful comparisons with regard to severity across the MS-DRGs. Our 
proposals, as set forth below, would also simplify the vaginal delivery 
procedure logic that we identified and commenters acknowledged as 
technically complex by eliminatng the extensive diagnosis and procedure 
code lists for several conditions that must be met for assignment to 
the vaginal delivery MS-DRGs. Our proposals are also intended to 
respond to issues identified and brought to our attention through 
public comments for consideration in updating the GROUPER logic code 
lists in MDC 14.
    Specifically, we are proposing to delete the following 10 MS-DRGs 
under MDC 14:
     MS-DRG 765 (Cesarean Section with CC/MCC);
     MS-DRG 766 (Cesarean Section without CC/MCC);
     MS-DRG 767 (Vaginal Delivery with Sterilization and/or 
D&C);
     MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);
     MS-DRG 775 (Vaginal Delivery without Complicating 
Diagnosis);
     MS-DRG 777 (Ectopic Pregnancy);
     MS-DRG 778 (Threatened Abortion);
     MS-DRG 780 (False Labor);
     MS-DRG 781 (Other Antepartum Diagnoses with Medical 
Complications); and
     MS-DRG 782 (Other Antepartum Diagnoses without Medical 
Complications).
    We are proposing to create the following new 18 MS-DRGs under MDC 
14:
     Proposed new MS-DRG 783 (Cesarean Section with 
Sterilization with MCC);
     Proposed new MS-DRG 784 (Cesarean Section with 
Sterilization with CC);
     Proposed new MS-DRG 785 (Cesarean Section with 
Sterilization without CC/MCC);
     Proposed new MS-DRG 786 (Cesarean Section without 
Sterilization with MCC);
     Proposed new MS-DRG 787 (Cesarean Section without 
Sterilization with CC);
     Proposed new MS-DRG 788 Cesarean Section without 
Sterilization without CC/MCC);
     Proposed new MS-DRG 796 (Vaginal Delivery with 
Sterilization/D&C with MCC);
     Proposed new MS-DRG 797 (Vaginal Delivery with 
Sterilization/D&C with CC);
     Proposed new MS-DRG 798 (Vaginal Delivery with 
Sterilization/D&C without CC/MCC);
     Proposed new MS-DRG 805 (Vaginal Delivery without 
Sterilization/D&C with MCC);
     Proposed new MS-DRG 806 (Vaginal Delivery without 
Sterilization/D&C with CC);
     Proposed new MS-DRG 807 (Vaginal Delivery without 
Sterilization/D&C without CC/MCC);
     Proposed new MS-DRG 817 (Other Antepartum Diagnoses with 
O.R. Procedure with MCC);
     Proposed new MS-DRG 818 (Other Antepartum Diagnoses with 
O.R. Procedure with CC);
     Proposed new MS-DRG 819 (Other Antepartum Diagnoses with 
O.R. Procedure without CC/MCC);
     Proposed new MS-DRG 831 (Other Antepartum Diagnoses 
without O.R. Procedure with MCC);
     Proposed new MS-DRG 832 (Other Antepartum Diagnoses 
without O.R. Procedure with CC); and
     Proposed new MS-DRG 833 (Other Antepartum Diagnoses 
without O.R. Procedure without CC/MCC).
    The diagrams below illustrate how the proposed MS-DRG logic for MDC 
14 would function. The first diagram (Diagram 1.) begins by asking if 
there is a principal diagnosis from MDC 14. If no, the GROUPER logic 
directs the case to the appropriate MDC based on the principal 
diagnosis reported. Next, the logic asks if there is a cesarean section 
procedure reported on the claim. If yes, the logic asks if there was a 
sterilization procedure reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 783, 784, or

[[Page 20224]]

785. If no, the logic assigns the case to one of the proposed new MS-
DRGs 786, 787, or 788. If there was not a cesarean section procedure 
reported on the claim, the logic asks if there was a vaginal delivery 
procedure reported on the claim. If yes, the logic asks if there was 
another O.R. procedure other than sterilization, D&C, delivery 
procedure or a delivery inclusive O.R. procedure. If yes, the logic 
assigns the case to existing MS-DRG 768. If no, the logic asks if there 
was a sterilization and/or D&C reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 796, 797, or 798. 
If no, the logic assigns the case to one of the proposed new MS-DRGs 
805, 806, or 807. If there was not a vaginal delivery procedure 
reported on the claim, the GROUPER logic directs you to the other non-
delivery MS-DRGs as shown in Diagram 2.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP07MY18.000

    The logic for Diagram 2. begins by asking if there is a principal 
diagnosis of abortion reported on the claim. If yes, the logic then 
asks if there was a D&C, aspiration curettage or hysterotomy procedure 
reported on the claim. If yes, the logic assigns the case to existing 
MS-DRG 770. If no, the logic assigns the case to existing MS-DRG 779. 
If there was not a principal diagnosis of abortion reported on the 
claim, the logic asks if there was a principal diagnosis of an 
antepartum condition reported on the claim. If yes, the logic then asks 
if there was an O.R. procedure reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 817, 818, or 819. 
If no, the logic assigns the case to one of the proposed new MS-DRGs 
831, 832, or 833. If there was not a principal diagnosis of an

[[Page 20225]]

antepartum condition reported on the claim, the logic asks if there was 
a principal diagnosis of a postpartum condition reported on the claim. 
If yes, the logic then asks if there was an O.R. procedure reported on 
the claim. If yes, the logic assigns the case to existing MS-DRG 769. 
If no, the logic assigns the case to existing MS-DRG 776. If there was 
not a principal diagnosis of a postpartum condition reported on the 
claim, the logic identifies that there was a principal diagnosis 
describing childbirth, delivery or an intrapartum condition reported on 
the claim without any other procedures, and assigns the case to 
existing MS-DRG 998 (Principal Diagnosis Invalid as Discharge 
Diagnosis).
    To assist in detecting coding and MS-DRG assignment errors for MS-
DRG 998 that could result when a provider does not report the procedure 
code for either a cesarean section or a vaginal delivery along with an 
outcome of delivery diagnosis code, as discussed in section II.F.13.d., 
we are proposing to add a new Questionable Obstetric Admission edit 
under the MCE. We are inviting public comments on this proposed MCE 
edit and we also are inviting public comments on the need for any 
additional MCE considerations with regard to the proposed changes for 
the MDC 14 MS-DRGs.
[GRAPHIC] [TIFF OMITTED] TP07MY18.001

BILLING CODE 4120-01-C
    We refer readers to Tables 6P.1h through 6P.1k for the lists of the 
diagnosis and procedure codes that we are proposing to assign to the 
GROUPER logic for the proposed new MS-DRGs and the existing MS-DRGs 
under MDC

[[Page 20226]]

14. We are inviting public comments on our proposed list of diagnosis 
codes, which also addresses the list of diagnosis codes that a 
commenter identified as missing from the GROUPER logic. We note that, 
as a result of our proposed GROUPER logic changes to the vaginal 
delivery MS-DRGs, which would only take into account the procedure 
codes for a vaginal delivery and the outcome of delivery secondary 
diagnosis codes, there is no longer a need to maintain a specific 
principal diagnosis logic list for those MS-DRGs. Therefore, while we 
appreciate the detailed suggestions and rationale submitted by the 
commenter for why specific diagnosis codes should be removed from the 
vaginal delivery principal diagnosis logic as displayed earlier in this 
discussion, we are proposing to remove that logic. We are inviting 
public comments on our proposal.
    We also are inviting public comments on our proposal to reassign 
ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that 
describe dilation and curettage procedures from MS-DRG 767 under MDC 14 
to MS-DRGs 744 and 745 under MDC 13.
    In addition, we are inviting public comments on our proposed list 
of procedure codes for the proposed revised MDC 14 MS-DRG logic, which 
would require a procedure code for case assignment. Finally, we are 
inviting public comments on the proposed deletion of the 10 MS-DRGs and 
the proposed creation of 18 new MS-DRGs with a 3-way severity level 
split listed above in this section, as well as on the potential 
alternative new MS-DRGs using a 2-way severity level split as also 
presented above.
11. MDC 18 (Infectious and Parasitic Diseases (Systematic or 
Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of 
Non-Infectious Origin
    ICD-10-CM diagnosis codes R65.10 (Systemic Inflammatory Response 
Syndrome (SIRS) of non-infectious origin without acute organ 
dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS) 
of non-infectious origin with acute organ dysfunction) are currently 
assigned to MS-DRGs 870 (Septicemia or Severe Sepsis with Mechanical 
Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with 
Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or 
Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under 
MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified 
Sites). Our clinical advisors noted that these diagnosis codes are 
specifically describing conditions of a non-infectious origin, and 
recommended that they be reassigned to a more clinically appropriate 
MS-DRG.
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases in MS-DRGs 870, 871, and 872. Our findings 
are shown in the following table.

       Septicemia or Severe Sepsis With and Without Mechanical Ventilation >96 Hours With and Without MCC
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 870--All cases...........................................          31,658            14.3         $42,981
MS-DRG 871--All cases...........................................         566,531             6.3          13,002
MS-DRG 872--All cases...........................................         150,437             4.3           7,532
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 31,658 cases in MS-DRG 
870, with an average length of stay of 14.3 days and average costs of 
$42,981. We found a total of 566,531 cases in MS-DRG 871, with an 
average length of stay of 6.3 days and average costs of $13,002. 
Lastly, we found a total of 150,437 cases in MS-DRG 872, with an 
average length of stay of 4.3 days and average costs of $7,532.
    We then examined claims data in MS-DRGs 870, 871, or 872 for cases 
reporting an ICD-10-CM diagnosis code of R65.10 or R65.11. Our findings 
are shown in the following table.

                     SIRS of Non-Infectious Origin With and Without Acute Organ Dysfunction
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                    MS-DRGs 870, 871 and 872                           cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis           1,254             3.8          $6,615
 code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis             138             4.8           9,655
 code of R65.11.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis           1,232             5.5          10,670
 code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis             117             6.2          12,525
 code of R65.11.................................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 1,254 cases reporting a 
principal diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with 
an average length of stay of 3.8 days and average costs of $6,615. We 
found a total of 138 cases reporting a principal diagnosis code of 
R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 
4.8 days and average costs of $9,655. We found a total of 1,232 cases 
reporting a secondary diagnosis code of R65.10 in MS-DRGs 870, 871, and 
872, with an average length of stay of 5.5 days and average costs of 
$10,670. Lastly, we found a total of 117 cases reporting a secondary 
diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average 
length of stay of 6.2 days and average costs of $12,525.
    The claims data included a total of 1,392 cases in MS-DRGs 870, 
871, and 872 that reported a principal diagnosis code of R65.10 or 
R65.11. We note that these 1,392 cases appear to have been coded 
inaccurately according to the ICD-10-CM Official Guidelines for Coding 
and Reporting at Section I.C.18.g., which specifically state: ``The 
systemic inflammatory response syndrome (SIRS) can develop as a result 
of certain non[dash]infectious disease processes, such as trauma, 
malignant neoplasm, or pancreatitis. When SIRS is documented with a 
non-infectious condition, and no subsequent infection

[[Page 20227]]

is documented, the code for the underlying condition, such as an 
injury, should be assigned, followed by code R65.10, Systemic 
inflammatory response syndrome (SIRS) of non-infectious origin without 
acute organ dysfunction or code R65.11, Systemic inflammatory response 
syndrome (SIRS) of non-infectious origin with acute organ 
dysfunction.'' Therefore, according to the Coding Guidelines, ICD-10-CM 
diagnosis codes R65.10 and R65.11 should not be reported as the 
principal diagnosis on an inpatient claim.
    We have acknowledged in past rulemaking the challenges with coding 
for SIRS (and sepsis) (71 FR 24037). In addition, we note that there 
has been confusion with regard to how these codes are displayed in the 
ICD-10 MS-DRG Definitions Manual under MS-DRGs 870, 871, and 872, which 
may also impact the reporting of these conditions. For example, in 
Version 35 of the ICD-10 MS-DRG Definitions Manual (which is available 
via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, the 
logic for case assignment to MS-DRGs 870, 871, and 872 is comprised of 
a list of several diagnosis codes, of which ICD-10-CM diagnosis codes 
R65.10 and R65.11 are included. Because these codes are listed under 
the heading of ``Principal Diagnosis'', it may appear that these codes 
are to be reported as a principal diagnosis for assignment to MS-DRGs 
870, 871, or 872. However, the Definitions Manual display of the 
GROUPER logic assignment for each diagnosis code is for grouping 
purposes only. The GROUPER (and, therefore, documentation in the MS-DRG 
Definitions Manual) was not designed to account for coding guidelines 
or coverage policies. Since the inception of the IPPS, the data editing 
function has been a separate and independent step in the process of 
determining a DRG assignment. Except for extreme data integrity issues 
that prevent a DRG from being assigned, such as an invalid principal 
diagnosis, the DRG assignment GROUPER does not edit for data integrity. 
Prior to assigning the MS-DRG to a claim, the MACs apply a series of 
data integrity edits using programs such as the Medicare Code Editor 
(MCE). The MCE is designed to identify cases that require further 
review before classification into an MS-DRG. These data integrity edits 
address issues such as data validity, coding rules, and coverage 
policies. The separation of the MS-DRG grouping and data editing 
functions allows the MS-DRG GROUPER to remain stable during a fiscal 
year even though coding rules and coverage policies may change during 
the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82 
FR 38050 through 38051), we finalized our proposal to add ICD-10-CM 
diagnosis codes R65.10 and R65.11 to the Unacceptable Principal 
Diagnosis edit in the MCE as a result of the Official Guidelines for 
Coding and Reporting related to SIRS, in efforts to improve coding 
accuracy for these types of cases.
    To address the issue of determining a more appropriate MS-DRG 
assignment for ICD-10-CM diagnosis codes R65.10 and R65.11, we reviewed 
alternative options under MDC 18. Our clinical advisors determined the 
most appropriate option is MS-DRG 864 (Fever) because the conditions 
that are assigned here describe conditions of a non-infectious origin.
    Therefore, we are proposing to reassign ICD-10-CM diagnosis codes 
R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 
to ``Fever and Inflammatory Conditions'' to better reflect the 
diagnoses assigned there.

                         Proposed Revised MS-DRG 864 (Fever and Inflammatory Conditions)
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                            MS-DRG                             Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 864--All cases........................................          12,144              3.4           $6,232
----------------------------------------------------------------------------------------------------------------

    We are inviting public comments on our proposals.
12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive 
Burns
    ICD-10-CM Coding Guidelines include ``Code first'' sequencing 
instructions for cases reporting a primary diagnosis of toxic effect 
(ICD-10-CM codes T51 through T65) and a secondary diagnosis of 
corrosive burn (ICD-10-CM codes T21.40 through T21.79). We received a 
request to reassign these cases from MS-DRGs 901 (Wound Debridements 
for Injuries with MCC), 902 (Wound Debridements for Injuries with CC), 
903 (Wound Debridements for Injuries without CC/MCC), 904 (Skin Grafts 
for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/
MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918 
(Poisoning and Toxic Effects of Drugs without MCC) to MS-DRGs 927 
(Extensive Burns or Full Thickness Burns with Mechanical Ventilation 
>96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or 
Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin 
Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or 
Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin 
Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation 
Injury), and 935 (Nonextensive Burns).
    The requestor noted that, for corrosion burns codes T21.40 through 
T21.79, ICD[dash]10-CM Coding Guidelines instruct to ``Code first (T51 
through T65) to identify chemical and intent.'' Because code first 
notes provide sequencing directive, when patients are admitted with 
corrosive burns (which can be full thickness and extensive), toxic 
effect codes T51 through T65 must be sequenced first followed by codes 
for the corrosive burns. This causes full-thickness and extensive burns 
to group to MS-DRGs 901 through 905 when excisional debridement and 
split thickness skin grafts are performed, and to MS-DRGs 917 and 918 
when procedures are not performed. This is in contrast to cases 
reporting a primary diagnosis of corrosive burn, which group to 
MS[dash]DRGs 927 through 935.
    The requestor stated that MS-DRGs 456 (Spinal Fusion except 
Cervical with Spinal Curvature or Malignancy or Infection or Extensive 
Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal 
Curvature or Malignancy or Infection or Extensive Fusions with CC), and 
458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy 
or Infection or Extensive Fusions without CC/MCC) are grouped based on 
the procedure performed in combination with the principal diagnosis or 
secondary

[[Page 20228]]

diagnosis (secondary scoliosis). The requestor stated that when codes 
for corrosive burns are reported as secondary diagnoses in conjunction 
with principal diagnoses codes T5l through T65, particularly when skin 
grafts are performed, they would be more appropriately assigned to MS-
DRGs 927 through 935.
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for all cases assigned to MS-DRGs 901, 902, 903, 904, 
905, 917, and 918, and subsets of these cases with primary diagnosis of 
toxic effect with secondary diagnosis of corrosive burn. We note that 
we found no cases from this subset in MS[dash]DRGs 903, 907, 908, and 
909 and, therefore, did not include the results for these MS[dash]DRGs 
in the table below. We also analyzed all cases assigned to MS-DRGs 927, 
928, 929, 933, 934, and 935 and those cases that reported a primary 
diagnosis of corrosive burn. Our findings are shown in the following 
two tables.

                             MDC 21 Injuries, Poisonings and Toxic Effects of Drugs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All Cases with primary diagnosis of toxic effect and secondary                55             5.5         $18,077
 diagnosis of corrosive burn--Across all MS-DRGs................
MS-DRG 901--All cases...........................................             968              13          31,479
MS-DRG 901--Cases with primary diagnosis of toxic effect and                   1               8          12,388
 secondary diagnosis of corrosive burn..........................
MS-DRG 902--All cases...........................................           1,775             6.6          14,206
MS-DRG 902--Cases with primary diagnosis of toxic effect and                   8            10.3          20,940
 secondary diagnosis of corrosive burn..........................
MS-DRG 904--All cases...........................................             905             9.8          23,565
MS-DRG 904--Cases with primary diagnosis of toxic effect and                   8             6.4          22,624
 secondary diagnosis of corrosive burn..........................
MS-DRG 905--All cases...........................................             263             4.9          13,291
MS-DRG 905--Cases with primary diagnosis of toxic effect and                   2             2.5           7,682
 secondary diagnosis of corrosive burn..........................
MS-DRG 906--All cases...........................................             458             4.8          13,555
MS-DRG 906--Cases with primary diagnosis of toxic effect and                   1               5           7,409
 secondary diagnosis of corrosive burn..........................
MS-DRG 917--All cases...........................................          31,730             4.8          10,280
MS-DRG 917--Cases with primary diagnosis of toxic effect and                   6             4.8           7,336
 secondary diagnosis of corrosive burn..........................
MS-DRG 918--All cases...........................................          19,819               3           5,529
MS-DRG 918--Cases with primary diagnosis of toxic effect and                  28             3.5           5,643
 secondary diagnosis of corrosive burn..........................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 55 cases with a 
primary diagnosis of toxic effect and a secondary diagnosis of 
corrosive burn across MS-DRGs 901, 902, 903, 904, 905, 917, and 918. 
When comparing this subset of codes relative to those of each MS-DRG as 
a whole, we noted that, in most of these MS-DRGs, the average costs and 
average length of stay for this subset of cases were roughly equivalent 
to or lower than the average costs and average length of stay for cases 
in the MS-DRG as a whole, while in one case, they were higher. As we 
have noted in prior rulemaking (77 FR 53309) and elsewhere in this 
rule, it is a fundamental principle of an averaged payment system that 
half of the procedures in a group will have above average costs. It is 
expected that there will be higher cost and lower cost subsets, 
especially when a subset has low numbers. The results of this analysis 
indicate that these cases are appropriately placed within their current 
MDC.
    Our clinical advisors reviewed this request and indicated that 
patients with a primary diagnosis of toxic effect and a secondary 
diagnosis of corrosive burn have been exposed to an irritant or 
corrosive substance and, therefore, are clinically similar to those 
patients in MDC 21. Furthermore, our clinical advisors do not believe 
that the size of this subset of cases justifies the significant changes 
to the GROUPER logic that would be required to address the commenter's 
request, which would involve rerouting cases when the primary and 
secondary diagnoses are in different MDCs.

                                                  MDC 22 Burns
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with primary diagnosis of corrosive burn--Across all                60             8.5         $19,456
 MS-DRGs........................................................
MS-DRG 927--All cases...........................................             159            28.1         128,960
MS-DRG 927--Cases with primary diagnosis of corrosive burn......               1              41          75,985
MS-DRG 928--All cases...........................................           1,021            15.1          42,868
MS-DRG 928--Cases with primary diagnosis of corrosive burn......              13            13.2          31,118
MS-DRG 929--All cases...........................................             295             7.9          21,600
MS-DRG 929--Cases with primary diagnosis of corrosive burn......               4            12.5          18,527
MS-DRG 933--All cases...........................................             121             4.6          21,291
MS-DRG 933--Cases with primary diagnosis of corrosive burn......               1               7          91,779
MS-DRG 934--All cases...........................................             503             6.1          13,286

[[Page 20229]]

 
MS-DRG 934--Cases with primary diagnosis of corrosive burn......              11             5.8          13,280
MS-DRG 935--All cases...........................................           1,705             5.2          13,065
MS-DRG 935--Cases with primary diagnosis of corrosive burn......              29               5           9,822
----------------------------------------------------------------------------------------------------------------

    To address the request of reassigning cases with a primary 
diagnosis of toxic effect and secondary diagnosis of corrosive burn, we 
reviewed the data for all cases in MS-DRGs 927, 928, 929, 933, 934, and 
935 and those cases reporting a primary diagnosis of corrosive burn. We 
found a total of 60 cases reporting a primary diagnosis of corrosive 
burn, with an average length of stay of 8.5 days and average costs of 
$19,456. Our clinical advisors believe that these cases reporting a 
primary diagnosis of corrosive burn are appropriately placed in MDC 22 
as they are clinically aligned with other patients in this MDC. In 
summary, the results of our claims data analysis and the advice from 
our clinical advisors do not support reassigning cases in MS-DRGs 901, 
902, 903, 904, 905, 917, and 918 reporting a primary diagnosis of toxic 
effect and a secondary diagnosis of corrosive burn to MS-DRGs 927, 928, 
929, 933, 934 and 935. Therefore, we are not proposing to reassign 
these cases. We are inviting public comments on our proposal to 
maintain the current MS[dash]DRG structure for these cases.
13. Proposed Changes to the Medicare Code Editor (MCE)
    The Medicare Code Editor (MCE) is a software program that detects 
and reports errors in the coding of Medicare claims data. Patient 
diagnoses, procedure(s), and demographic information are entered into 
the Medicare claims processing systems and are subjected to a series of 
automated screens. The MCE screens are designed to identify cases that 
require further review before classification into an MS-DRG.
    As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38045), 
we made available the FY 2018 ICD-10 MCE Version 35 manual file. The 
link to this MCE manual file, along with the link to the mainframe and 
computer software for the MCE Version 35 (and ICD-10 MS-DRGs) are 
posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html through the FY 2018 
IPPS Final Rule Home Page.
    For this FY 2019 IPPS/LTCH PPS proposed rule, below we address the 
MCE requests we received by the November 1, 2017 deadline. We also 
discuss the proposals we are making based on our internal review and 
analysis.
a. Age Conflict Edit
    In the MCE, the Age Conflict edit exists to detect inconsistencies 
between a patient's age and any diagnosis on the patient's record; for 
example, a 5-year-old patient with benign prostatic hypertrophy or a 
78-year-old patient coded with a delivery. In these cases, the 
diagnosis is clinically and virtually impossible for a patient of the 
stated age. Therefore, either the diagnosis or the age is presumed to 
be incorrect. Currently, in the MCE, the following four age diagnosis 
categories appear under the Age Conflict edit and are listed in the 
manual and written in the software program:
     Perinatal/Newborn--Age of 0 years only; a subset of 
diagnoses which will only occur during the perinatal or newborn period 
of age 0 (for example, tetanus neonatorum, health examination for 
newborn under 8 days old).
     Pediatric--Age is 0-17 years inclusive (for example, 
Reye's syndrome, routine child health exam).
     Maternity--Age range is 12-55 years inclusive (for 
example, diabetes in pregnancy, antepartum pulmonary complication).
     Adult--Age range is 15-124 years inclusive (for example, 
senile delirium, mature cataract).
(1) Perinatal/Newborn Diagnoses Category
    Under the ICD-10 MCE, the Perinatal/Newborn Diagnoses category 
under the Age Conflict edit considers the age of 0 years only; a subset 
of diagnoses which will only occur during the perinatal or newborn 
period of age 0 to be inclusive. This includes conditions that have 
their origin in the fetal or perinatal period (before birth through the 
first 28 days after birth) even if morbidity occurs later. For that 
reason, the diagnosis codes on this Age Conflict edit list would be 
expected to apply to conditions or disorders specific to that age group 
only.
    In the ICD-10-CM classification, there are 14 diagnosis codes that 
describe specific suspected conditions that have been evaluated and 
ruled out during the newborn period and are currently not on the 
Perinatal/Newborn Diagnoses Category edit code list. We consulted with 
staff at the Centers for Disease Control's (CDC's) National Center for 
Health Statistics (NCHS) because NCHS has the lead responsibility for 
the ICD-10-CM diagnosis codes. The NCHS' staff confirmed that the 
following diagnosis codes are appropriate to add to the edit code list 
for the Perinatal/Newborn Diagnoses Category.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z05.0.....................  Observation and evaluation of newborn for
                             suspected cardiac condition ruled out.
Z05.1.....................  Observation and evaluation of newborn for
                             suspected infectious condition ruled out.
Z05.2.....................  Observation and evaluation of newborn for
                             suspected neurological condition ruled out.
Z05.3.....................  Observation and evaluation of newborn for
                             suspected respiratory condition ruled out.
Z05.41....................  Observation and evaluation of newborn for
                             suspected genetic condition ruled out.
Z05.42....................  Observation and evaluation of newborn for
                             suspected metabolic condition ruled out.
Z05.43....................  Observation and evaluation of newborn for
                             suspected immunologic condition ruled out.
Z05.5.....................  Observation and evaluation of newborn for
                             suspected gastrointestinal condition ruled
                             out.
Z05.6.....................  Observation and evaluation of newborn for
                             suspected genitourinary condition ruled
                             out.
Z05.71....................  Observation and evaluation of newborn for
                             suspected skin and subcutaneous tissue
                             condition ruled out.

[[Page 20230]]

 
Z05.72....................  Observation and evaluation of newborn for
                             suspected musculoskeletal condition ruled
                             out.
Z05.73....................  Observation and evaluation of newborn for
                             suspected connective tissue condition ruled
                             out.
Z05.8.....................  Observation and evaluation of newborn for
                             other specified suspected condition ruled
                             out.
Z05.9.....................  Observation and evaluation of newborn for
                             unspecified suspected condition ruled out.
------------------------------------------------------------------------

    Therefore, we are proposing to add the ICD-10-CM diagnosis codes 
listed in the table above to the Age Conflict edit under the Perinatal/
Newborn Diagnoses Category edit code list. We also are proposing to 
continue to include the existing diagnosis codes currently listed under 
the Perinatal/Newborn Diagnoses Category edit code list. We are 
inviting public comments on our proposals.
(2) Pediatric Diagnoses Category
    Under the ICD-10 MCE, the Pediatric Diagnoses Category for the Age 
Conflict edit considers the age range of 0 to 17 years inclusive. For 
that reason, the diagnosis codes on this Age Conflict edit list would 
be expected to apply to conditions or disorders specific to that age 
group only.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed 
rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnoses that are no longer 
effective as of October 1, 2018. Included in this table is an ICD-10-CM 
diagnosis code currently listed on the Pediatric Diagnoses Category 
edit code list, ICD-10-CM diagnosis code Z13.4 (Encounter for screening 
for certain developmental disorders in childhood). We are proposing to 
remove this code from the Pediatric Diagnoses Category edit code list. 
We also are proposing to continue to include the other existing 
diagnosis codes currently listed under the Pediatric Diagnoses Category 
edit code list. We are inviting public comments on our proposals.
(3) Maternity Diagnoses
    Under the ICD-10 MCE, the Maternity Diagnoses Category for the Age 
Conflict edit considers the age range of 12 to 55 years inclusive. For 
that reason, the diagnosis codes on this Age Conflict edit list would 
be expected to apply to conditions or disorders specific to that age 
group only.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule 
(which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnoses codes that have 
been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. The following table lists the 
new ICD-10-CM diagnosis codes included in Table 6A associated with 
pregnancy and maternal care that we believe are appropriate to add to 
the Maternity Diagnoses Category edit code list under the Age Conflict 
edit. Therefore, we are proposing to add these codes to the Maternity 
Diagnoses Category edit code list under the Age Conflict edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.0.....................  Postpartum depression.
F53.1.....................  Puerperal psychosis.
O30.131...................  Triplet pregnancy, trichorionic/triamniotic,
                             first trimester.
O30.132...................  Triplet pregnancy, trichorionic/triamniotic,
                             second trimester.
O30.133...................  Triplet pregnancy, trichorionic/triamniotic,
                             third trimester.
O30.139...................  Triplet pregnancy, trichorionic/triamniotic,
                             unspecified trimester.
O30.231...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, first trimester.
O30.232...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, second trimester.
O30.233...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, third trimester.
O30.239...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, unspecified trimester.
O30.831...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, first trimester.
O30.832...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, second trimester.
O30.833...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, third trimester.
O30.839...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, unspecified
                             trimester.
O86.00....................  Infection of obstetric surgical wound,
                             unspecified.
O86.01....................  Infection of obstetric surgical wound,
                             superficial incisional site.
O86.02....................  Infection of obstetric surgical wound, deep
                             incisional site.
O86.03....................  Infection of obstetric surgical wound, organ
                             and space site.
O86.04....................  Sepsis following an obstetrical procedure.
O86.09....................  Infection of obstetric surgical wound, other
                             surgical site.
------------------------------------------------------------------------

    In addition, as discussed in section II.F.15. of the preamble of 
this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with 
this proposed rule (which is available via the Internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that 
are no longer effective as of October 1, 2018. Included in this table 
are two ICD-10-CM diagnosis codes currently listed on the Maternity 
Diagnoses Category edit code list: ICD-10-CM diagnosis codes F53 
(Puerperal psychosis) and O86.0 (Infection of obstetric surgical 
wound). We are proposing to remove these codes from the Maternity 
Diagnoses Category Edit code list. We also are proposing to continue to 
include the other existing diagnosis codes currently listed under the 
Maternity Diagnoses Category edit

[[Page 20231]]

code list. We are inviting public comments on our proposals.
b. Sex Conflict Edit
    In the MCE, the Sex Conflict edit detects inconsistencies between a 
patient's sex and any diagnosis or procedure on the patient's record; 
for example, a male patient with cervical cancer (diagnosis) or a 
female patient with a prostatectomy (procedure). In both instances, the 
indicated diagnosis or the procedure conflicts with the stated sex of 
the patient. Therefore, the patient's diagnosis, procedure, or sex is 
presumed to be incorrect.
(1) Diagnoses for Females Only Edit
    We received a request to consider the addition of the following 
ICD-10-CM diagnosis codes to the list for the Diagnoses for Females 
Only edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z30.015...................  Encounter for initial prescription of
                             vaginal ring hormonal contraceptive.
Z31.7.....................  Encounter for procreative management and
                             counseling for gestational carrier.
Z98.891...................  History of uterine scar from previous
                             surgery.
------------------------------------------------------------------------

    The requestor noted that, currently, ICD-10-CM diagnosis code 
Z30.44 (Encounter for surveillance of vaginal ring hormonal 
contraceptive device) is on the Diagnoses for Females Only edit code 
list and suggested that ICD-10-CM diagnosis code Z30.015, which also 
describes an encounter involving a vaginal ring hormonal contraceptive, 
be added to the Diagnoses for Females Only edit code list as well. In 
addition, the requestor suggested that ICD-10-CM diagnosis codes Z31.7 
and Z98.891 be added to the Diagnoses for Females Only edit code list.
    We reviewed ICD-10-CM diagnosis codes Z30.015, Z31.7, and Z98.891, 
and we agree with the requestor that it is clinically appropriate to 
add these three ICD-10-CM diagnosis codes to the Diagnoses for Females 
Only edit code list because the conditions described by these codes are 
specific to and consistent with the female sex.
    In addition, as discussed in section II.F.15. of the preamble of 
this proposed rule, Table 6A.--New Diagnosis Codes associated with this 
proposed rule (which is available via the Internet on the CMS website 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have 
been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. The following table lists the 
new diagnosis codes that are associated with conditions consistent with 
the female sex. We are proposing to add these ICD-10-CM diagnosis codes 
to the Diagnoses for Females Only edit code list under the Sex Conflict 
edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.0.....................  Postpartum depression.
F53.1.....................  Puerperal psychosis.
N35.82....................  Other urethral stricture, female.
N35.92....................  Unspecified urethral stricture, female.
O30.131...................  Triplet pregnancy, trichorionic/triamniotic,
                             first trimester.
O30.132...................  Triplet pregnancy, trichorionic/triamniotic,
                             second trimester.
O30.133...................  Triplet pregnancy, trichorionic/triamniotic,
                             third trimester.
O30.139...................  Triplet pregnancy, trichorionic/triamniotic,
                             unspecified trimester.
O30.231...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, first trimester.
O30.232...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, second trimester.
O30.233...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, third trimester.
O30.239...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, unspecified trimester.
O30.831...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, first trimester.
O30.832...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, second trimester.
O30.833...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, third trimester.
O30.839...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, unspecified
                             trimester.
O86.00....................  Infection of obstetric surgical wound,
                             unspecified.
O86.01....................  Infection of obstetric surgical wound,
                             superficial incisional site.
O86.02....................  Infection of obstetric surgical wound, deep
                             incisional site.
O86.03....................  Infection of obstetric surgical wound, organ
                             and space site.
O86.04....................  Sepsis following an obstetrical procedure.
O86.09....................  Infection of obstetric surgical wound, other
                             surgical site.
Q51.20....................  Other doubling of uterus, unspecified.
Q51.21....................  Other complete doubling of uterus.
Q51.22....................  Other partial doubling of uterus.
Q51.28....................  Other doubling of uterus, other specified.
Z13.32....................  Encounter for screening for maternal
                             depression.
------------------------------------------------------------------------

    We are inviting public comments on our proposals.
    In addition, as discussed in section II.F.15. of the preamble of 
this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with 
this proposed rule (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that 
are no longer effective as of October 1, 2018. Included

[[Page 20232]]

in this table are the following three ICD-10-CM diagnosis codes 
currently listed on the Diagnoses for Females Only edit code list.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.......................  Puerperal psychosis.
O86.00....................  Infection of obstetric surgical wound.
Q51.20....................  Other doubling of uterus, unspecified.
------------------------------------------------------------------------

    Because these three ICD-10-CM diagnosis codes will no longer be 
effective as of October 1, 2018, we are proposing to remove them from 
the Diagnoses for Females Only edit code list under the Sex Conflict 
edit. We are inviting public comments on our proposal.
(2) Procedures for Females Only Edit
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6B.--New Procedure Codes associated with this proposed rule 
(which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the procedure codes that have been 
approved to date, which will be effective with discharges occurring on 
and after October 1, 2018. We are proposing to add the three ICD-10-PCS 
procedure codes in the following table describing procedures associated 
with the female sex to the Procedures for Females Only edit code list.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
0UY90Z0...................  Transplantation of uterus, allogeneic, open
                             approach.
0UY90Z1...................  Transplantation of uterus, syngeneic, open
                             approach.
0UY90Z2...................  Transplantation of uterus, zooplastic, open
                             approach.
------------------------------------------------------------------------

    We also are proposing to continue to include the existing procedure 
codes currently listed under the Procedures for Females Only edit code 
list. We are inviting public comments on our proposals.
(3) Diagnoses for Males Only Edit
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule 
(which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have 
been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. The following table lists the 
new diagnosis codes that are associated with conditions consistent with 
the male sex. We are proposing to add these ICD-10-CM diagnosis codes 
to the Diagnoses for Males Only edit code list under the Sex Conflict 
edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
N35.016...................  Post-traumatic urethral stricture, male,
                             overlapping sites.
N35.116...................  Postinfective urethral stricture, not
                             elsewhere classified, male, overlapping
                             sites.
N35.811...................  Other urethral stricture, male, meatal.
N35.812...................  Other urethral bulbous stricture, male.
N35.813...................  Other membranous urethral stricture, male.
N35.814...................  Other anterior urethral stricture, male,
                             anterior.
N35.816...................  Other urethral stricture, male, overlapping
                             sites.
N35.819...................  Other urethral stricture, male, unspecified
                             site.
N35.911...................  Unspecified urethral stricture, male,
                             meatal.
N35.912...................  Unspecified bulbous urethral stricture,
                             male.
N35.913...................  Unspecified membranous urethral stricture,
                             male.
N35.914...................  Unspecified anterior urethral stricture,
                             male.
N35.916...................  Unspecified urethral stricture, male,
                             overlapping sites.
N35.919...................  Unspecified urethral stricture, male,
                             unspecified site.
N99.116...................  Postprocedural urethral stricture, male,
                             overlapping sites.
R93.811...................  Abnormal radiologic findings on diagnostic
                             imaging of right testicle.
R93.812...................  Abnormal radiologic findings on diagnostic
                             imaging of left testicle.
R93.813...................  Abnormal radiologic findings on diagnostic
                             imaging of testicles, bilateral.
R93.819...................  Abnormal radiologic findings on diagnostic
                             imaging of unspecified testicle.
------------------------------------------------------------------------

    We also are proposing to continue to include the existing diagnosis 
codes currently listed under the Diagnoses for Males Only edit code 
list. We are inviting public comments on our proposals.
c. Manifestation Code as Principal Diagnosis Edit
    In the ICD-10-CM classification system, manifestation codes 
describe the manifestation of an underlying disease, not the disease 
itself and, therefore, should not be used as a principal diagnosis.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule 
(which is available via the Internet on the CMS

[[Page 20233]]

website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes 
that have been approved to date which will be effective with discharges 
occurring on and after October 1, 2018. Included in this table are ICD-
10-CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis) 
and K82.A2 (Perforation of gallbladder in cholecystitis). We are 
proposing to add these two ICD-10-CM diagnosis codes to the 
Manifestation Code as Principal Diagnosis edit code list because the 
type of cholecystitis would be required to be reported first. We also 
are proposing to continue to include the existing diagnosis codes 
currently listed under the Manifestation Code as Principal Diagnosis 
edit code list. We are inviting public comments on our proposals.
d. Questionable Admission Edit
    In the MCE, some diagnoses are not usually sufficient justification 
for admission to an acute care hospital. For example, if a patient is 
assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure 
reading, without diagnosis of hypertension), the patient would have a 
questionable admission because an elevated blood pressure reading is 
not normally sufficient justification for admission to a hospital.
    As discussed in section II.F.10. of the preamble of this proposed 
rule, we are proposing several modifications to the MS-DRGs under MDC 
14 (Pregnancy, Childbirth and the Puerperium). One aspect of these 
proposed modifications involves the GROUPER logic for the cesarean 
section and vaginal delivery MS-DRGs. We refer readers to section 
II.F.10. of the preamble of this proposed rule for a detailed 
discussion of the proposals regarding these MS-DRG modifications under 
MDC 14 and the relation to the MCE.
    If a patient presents to the hospital and either a cesarean section 
or a vaginal delivery occurs, it is expected that, in addition to the 
specific type of delivery code, an outcome of delivery code is also 
assigned and reported on the claim. The outcome of delivery codes are 
ICD-10-CM diagnosis codes that are to be reported as secondary 
diagnoses as instructed in Section I.C.15.b.5 of the ICD-10-CM Official 
Guidelines for Coding and Reporting which states: ``A code from 
category Z37, Outcome of delivery, should be included on every maternal 
record when a delivery has occurred. These codes are not to be used on 
subsequent records or on the newborn record.'' Therefore, to encourage 
accurate coding and appropriate MS-DRG assignment in alignment with the 
proposed modifications to the delivery MS-DRGs, we are proposing to 
create a new ``Questionable Obstetric Admission Edit'' under the 
Questionable Admission edit to read as follows:

``b. Questionable obstetric admission

ICD-10-PCS procedure codes describing a cesarean section or vaginal 
delivery are considered to be a questionable admission except when 
reported with a corresponding secondary diagnosis code describing 
the outcome of delivery.

Procedure code list for cesarean section

10D00Z0 Extraction of Products of Conception, High, Open Approach
10D00Z1 Extraction of Products of Conception, Low, Open Approach
10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open 
Approach

Procedure code list for vaginal delivery

10D07Z3 Extraction of Products of Conception, Low Forceps, Via 
Natural or Artificial Opening
10D07Z4 Extraction of Products of Conception, Mid Forceps, Via 
Natural or Artificial Opening
10D07Z5 Extraction of Products of Conception, High Forceps, Via 
Natural or Artificial Opening
10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or 
Artificial Opening
10D07Z7 Extraction of Products of Conception, Internal Version, Via 
Natural or Artificial Opening
10D07Z8 Extraction of Products of Conception, Other, Via Natural or 
Artificial Opening
10D17Z9 Manual Extraction of Products of Conception, Retained, Via 
Natural or Artificial Opening
10D18Z9 Manual Extraction of Products of Conception, Retained, Via 
Natural or Artificial Opening Endoscopic
10E0XZZ Delivery of Products of Conception, External Approach

Secondary diagnosis code list for outcome of delivery

Z37.0 Single live birth
Z37.1 Single stillbirth
Z37.2 Twins, both liveborn
Z37.3 Twins, one liveborn and one stillborn
Z37.4 Twins, both stillborn
Z37.50 Multiple births, unspecified, all liveborn
Z37.51 Triplets, all liveborn
Z37.52 Quadruplets, all liveborn
Z37.53 Quintuplets, all liveborn
Z37.54 Sextuplets, all liveborn
Z37.59 Other multiple births, all liveborn
Z37.60 Multiple births, unspecified, some liveborn
Z37.61 Triplets, some liveborn
Z37.62 Quadruplets, some liveborn
Z37.63 Quintuplets, some liveborn
Z37.64 Sextuplets, some liveborn
Z37.69 Other multiple births, some liveborn
Z37.7 Other multiple births, all stillborn
Z37.9 Outcome of delivery, unspecified''
    We are proposing that the three ICD-10-PCS procedure codes listed 
in the following table would be used to establish the list of codes for 
the proposed Questionable Obstetric Admission edit logic for cesarean 
section.

   ICD-10-PCS Procedure Codes for Cesarean Section Under the Proposed
       Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
10D00Z0...................  Extraction of products of conception, high,
                             open approach.
10D00Z1...................  Extraction of products of conception, low,
                             open approach.
10D00Z2...................  Extraction of products of conception,
                             extraperitoneal, open approach.
------------------------------------------------------------------------

    We are proposing that the nine ICD-10-PCS procedure codes listed in 
the following table would be used to establish the list of codes for 
the proposed new Questionable Obstetric Admission edit logic for 
vaginal delivery.

[[Page 20234]]



   ICD-10-PCS Procedure Codes for Vaginal Delivery Under the Proposed
       Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
10D07Z3...................  Extraction of products of conception, low
                             forceps, via natural or artificial opening.
10D07Z4...................  Extraction of products of conception, mid
                             forceps, via natural or artificial opening.
10D07Z5...................  Extraction of products of conception, high
                             forceps, via natural or artificial opening.
10D07Z6...................  Extraction of products of conception,
                             vacuum, via natural or artificial opening.
10D07Z7...................  Extraction of products of conception,
                             internal version, via natural or artificial
                             opening.
10D07Z8...................  Extraction of products of conception, other,
                             via natural or artificial opening.
10D17Z9...................  Manual extraction of products of conception,
                             retained, via natural or artificial
                             opening.
10D18Z9...................  Manual extraction of products of conception,
                             retained, via natural or artificial
                             opening.
10E0XZZ...................  Delivery of products of conception, external
                             approach.
------------------------------------------------------------------------

    We are proposing that the 19 ICD-10-CM diagnosis codes listed in 
the following table would be used to establish the list of secondary 
diagnosis codes for the proposed new Questionable Obstetric Admission 
edit logic for outcome of delivery.

  ICD-10-CM Secondary Diagnosis Codes for Outcome of Delivery Under the
   Proposed Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z37.0.....................  Single live birth.
Z37.1.....................  Single stillbirth.
Z37.2.....................  Twins, both liveborn.
Z37.3.....................  Twins, one liveborn and one stillborn.
Z37.4.....................  Twins, both stillborn.
Z37.50....................  Multiple births, unspecified, all liveborn.
Z37.51....................  Triplets, all liveborn.
Z37.52....................  Quadruplets, all liveborn.
Z37.53....................  Quintuplets, all liveborn.
Z37.54....................  Sextuplets, all liveborn.
Z37.59....................  Other multiple births, all liveborn.
Z37.60....................  Multiple births, unspecified, some liveborn.
Z37.61....................  Triplets, some liveborn.
Z37.62....................  Quadruplets, some liveborn.
Z37.63....................  Quintuplets, some liveborn.
Z37.64....................  Sextuplets, some liveborn.
Z37.69....................  Other multiple births, some liveborn.
Z37.7.....................  Other multiple births, all liveborn.
Z37.9.....................  Outcome of delivery, unspecified.
------------------------------------------------------------------------

    We are inviting public comments on our proposal to create this new 
Questionable Obstetric Admission edit. We also are inviting public 
comments on the lists of diagnosis and procedure codes that we are 
proposing to include for this edit.
e. Unacceptable Principal Diagnosis Edit
    In the MCE, there are select codes that describe a circumstance 
which influences an individual's health status, but does not actually 
describe a current illness or injury. There also are codes that are not 
specific manifestations, but may be due to an underlying cause. These 
codes are considered unacceptable as a principal diagnosis. In limited 
situations, there are a few codes on the MCE Unacceptable Principal 
Diagnosis edit code list that are considered ``acceptable'' when a 
specified secondary diagnosis is also coded and reported on the claim.
    As discussed in section II.F.9. of the preamble of this proposed 
rule, ICD-10-CM diagnosis codes Z49.02 (Encounter for fitting and 
adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for 
adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy 
testing for peritoneal dialysis) are currently on the Unacceptable 
Principal Diagnosis edit code list. We are proposing to add diagnosis 
code Z49.01 (Encounter for fitting and adjustment of extracorporeal 
dialysis catheter) to the Unacceptable Principal Diagnosis edit code 
list because this is an encounter code that would more likely be 
performed in an outpatient setting.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed 
rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that are no 
longer effective as of October 1, 2018. As previously noted, included 
in this table is an ICD-10-CM diagnosis code Z13.4 (Encounter for 
screening for certain developmental disorders in childhood) which is 
currently listed on the Unacceptable Principal diagnoses Category edit 
code list. We are proposing to remove this code from the Unacceptable 
Principal Diagnoses Category edit code list.
    We also are proposing to continue to include the other existing 
diagnosis codes currently listed under the Unacceptable Principal 
Diagnosis edit code list. We are inviting public comments on our 
proposals.

[[Page 20235]]

f. Future Enhancement
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 
38054), we noted the importance of ensuring accuracy of the coded data 
from the reporting, collection, processing, coverage, payment, and 
analysis aspects. We have engaged a contractor to assist in the review 
of the limited coverage and noncovered procedure edits in the MCE that 
may also be present in other claims processing systems that are 
utilized by our MACs. The MACs must adhere to criteria specified within 
the National Coverage Determinations (NCDs) and may implement their own 
edits in addition to what are already incorporated into the MCE, 
resulting in duplicate edits. The objective of this review is to 
identify where duplicate edits may exist and to determine what the 
impact might be if these edits were to be removed from the MCE.
    We have noted that the purpose of the MCE is to ensure that errors 
and inconsistencies in the coded data are recognized during Medicare 
claims processing. We are considering whether the inclusion of coverage 
edits in the MCE necessarily aligns with that specific goal because the 
focus of coverage edits is on whether or not a particular service is 
covered for payment purposes and not whether it was coded correctly.
    As we continue to evaluate the purpose and function of the MCE with 
respect to ICD-10, we encourage public input for future discussion. As 
we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a 
need to further examine the current list of edits and the definitions 
of those edits. We continue to encourage public comments on whether 
there are additional concerns with the current edits, including 
specific edits or language that should be removed or revised, edits 
that should be combined, or new edits that should be added to assist in 
detecting errors or inaccuracies in the coded data. Comments should be 
directed to the MS-DRG Classification Change Mailbox located at: 
[email protected] by November 1, 2018 for FY 2020.
14. Proposed Changes to Surgical Hierarchies
    Some inpatient stays entail multiple surgical procedures, each one 
of which, occurring by itself, could result in assignment of the case 
to a different MS-DRG within the MDC to which the principal diagnosis 
is assigned. Therefore, it is necessary to have a decision rule within 
the GROUPER by which these cases are assigned to a single MS-DRG. The 
surgical hierarchy, an ordering of surgical classes from most 
resource[dash]intensive to least resource[dash]intensive, performs that 
function. Application of this hierarchy ensures that cases involving 
multiple surgical procedures are assigned to the MS-DRG associated with 
the most resource[dash]intensive surgical class.
    A surgical class can be composed of one or more MS-DRGs. For 
example, in MDC 11, the surgical class ``kidney transplant'' consists 
of a single MS-DRG (MS-DRG 652) and the class ``major bladder 
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655). 
Consequently, in many cases, the surgical hierarchy has an impact on 
more than one MS-DRG. The methodology for determining the most 
resource-intensive surgical class involves weighting the average 
resources for each MS-DRG by frequency to determine the weighted 
average resources for each surgical class. For example, assume surgical 
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To 
determine whether surgical class A should be higher or lower than 
surgical class B in the surgical hierarchy, we would weigh the average 
costs of each MS-DRG in the class by frequency (that is, by the number 
of cases in the MS-DRG) to determine average resource consumption for 
the surgical class. The surgical classes would then be ordered from the 
class with the highest average resource utilization to that with the 
lowest, with the exception of ``other O.R. procedures'' as discussed in 
this proposed rule.
    This methodology may occasionally result in assignment of a case 
involving multiple procedures to the lower[dash]weighted MS-DRG (in the 
highest, most resource[dash]intensive surgical class) of the available 
alternatives. However, given that the logic underlying the surgical 
hierarchy provides that the GROUPER search for the procedure in the 
most resource[dash]intensive surgical class, in cases involving 
multiple procedures, this result is sometimes unavoidable.
    We note that, notwithstanding the foregoing discussion, there are a 
few instances when a surgical class with a lower average cost is 
ordered above a surgical class with a higher average cost. For example, 
the ``other O.R. procedures'' surgical class is uniformly ordered last 
in the surgical hierarchy of each MDC in which it occurs, regardless of 
the fact that the average costs for the MS-DRG or MS-DRGs in that 
surgical class may be higher than those for other surgical classes in 
the MDC. The ``other O.R. procedures'' class is a group of procedures 
that are only infrequently related to the diagnoses in the MDC, but are 
still occasionally performed on patients with cases assigned to the MDC 
with these diagnoses. Therefore, assignment to these surgical classes 
should only occur if no other surgical class more closely related to 
the diagnoses in the MDC is appropriate.
    A second example occurs when the difference between the average 
costs for two surgical classes is very small. We have found that small 
differences generally do not warrant reordering of the hierarchy 
because, as a result of reassigning cases on the basis of the hierarchy 
change, the average costs are likely to shift such that the 
higher[dash]ordered surgical class has lower average costs than the 
class ordered below it.
    Based on the changes that we are proposing to make in this FY 2019 
IPPS/LTCH PPS proposed rule, as discussed in section II.F.10. of the 
preamble of this proposed rule, we are proposing to revise the surgical 
hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as 
follows: In MDC 14, we are proposing to delete MS-DRGs 765 and 766 
(Cesarean Section with and without CC/MCC, respectively) and MS-DRG 767 
(Vaginal Delivery with Sterilization and/or D&C) from the surgical 
hierarchy. We are proposing to sequence proposed new MS-DRGs 783, 784, 
and 785 (Cesarean Section with Sterilization with MCC, with CC and 
without CC/MCC, respectively) above proposed new MS-DRGs 786, 787, and 
788 (Cesarean Section without Sterilization with MCC, with CC and 
without CC/MCC, respectively). We are proposing to sequence proposed 
new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization 
with MCC, with CC and without CC/MCC, respectively) above MS-DRG 768 
(Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C). 
We also are proposing to sequence proposed new MS-DRGs 796, 797, and 
798 (Vaginal Delivery with Sterilization/D&C with MCC, with CC and 
without CC/MCC, respectively) below MS-DRG 768 and above MS-DRG 770 
(Abortion with D&C, Aspiration Curettage or Hysterotomy). Finally, we 
are proposing to sequence proposed new MS-DRGs 817, 818, and 819 (Other 
Antepartum Diagnoses with O.R. procedure with

[[Page 20236]]

MCC, with CC and without CC/MCC, respectively) below MS-DRG 770 and 
above MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. 
Procedure). Our proposals for Appendix D MS-DRG Surgical Hierarchy by 
MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 are 
illustrated in the following table.

                   Proposed Surgical Hierarchy: MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Proposed New MS-DRGs 783-785...........  Cesarean Section with
                                          Sterilization.
Proposed New MS-DRGs 786-788...........  Cesarean Section without
                                          Sterilization.
MS-DRG 768.............................  Vaginal Delivery with O.R.
                                          Procedures.
Proposed New MS-DRGs 796-798...........  Vaginal Delivery with
                                          Sterilization/D&C.
MS-DRG 770.............................  Abortion with D&C, Aspiration
                                          Curettage or Hysterotomy.
Proposed New MS-DRGs 817-819...........  Other Antepartum Diagnoses with
                                          O.R. Procedure.
MS-DRG 769.............................  Postpartum and Post Abortion
                                          Diagnoses with O.R. Procedure.
------------------------------------------------------------------------

    We are inviting public comments on our proposals.
    As with other MS-DRG related issues, we encourage commenters to 
submit requests to examine ICD-10 claims pertaining to the surgical 
hierarchy via the CMS MS[dash]DRG Classification Change Request Mailbox 
located at: [email protected] by November 1, 2018 
for FY 2020 consideration.
15. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2019
a. Background of the CC List and the CC Exclusions List
    Under the IPPS MS-DRG classification system, we have developed a 
standard list of diagnoses that are considered CCs. Historically, we 
developed this list using physician panels that classified each 
diagnosis code based on whether the diagnosis, when present as a 
secondary condition, would be considered a substantial complication or 
comorbidity. A substantial complication or comorbidity was defined as a 
condition that, because of its presence with a specific principal 
diagnosis, would cause an increase in the length-of-stay by at least 1 
day in at least 75 percent of the patients. However, depending on the 
principal diagnosis of the patient, some diagnoses on the basic list of 
complications and comorbidities may be excluded if they are closely 
related to the principal diagnosis. In FY 2008, we evaluated each 
diagnosis code to determine its impact on resource use and to determine 
the most appropriate CC subclassification (non-CC, CC, or MCC) 
assignment. We refer readers to sections II.D.2. and 3. of the preamble 
of the FY 2008 IPPS final rule with comment period for a discussion of 
the refinement of CCs in relation to the MS[dash]DRGs we adopted for FY 
2008 (72 FR 47152 through 47171).
b. Proposed Additions and Deletions to the Diagnosis Code Severity 
Levels for FY 2019
    The following tables identifying the proposed additions and 
deletions to the MCC severity levels list and the proposed additions 
and deletions to the CC severity levels list for FY 2019 are available 
via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    Table 6I.1--Proposed Additions to the MCC List--FY 2019;
    Table 6I.2--Proposed Deletions to the MCC List--FY 2019;
    Table 6J.1--Proposed Additions to the CC List--FY 2019; and
    Table 6J.2--Proposed Deletions to the CC List--FY 2019.
    We are inviting public comments on our proposed severity level 
designations for the diagnosis codes listed in Table 6I.1. and Table 
6J.1. We note that, for Table 6I.2. and Table 6J.2., the proposed 
deletions are a result of code expansions, with the exception of 
diagnosis codes B20 and J80, which are the result of proposed severity 
level designation changes. Therefore, the diagnosis codes on these 
lists will no longer be valid codes, effective FY 2019.
    We refer readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 
associated with this proposed rule, which are available via the 
Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
c. Principal Diagnosis Is Its Own CC or MCC
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided 
the public with notice of our plans to conduct a comprehensive review 
of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38056 through 38057), we also finalized our proposal to 
maintain the existing lists of principal diagnosis codes in Table 6L.--
Principal Diagnosis Is Its Own MCC List and Table 6M.--Principal 
Diagnosis Is Its Own CC List for FY 2018, without any changes to the 
existing lists, noting our plans to conduct a comprehensive review of 
the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having 
multiple lists for CC and MCC diagnoses when reported as a principal 
and/or secondary diagnosis may not provide an accurate representation 
of resource utilization for the MS-DRGs.
    We also stated that the purpose of the Principal Diagnosis Is Its 
Own CC or MCC Lists was to ensure consistent MS-DRG assignment between 
the ICD-9-CM and ICD-10 MS-DRGs. The Principal Diagnosis Is Its Own CC 
or MCC Lists were developed for the FY 2016 implementation of the ICD-
10 version of the MS-DRGs to facilitate replication of the ICD-9-CM MS-
DRGs. As part of our efforts to replicate the ICD-9-CM MS-DRGs, we 
implemented logic that may have increased the complexity of the MS-DRG 
assignment hierarchy and altered the format of the ICD-10 MS-DRG 
Definitions Manual. Two examples of workarounds used to facilitate 
replication are the proliferation of procedure clusters in the surgical 
MS-DRGs and the creation of the Principal Diagnosis Is Its Own CC or 
MCC Lists special logic.
    The following paragraph was added to the Version 33 ICD-10 MS-DRG 
Definitions Manual to explain the use of the Principal Diagnosis Is Its 
Own CC or MCC Lists: ``A few ICD-10-CM diagnosis codes express 
conditions that are normally coded in ICD-9-CM using two or more ICD-9-
CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs 
Version 33 places a patient in the same DRG regardless whether the 
patient record were to be coded in ICD-9-CM or ICD-10-CM/PCS, whenever 
one of these ICD-10-CM combination codes is used as principal 
diagnosis, the cluster of ICD-9-CM codes that would be coded on an ICD-
9-CM record is considered. If one of the ICD-9-CM codes in the cluster 
is a CC

[[Page 20237]]

or MCC, then the single ICD-10-CM combination code used as a principal 
diagnosis must also imply the CC or MCC that the ICD-9-CM cluster would 
have presented. The ICD-10-CM diagnoses for which this implication must 
be made are listed here.'' Versions 34 and 35 of the ICD-10 MS-DRG 
Definitions Manual also include this special logic for the MS-DRGs.
    The Principal Diagnosis Is Its Own CC or MCC Lists were developed 
in the absence of ICD-10 coded data by mapping the ICD-9-CM diagnosis 
codes to the new ICD-10-CM combination codes. CMS has historically used 
clinical judgment combined with data analysis to assign a principal 
diagnosis describing a complex or severe condition to the appropriate 
DRG or MS-DRG. The initial ICD-10 version of the MS[dash]DRGs 
replicated from the ICD-9 version can now be evaluated using clinical 
judgment combined with ICD-10 coded data because it is no longer 
necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 
versions of the MS-DRGs for purposes of calculating relative weights. 
Now that ICD-10 coded data are available, in addition to using the data 
for calculating relative weights, ICD-10 data can be used to evaluate 
the effectiveness of the special logic for assigning a severity level 
to a principal diagnosis, as an indicator of resource utilization. To 
evaluate the effectiveness of the special logic, we have conducted 
analysis of the ICD-10 coded data combined with clinical review to 
determine whether to propose to keep the special logic for assigning a 
severity level to a principal diagnosis, or to propose to remove the 
special logic and use other available means of assigning a complex 
principal diagnosis to the appropriate MS[dash]DRG.
    Using claims data from the September 2017 update of the FY 2017 
MedPAR file, we employed the following method to determine the impact 
of removing the special logic used in the current Version 35 GROUPER to 
process claims containing a code on the Principal Diagnosis Is Its Own 
CC or MCC Lists. Edits and cost estimations used for relative weight 
calculations were applied, resulting in 9,070,073 IPPS claims analyzed 
for this special logic impact evaluation. We refer readers to section 
II.G. of the preamble of this proposed rule for further information 
regarding the methodology for calculation of the proposed relative 
weights.
    First, we identified the number of cases potentially impacted by 
the special logic. We identified 310,184 cases reporting a principal 
diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the 
310,184 total cases that reported a principal diagnosis code on the 
Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also 
reported a secondary diagnosis code at the same severity level or 
higher severity level, and therefore the special logic had no impact on 
MS-DRG assignment. However, of the 310,184 total cases, there were 
105,435 cases that did not report a secondary diagnosis code at the 
same severity level or higher severity level, and therefore the special 
logic could potentially impact MS-DRG assignment, depending on the 
specific severity leveling structure of the base DRG.
    Next, we removed the special logic in the GROUPER that is used for 
processing claims reporting a principal diagnosis on the Principal 
Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified 
Version 35 GROUPER. Using this Modified Version 35 GROUPER, we 
reprocessed the 105,435 claims for which the principal diagnosis code 
was the sole source of a MCC or CC on the case, to obtain data for 
comparison showing the effect of removing the special logic.
    After removing the special logic in the Version 35 GROUPER for 
processing claims containing diagnosis codes on the Principal Diagnosis 
Is Its Own CC or MCC Lists, and reprocessing the claims using the 
Modified Version 35 GROUPER software, we found that 18,596 (6 percent) 
of the 310,184 cases reporting a principal diagnosis on the Principal 
Diagnosis Is Its Own CC or MCC Lists resulted in a different MS-DRG 
assignment. Overall, the number of claims impacted by removal of the 
special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS 
claims analyzed.
    Below we provide a summary of the steps that we followed for the 
analysis performed.
    Step 1. We analyzed 9,070,073 claims to determine the number of 
cases impacted by the special logic.

              With Special Logic--9,070,073 Claims Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the         310,184
 Principal Diagnosis Is Its Own CC/MCC lists (special
 logic).................................................
Number of cases reporting an additional CC/MCC secondary         204,749
 diagnosis code at or above the level of the designated
 severity level of the principal diagnosis..............
Number of cases not reporting an additional CC/MCC               105,435
 secondary diagnosis code...............................
------------------------------------------------------------------------

    Step 2. We removed special logic from GROUPER and created a 
modified GROUPER.
    Step 3. We reprocessed 105,435 claims with modified GROUPER.

             Without Special Logic--105,435 Claims Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the         310,184
 Principal Diagnosis Is Its Own CC/MCC lists............
Number of cases resulting in different MS-DRG assignment          18,596
------------------------------------------------------------------------

    To estimate the overall financial impact of removing the special 
logic from the GROUPER, we calculated the aggregate change in estimated 
payment for the MS-DRGs by comparing average costs for each MS-DRG 
affected by the change, before and after removing the special logic. 
Before removing the special logic in the Version 35 GROUPER, the cases 
impacted by the special logic had an estimated average payment of $58 
million above the average costs for all the MS-DRGs to which the claim 
was originally assigned. After removing the special logic in the 
Version 35 GROUPER, the 18,596 cases impacted by the special logic had 
an estimated average payment of $39 million below the average costs for 
the newly assigned MS-DRGs.
    We performed regression analysis to compare the proportion of 
variance in the MS-DRGs with and without the special logic. The results 
of the

[[Page 20238]]

regression analysis showed a slight decrease in variance when the logic 
was removed. While the decrease itself was not statistically 
significant (an R-squared of 36.2603 percent after the special logic 
was removed, compared with an R-squared of 36.2501 percent in the 
current version 35 GROUPER), we note that the proportion of variance 
across the MS-DRGs essentially stayed the same, and certainly did not 
increase, when the special logic was removed.
    We further examined the 18,596 claims that were impacted by the 
special logic in the GROUPER for processing claims containing a code on 
the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims 
were analyzed by the principal diagnosis code and the MS-DRG assigned, 
resulting in 588 principal diagnosis and MS-DRG combinations or 
subsets. Of the 588 subsets of cases that utilized the special logic, 
556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of 
the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the 
588 subsets (83 percent) had fewer than 25 cases.
    We examined the 32 subsets of cases (5 percent of the 588 subsets) 
that utilized the special logic and had 100 or more cases. Of the 32 
subsets of cases, 18 (56 percent) are similar in terms of average costs 
and length of stay to the MS-DRG assignment that results when the 
special logic is removed, and 14 of the 32 subsets of cases (44 
percent) are similar in terms of average costs and length of stay to 
the MS-DRG assignment that results when the special logic is utilized.
    The table below contains examples of four subsets of cases that 
utilize the special logic, comparing average length of stay and average 
costs between two MS-DRGs within a base DRG, corresponding to the MS-
DRG assigned when the special logic is removed and the MS-DRG assigned 
when the special logic is utilized. All four subsets of cases involve 
the principal diagnosis code E11.52 (Type 2 diabetes mellitus with 
diabetic peripheral angiopathy with gangrene). There are four subsets 
of cases in this example because the records involving the principal 
diagnosis code E11.52 are assigned to four different base DRGs, one 
medical MS-DRG and three surgical MS[dash]DRGs, depending on the 
procedure code(s) reported on the claim. All subsets of cases contain 
more than 100 claims. In three of the four subsets, the cases are 
similar in terms of average length of stay and average costs to the MS-
DRG assignment that results when the special logic is removed, and in 
one of the four subsets, the cases are similar in terms of average 
length of stay and average costs to the MS-DRG assignment that results 
when the special logic is utilized.
    As shown in the following table, using ICD-10-CM diagnosis code 
E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy 
with gangrene) as our example, the data findings show four different 
MS-DRG pairs for which code E11.52 was the principal diagnosis on the 
claim and where the special logic impacted MS-DRG assignment. For the 
first MS-DRG pair, we examined MS-DRGs 240 and 241 (Amputation for 
Circulatory System Disorders Except Upper Limb and Toe with CC and 
without CC/MCC, respectively). We found 436 cases reporting diagnosis 
code E11.52 as the principal diagnosis, with an average length of stay 
of 5.5 days and average costs of $11,769. These 436 cases are assigned 
to MS-DRG 240 with the special logic utilized, and assigned to MS-DRG 
241 with the special logic removed. The total number of cases reported 
in MS-DRG 240 was 7,675, with an average length of stay of 8.3 days and 
average costs of $17,876. The total number of cases reported in MS-DRG 
241 was 778, with an average length of stay of 5.0 days and average 
costs of $10,882. The 436 cases are more similar to MS-DRG 241 in terms 
of length of stay and average cost and less similar to MS-DRG 240.
    For the second MS-DRG pair, we examined MS-DRGs 256 and 257 (Upper 
Limb and Toe Amputation for Circulatory System Disorders with CC and 
without CC/MCC, respectively). We found 193 cases reporting ICD-10-CM 
diagnosis code E11.52 as the principal diagnosis, with an average 
length of stay of 4.2 days and average costs of $8,478. These 193 cases 
are assigned to MS-DRG 256 with the special logic utilized, and 
assigned to MS-DRG 257 with the special logic removed. The total number 
of cases reported in MS-DRG 256 was 2,251, with an average length of 
stay of 6.1 days and average costs of $11,987. The total number of 
cases reported in MS-DRG 257 was 115, with an average length of stay of 
4.6 days and average costs of $7,794. These 193 cases are more similar 
to MS-DRG 257 in terms of average length of stay and average costs and 
less similar to MS-DRG 256.
    For the third MS-DRG pair, we examined MS-DRGs 300 and 301 
(Peripheral Vascular Disorders with CC and without CC/MCC, 
respectively). We found 185 cases reporting ICD-10-CM diagnosis code 
E11.52 as the principal diagnosis, with an average length of stay of 
3.6 days and average costs of $5,981. These 185 cases are assigned to 
MS-DRG 300 with the special logic utilized, and assigned to MS-DRG 301 
with the special logic removed. The total number of cases reported in 
MS-DRG 300 was 29,327, with an average length of stay of 4.1 days and 
average costs of $7,272. The total number of cases reported in MS-DRG 
301 was 9,611, with an average length of stay of 2.8 days and average 
costs of $5,263. These 185 cases are more similar to MS-DRG 301 in 
terms of average length of stay and average costs and less similar to 
MS-DRG 300.
    For the fourth MS-DRG pair, we examined MS-DRGs 253 and 254 (Other 
Vascular Procedures with CC and without CC/MCC, respectively). We found 
225 cases reporting diagnosis code E11.52 as the principal diagnosis, 
with an average length of stay of 5.2 days and average costs of 
$17,901. These 225 cases are assigned to MS-DRG 253 with the special 
logic utilized, and assigned to MS-DRG 254 with the special logic 
removed. The total number of cases reported in MS-DRG 253 was 25,714, 
with an average length of stay of 5.4 days and average costs of 
$18,986. The total number of cases reported in MS-DRG 254 was 12,344, 
with an average length of stay of 2.8 days and average costs of 
$13,287. Unlike the previous three MS-DRG pairs, these 225 cases are 
more similar to MS-DRG 253 in terms of average length of stay and 
average costs and less similar to MS-DRG 254.

        MS-DRG Pairs for Principal Diagnosis ICD-10-CM Code E11.52 With and Without Special MS-DRG Logic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 240 and 241--Special logic impacted cases with ICD-10-CM             436             5.5         $11,769
 code E11.52 as principal diagnosis.............................
MS-DRG 240--All cases...........................................           7,675             8.3          17,876
MS-DRG 241--All cases...........................................             778             5.0          10,882

[[Page 20239]]

 
MS-DRGs 253 and 254--Special logic impacted cases with ICD-10-CM             225             5.2          17,901
 E11.52 as principal diagnosis..................................
MS-DRG 253--All cases...........................................          25,714             5.4          18,986
MS-DRG 254--All cases...........................................          12,344             2.8          13,287
MS-DRGs 256 and 257--Special logic impacted cases with ICD-10-CM             193             4.2           8,478
 E11.52 as principal diagnosis..................................
MS-DRG 256--All cases...........................................           2,251             6.1          11,987
MS-DRG 257--All cases...........................................             115             4.6           7,794
MS-DRGs 300 and 301--Special logic impacted cases with ICD-10-CM             185             3.6           5,981
 E11.52 as principal diagnosis..................................
MS-DRG 300--All cases...........................................          29,327             4.1           7,272
MS-DRG 301--All cases...........................................           9,611             2.8           5,263
----------------------------------------------------------------------------------------------------------------

    Based on our analysis of the data, we believe that there may be 
more effective indicators of resource utilization than the Principal 
Diagnosis Is Its Own CC or MCC Lists and the special logic used to 
assign clinical severity to a principal diagnosis. As stated earlier in 
this discussion, it is no longer necessary to replicate MS-DRG 
assignment across the ICD-9 and ICD-10 versions of the MS-DRGs. The 
available ICD-10 data can now be used to evaluate other indicators of 
resource utilization.
    Therefore, as an initial recommendation from the first phase in our 
comprehensive review of the CC and MCC lists, we are proposing to 
remove the special logic in the GROUPER for processing claims 
containing a diagnosis code from the Principal Diagnosis Is Its Own CC 
or MCC Lists, and we are proposing to delete the tables containing the 
lists of principal diagnosis codes, Table 6L.--Principal Diagnosis Is 
Its Own MCC List and Table 6M.--Principal Diagnosis Is Its Own CC List, 
from the ICD-10 MS-DRG Definitions Manual for FY 2019. We are inviting 
public comments on our proposals.
d. Proposed CC Exclusions List for FY 2019
    In the September 1, 1987 final notice (52 FR 33143) concerning 
changes to the DRG classification system, we modified the GROUPER logic 
so that certain diagnoses included on the standard list of CCs would 
not be considered valid CCs in combination with a particular principal 
diagnosis. We created the CC Exclusions List for the following reasons: 
(1) To preclude coding of CCs for closely related conditions; (2) to 
preclude duplicative or inconsistent coding from being treated as CCs; 
and (3) to ensure that cases are appropriately classified between the 
complicated and uncomplicated DRGs in a pair.
    In the May 19, 1987 proposed notice (52 FR 18877) and the September 
1, 1987 final notice (52 FR 33154), we explained that the excluded 
secondary diagnoses were established using the following five 
principles:
     Chronic and acute manifestations of the same condition 
should not be considered CCs for one another;
     Specific and nonspecific (that is, not otherwise specified 
(NOS)) diagnosis codes for the same condition should not be considered 
CCs for one another;
     Codes for the same condition that cannot coexist, such as 
partial/total, unilateral/bilateral, obstructed/unobstructed, and 
benign/malignant, should not be considered CCs for one another;
     Codes for the same condition in anatomically proximal 
sites should not be considered CCs for one another; and
     Closely related conditions should not be considered CCs 
for one another.
    The creation of the CC Exclusions List was a major project 
involving hundreds of codes. We have continued to review the remaining 
CCs to identify additional exclusions and to remove diagnoses from the 
master list that have been shown not to meet the definition of a CC. We 
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 
through 50544) for detailed information regarding revisions that were 
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
    In this proposed rule, for FY 2019, we are proposing changes to the 
ICD-10 MS-DRGs Version 36 CC Exclusion List. Therefore, we developed 
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC 
Exclusions List--FY 2019; Table 6G.2.--Proposed Principal Diagnosis 
Order Additions to the CC Exclusions List--FY 2019; Table 6H.1.--
Proposed Secondary Diagnosis Order Deletions to the CC Exclusions 
List--FY 2019; and Table 6H.2.--Proposed Principal Diagnosis Order 
Deletions to the CC Exclusions List--FY 2019. For Table 6G.1, each 
secondary diagnosis code proposed for addition to the CC Exclusion List 
is shown with an asterisk and the principal diagnoses proposed to 
exclude the secondary diagnosis code are provided in the indented 
column immediately following it. For Table 6G.2, each of the principal 
diagnosis codes for which there is a CC exclusion is shown with an 
asterisk and the conditions proposed for addition to the CC Exclusion 
List that will not count as a CC are provided in an indented column 
immediately following the affected principal diagnosis. For Table 6H.1, 
each secondary diagnosis code proposed for deletion from the CC 
Exclusion List is shown with an asterisk followed by the principal 
diagnosis codes that currently exclude it. For Table 6H.2, each of the 
principal diagnosis codes is shown with an asterisk and the proposed 
deletions to the CC Exclusions List are provided in an indented column 
immediately following the affected principal diagnosis. Tables 6G.1., 
6G.2., 6H.1., and 6H.2. associated with this proposed rule are 
available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    To identify new, revised and deleted diagnosis and procedure codes, 
for FY 2019, we developed Table 6A.--New Diagnosis Codes, Table 6B.--
New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--
Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and 
Table 6F.--Revised Procedure Code Titles for this proposed rule.
    These tables are not published in the Addendum to the proposed rule 
but are available via the Internet on the CMS

[[Page 20240]]

website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the 
Addendum to this proposed rule. As discussed in section II.F.18. of the 
preamble of this proposed rule, the code titles are adopted as part of 
the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we publish the code titles in the IPPS 
proposed and final rules, they are not subject to comment in the 
proposed or final rules.
    In this FY 2019 IPPS/LTCH PPS proposed rule, we are inviting public 
comments on the MDC and MS-DRG assignments for the new diagnosis and 
procedure codes as set forth in Table 6A.--New Diagnosis Codes and 
Table 6B.--New Procedure Codes. In addition, we are inviting public 
comments on the proposed severity level designations for the new 
diagnosis codes as set forth in Table 6A. and the proposed O.R. status 
for the new procedure codes as set forth in Table 6B.
    We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html 
the following tables associated with this proposed rule:
     Table 6A.--New Diagnosis Codes--FY 2019;
     Table 6B.--New Procedure Codes--FY 2019;
     Table 6C.--Invalid Diagnosis Codes--FY 2019;
     Table 6D.--Invalid Procedure Codes--FY 2019;
     Table 6E.--Revised Diagnosis Code Titles--FY 2019;
     Table 6F.--Revised Procedure Code Titles--FY 2019;
     Table 6G.1.--Proposed Secondary Diagnosis Order Additions 
to the CC Exclusions List--FY 2019;
     Table 6G.2.--Proposed Principal Diagnosis Order Additions 
to the CC Exclusions List--FY 2019;
     Table 6H.1.--Proposed Secondary Diagnosis Order Deletions 
to the CC Exclusions List--FY 2019;
     Table 6H.2.--Proposed Principal Diagnosis Order Deletions 
to the CC Exclusions List--FY 2019;
     Table 6I.1.--Proposed Additions to the MCC List--FY 2019;
     Table 6I.2.--Proposed Deletions to the MCC List--FY 2019;
     Table 6J.1.--Proposed Additions to the CC List--FY 2019; 
and
     Table 6J.2.--Proposed Deletions to the CC List--FY 2019.
    We note that, as discussed in section II.F.15.c. of the preamble of 
this proposed rule, we are proposing to delete Table 6L. and Table 6M. 
from the ICD-10 MS-DRG Definitions Manual for FY 2019.
16. Comprehensive Review of CC List for FY 2019
a. Overview of Comprehensive CC/MCC Analysis
    In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described 
our process for establishing three different levels of CC severity into 
which we would subdivide the diagnosis codes. The categorization of 
diagnoses as an MCC, CC, or non[dash]CC was accomplished using an 
iterative approach in which each diagnosis was evaluated to determine 
the extent to which its presence as a secondary diagnosis resulted in 
increased hospital resource use. We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47159) for a complete discussion of our 
approach. Since this comprehensive analysis was completed for FY 2008, 
we have evaluated diagnosis codes individually when receiving requests 
to change the severity level of specific diagnosis codes. However, 
given the transition to ICD-10-CM and the significant changes that have 
occurred to diagnosis codes since this review, we believe it is 
necessary to conduct a comprehensive analysis once again. We have begun 
this analysis and will discuss our findings in future rulemaking. We 
are currently using the same methodology utilized in FY 2008 and 
described below to conduct this analysis.
    For each secondary diagnosis, we measured the impact in resource 
use for the following three subsets of patients:
    (1) Patients with no other secondary diagnosis or with all other 
secondary diagnoses that are non-CCs.
    (2) Patients with at least one other secondary diagnosis that is a 
CC but none that is an MCC.
    (3) Patients with at least one other secondary diagnosis that is an 
MCC.
    Numerical resource impact values were assigned for each diagnosis 
as follows:

------------------------------------------------------------------------
              Value                               Meaning
------------------------------------------------------------------------
0................................  Significantly below expected value
                                    for the non-CC subgroup.
1................................  Approximately equal to expected value
                                    for the non-CC subgroup.
2................................  Approximately equal to expected value
                                    for the CC subgroup.
3................................  Approximately equal to expected value
                                    for the MCC subgroup.
4................................  Significantly above the expected
                                    value for the MCC subgroup.
------------------------------------------------------------------------

    Each diagnosis for which Medicare data were available was evaluated 
to determine its impact on resource use and to determine the most 
appropriate CC subclass (non[dash]CC, CC, or MCC) assignment. In order 
to make this determination, the average cost for each subset of cases 
was compared to the expected cost for cases in that subset. The 
following format was used to evaluate each diagnosis:

--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Code       Diagnosis                    Cnt1               C1                 Cnt2               C2                 Cnt3               C3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Count (Cnt) is the number of patients in each subset and C1, C2, 
and C3 are a measure of the impact on resource use of patients in each 
of the subsets. The C1, C2, and C3 values are a measure of the ratio of 
average costs for patients with these conditions to the expected 
average cost across all cases. The C1 value reflects a patient with no 
other secondary diagnosis or with all other secondary diagnoses that 
are non-CCs. The C2 value reflects a patient with at least one other 
secondary diagnosis that is a CC but none that is a major CC. The C3 
value reflects a patient with at least one other secondary diagnosis 
that is a major CC. A value close to 1.0 in the C1 field would suggest 
that the code produces the same expected value as a non-CC diagnosis. 
That is, average costs for the case are similar to the expected average 
costs for that subset and the diagnosis is not expected to increase 
resource usage. A higher value in the C1 (or C2 and C3) field suggests 
more resource usage is associated with the diagnosis and an increased 
likelihood that it is more like a CC or major CC than a non-CC. Thus, a 
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to 
3.0 suggests the condition is expected to consume resources more 
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 
for a secondary diagnosis means that for the subset of patients who 
have the secondary diagnosis and have either no other secondary 
diagnosis present, or all the other secondary diagnoses present are 
non[dash]CCs, the impact on resource use of the secondary diagnoses is 
greater than the expected value for a non[dash]CC by an amount equal to 
80

[[Page 20241]]

percent of the difference between the expected value of a CC and a non-
CC (that is, the impact on resource use of the secondary diagnosis is 
closer to a CC than a non[dash]CC).
    These mathematical constructs are used as guides in conjunction 
with the judgment of our clinical advisors to classify each secondary 
diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews 
the resource use impact reports and suggests modifications to the 
initial CC subclass assignments when clinically appropriate.
b. Requested Changes to Severity Levels
(1) Human Immunodeficiency Virus [HIV] Disease
    We received a request that we consider changing the severity level 
of ICD-10-CM diagnosis code B20 (Human immunodeficiency virus [HIV] 
disease) from an MCC to a CC. We used the approach outlined above to 
evaluate this request. The table below contains the data that were 
evaluated for this request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
B20 (Human immunodeficiency virus [HIV] disease)........      2,918      0.9946       8,938      2.1237      11,479      3.0960           MCC          CC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    While the data did not strongly suggest that the categorization of 
HIV as an MCC was inaccurate, our clinical advisors indicated that, for 
many patients with HIV disease, symptoms are well controlled by 
medications. Our clinical advisors stated that if these patients have 
an HIV-related complicating disease, that complicating disease would 
serve as a CC or an MCC. Therefore, they advised us that ICD-10-CM 
diagnosis code B20 is more similar to a CC than an MCC. Based on the 
data results and the advice of our clinical advisors, we are proposing 
to change the severity level of ICD-10-CM diagnosis code B20 from an 
MCC to a CC. We are inviting public comments on our proposal.
(2) Acute Respiratory Distress Syndrome
    We also received a request to change the severity level for ICD-10-
CM diagnosis code J80 (Acute respiratory distress syndrome) from a CC 
to a MCC. We used the approach outlined above to evaluate this request. 
The following table contains the data that were evaluated for this 
request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
J80 (Acute respiratory distress syndrome)...............      1,840      1.7704       6,818      2.5596      18,376      3.3428            CC         MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The data suggest that the resources involved in caring for a 
patient with this condition are 77 percent greater than expected when 
the patient has either no other secondary diagnosis present, or all the 
other secondary diagnoses present are non[dash]CCs. The resources are 
56 percent greater than expected when reported in conjunction with 
another secondary diagnosis that is a CC, and 34 percent greater than 
expected when reported in conjunction with another secondary diagnosis 
code that is an MCC. Our clinical advisors agree that the resources 
required to care for a patient with this secondary diagnosis are 
consistent with those of an MCC. Therefore, we are proposing to change 
the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC. 
We are inviting public comments on our proposal.
(3) Encephalopathy
    We also received a request to change the severity level for ICD-10-
CM diagnosis code G93.40 (Encephalopathy, unspecified) from an MCC to a 
non-CC. The requestor pointed out that the nature of the encephalopathy 
or its underlying cause should be coded. The requestor also noted that 
unspecified heart failure is a non-CC. We used the approach outlined 
earlier to evaluate this request. The following table contains the data 
that were evaluated for this request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
G93.40 (Encephalopathy, unspecified)....................      1.840      16,306      1.8471      80,222      2.4901     139,066           MCC         MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The data suggest that the resources involved in caring for a 
patient with this condition are 84 percent greater than expected when 
the patient has either no other secondary diagnosis present, or all the 
other secondary diagnoses present are non[dash]CCs. The resources are 
15 percent lower than expected when reported in conjunction with 
another secondary diagnosis that is a CC, and 49 percent greater than 
expected when reported in conjunction with another secondary diagnosis 
code that is an MCC. We note that the pattern observed in resource use 
for the condition of unspecified heart failure (ICD-10-CM diagnosis 
code I50.9) differs from that of unspecified encephalopathy. Our 
clinical advisors reviewed this request and agree that the resources 
involved in caring for a patient with this condition are aligned with 
those of an MCC. Therefore, we are not proposing a change to the 
severity level for ICD-10-CM diagnosis code G93.40. We are inviting 
public comments on our proposal.
17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987 
Through 989
    Each year, we review cases assigned to MS-DRGs 981, 982, and 983

[[Page 20242]]

(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, 
with CC, and without CC/MCC, respectively) and MS-DRGs 987, 988, and 
989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with 
MCC, with CC, and without CC/MCC, respectively) to determine whether it 
would be appropriate to change the procedures assigned among these MS-
DRGs. MS-DRGs 981 through 983 and 987 through 989 are reserved for 
those cases in which none of the O.R. procedures performed are related 
to the principal diagnosis. These MS-DRGs are intended to capture 
atypical cases, that is, those cases not occurring with sufficient 
frequency to represent a distinct, recognizable clinical group.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987 
Through 989 Into MDCs
    We annually conduct a review of procedures producing assignment to 
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to 
Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure 
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) on the basis of volume, by procedure, to see if it would 
be appropriate to move procedure codes out of these MS-DRGs into one of 
the surgical MS-DRGs for the MDC into which the principal diagnosis 
falls. The data are arrayed in two ways for comparison purposes. We 
look at a frequency count of each major operative procedure code. We 
also compare procedures across MDCs by volume of procedure codes within 
each MDC.
    We identify those procedures occurring in conjunction with certain 
principal diagnoses with sufficient frequency to justify adding them to 
one of the surgical MS-DRGs for the MDC in which the diagnosis falls. 
Based on the results of our review of the claims data from the 
September 2017 update of the FY 2017 MedPAR file, we are not proposing 
to move any procedures from MS-DRGs 981 through 983 or MS-DRGs 987 
through 989 into one of the surgical MS-DRGs for the MDC into which the 
principal diagnosis is assigned. We are inviting public comments on our 
proposal to maintain the current structure of these MS-DRGs.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 
Through 989
    We also review the list of ICD-10-PCS procedures that, when in 
combination with their principal diagnosis code, result in assignment 
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether 
any of those procedures should be reassigned from one of those two 
groups of MS-DRGs to the other group of MS-DRGs based on average costs 
and the length of stay. We look at the data for trends such as shifts 
in treatment practice or reporting practice that would make the 
resulting MS-DRG assignment illogical. If we find these shifts, we 
would propose to move cases to keep the MS-DRGs clinically similar or 
to provide payment for the cases in a similar manner. Generally, we 
move only those procedures for which we have an adequate number of 
discharges to analyze the data.
    Based on the results of our review of the September 2017 update of 
the FY 2017 MedPAR file, we are proposing to maintain the current 
structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.
    We are inviting public comments on our proposal.
c. Adding Diagnosis or Procedure Codes to MDCs
    We received a request recommending that CMS reassign cases for 
congenital pectus excavatum (congenital depression of the sternum or 
concave chest) when reported with a procedure describing repositioning 
of the sternum (the Nuss procedure) from MS-DRGs 981, 982, and 983 
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, 
with CC, and without CC/MCC, respectively) to MS-DRGs 515, 516, and 517 
(Other Musculoskeletal System and Connective Tissue O.R. Procedures 
with MCC, with CC, and without CC/MCC, respectively). ICD-10-CM 
diagnosis code Q67.6 (Pectus excavatum) is reported for this congenital 
condition and is currently assigned to MDC 4 (Diseases and Disorders of 
the Respiratory System). ICD-10-PCS procedure code 0PS044Z (Reposition 
sternum with internal fixation device, percutaneous endoscopic 
approach) may be reported to identify the Nuss procedure and is 
currently assigned to MDC 8 (Diseases and Disorders of the 
Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 
517. The requester noted that acquired pectus excavatum (ICD-10-CM 
diagnosis code M95.4) groups to MS-DRGs 515, 516, and 517 when reported 
with a ICD-10-PCS procedure code describing repositioning of the 
sternum and requested that cases involving diagnoses describing 
congenital pectus excavatum also group to those MS-DRGs when reported 
with a ICD-10-PCS procedure code describing repositioning of the 
sternum.
    Our analysis of this grouping issue confirmed that, when pectus 
excavatum (ICD-10-CM diagnosis code Q67.6) is reported as a principal 
diagnosis with a procedure such as the Nuss procedure (ICD-10-PCS 
procedure code 0PS044Z), these cases group to MS-DRGs 981, 982, and 
983. The reason for this grouping is because whenever there is a 
surgical procedure reported on a claim, which is unrelated to the MDC 
to which the case was assigned based on the principal diagnosis, it 
results in an MS-DRG assignment to a surgical class referred to as 
``unrelated operating room procedures.'' In the example provided, 
because the ICD-10-CM diagnosis code Q67.6 describing pectus excavatum 
is classified to MDC 4 and the ICD-10-PCS procedure code 0PS044Z is 
classified to MDC 8, the GROUPER logic assigns this case to the 
``unrelated operating room procedures'' set of MS-DRGs.
    During our review of ICD-10-CM diagnosis code Q67.6, we also 
reviewed additional ICD-10-CM diagnosis codes in the Q65 through Q79 
code range to determine if there might be other conditions classified 
to MDC 4 that describe congenital malformations and deformities of the 
musculoskeletal system. We identified the following six ICD-10-CM 
diagnosis codes:

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.7.....................  Pectus carinatum.
Q76.6.....................  Other congenital malformations of ribs.
Q76.7.....................  Congenital malformation of sternum.
Q76.8.....................  Other congenital malformations of bony
                             thorax.
Q76.9.....................  Congenital malformation of bony thorax,
                             unspecified.
Q77.2.....................  Short rib syndrome.
------------------------------------------------------------------------


[[Page 20243]]

    We are proposing to reassign ICD-10-CM diagnosis code Q67.6, as 
well as the additional six ICD-10-CM diagnosis codes above describing 
congenital musculoskeletal conditions, from MDC 4 to MDC 8 where other 
related congenital conditions that correspond to the musculoskeletal 
system are classified, as discussed further below.
    We identified other related ICD-10-CM diagnosis codes that are 
currently assigned to MDC 8 in categories Q67 (Congenital 
musculoskeletal deformities of head, face, spine and chest), Q76 
(Congenital malformations of spine and bony thorax), and Q77 
(Osteochondrodysplasia with defects of growth of tubular bones and 
spine) that are listed in the following table.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.0.....................  Congenital facial asymmetry.
Q67.1.....................  Congenital compression facies.
Q67.2.....................  Dolichocephaly.
Q67.3.....................  Plagiocephaly.
Q67.4.....................  Other congenital deformities of skull, face
                             and jaw.
Q67.5.....................  Congenital deformity of spine.
Q67.8.....................  Other congenital deformities of chest.
Q76.1.....................  Klippel-Feil syndrome.
Q76.2.....................  Congenital spondylolisthesis.
Q76.3.....................  Congenital scoliosis due to congenital bony
                             malformation.
Q76.411...................  Congenital kyphosis, occipito-atlanto-axial
                             region.
Q76.412...................  Congenital kyphosis, cervical region.
Q76.413...................  Congenital kyphosis, cervicothoracic region.
Q76.414...................  Congenital kyphosis, thoracic region.
Q76.415...................  Congenital kyphosis, thoracolumbar region.
Q76.419...................  Congenital kyphosis, unspecified region.
Q76.425...................  Congenital lordosis, thoracolumbar region.
Q76.426...................  Congenital lordosis, lumbar region.
Q76.427...................  Congenital lordosis, lumbosacral region.
Q76.428...................  Congenital lordosis, sacral and
                             sacrococcygeal region.
Q76.429...................  Congenital lordosis, unspecified region.
Q76.49....................  Other congenital malformations of spine, not
                             associated with scoliosis.
Q76.5.....................  Cervical rib.
Q77.0.....................  Achondrogenesis.
Q77.1.....................  Thanatophoric short stature.
Q77.3.....................  Chondrodysplasia punctate.
Q77.4.....................  Achondroplasia.
Q77.5.....................  Diastrophic dysplasia.
Q77.6.....................  Chondroectodermal dysplasia.
Q77.7.....................  Spondyloepiphyseal dysplasia.
Q77.8.....................  Other osteochondrodysplasia with defects of
                             growth of tubular bones and spine.
Q77.9.....................  Osteochondrodysplasia with defects of growth
                             of tubular bones and spine, unspecified.
------------------------------------------------------------------------

    Next, we analyzed the MS-DRG assignments for the related codes 
listed above and found that cases with the following conditions are 
assigned to MS-DRGs 551 and 552 (Medical Back Problems with and without 
MCC, respectively) under MDC 8.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q76.2.....................  Congenital spondylolisthesis.
Q76.411...................  Congenital kyphosis, occipito-atlanto-axial
                             region.
Q76.412...................  Congenital kyphosis, cervical region.
Q76.413...................  Congenital kyphosis, cervicothoracic region.
Q76.414...................  Congenital kyphosis, thoracic region.
Q76.415...................  Congenital kyphosis, thoracolumbar region.
Q76.419...................  Congenital kyphosis, unspecified region.
Q76.49....................  Other congenital malformations of spine, not
                             associated with scoliosis.
------------------------------------------------------------------------

    The remaining conditions shown below are assigned to MS-DRGs 564, 
565, and 566 (Other Musculoskeletal System and Connective Tissue 
Diagnoses with MCC, with CC, and without CC/MCC, respectively) under 
MDC 8.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.0.....................  Congenital facial asymmetry.
Q67.1.....................  Congenital compression facies.
Q67.2.....................  Dolichocephaly.
Q67.3.....................  Plagiocephaly.

[[Page 20244]]

 
Q67.4.....................  Other congenital deformities of skull, face
                             and jaw.
Q67.5.....................  Congenital deformity of spine.
Q67.8.....................  Other congenital deformities of chest.
Q76.1.....................  Klippel-Feil syndrome.
Q76.3.....................  Congenital scoliosis due to congenital bony
                             malformation.
Q76.425...................  Congenital lordosis, thoracolumbar region.
Q76.426...................  Congenital lordosis, lumbar region.
Q76.427...................  Congenital lordosis, lumbosacral region.
Q76.428...................  Congenital lordosis, sacral and
                             sacrococcygeal region.
Q76.429...................  Congenital lordosis, unspecified region.
Q76.5.....................  Cervical rib.
Q77.0.....................  Achondrogenesis.
Q77.1.....................  Thanatophoric short stature.
Q77.3.....................  Chondrodysplasia punctate.
Q77.4.....................  Achondroplasia.
Q77.5.....................  Diastrophic dysplasia.
Q77.6.....................  Chondroectodermal dysplasia.
Q77.7.....................  Spondyloepiphyseal dysplasia.
Q77.8.....................  Other osteochondrodysplasia with defects of
                             growth of tubular bones and spine.
Q77.9.....................  Osteochondrodysplasia with defects of growth
                             of tubular bones and spine, unspecified.
------------------------------------------------------------------------

    As a result of our review, we are proposing to reassign ICD-10-CM 
diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis 
codes above describing congenital musculoskeletal conditions, from MDC 
4 to MDC 8 in MS-DRGs 564, 565, and 566. Our clinical advisors agree 
with this proposed reassignment because it is clinically appropriate 
and consistent with the other related ICD-10-CM diagnosis codes grouped 
in the Q65 through Q79 range that describe congenital malformations and 
deformities of the musculoskeletal system that are classified under MDC 
8 in MS-DRGs 564, 565, and 566. By reassigning ICD-10-CM diagnosis code 
Q67.6 and the additional six ICD-10-CM diagnosis codes listed in the 
table above from MDC 4 to MDC 8, cases reporting these ICD-10-CM 
diagnosis codes in combination with the respective ICD-10-PCS procedure 
code will reflect a more appropriate grouping from a clinical 
perspective because they will now be classified under a surgical 
musculoskeletal system related MS-DRG and will no longer result in an 
MS-DRG assignment to the ``unrelated operating room procedures'' 
surgical class.
    In summary, we are proposing to reassign ICD-10-CM diagnosis codes 
Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 
in MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and 
Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, 
respectively). We are inviting public comments on our proposals.
    We also received a request recommending that CMS reassign cases for 
sternal fracture repair procedures from MS-DRGs 981, 982, and 983 and 
from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures 
with MCC, with CC and without CC/MCC, respectively) under MDC 4 to MS-
DRGs 515, 516, and 517 under MDC 8. The requester noted that clavicle 
fracture repair procedures with an internal fixation device group to 
MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis 
code describing a fractured clavicle. However, sternal fracture repair 
procedures with an internal fixation device group to MS-DRGs 981, 982, 
and 983 or MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM 
diagnosis code describing a fracture of the sternum. According to the 
requestor, because the clavicle and sternum are in the same anatomical 
region of the body, it would appear that assignment to MS-DRGs 515, 
516, and 517 would be more appropriate for sternal fracture repair 
procedures.
    The requestor provided the following list of ICD-10-PCS procedure 
codes in its request for consideration to reassign to MS-DRGs 515, 516 
and 517 when reported with an ICD-10-CM diagnosis code for sternal 
fracture.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PS000Z...................  Reposition sternum with rigid plate internal
                             fixation device, open approach.
0PS004Z...................  Reposition sternum with internal fixation
                             device, open approach.
0PS00ZZ...................  Reposition sternum, open approach.
0PS030Z...................  Reposition sternum with rigid plate internal
                             fixation device, percutaneous approach.
0PS034Z...................  Reposition sternum with internal fixation
                             device, percutaneous approach.
------------------------------------------------------------------------

    We note that the above five ICD-10-PCS procedure codes that may be 
reported to describe a sternal fracture repair are already assigned to 
MS-DRGs 515, 516, and 517 under MDC 8. In addition, ICD-10-PCS 
procedure codes 0PS000Z and 0PS030Z are assigned to MS-DRGs 166, 167 
and 168 under MDC 4.
    As noted in the previous discussion, whenever there is a surgical 
procedure reported on a claim, which is unrelated to the MDC to which 
the case was assigned based on the principal diagnosis, it results in 
an MS-DRG assignment to a surgical class referred to as ``unrelated 
operating room procedures.'' In the examples provided by the requestor, 
when the ICD-10-CM diagnosis code describing a sternal fracture is 
classified under MDC 4 and the ICD-10-PCS procedure code describing a 
sternal fracture repair procedure is classified under MDC 8, the 
GROUPER logic assigns these cases to the ``unrelated operating room 
procedures'' group of MS-DRGs (981,

[[Page 20245]]

982, and 983) and when the ICD-10-CM diagnosis code describing a 
sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure 
code describing a sternal repair procedure is also classified under MDC 
4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.
    For our review of this grouping issue and the request to have 
procedures for sternal fracture repairs assigned to MDC 8, we analyzed 
the ICD-10-CM diagnosis codes describing a sternal fracture currently 
classified under MDC 4. We identified 10 ICD-10-CM diagnosis codes 
describing a sternal fracture with an ``initial encounter'' classified 
under MDC 4 that are listed in the following table.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
S22.20XA..................  Unspecified fracture of sternum, initial
                             encounter for closed fracture.
S22.20XB..................  Unspecified fracture of sternum, initial
                             encounter for open fracture.
S22.21XA..................  Fracture of manubrium, initial encounter for
                             closed fracture.
S22.21XB..................  Fracture of manubrium, initial encounter for
                             open fracture.
S22.22XA..................  Fracture of body of sternum, initial
                             encounter for closed fracture.
S22.22XB..................  Fracture of body of sternum, initial
                             encounter for open fracture.
S22.23XA..................  Sternal manubrial dissociation, initial
                             encounter for closed fracture.
S22.23XB..................  Sternal manubrial dissociation, initial
                             encounter for open fracture.
S22.24XA..................  Fracture of xiphoid process, initial
                             encounter for closed fracture.
S22.24XB..................  Fracture of xiphoid process, initial
                             encounter for open fracture.
------------------------------------------------------------------------

    Our analysis of this grouping issue confirmed that when 1 of the 10 
ICD-10-CM diagnosis codes describing a sternal fracture listed in the 
table above from MDC 4 is reported as a principal diagnosis with an 
ICD-10-PCS procedure code for a sternal repair procedure from MDC 8, 
these cases group to MS-DRG 981, 982, or 983. We also confirmed that 
when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal 
fracture listed in the table above from MDC 4 is reported as a 
principal diagnosis with an ICD-10-PCS procedure code for a sternal 
repair procedure from MDC 4, these cases group to MS-DRG 166, 167 or 
168.
    Our clinical advisors agree with the requested reclassification of 
ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, 
S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB 
describing a sternal fracture with an initial encounter from MDC 4 to 
MDC 8. They advised that this requested reclassification is clinically 
appropriate because it is consistent with the other related ICD-10-CM 
diagnosis codes that describe fractures of the sternum and which are 
classified under MDC 8. The ICD-10-CM diagnosis codes describing a 
sternal fracture currently classified under MDC 8 to MS-DRGs 564, 565, 
and 566 are listed in the following table.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
S22.20XD..................  Unspecified fracture of sternum, subsequent
                             encounter for fracture with routine
                             healing.
S22.20XG..................  Unspecified fracture of sternum, subsequent
                             encounter for fracture with delayed
                             healing.
S22.20XK..................  Unspecified fracture of sternum, subsequent
                             encounter for fracture with nonunion.
S22.20XS..................  Unspecified fracture of sternum, sequela.
S22.21XD..................  Fracture of manubrium, subsequent encounter
                             for fracture with routine healing.
S22.21XG..................  Fracture of manubrium, subsequent encounter
                             for fracture with delayed healing.
S22.21XK..................  Fracture of manubrium, subsequent encounter
                             for fracture with nonunion.
S22.21XS..................  Fracture of manubrium, sequela.
S22.22XD..................  Fracture of body of sternum, subsequent
                             encounter for fracture with routine
                             healing.
S22.22XG..................  Fracture of body of sternum, subsequent
                             encounter for fracture with delayed
                             healing.
S22.22XK..................  Fracture of body of sternum, subsequent
                             encounter for fracture with nonunion.
S22.22XS..................  Fracture of body of sternum, sequela.
S22.23XD..................  Sternal manubrial dissociation, subsequent
                             encounter for fracture with routine
                             healing.
S22.23XG..................  Sternal manubrial dissociation, subsequent
                             encounter for fracture with delayed
                             healing.
S22.23XK..................  Sternal manubrial dissociation, subsequent
                             encounter for fracture with nonunion.
S22.23XS..................  Sternal manubrial dissociation, sequela.
S22.24XD..................  Fracture of xiphoid process, subsequent
                             encounter for fracture with routine
                             healing.
S22.24XG..................  Fracture of xiphoid process, subsequent
                             encounter for fracture with delayed
                             healing.
S22.24XK..................  Fracture of xiphoid process, subsequent
                             encounter for fracture with nonunion.
S22.24XS..................  Fracture of xiphoid process, sequela.
------------------------------------------------------------------------

    By reclassifying the 10 ICD-10-CM diagnosis codes listed in the 
table earlier in this section describing sternal fracture codes with an 
``initial encounter'' from MDC 4 to MDC 8, the cases reporting these 
ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS 
procedure codes will reflect a more appropriate grouping from a 
clinical perspective and will no longer result in an MS-DRG assignment 
to the ``unrelated operating room procedures'' surgical class when 
reported with a surgical procedure classified under MDC 8.
    Therefore, we are proposing to reassign ICD-10-CM diagnosis codes 
S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, 
S22.23XB, S22.24XA, and S22.24XB from under MDC 4 to MDC 8 to MS-DRGs 
564, 565, and 566. We are inviting public comments on our proposals.
    In addition, we received a request recommending that CMS reassign 
cases for rib fracture repair procedures from MS-DRGs 981, 982, and 
983, and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. 
Procedures

[[Page 20246]]

with MCC, with CC, and without CC/MCC, respectively) under MDC 4 to MS-
DRGs 515, 516, and 517 under MDC 8. The requestor noted that clavicle 
fracture repair procedures with an internal fixation device group to 
MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis 
code describing a fractured clavicle. However, rib fracture repair 
procedures with an internal fixation device group to MS-DRGs 981, 982, 
and 983 or to MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM 
diagnosis code describing a rib fracture. According to the requestor, 
because the clavicle and ribs are in the same anatomical region of the 
body, it would appear that assignment to MS-DRGs 515, 516, and 517 
would be more appropriate for rib fracture repair procedures.
    The requestor provided the following list of 10 ICD-10-PCS 
procedure codes in its request for consideration for reassignment to 
MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code 
for rib fracture.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PH104Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, open approach.
0PH134Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, percutaneous approach.
0PH144Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, percutaneous endoscopic
                             approach.
0PH204Z...................  Insertion of internal fixation device into 3
                             or more ribs, open approach.
0PH234Z...................  Insertion of internal fixation device into 3
                             or more ribs, percutaneous approach.
0PH244Z...................  Insertion of internal fixation device into 3
                             or more ribs, percutaneous endoscopic
                             approach.
0PS104Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, open approach.
0PS134Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous approach.
0PS204Z...................  Reposition 3 or more ribs with internal
                             fixation, device, open approach.
0PS234Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous approach.
------------------------------------------------------------------------

    We note that the above 10 ICD-10-PCS procedure codes that may be 
reported to describe a rib fracture repair are already assigned to MS-
DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD 10-PCS 
procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 
0PH234Z and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 
under MDC 4.
    As noted in the previous discussions above, whenever there is a 
surgical procedure reported on a claim, which is unrelated to the MDC 
to which the case was assigned based on the principal diagnosis, it 
results in an MS-DRG assignment to a surgical class referred to as 
``unrelated operating room procedures.'' In the examples provided by 
the requestor, when the ICD-10-CM diagnosis code describing a rib 
fracture is classified under MDC 4 and the ICD-10-PCS procedure code 
describing a rib fracture repair procedure is classified under MDC 8, 
the GROUPER logic assigns these cases to the ``unrelated operating room 
procedures'' group of MS-DRGs (981, 982, and 983) and when the ICD-10-
CM diagnosis code describing a rib fracture is classified under MDC 4 
and the ICD-10-PCS procedure code describing a rib repair procedure is 
also classified under MDC 4, the GROUPER logic assigns these cases to 
MS-DRG 166, 167, or 168.
    For our review of this grouping issue and the request to have 
procedures for rib fracture repairs assigned to MDC 8, we analyzed the 
ICD-10-CM diagnosis codes describing a rib fracture and found that, 
while some rib fracture ICD-10-CM diagnosis codes are classified under 
MDC 8 (which would result in those cases grouping appropriately to MS-
DRGs 515, 516, and 517), there are other ICD-10-CM diagnosis codes that 
are currently classified under MDC 4. We identified the following ICD-
10-CM diagnosis codes describing a rib fracture with an initial 
encounter classified under MDC 4, as listed in the following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
S2231XA...................  Fracture of one rib, right side, initial
                             encounter for closed fracture.
S2231XB...................  Fracture of one rib, right side, initial
                             encounter for open fracture.
S2232XA...................  Fracture of one rib, left side, initial
                             encounter for closed fracture.
S2232XB...................  Fracture of one rib, left side, initial
                             encounter for open fracture.
S2239XA...................  Fracture of one rib, unspecified side,
                             initial encounter for closed fracture.
S2239XB...................  Fracture of one rib, unspecified side,
                             initial encounter for open fracture.
S2241XA...................  Multiple fractures of ribs, right side,
                             initial encounter for closed fracture.
S2241XB...................  Multiple fractures of ribs, right side,
                             initial encounter for open fracture.
S2242XA...................  Multiple fractures of ribs, left side,
                             initial encounter for closed fracture.
S2242XB...................  Multiple fractures of ribs, left side,
                             initial encounter for open fracture.
S2243XA...................  Multiple fractures of ribs, bilateral,
                             initial encounter for closed fracture.
S2243XB...................  Multiple fractures of ribs, bilateral,
                             initial encounter for open fracture.
S2249XA...................  Multiple fractures of ribs, unspecified
                             side, initial encounter for closed
                             fracture.
S2249XB...................  Multiple fractures of ribs, unspecified
                             side, initial encounter for open fracture.
S225XXA...................  Flail chest, initial encounter for closed
                             fracture.
S225XXB...................  Flail chest, initial encounter for open
                             fracture.
------------------------------------------------------------------------

    Our analysis of this grouping issue confirmed that, when one of the 
following four ICD-10-PCS procedure codes identified by the requestor 
(and listed in the table earlier in this section) from MDC 8 (0PS104Z, 
0PS134Z, 0PS204Z, or 0PS234Z) is reported to describe a rib fracture 
repair procedure with a principal diagnosis code for a rib fracture 
with an initial encounter listed in the table above from MDC 4, these 
cases group to MS-DRG 981, 982, or 983.
    During our review of those four repositioning of the rib procedure 
codes, we also identified the following four ICD-10-PCS procedure codes 
classified

[[Page 20247]]

to MDC 8 that describe repositioning of the ribs.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PS10ZZ...................  Reposition 1 to 2 ribs, open approach.
0PS144Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
0PS20ZZ...................  Reposition 3 or more ribs, open approach.
0PS244Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    We confirmed that when one of the above four procedure codes is 
reported with a principal diagnosis code for a rib fracture listed in 
the table above from MDC 4, these cases also group to MS-DRG 981, 982, 
or 983.
    Lastly, we confirmed that when one of the six ICD-10-PCS procedure 
codes describing a rib fracture repair listed in the previous table 
above from MDC 4 is reported with a principal diagnosis code for a rib 
fracture with an initial encounter from MDC 4, these cases group to MS-
DRG 166, 167, or 168.
    In response to the request to reassign the procedure codes that 
describe a rib fracture repair procedure from MS-DRGs 981, 982, and 983 
and from MS-DRGs 166, 167, and 168 under MDC 4 to MS-DRGs 515, 516, and 
517 under MDC 8, as discussed above, the 10 ICD-10-PCS procedure codes 
submitted by the requestor that may be reported to describe a rib 
fracture repair are already assigned to MS-DRGs 515, 516, and 517 under 
MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z, 
0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS-DRGs 166, 167, 
and 168 under MDC 4.
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting a principal diagnosis of a rib 
fracture (initial encounter) from the list of diagnosis codes shown in 
the table above with one of the six ICD-10-PCS procedure codes 
describing the insertion of an internal fixation device into the rib 
(0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS-DRGs 
166, 167, and 168 under MDC 4. Our findings are shown in the table 
below.

                              MS-DRGs for Other Respiratory System O.R. Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 166--All cases...........................................          22,938            10.2         $24,299
MS-DRG 166--Cases with principal diagnosis of rib fracture(s)                 40            11.4          43,094
 and insertion of internal fixation device for the rib(s).......
MS-DRG 167--All cases...........................................          10,815             5.7          13,252
MS-DRG 167--Cases with principal diagnosis of rib fracture(s)                 10             6.7          30,617
 and insertion of internal fixation device for the rib(s).......
MS-DRG 168--All cases...........................................           3,242             3.1           9,708
MS-DRG 168--Cases with principal diagnosis of rib fracture(s)                  4               2          21,501
 and insertion of internal fixation device for the rib(s).......
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 22,938 cases in MS-
DRG 166, with an average length of stay of 10.2 days and average costs 
of $24,299. In MS-DRG 166, we found 40 cases reporting a principal 
diagnosis of a rib fracture(s) with insertion of an internal fixation 
device for the rib(s), with an average length of stay of 11.4 days and 
average costs of $43,094. There were a total of 10,815 cases in MS-DRG 
167, with an average length of stay of 5.7 days and average costs of 
$13,252. In MS-DRG 167, we found 10 cases reporting a principal 
diagnosis of a rib fracture(s) with insertion of an internal fixation 
device for the rib(s), with an average length of stay of 6.7 days and 
average costs of $30,617. There were a total of 3,242 cases in MS-DRG 
168, with an average length of stay of 3.1 days and average costs of 
$9,708. In MS-DRG 168, we found 4 cases reporting a principal diagnosis 
of a rib fracture(s) with insertion of an internal fixation device for 
the rib(s), with an average length of stay of 2 days and average costs 
of $21,501. Overall, for MS-DRGs 166, 167, and 168, there were a total 
of 54 cases reporting a principal diagnosis of a rib fracture(s) with 
insertion of an internal fixation device for the rib(s), demonstrating 
that while rib fractures may require treatment, they are not typically 
corrected surgically. Our clinical advisors agree with the current 
assignment of procedure codes to MS-DRGs 166, 167, and 168 that may be 
reported to describe repair of a rib fracture under MDC 4, as well as 
the current assignment of procedure codes to MS-DRGs 515, 516, and 517 
that may be reported to describe repair of a rib fracture under MDC 8. 
Our clinical advisors noted that initial, acute rib fractures can cause 
numerous respiratory related issues requiring various treatments and 
problems with the healing of a rib fracture are considered 
musculoskeletal issues.
    We also note that the procedure codes submitted by the requestor 
may be reported for other indications and they are not restricted to 
reporting for repair of a rib fracture. Therefore, assignment of these 
codes to the MDC 4 MS-DRGs and the MDC 8 MS-DRGs is clinically 
appropriate.
    To address the cases reporting procedure codes describing the 
repositioning of a rib(s) that are grouping to MS-DRGs 981, 982, and 
983 when reported with a principal diagnosis of a rib fracture (initial 
encounter), we are proposing to add the following eight ICD-10-PCS 
procedure codes currently assigned to MDC 8 into MDC 4, in MS-DRGs 166, 
167 and 168.

[[Page 20248]]



------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PS104Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, open approach.
0PS10ZZ...................  Reposition 1 to 2 ribs, open approach.
0PS134Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous approach.
0PS144Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
0PS204Z...................  Reposition 3 or more ribs with internal
                             fixation device, open approach.
0PS20ZZ...................  Reposition 3 or more ribs, open approach.
0PS234Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous approach.
0PS244Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    Our clinical advisors agree with this proposed addition to the 
classification structure because it is clinically appropriate and 
consistent with the other related ICD-10-PCS procedure codes that may 
be reported to describe rib fracture repair procedures with the 
insertion of an internal fixation device and are classified under MDC 
4.
    By adding the eight ICD-10-PCS procedure codes describing 
repositioning of the rib(s) that may be reported to describe a rib 
fracture repair procedure under the classification structure for MDC 4, 
these cases will no longer result in an MS-DRG assignment to the 
``unrelated operating room procedures'' surgical class when reported 
with a diagnosis code under MDC 4.
    We are inviting public comments on our proposals.
18. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
    In September 1985, the ICD[dash]9[dash]CM Coordination and 
Maintenance Committee was formed. This is a Federal interdepartmental 
committee, co-chaired by the National Center for Health Statistics 
(NCHS), the Centers for Disease Control and Prevention (CDC), and CMS, 
charged with maintaining and updating the ICD[dash]9[dash]CM system. 
The final update to ICD-9-CM codes was made on October 1, 2013. 
Thereafter, the name of the Committee was changed to the ICD-10 
Coordination and Maintenance Committee, effective with the March 19-20, 
2014 meeting. The ICD-10 Coordination and Maintenance Committee 
addresses updates to the ICD-10-CM and ICD-10-PCS coding systems. The 
Committee is jointly responsible for approving coding changes, and 
developing errata, addenda, and other modifications to the coding 
systems to reflect newly developed procedures and technologies and 
newly identified diseases. The Committee is also responsible for 
promoting the use of Federal and non[dash]Federal educational programs 
and other communication techniques with a view toward standardizing 
coding applications and upgrading the quality of the classification 
system.
    The official list of ICD-9-CM diagnosis and procedure codes by 
fiscal year can be found on the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official 
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website 
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
    The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM 
diagnosis codes included in the Tabular List and Alphabetic Index for 
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index 
for Procedures.
    The Committee encourages participation in the previously mentioned 
process by health-related organizations. In this regard, the Committee 
holds public meetings for discussion of educational issues and proposed 
coding changes. These meetings provide an opportunity for 
representatives of recognized organizations in the coding field, such 
as the American Health Information Management Association (AHIMA), the 
American Hospital Association (AHA), and various physician specialty 
groups, as well as individual physicians, health information management 
professionals, and other members of the public, to contribute ideas on 
coding matters. After considering the opinions expressed at the public 
meetings and in writing, the Committee formulates recommendations, 
which then must be approved by the agencies.
    The Committee presented proposals for coding changes for 
implementation in FY 2019 at a public meeting held on September 12-13, 
2017, and finalized the coding changes after consideration of comments 
received at the meetings and in writing by November 13, 2017.
    The Committee held its 2018 meeting on March 6-7, 2018. The 
deadline for submitting comments on these code proposals is scheduled 
for April 6, 2018. It was announced at this meeting that any new ICD-
10-CM/PCS codes for which there was consensus of public support and for 
which complete tabular and indexing changes would be made by May 2018 
would be included in the October 1, 2018 update to ICD-10-CM/ICD-10-
PCS. As discussed in earlier sections of the preamble of the proposed 
rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and 
ICD-10-PCS procedure codes that are captured in Table 6A.--New 
Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid 
Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised 
Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for 
this proposed rule, which are available via the Internet on the CMS 
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The code titles are adopted as 
part of the ICD-10 (previously ICD-9-CM) Coordination and Maintenance 
Committee process. Therefore, although we make the code titles 
available for the IPPS proposed rule, they are not subject to comment 
in the proposed rule. We are inviting public comments on the MDC and 
MS-DRG assignments for the new diagnosis and procedure codes as set 
forth in Table 6A--New Diagnosis Codes and Table 6B.--New Procedure 
Codes. In addition, we are inviting public comments on the proposed 
severity level designations for the new diagnosis codes as set forth in 
Table 6A. and the proposed O.R. status for the new procedure codes as 
set forth in Table 6B. Because of the length of these tables, they are 
not published in the Addendum to this proposed rule. Rather, they are 
available via the Internet as discussed in section VI. of the Addendum 
to this proposed rule.
    Live Webcast recordings of the discussions of procedure codes at 
the Committee's September 12-13, 2017 meeting and March 6-7, 2018 
meeting can be obtained from the CMS website at: http://cms.hhs.gov/
Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/
icd9ProviderDiagnosticCodes/

[[Page 20249]]

03_meetings.asp. The minutes of the discussions of diagnosis codes at 
the September 12-13, 2017 meeting and March 6-7, 2018 meeting can be 
found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These 
websites also provide detailed information about the Committee, 
including information on requesting a new code, attending a Committee 
meeting, and timeline requirements and meeting dates.
    We encourage commenters to address suggestions on coding issues 
involving diagnosis codes to: Donna Pickett, Co[dash]Chairperson, ICD-
10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo 
Road, Hyattsville, MD 20782. Comments may be sent by E[dash]mail to: 
[email protected].
    Questions and comments concerning the procedure codes should be 
submitted via E[dash]mail to: [email protected].
    In the September 7, 2001 final rule implementing the IPPS new 
technology add[dash]on payments (66 FR 46906), we indicated we would 
attempt to include proposals for procedure codes that would describe 
new technology discussed and approved at the Spring meeting as part of 
the code revisions effective the following October.
    Section 503(a) of Public Law 108[dash]173 included a requirement 
for updating diagnosis and procedure codes twice a year instead of a 
single update on October 1 of each year. This requirement was included 
as part of the amendments to the Act relating to recognition of new 
technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K) 
of the Act by adding a clause (vii) which states that the Secretary 
shall provide for the addition of new diagnosis and procedure codes on 
April 1 of each year, but the addition of such codes shall not require 
the Secretary to adjust the payment (or diagnosis[dash]related group 
classification) until the fiscal year that begins after such date. This 
requirement improves the recognition of new technologies under the IPPS 
by providing information on these new technologies at an earlier date. 
Data will be available 6 months earlier than would be possible with 
updates occurring only once a year on October 1.
    While section 1886(d)(5)(K)(vii) of the Act states that the 
addition of new diagnosis and procedure codes on April 1 of each year 
shall not require the Secretary to adjust the payment, or DRG 
classification, under section 1886(d) of the Act until the fiscal year 
that begins after such date, we have to update the DRG software and 
other systems in order to recognize and accept the new codes. We also 
publicize the code changes and the need for a mid[dash]year systems 
update by providers to identify the new codes. Hospitals also have to 
obtain the new code books and encoder updates, and make other system 
changes in order to identify and report the new codes.
    The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance 
Committee holds its meetings in the spring and fall in order to update 
the codes and the applicable payment and reporting systems by October 1 
of each year. Items are placed on the agenda for the Committee meeting 
if the request is received at least 2 months prior to the meeting. This 
requirement allows time for staff to review and research the coding 
issues and prepare material for discussion at the meeting. It also 
allows time for the topic to be publicized in meeting announcements in 
the Federal Register as well as on the CMS website. Final decisions on 
code title revisions are currently made by March 1 so that these titles 
can be included in the IPPS proposed rule. A complete addendum 
describing details of all diagnosis and procedure coding changes, both 
tabular and index, is published on the CMS and NCHS websites in June of 
each year. Publishers of coding books and software use this information 
to modify their products that are used by health care providers. This 
5[dash]month time period has proved to be necessary for hospitals and 
other providers to update their systems.
    A discussion of this timeline and the need for changes are included 
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance 
Committee Meeting minutes. The public agreed that there was a need to 
hold the fall meetings earlier, in September or October, in order to 
meet the new implementation dates. The public provided comment that 
additional time would be needed to update hospital systems and obtain 
new code books and coding software. There was considerable concern 
expressed about the impact this April update would have on providers.
    In the FY 2005 IPPS final rule, we implemented section 
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 
108-173, by developing a mechanism for approving, in time for the April 
update, diagnosis and procedure code revisions needed to describe new 
technologies and medical services for purposes of the new technology 
add[dash]on payment process. We also established the following process 
for making these determinations. Topics considered during the Fall ICD-
10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting 
are considered for an April 1 update if a strong and convincing case is 
made by the requester at the Committee's public meeting. The request 
must identify the reason why a new code is needed in April for purposes 
of the new technology process. The participants at the meeting and 
those reviewing the Committee meeting summary report are provided the 
opportunity to comment on this expedited request. All other topics are 
considered for the October 1 update. Participants at the Committee 
meeting are encouraged to comment on all such requests. There were not 
any requests approved for an expedited April l, 2018 implementation of 
a code at the September 12-13, 2017 Committee meeting. Therefore, there 
are not any new codes for implementation on April 1, 2018.
    ICD-9-CM addendum and code title information is published on the 
CMS website at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and 
ICD-10-PCS addendum and code title information is published on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. CMS 
also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its 
Medicare contractors for use in updating their systems and providing 
education to providers.
    Information on ICD-10-CM diagnosis codes, along with the Official 
ICD-10-CM Coding Guidelines, can also be found on the CDC website at: 
http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on 
new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is provided to the 
AHA for publication in the Coding Clinic for ICD-10. AHA also 
distributes coding update information to publishers and software 
vendors.
    The following chart shows the number of ICD-10-CM and ICD-10-PCS 
codes and code changes since FY 2016 when ICD-10 was implemented.

  Total Number of Codes and Changes in Total Number of Codes per Fiscal
                   Year ICD-10-CM and ICD-10-PCS Codes
------------------------------------------------------------------------
                     Fiscal year                       Number    Change
------------------------------------------------------------------------
FY 2016:
  ICD-10-CM.........................................    69,823  ........
  ICD-10-PCS........................................    71,974  ........
FY 2017:
  ICD-10-CM.........................................    71,486    +1,663
  ICD-10-PCS........................................    75,789    +3,815

[[Page 20250]]

 
FY 2018:
  ICD-10-CM.........................................    71,704      +218
  ICD-10-PCS........................................    78,705    +2,916
Proposed FY 2019:
  ICD-10-CM.........................................    71,902      +198
  ICD-10-PCS........................................    78,533      -172
------------------------------------------------------------------------

    As mentioned previously, the public is provided the opportunity to 
comment on any requests for new diagnosis or procedure codes discussed 
at the ICD-10 Coordination and Maintenance Committee meeting.
    At the September 12-13, 2017 and March 6-7, 2018 Committee 
meetings, we discussed any requests we had received for new ICD-10-CM 
diagnosis codes and ICD-10-PCS procedure codes that were to be 
implemented on October 1, 2018. We invited public comments on any code 
requests discussed at the September 12-13, 2017 and March 6-7, 2018 
Committee meetings for implementation as part of the October 1, 2018 
update. The deadline for commenting on code proposals discussed at the 
September 12-13, 2017 Committee meeting was November 13, 2017. The 
deadline for commenting on code proposals discussed at the March 6-7, 
2018 Committee meeting was April 6, 2018.
19. Proposed Replaced Devices Offered Without Cost or With a Credit
a. Background
    In the FY 2008 IPPS final rule with comment period (72 FR 47246 
through 47251), we discussed the topic of Medicare payment for devices 
that are replaced without cost or where credit for a replaced device is 
furnished to the hospital. We implemented a policy to reduce a 
hospital's IPPS payment for certain MS-DRGs where the implantation of a 
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a 
hospital's IPPS payment for those MS-DRGs where the hospital received a 
credit for a replaced device equal to 50 percent or more of the cost of 
the device.
    In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 
51557), we clarified this policy to state that the policy applies if 
the hospital received a credit equal to 50 percent or more of the cost 
of the replacement device and issued instructions to hospitals 
accordingly.
b. Proposed Changes for FY 2019
    In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are 
not proposing to add any MS-DRGs to the policy for replaced devices 
offered without cost or with a credit. We are proposing to continue to 
include the existing MS-DRGs currently subject to the policy as 
displayed in the table below.
    We are soliciting public comments on our proposal to continue to 
include the existing MS-DRGs currently subject to the policy for 
replaced devices offered without cost or with credit and to not add any 
additional MS-DRGs to the policy.

------------------------------------------------------------------------
            MDC                  MS-DRG              MS-DRG title
------------------------------------------------------------------------
Pre-MDC....................             001  Heart Transplant or Implant
                                              of Heart Assist System
                                              with MCC.
Pre-MDC....................             002  Heart Transplant or Implant
                                              of Heart Assist System
                                              without MCC.
1..........................             023  Craniotomy with Major
                                              Device Implant or Acute
                                              Complex CNS Principal
                                              Diagnosis with MCC or
                                              Chemotherapy Implant or
                                              Epilepsy with
                                              Neurostimulator.
1..........................             024  Craniotomy with Major
                                              Device Implant or Acute
                                              Complex CNS Principal
                                              Diagnosis without MCC.
1..........................             025  Craniotomy & Endovascular
                                              Intracranial Procedures
                                              with MCC.
1..........................             026  Craniotomy & Endovascular
                                              Intracranial Procedures
                                              with CC.
1..........................             027  Craniotomy & Endovascular
                                              Intracranial Procedures
                                              without CC/MCC.
1..........................             040  Peripheral, Cranial Nerve &
                                              Other Nervous System
                                              Procedures with MCC.
1..........................             041  Peripheral, Cranial Nerve &
                                              Other Nervous System
                                              Procedures with CC or
                                              Peripheral
                                              Neurostimulator.
1..........................             042  Peripheral, Cranial Nerve &
                                              Other Nervous System
                                              Procedures without CC/MCC.
3..........................             129  Major Head & Neck
                                              Procedures with CC/MCC or
                                              Major Device.
3..........................             130  Major Head & Neck
                                              Procedures without CC/MCC.
5..........................             215  Other Heart Assist System
                                              Implant.
5..........................             216  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              with Cardiac
                                              Catheterization with MCC.
5..........................             217  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              with Cardiac
                                              Catheterization with CC.
5..........................             218  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              with Cardiac
                                              Catheterization without CC/
                                              MCC.
5..........................             219  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              without Cardiac
                                              Catheterization with MCC.
5..........................             220  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              without Cardiac
                                              Catheterization with CC.
5..........................             221  Cardiac Valve & Other Major
                                              Cardiothoracic Procedure
                                              without Cardiac
                                              Catheterization without CC/
                                              MCC.
5..........................             222  Cardiac Defibrillator
                                              Implant with Cardiac
                                              Catheterization with AMI/
                                              Heart Failure/Shock with
                                              MCC.
5..........................             223  Cardiac Defibrillator
                                              Implant with Cardiac
                                              Catheterization with AMI/
                                              Heart Failure/Shock
                                              without MCC.
5..........................             224  Cardiac Defibrillator
                                              Implant with Cardiac
                                              Catheterization without
                                              AMI/Heart Failure/Shock
                                              with MCC.
5..........................             225  Cardiac Defibrillator
                                              Implant with Cardiac
                                              Catheterization without
                                              AMI/Heart Failure/Shock
                                              without MCC.
5..........................             226  Cardiac Defibrillator
                                              Implant without Cardiac
                                              Catheterization with MCC.
5..........................             227  Cardiac Defibrillator
                                              Implant without Cardiac
                                              Catheterization without
                                              MCC.
5..........................             242  Permanent Cardiac Pacemaker
                                              Implant with MCC.
5..........................             243  Permanent Cardiac Pacemaker
                                              Implant with CC.
5..........................             244  Permanent Cardiac Pacemaker
                                              Implant without CC/MCC.
5..........................             245  AICD Generator Procedures.
5..........................             258  Cardiac Pacemaker Device
                                              Replacement with MCC.
5..........................             259  Cardiac Pacemaker Device
                                              Replacement without MCC.
5..........................             260  Cardiac Pacemaker Revision
                                              Except Device Replacement
                                              with MCC.
5..........................             261  Cardiac Pacemaker Revision
                                              Except Device Replacement
                                              with CC.
5..........................             262  Cardiac Pacemaker Revision
                                              Except Device Replacement
                                              without CC/MCC.
5..........................             265  AICD Lead Procedures.
5..........................             266  Endovascular Cardiac Valve
                                              Replacement with MCC.
5..........................             267  Endovascular Cardiac Valve
                                              Replacement without MCC.
5..........................             268  Aortic and Heart Assist
                                              Procedures Except
                                              Pulsation Balloon with
                                              MCC.
5..........................             269  Aortic and Heart Assist
                                              Procedures Except
                                              Pulsation Balloon without
                                              MCC.
5..........................             270  Other Major Cardiovascular
                                              Procedures with MCC.

[[Page 20251]]

 
5..........................             271  Other Major Cardiovascular
                                              Procedures with CC.
5..........................             272  Other Major Cardiovascular
                                              Procedures without CC/MCC.
8..........................             461  Bilateral or Multiple Major
                                              Joint Procedures of Lower
                                              Extremity with MCC.
8..........................             462  Bilateral or Multiple Major
                                              Joint Procedures of Lower
                                              Extremity without MCC.
8..........................             466  Revision of Hip or Knee
                                              Replacement with MCC.
8..........................             467  Revision of Hip or Knee
                                              Replacement with CC.
8..........................             468  Revision of Hip or Knee
                                              Replacement without CC/
                                              MCC.
8..........................             469  Major Hip and Knee Joint
                                              Replacement or
                                              Reattachment of Lower
                                              Extremity with MCC or
                                              Total Ankle Replacement.
8..........................             470  Major Hip and Knee Joint
                                              Replacement or
                                              Reattachment of Lower
                                              Extremity without MCC.
------------------------------------------------------------------------

20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R. 
Issues
    In this proposed rule, we are addressing requests that we received 
regarding changing the designation of specific ICD-10-PCS procedure 
codes from non-O.R. to O.R. procedures, or changing the designation 
from O.R. procedure to non-O.R. procedure. In cases where we are 
proposing to change the designation of procedure codes from non-O.R. to 
O.R. procedures, we also are proposing one or more MS-DRGs with which 
these procedures are clinically aligned and to which the procedure code 
would be assigned. We generally examine the MS-DRG assignment for 
similar procedures, such as the other approaches for that procedure, to 
determine the most appropriate MS-DRG assignment for procedures newly 
designated as O.R. procedures. We are inviting public comments on these 
proposed MS-DRG assignments.
    We also note that many MS-DRGs require the presence of any O.R. 
procedure. As a result, cases with a principal diagnosis associated 
with a particular MS-DRG would, by default, be grouped to that MS-DRG. 
Therefore, we do not list these MS-DRGs in our discussion below. 
Instead, we only discuss MS-DRGs that require explicitly adding the 
relevant procedures codes to the GROUPER logic in order for those 
procedure codes to affect the MS-DRG assignment as intended. In 
addition, cases that contain O.R. procedures will map to MS-DRGs 981, 
982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis 
with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 
988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal 
Diagnosis with MCC, with CC, and without CC/MCC, respectively) when 
they do not contain a principal diagnosis that corresponds to one of 
the MDCs to which that procedure is assigned. These procedures need not 
be assigned to MS-DRGs 981 through 989 in order for this to occur. 
Therefore, if requestors included some or all of MS-DRGs 981 through 
989 in their request or included MS-DRGs that require the presence of 
any O.R. procedure, we did not specifically address that aspect in 
summarizing their request or our response to the request in the section 
below.
a. Percutaneous and Percutaneous Endoscopic Excision of Brain and 
Cerebral Ventricle
    One requestor identified 22 ICD-10-PCS procedure codes that 
describe procedures involving transcranial brain and cerebral ventricle 
excision that the requestor stated would generally require the 
resources of an operating room. The 22 procedure codes are listed in 
the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
00B03ZX...................  Excision of brain, percutaneous approach,
                             diagnostic.
00B13ZX...................  Excision of cerebral meninges, percutaneous
                             approach, diagnostic.
00B23ZX...................  Excision of dura mater, percutaneous
                             approach, diagnostic.
00B63ZX...................  Excision of cerebral ventricle, percutaneous
                             approach, diagnostic.
00B73ZX...................  Excision of cerebral hemisphere,
                             percutaneous approach, diagnostic.
00B83ZX...................  Excision of basal ganglia, percutaneous
                             approach, diagnostic.
00B93ZX...................  Excision of thalamus, percutaneous approach,
                             diagnostic.
00BA3ZX...................  Excision of hypothalamus, percutaneous
                             approach, diagnostic.
00BB3ZX...................  Excision of pons, percutaneous approach,
                             diagnostic.
00BC3ZX...................  Excision of cerebellum, percutaneous
                             approach, diagnostic.
00BD3ZX...................  Excision of medulla oblongata, percutaneous
                             approach, diagnostic.
00B04ZX...................  Excision of brain, percutaneous endoscopic
                             approach, diagnostic.
00B14ZX...................  Excision of cerebral meninges, percutaneous
                             endoscopic approach, diagnostic.
00B24ZX...................  Excision of dura mater, percutaneous
                             endoscopic approach, diagnostic.
00B64ZX...................  Excision of cerebral ventricle, percutaneous
                             endoscopic approach, diagnostic.
00B74ZX...................  Excision of cerebral hemisphere,
                             percutaneous endoscopic approach,
                             diagnostic.
00B84ZX...................  Excision of basal ganglia, percutaneous
                             endoscopic approach, diagnostic.
00B94ZX...................  Excision of thalamus, percutaneous
                             endoscopic approach, diagnostic.
00BA4ZX...................  Excision of hypothalamus, percutaneous
                             endoscopic approach, diagnostic.
00BB4ZX...................  Excision of pons, percutaneous endoscopic
                             approach, diagnostic.
00BC4ZX...................  Excision of cerebellum, percutaneous
                             endoscopic approach, diagnostic.
00BD4ZX...................  Excision of medulla oblongata, percutaneous
                             endoscopic approach, diagnostic.
------------------------------------------------------------------------

    The requestor stated that, although percutaneous burr hole biopsies 
are performed through smaller openings in the skull than open burr hole 
biopsies, these procedures require drilling or cutting through the 
skull using sterile technique with anesthesia for pain control. The 
requestor also noted that similar procedures involving percutaneous 
drainage of the subdural space are currently classified as O.R. 
procedures in Version 35 of the ICD-10

[[Page 20252]]

MS-DRGs. However, these 22 ICD-10-PCS procedure codes are not 
recognized as O.R. procedures for purposes of MS-DRG assignment. The 
requestor recommended that the 22 ICD-10-PCS codes be designated as 
O.R. procedures and assigned to MS-DRGs 25, 26, and 27 (Craniotomy and 
Endovascular Intracranial Procedures with MCC, with CC, and without CC/
MCC, respectively).
    We agree with the requestor that these procedures typically require 
the resources of an operating room. Therefore, we are proposing to add 
these 22 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 
25, 26, and 27 in MDC 1 (Diseases and Disorders of the Nervous System). 
We are inviting public comments on our proposal.
b. Open Extirpation of Subcutaneous Tissue and Fascia
    One requestor identified 22 ICD-10-PCS procedure codes that 
describe procedures involving open extirpation of subcutaneous tissue 
and fascia that the requestor stated would generally require the 
resources of an operating room. The 22 procedure codes are listed in 
the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0JC00ZZ...................  Extirpation of matter from scalp
                             subcutaneous tissue and fascia, open
                             approach.
0JC10ZZ...................  Extirpation of matter from face subcutaneous
                             tissue and fascia, open approach.
0JC40ZZ...................  Extirpation of matter from right neck
                             subcutaneous tissue and fascia, open
                             approach.
0JC50ZZ...................  Extirpation of matter from left neck
                             subcutaneous tissue and fascia, open
                             approach.
0JC60ZZ...................  Extirpation of matter from chest
                             subcutaneous tissue and fascia, open
                             approach.
0JC70ZZ...................  Extirpation of matter from back subcutaneous
                             tissue and fascia, open approach.
0JC80ZZ...................  Extirpation of matter from abdomen
                             subcutaneous tissue and fascia, open
                             approach.
0JC90ZZ...................  Extirpation of matter from buttock
                             subcutaneous tissue and fascia, open
                             approach.
0JCB0ZZ...................  Extirpation of matter from perineum
                             subcutaneous tissue and fascia, open
                             approach.
0JCC0ZZ...................  Extirpation of matter from pelvic region
                             subcutaneous tissue and fascia, open
                             approach.
0JCD0ZZ...................  Extirpation of matter from right upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCF0ZZ...................  Extirpation of matter from left upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCG0ZZ...................  Extirpation of matter from right lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCH0ZZ...................  Extirpation of matter from left lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCJ0ZZ...................  Extirpation of matter from right hand
                             subcutaneous tissue and fascia, open
                             approach.
0JCK0ZZ...................  Extirpation of matter from left hand
                             subcutaneous tissue and fascia, open
                             approach.
0JCL0ZZ...................  Extirpation of matter from right upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCM0ZZ...................  Extirpation of matter from left upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCN0ZZ...................  Extirpation of matter from right lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCP0ZZ...................  Extirpation of matter from left lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCQ0ZZ...................  Extirpation of matter from right foot
                             subcutaneous tissue and fascia, open
                             approach.
0JCR0ZZ...................  Extirpation of matter from left foot
                             subcutaneous tissue and fascia, open
                             approach.
------------------------------------------------------------------------

    The requestor stated that these procedures involve making an open 
incision deeper than the skin under general anesthesia, and that 
irrigation and/or excision of devitalized tissue or cavity are often 
required and are considered inherent to the procedure. The requestor 
also stated that open drainage of subcutaneous tissue and fascia, open 
excisional debridement of subcutaneous tissue and fascia, and open 
nonexcisional debridement/extraction of subcutaneous tissue and fascia 
are designated as O.R. procedures, and that these 22 procedures should 
be designated as O.R. procedures for the same reason. In the ICD-10 MS-
DRGs Version 35, these 22 ICD-10-PCS procedure codes are not recognized 
as O.R. procedures for purposes of MS-DRG assignment. The requestor 
recommended that the 22 ICD-10-PCS procedure codes listed in the table 
be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous 
Tissue and Breast Procedures with MCC, CC, and without CC/MCC, 
respectively).
    We disagree with the requestor that these procedures typically 
require the resources of an operating room. Our clinical advisors 
indicated that these open extirpation procedures are minor procedures 
that can be performed outside of an operating room, such as in a 
radiology suite with CT or MRI guidance. We disagree that these 
procedures are similar to open drainage procedures. Therefore, we are 
proposing to maintain the status of these 22 ICD-10-PCS procedure codes 
as non-O.R. procedures. We are inviting public comments on our 
proposal.
c. Open Scrotum and Breast Procedures
    One requestor identified 13 ICD-10-PCS procedure codes that 
describe procedures involving open drainage, open extirpation, and open 
debridement/excision of the scrotum and breast. The requestor stated 
that the 13 procedures listed in the following table involve making an 
open incision deeper than the skin under general anesthesia, and that 
irrigation and/or excision of devitalized tissue or cavity are often 
required and are considered inherent to the procedure. The requestor 
also stated that open drainage of subcutaneous tissue and fascia, open 
excisional debridement of subcutaneous tissue and fascia, open 
non[dash]excisional debridement/extraction of subcutaneous tissue and 
fascia, and open excision of breast are designated as O.R. procedures, 
and that these 13 procedures should be designated as O.R. procedures 
for the same reason. In the ICD-10 MS-DRGs Version 35, these 13 ICD-10-
PCS procedure codes are not recognized as O.R. procedures for purposes 
of MS-DRG assignment.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0V950ZZ...................  Drainage of scrotum, open approach.
0VB50ZZ...................  Excision of scrotum, open approach.
0VC50ZZ...................  Extirpation of matter from scrotum, open
                             approach.

[[Page 20253]]

 
0H9U0ZZ...................  Drainage of left breast, open approach.
0H9T0ZZ...................  Drainage of right breast, open approach.
0H9V0ZZ...................  Drainage of bilateral breast, open approach.
0H9W0ZZ...................  Drainage of right nipple, open approach.
0H9X0ZZ...................  Drainage of left nipple, open approach.
0HCT0ZZ...................  Extirpation of matter from right breast,
                             open approach.
0HCU0ZZ...................  Extirpation of matter from left breast, open
                             approach.
0HCV0ZZ...................  Extirpation of matter from bilateral breast,
                             open approach.
0HCW0ZZ...................  Extirpation of matter from right nipple,
                             open approach.
0HCX0ZZ...................  Extirpation of matter from left nipple, open
                             approach.
------------------------------------------------------------------------

    The requestor recommended that the 3 ICD-10-PCS scrotal procedure 
codes be assigned to MS-DRGs 717 and 718 (Other Male Reproductive 
System O.R. Procedures Except Malignancy with CC/MCC and without CC/
MCC, respectively) and the 10 breast procedure codes be assigned to MS-
DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast 
Procedures with CC/MCC and without CC/MCC, respectively).
    We agree with the requestor that these procedures typically require 
the resources of an operating room due to the nature of breast and 
scrotal tissue, as well as with the MS-DRG assignments recommended by 
the requestor. In addition, we believe that the scrotal codes should 
also be assigned to MS-DRGs 715 and 716 (Other Male Reproductive System 
O.R. Procedures for Malignancy with CC/MCC and without CC/MCC, 
respectively). Therefore, we are proposing to add these 13 ICD-10-PCS 
procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions 
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures, assigned to MS-DRGs 715, 716, 717, and 
718 in MDC 12 (Diseases and Disorders of the Male Reproductive System) 
for the scrotal procedure codes and assigned to MS-DRGs 584 and 585 in 
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue & 
Breast) for the breast procedure codes. We are inviting public comments 
on our proposal.
d. Open Parotid Gland and Submaxillary Gland Procedures
    One requestor identified eight ICD-10-PCS procedure codes that 
describe procedures involving open drainage and open extirpation of the 
parotid or submaxillary glands, shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0C980ZZ...................  Drainage of right parotid gland, open
                             approach.
0C990ZZ...................  Drainage of left parotid gland, open
                             approach.
0C9G0ZZ...................  Drainage of right submaxillary gland, open
                             approach.
0C9H0ZZ...................  Drainage of left submaxillary gland, open
                             approach.
0CC80ZZ...................  Extirpation of matter from right parotid
                             gland, open approach.
0CC90ZZ...................  Extirpation of matter from left parotid
                             gland, open approach.
0CCG0ZZ...................  Extirpation of matter from right
                             submaxillary gland, open approach.
0CCH0ZZ...................  Extirpation of matter from left submaxillary
                             gland, open approach.
------------------------------------------------------------------------

    The requestor stated that these procedures involve making an open 
incision through subcutaneous tissue, fascia, and potentially muscle, 
to reach and incise the parotid or submaxillary gland under general 
anesthesia, and that irrigation and/or excision of devitalized tissue 
or cavity may be required and are considered inherent to the procedure. 
The requestor also stated that open drainage of subcutaneous tissue and 
fascia, open excisional debridement of subcutaneous tissue and fascia, 
and open non[dash]excisional debridement/extraction of subcutaneous 
tissue and fascia are designated as O.R. procedures, and that these 
eight procedures should be designated as O.R. procedures for the same 
reason. In the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS 
procedure codes are not recognized as O.R. procedures for purposes of 
MS-DRG assignment. The requestor requested that these procedures be 
assigned to MS-DRG 139 (Salivary Gland Procedures).
    We agree with the requestor that these eight procedures typically 
require the resources of an operating room. Therefore, we are proposing 
to add these ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 
139 in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and 
Throat). We are inviting public comments on our proposal.
e. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint
    One requestor identified four sets of ICD-10-PCS procedure code 
combinations (eight ICD-10-PCS codes) that describe procedures 
involving open removal and insertion of spacers into the knee or hip 
joints, shown in the following table. The requestor stated that these 
are invasive procedures involving removal and reinsertion of devices 
into major joints and are performed in the operating room under general 
anesthesia. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS 
procedure code combinations are not recognized as O.R. procedures for 
purposes of MS-DRG assignment. The requestor recommended that CMS 
determine the most appropriate surgical DRGs for these procedures.

[[Page 20254]]



------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0SPC08Z...................  Removal of spacer from right knee joint,
                             open approach.
0SHC08Z...................  Insertion of spacer into right knee joint,
                             open approach.
0SPD08Z...................  Removal of spacer from left knee joint, open
                             approach.
0SHD08Z...................  Insertion of spacer into left knee joint,
                             open approach.
0SP908Z...................  Removal of spacer from right hip joint, open
                             approach.
0SH908Z...................  Insertion of spacer into right hip joint,
                             open approach.
0SPB08Z...................  Removal of spacer from left hip joint, open
                             approach.
0SHB08Z...................  Insertion of spacer into left hip joint,
                             open approach.
------------------------------------------------------------------------

    We agree with the requestor that these procedures typically require 
the resources of an operating room. However, our clinical advisors 
indicated that these codes should be designated as O.R. procedures even 
when reported as stand-alone procedures. Therefore, for the knee 
procedures, we are proposing to add these four ICD-10-PCS procedure 
codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in 
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index 
as O.R. procedures assigned to MS-DRGs 485, 486, and 487 (Knee 
Procedures with Principal Diagnosis of Infection with MCC, with CC, and 
without CC/MCC, respectively) or MS-DRGs 488 and 489 (Knee Procedures 
without Principal diagnosis of Infection with CC/MCC and without CC/
MCC, respectively), both in MDC 8 (Diseases and Disorders of the 
Musculoskeletal System and Connective Tissue). For the hip procedures, 
we are proposing to add these four ICD-10-PCS procedure codes to the FY 
2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. 
procedures assigned to MS-DRGs 480, 481, and 482 (Hip and Femur 
Procedures Except Major Joint with MCC, with CC, and without CC/MCC, 
respectively) in MDC 8 (Diseases and Disorders of the Musculoskeletal 
System and Connective Tissue). We are inviting public comments on our 
proposal.
f. Endoscopic Dilation of Ureter(s) With Intraluminal Device
    One requestor identified the following three ICD-10-PCS procedure 
codes that describe procedures involving endoscopic dilation of 
ureter(s) with intraluminal device.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0T778DZ...................  Dilation of left ureter with intraluminal
                             device, via natural or artificial opening
                             endoscopic.
0T768DZ...................  Dilation of right ureter with intraluminal
                             device, via natural or artificial opening
                             endoscopic.
0T788DZ...................  Dilation of bilateral ureters with
                             intraluminal device, via natural or
                             artificial opening endoscopic.
------------------------------------------------------------------------

    The requestor stated that these procedures involve the use of 
cystoureteroscopy to view the bladder and ureter and dilation under 
visualization, which are often followed by placement of a ureteral 
stent. The requestor also stated that endoscopic extirpation of matter 
from ureter, endoscopic biopsy of bladder, endoscopic dilation of 
bladder, endoscopic dilation of renal pelvis, and endoscopic dilation 
of the ureter without insertion of intraluminal device are all assigned 
to surgical DRGs, and that these three procedures should be designated 
as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 
35, these three ICD-10-PCS procedure codes are not recognized as O.R. 
procedures for purposes of MS-DRG assignment. The requestor recommended 
that these procedures be assigned to MS-DRGs 656, 657, and 658 (Kidney 
and Ureter Procedures for Neoplasm with MCC, with CC, and without CC/
MCC, respectively) and MS-DRGs 659, 660, and 661 (Kidney and Ureter 
Procedures for Non-Neoplasm with MCC, with CC, and without CC/MCC, 
respectively).
    We agree with the requestor that these procedures typically require 
the resources of an operating room. In addition to the MS-DRGs 
recommended by the requestor, we believe that these procedure codes 
should also be assigned to other MS-DRGs, consistent with the 
assignment of other dilation of ureter procedures: MS-DRG 907, 908, and 
909 (Other O.R. Procedures for Injuries with MCC, with CC, and without 
CC/MCC, respectively) and MS-DRGs 957, 958, and 959 (Other O.R. 
Procedures for Multiple Significant Trauma with MCC, with CC, and 
without CC/MCC, respectively). Therefore, we are proposing to add the 
three ICD-10-PCS procedure codes identified by the requestor to the FY 
2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. 
procedures assigned to MS-DRGs 656, 657, and 658 in MDC 11 (Diseases 
and Disorders of the Kidney and Urinary Tract), MS-DRGs 659, 660, and 
661 in MDC 11, MS-DRGs 907, 908, and 909 in MDC 21 (Injuries, 
Poisonings and Toxic Effects of Drugs), and MS-DRGs 957, 958, and 959 
in MDC 24 (Multiple Significant Trauma). We are inviting public 
comments on our proposal.
g. Thoracoscopic Procedures of Pericardium and Pleura
    One requestor identified seven ICD-10-PCS procedure codes that 
describe procedures involving thoracoscopic drainage of the pericardial 
cavity or pleural cavity, or extirpation of matter from the pleura, as 
shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0W9D4ZZ...................  Drainage of pericardial cavity, percutaneous
                             endoscopic approach.
0W9D40Z...................  Drainage of pericardial cavity with drainage
                             device, percutaneous endoscopic approach.
0W9D4ZX...................  Drainage of pericardial cavity, percutaneous
                             endoscopic approach, diagnostic.

[[Page 20255]]

 
0W994ZX...................  Drainage of right pleural cavity,
                             percutaneous endoscopic approach,
                             diagnostic.
0W9B4ZX...................  Drainage of left pleural cavity,
                             percutaneous endoscopic approach,
                             diagnostic.
0BCP4ZZ...................  Extirpation of matter from left pleura,
                             percutaneous endoscopic approach.
0BCN4ZZ...................  Extirpation of matter from right pleura,
                             percutaneous endoscopic approach.
------------------------------------------------------------------------

    The requestor stated that these procedures involve making an 
incision through the chest wall and inserting a thoracoscope for 
visualization of thoracic structures during the procedure. The 
requestor also stated that some thoracoscopic procedures are assigned 
to surgical MS-DRGs, while other procedures are assigned to medical MS-
DRGs. In the ICD-10 MS-DRGs Version 35, these seven ICD-10-PCS 
procedure codes are not recognized as O.R. procedures for purposes of 
MS-DRG assignment.
    We agree with the requestor that these procedures typically require 
the resources of an operating room, as well as significant time and 
skill. During our review, we noted that the following two related 
procedures using the open approach also were not currently recognized 
as O.R. procedures:

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0BCP0ZZ...................  Extirpation of matter from left pleura, open
                             approach.
0BCN0ZZ...................  Extirpation of matter from right pleura,
                             open approach.
------------------------------------------------------------------------

    Therefore, to be consistent with the MS-DRGs to which other 
approaches for procedures involving drainage or extirpation of matter 
from the pleura are assigned, we are proposing to add these nine ICD-
10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 
Definitions Manual in Appendix E--Operating Room Procedures and 
Procedure Code/MS-DRG Index as O.R. procedures assigned to one of the 
following MS-DRGs: MS-DRGs 163, 164, and 165 (Major Chest Procedures 
with MCC, with CC, and without CC/MCC, respectively) in MDC 4 (Diseases 
and Disorders of the Respiratory System); MS-DRGs 270, 271, and 272 
(Other Major Cardiovascular Procedures with MCC, with CC, and without 
CC/MCC, respectively) in MDC 5 (Diseases and Disorders of the 
Circulatory System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia 
with Major O.R. Procedure with MCC, with CC, and without CC/MCC, 
respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, 
Poorly Differentiated Neoplasms); MS-DRGs 826, 827, and 828 
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with 
Major O.R. Procedure with MCC, with CC, and without CC/MCC, 
respectively) in MDC 17; MS-DRGs 907, 908, and 909 (Other O.R. 
Procedures for Injuries with MCC, with CC, and without CC/MCC, 
respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of 
Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for 
Multiple Significant Trauma with MCC, with CC, and without CC/MCC, 
respectively) in MDC 24 (Multiple Significant Trauma). We are inviting 
public comments on our proposal.
h. Open Insertion of Totally Implantable and Tunneled Vascular Access 
Devices
    One requestor identified 20 ICD-10-PCS procedure codes that 
describe procedures involving open insertion of totally implantable and 
tunneled vascular access devices. The codes are identified in the 
following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0JH60WZ...................  Insertion of totally implantable vascular
                             access device into chest subcutaneous
                             tissue and fascia, open approach.
0JH60XZ...................  Insertion of tunneled vascular access device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH80WZ...................  Insertion of totally implantable vascular
                             access device into abdomen subcutaneous
                             tissue and fascia, open approach.
0JH80XZ...................  Insertion of tunneled vascular access device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JHD0WZ...................  Insertion of totally implantable vascular
                             access device into right upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHD0XZ...................  Insertion of tunneled vascular access device
                             into right upper arm subcutaneous tissue
                             and fascia, open approach.
0JHF0WZ...................  Insertion of totally implantable vascular
                             access device into left upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHF0XZ...................  Insertion of tunneled vascular access device
                             into left upper arm subcutaneous tissue and
                             fascia, open approach.
0JHG0WZ...................  Insertion of totally implantable vascular
                             access device into right lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHG0XZ...................  Insertion of tunneled vascular access device
                             into right lower arm subcutaneous tissue
                             and fascia, open approach.
0JHH0WZ...................  Insertion of totally implantable vascular
                             access device into left lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHH0XZ...................  Insertion of tunneled vascular access device
                             into left lower arm subcutaneous tissue and
                             fascia, open approach.
0JHL0WZ...................  Insertion of totally implantable vascular
                             access device into right upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHL0XZ...................  Insertion of tunneled vascular access device
                             into right upper leg subcutaneous tissue
                             and fascia, open approach.
0JHM0WZ...................  Insertion of totally implantable vascular
                             access device into left upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHM0XZ...................  Insertion of tunneled vascular access device
                             into left upper leg subcutaneous tissue and
                             fascia, open approach.
0JHN0WZ...................  Insertion of totally implantable vascular
                             access device into right lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHN0XZ...................  Insertion of tunneled vascular access device
                             into right lower leg subcutaneous tissue
                             and fascia, open approach.
0JHP0WZ...................  Insertion of totally implantable vascular
                             access device into left lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHP0XZ...................  Insertion of tunneled vascular access device
                             into left lower leg subcutaneous tissue and
                             fascia, open approach.
------------------------------------------------------------------------

    The requestor stated that open procedures to insert totally 
implantable vascular access devices (VAD) involve implantation of a 
port by open approach, cutting through subcutaneous tissue/fascia, 
placing the device, and

[[Page 20256]]

then closing tissues so that none of the device is exposed. The 
requestor explained that open procedures to insert tunneled VADs 
involve insertion of the catheter into central vasculature, and then 
open incision of subcutaneous tissue and fascia through which the 
device is tunneled. The requestor also indicated that these procedures 
require two ICD-10-PCS codes: One for the insertion of the VAD or port 
within the subcutaneous tissue; and one for percutaneous insertion of 
the central venous catheter that is connected to the device. The 
requestor further noted that, in MDC 11, cases with these procedure 
codes are assigned to surgical MS-DRGs and that insertion of infusion 
pumps by open approach groups to surgical MS-DRGs. The requestor 
recommended that these procedures be assigned to surgical MS-DRGs in 
MDC 09 as well. We examined the O.R. designations for this group of 
procedures and determined that they currently are designated as non-
O.R. procedures for MDC 09 and MDC 11.
    We agree with the requestor that procedures involving open 
insertion of totally implantable VAD procedures typically require the 
resources of an operating room. However, we disagree that the tunneled 
VAD procedures typically require the resources of an operating room. 
Therefore, we are proposing to update the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index to designate the 10 ICD-10-PCS 
procedure codes describing the totally implantable VAD procedures as 
O.R. procedures, which will continue to be assigned to MS-DRGs 579, 
580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures 
with MCC, with CC, and without CC/MCC, respectively) in MDC 9 (Diseases 
and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRGs 
673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with CC, 
with MCC, and without CC/MCC, respectively) in MDC 11 (Diseases and 
Disorders of the Kidney and Urinary Tract). We note that these 
procedures already affect MS-DRG assignment to these MS-DRGs. However, 
if the procedure is unrelated to the principal diagnosis, it will be 
assigned to MS-DRGs 981, 982, and 983 instead of a medical MS[dash]DRG. 
We are inviting public comments on our proposal.
i. Percutaneous Joint Reposition With Internal Fixation Device
    One requestor identified 20 ICD-10-PCS procedure codes that 
describe procedures involving percutaneous joint reposition with 
internal fixation device, shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0SS034Z...................  Reposition lumbar vertebral joint with
                             internal fixation device, percutaneous
                             approach.
0SS334Z...................  Reposition lumbosacral joint with internal
                             fixation device, percutaneous approach.
0SS534Z...................  Reposition sacrococcygeal joint with
                             internal fixation device, percutaneous
                             approach.
0SS634Z...................  Reposition coccygeal joint with internal
                             fixation device, percutaneous approach.
0SS734Z...................  Reposition right sacroiliac joint with
                             internal fixation device, percutaneous
                             approach.
0SS834Z...................  Reposition left sacroiliac joint with
                             internal fixation device, percutaneous
                             approach.
0SS934Z...................  Reposition right hip joint with internal
                             fixation device, percutaneous approach.
0SSB34Z...................  Reposition left hip joint with internal
                             fixation device, percutaneous approach.
0SSC34Z...................  Reposition right knee joint with internal
                             fixation device, percutaneous approach.
0SSD34Z...................  Reposition left knee joint with internal
                             fixation device, percutaneous approach.
0SSF34Z...................  Reposition right ankle joint with internal
                             fixation device, percutaneous approach.
0SSG34Z...................  Reposition left ankle joint with internal
                             fixation device, percutaneous approach.
0SSH34Z...................  Reposition right tarsal joint with internal
                             fixation device, percutaneous approach.
0SSJ34Z...................  Reposition left tarsal joint with internal
                             fixation device, percutaneous approach.
0SSK34Z...................  Reposition right tarsometatarsal joint with
                             internal fixation device, percutaneous
                             approach.
0SSL34Z...................  Reposition left tarsometatarsal joint with
                             internal fixation device, percutaneous
                             approach.
0SSM34Z...................  Reposition right metatarsal-phalangeal joint
                             with internal fixation device, percutaneous
                             approach.
0SSN34Z...................  Reposition left metatarsal-phalangeal joint
                             with internal fixation device, percutaneous
                             approach.
0SSP34Z...................  Reposition right toe phalangeal joint with
                             internal fixation device, percutaneous
                             approach.
0SSQ34Z...................  Reposition left toe phalangeal joint with
                             internal fixation device, percutaneous
                             approach.
------------------------------------------------------------------------

    The requestor stated that reposition of the sacrum, femur, tibia, 
fibula, and other fractures of bone with internal fixation device by 
percutaneous approach are assigned to surgical DRGs, and that 
reposition of sacroiliac, hip, knee, and other joint locations with 
internal fixation should therefore also be assigned to surgical DRGs. 
In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-PCS procedure codes 
are not recognized as O.R. procedures for purposes of MS-DRG 
assignment.
    We disagree with the requestor that these procedures typically 
require the resources of an operating room, as these procedures are not 
as invasive as the bone reposition procedures referenced by the 
requestor. Our clinical advisors advised that these procedures are 
typically performed in a radiology suite. Therefore, we are proposing 
to maintain the status of these 20 ICD-10-PCS procedure codes as non-
O.R. procedures. We are inviting public comments on our proposal.
j. Endoscopic Destruction of Intestine
    One requestor identified four ICD-10-PCS procedure codes that 
describe procedures involving endoscopic destruction of the intestine, 
as shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0D5A8ZZ...................  Destruction of jejunum, via natural or
                             artificial opening endoscopic.
0D5B8ZZ...................  Destruction of ileum, via natural or
                             artificial opening endoscopic.
0D5C8ZZ...................  Destruction of ileocecal valve, via natural
                             or artificial opening endoscopic.
0D588ZZ...................  Destruction of small intestine, via natural
                             or artificial opening endoscopic.
------------------------------------------------------------------------


[[Page 20257]]

    The requestor stated that these procedures are rarely performed in 
the operating room. In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-
PCS procedure codes are currently recognized as O.R. procedures for 
purposes of MS-DRG assignment.
    We agree with the requestor that these procedures do not typically 
require the resources of an operating room. Therefore, we are proposing 
to remove these four procedure codes from the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting 
public comments on our proposal.
k. Drainage of Lower Lung Via Natural or Artificial Opening Endoscopic, 
Diagnostic
    One requestor identified the following ICD-10-PCS procedure codes 
that describe procedures involving endoscopic drainage of the lung via 
natural or artificial opening for diagnostic purposes.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0B9J8ZX...................  Drainage of left lower lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9F8ZX...................  Drainage of right lower lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
------------------------------------------------------------------------

    The requestor stated that these procedures are rarely performed in 
the operating room.
    We agree with the requestor that these procedures do not require 
the resources of an operating room. In addition, while we were 
reviewing this comment, we identified three additional related codes:

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0B9D8ZX...................  Drainage of right middle lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9C8ZX...................  Drainage of right upper lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9G8ZX...................  Drainage of left upper lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
------------------------------------------------------------------------

    In the ICD-10 MS-DRGs Version 35, these ICD-10-PCS procedure codes 
are currently recognized as O.R. procedures for purposes of MS-DRG 
assignment.
    We are proposing to remove ICD-10-PCS procedure codes 0B9J8ZX, 
0B9F8ZX, 0B9D8ZX, 0B9C8ZX, and 0B9G8ZX from the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting 
public comments on our proposal.

G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights

1. Data Sources for Developing the Proposed Relative Weights
    In developing the proposed FY 2019 system of weights, we are 
proposing to use two data sources: Claims data and cost report data. As 
in previous years, the claims data source is the MedPAR file. This file 
is based on fully coded diagnostic and procedure data for all Medicare 
inpatient hospital bills. The FY 2017 MedPAR data used in this proposed 
rule include discharges occurring on October 1, 2016, through September 
30, 2017, based on bills received by CMS through December 31, 2017, 
from all hospitals subject to the IPPS and short[dash]term, acute care 
hospitals in Maryland (which at that time were under a waiver from the 
IPPS). The FY 2017 MedPAR file used in calculating the proposed 
relative weights includes data for approximately 9,652,400 Medicare 
discharges from IPPS providers. Discharges for Medicare beneficiaries 
enrolled in a Medicare Advantage managed care plan are excluded from 
this analysis. These discharges are excluded when the MedPAR ``GHO 
Paid'' indicator field on the claim record is equal to ``1'' or when 
the MedPAR DRG payment field, which represents the total payment for 
the claim, is equal to the MedPAR ``Indirect Medical Education (IME)'' 
payment field, indicating that the claim was an ``IME only'' claim 
submitted by a teaching hospital on behalf of a beneficiary enrolled in 
a Medicare Advantage managed care plan. In addition, the December 31, 
2017 update of the FY 2017 MedPAR file complies with version 5010 of 
the X12 HIPAA Transaction and Code Set Standards, and includes a 
variable called ``claim type.'' Claim type ``60'' indicates that the 
claim was an inpatient claim paid as fee-for-service. Claim types 
``61,'' ``62,'' ``63,'' and ``64'' relate to encounter claims, Medicare 
Advantage IME claims, and HMO no-pay claims. Therefore, the calculation 
of the proposed relative weights for FY 2019 also excludes claims with 
claim type values not equal to ``60.'' The data exclude CAHs, including 
hospitals that subsequently became CAHs after the period from which the 
data were taken. We note that the proposed FY 2019 relative weights are 
based on the ICD[dash]10[dash]CM diagnoses and ICD-10-PCS procedure 
codes from the FY 2017 MedPAR claims data, grouped through the 
ICD[dash]10 version of the proposed FY 2019 GROUPER (Version 36).
    The second data source used in the cost[dash]based relative 
weighting methodology is the Medicare cost report data files from the 
HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the 
IPPS fiscal year. Specifically, we used cost report data from the 
December 31, 2017 update of the FY 2016 HCRIS for calculating the 
proposed FY 2019 cost[dash]based relative weights.
2. Methodology for Calculation of the Proposed Relative Weights
    As we explain in section II.E.2. of the preamble of this proposed 
rule, we calculated the proposed FY 2019 relative weights based on 19 
CCRs, as we did for FY 2018. The methodology we are proposing to use to 
calculate the FY 2019 MS-DRG cost[dash]based relative weights based on 
claims data in the FY 2017 MedPAR file and data from the FY 2016 
Medicare cost reports is as follows:
     To the extent possible, all the claims were regrouped 
using the proposed FY 2019 MS[dash]DRG classifications discussed in 
sections II.B. and II.F. of the preamble of this proposed rule.
     The transplant cases that were used to establish the 
proposed relative weights for heart and heart[dash]lung, liver and/or 
intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, 
respectively) were limited to those Medicare[dash]approved transplant 
centers that have cases in the FY 2017 MedPAR

[[Page 20258]]

file. (Medicare coverage for heart, heart[dash]lung, liver and/or 
intestinal, and lung transplants is limited to those facilities that 
have received approval from CMS as transplant centers.)
     Organ acquisition costs for kidney, heart, 
heart[dash]lung, liver, lung, pancreas, and intestinal (or 
multivisceral organs) transplants continue to be paid on a reasonable 
cost basis. Because these acquisition costs are paid separately from 
the prospective payment rate, it is necessary to subtract the 
acquisition charges from the total charges on each transplant bill that 
showed acquisition charges before computing the average cost for each 
MS-DRG and before eliminating statistical outliers.
     Claims with total charges or total lengths of stay less 
than or equal to zero were deleted. Claims that had an amount in the 
total charge field that differed by more than $30.00 from the sum of 
the routine day charges, intensive care charges, pharmacy charges, 
implantable devices charges, supplies and equipment charges, therapy 
services charges, operating room charges, cardiology charges, 
laboratory charges, radiology charges, other service charges, labor and 
delivery charges, inhalation therapy charges, emergency room charges, 
blood and blood products charges, anesthesia charges, cardiac 
catheterization charges, CT scan charges, and MRI charges were also 
deleted.
     At least 92.5 percent of the providers in the MedPAR file 
had charges for 14 of the 19 cost centers. All claims of providers that 
did not have charges greater than zero for at least 14 of the 19 cost 
centers were deleted. In other words, a provider must have no more than 
five blank cost centers. If a provider did not have charges greater 
than zero in more than five cost centers, the claims for the provider 
were deleted.
     Statistical outliers were eliminated by removing all cases 
that were beyond 3.0 standard deviations from the geometric mean of the 
log distribution of both the total charges per case and the total 
charges per day for each MS-DRG.
     Effective October 1, 2008, because hospital inpatient 
claims include a POA indicator field for each diagnosis present on the 
claim, only for purposes of relative weight-setting, the POA indicator 
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have 
an ``N'' (No) or a ``U'' (documentation insufficient to determine if 
the condition was present at the time of inpatient admission) in the 
POA field.
    Under current payment policy, the presence of specific HAC codes, 
as indicated by the POA field values, can generate a lower payment for 
the claim. Specifically, if the particular condition is present on 
admission (that is, a ``Y'' indicator is associated with the diagnosis 
on the claim), it is not a HAC, and the hospital is paid for the higher 
severity (and, therefore, the higher weighted MS-DRG). If the 
particular condition is not present on admission (that is, an ``N'' 
indicator is associated with the diagnosis on the claim) and there are 
no other complicating conditions, the DRG GROUPER assigns the claim to 
a lower severity (and, therefore, the lower weighted MS-DRG) as a 
penalty for allowing a Medicare inpatient to contract a HAC. While the 
POA reporting meets policy goals of encouraging quality care and 
generates program savings, it presents an issue for the relative 
weight-setting process. Because cases identified as HACs are likely to 
be more complex than similar cases that are not identified as HACs, the 
charges associated with HAC cases are likely to be higher as well. 
Therefore, if the higher charges of these HAC claims are grouped into 
lower severity MS-DRGs prior to the relative weight-setting process, 
the relative weights of these particular MS-DRGs would become 
artificially inflated, potentially skewing the relative weights. In 
addition, we want to protect the integrity of the budget neutrality 
process by ensuring that, in estimating payments, no increase to the 
standardized amount occurs as a result of lower overall payments in a 
previous year that stem from using weights and case-mix that are based 
on lower severity MS-DRG assignments. If this would occur, the 
anticipated cost savings from the HAC policy would be lost.
    To avoid these problems, we reset the POA indicator field to ``Y'' 
only for relative weight-setting purposes for all claims that otherwise 
have an ``N'' or a ``U'' in the POA field. This resetting ``forced'' 
the more costly HAC claims into the higher severity MS[dash]DRGs as 
appropriate, and the relative weights calculated for each MS-DRG more 
closely reflect the true costs of those cases.
    In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 
and subsequent fiscal years, we finalized a policy to treat hospitals 
that participate in the Bundled Payments for Care Improvement (BPCI) 
initiative the same as prior fiscal years for the IPPS payment modeling 
and ratesetting process without regard to hospitals' participation 
within these bundled payment models (77 FR 53341 through 53343). 
Specifically, because acute care hospitals participating in the BPCI 
initiative still receive IPPS payments under section 1886(d) of the 
Act, we include all applicable data from these subsection (d) hospitals 
in our IPPS payment modeling and ratesetting calculations as if they 
were not participating in those models under the BPCI initiative. We 
refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete 
discussion on our final policy for the treatment of hospitals 
participating in the BPCI Initiative in our ratesetting process.
    The participation of hospitals in the BPCI initiative is set to 
conclude on September 30, 2018. The participation of hospitals in the 
Bundled Payments for Care Improvement (BPCI) Advanced model is set to 
start on October 1, 2018. The BPCI Advanced model, tested under the 
authority of section 3021 of the Affordable Care Act (codified at 
section 1115A of the Act), is comprised of a single payment and risk 
track, which bundles payments for multiple services beneficiaries 
receive during a Clinical Episode. Acute care hospitals may participate 
in BPCI Advanced in one of two capacities: As a model Participant or as 
a downstream Episode Initiator. Regardless of the capacity in which 
they participate in the BPCI Advanced model, participating acute care 
hospitals will continue to receive IPPS payments under section 1886(d) 
of the Act. Acute care hospitals that are Participants also assume 
financial and quality performance accountability for Clinical Episodes 
in the form of a reconciliation payment. For additional information on 
the BPCI Advanced model, we refer readers to the BPCI Advanced webpage 
on the CMS Center for Medicare and Medicaid Innovation's website at: 
https://innovation.cms.gov/initiatives/bpci-advanced/. For FY 2019, 
consistent with how we have treated hospitals that participated in the 
BPCI Initiative, we believe it is appropriate to include all applicable 
data from the subsection (d) hospitals participating in the BPCI 
Advanced model in our IPPS payment modeling and ratesetting 
calculations because, as noted above, these hospitals are still 
receiving IPPS payments under section 1886(d) of the Act.
    The charges for each of the proposed 19 cost groups for each claim 
were standardized to remove the effects of differences in proposed area 
wage levels, IME and DSH payments, and for hospitals located in Alaska 
and Hawaii, the applicable proposed cost[dash]of[dash]living 
adjustment. Because hospital charges include charges for both operating 
and capital costs, we standardized total charges to remove the effects 
of differences in proposed geographic

[[Page 20259]]

adjustment factors, cost[dash]of[dash]living adjustments, and DSH 
payments under the capital IPPS as well. Charges were then summed by 
MS-DRG for each of the proposed 19 cost groups so that each MS-DRG had 
19 standardized charge totals. Statistical outliers were then removed. 
These charges were then adjusted to cost by applying the proposed 
national average CCRs developed from the FY 2016 cost report data.
    The 19 cost centers that we used in the proposed relative weight 
calculation are shown in the following table. The table shows the lines 
on the cost report and the corresponding revenue codes that we used to 
create the proposed 19 national cost center CCRs. If stakeholders have 
comments about the groupings in this table, we may consider those 
comments as we finalize our policy.
    We are inviting public comments on our proposals related to 
recalibration of the proposed FY 2019 relative weights and the changes 
in relative weights from FY 2018.
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3. Development of Proposed National Average CCRs
    We developed the proposed national average CCRs as follows:
    Using the FY 2016 cost report data, we removed CAHs, Indian Health 
Service hospitals, all[dash]inclusive rate hospitals, and cost reports 
that represented time periods of less than 1 year (365 days). We 
included hospitals located in Maryland because we include their charges 
in our claims database. We then created CCRs for each provider for each 
cost center (see prior table for line items used in the calculations) 
and removed any CCRs that were greater than 10 or less than 0.01. We 
normalized the departmental CCRs by dividing the CCR for each 
department by the total CCR for the hospital for the purpose of 
trimming the data. We then took the logs of the normalized cost center 
CCRs and removed any cost center CCRs where the log of the cost center 
CCR was greater or less than the mean log plus/minus 3 times the 
standard deviation for the log of that cost center CCR. Once the cost 
report data were trimmed, we calculated a Medicare[dash]specific CCR. 
The Medicare[dash]specific CCR was determined by taking the Medicare 
charges for each line item from Worksheet D-3 and deriving the 
Medicare[dash]specific costs by applying the hospital[dash]specific 
departmental CCRs to the Medicare[dash]specific charges for each line 
item from Worksheet D-3. Once each hospital's Medicare[dash]specific 
costs were established, we summed the total Medicare[dash]specific 
costs and divided by the sum of the total Medicare[dash]specific 
charges to produce national average, charge[dash]weighted CCRs.
    After we multiplied the total charges for each MS-DRG in each of 
the proposed 19 cost centers by the corresponding national average CCR, 
we summed the 19 ``costs'' across each proposed MS-DRG to produce a 
total standardized cost for the proposed MS-DRG. The average 
standardized cost for each proposed MS-DRG was then computed as the 
total standardized cost for the proposed MS-DRG divided by the 
transfer[dash]adjusted case count for the proposed MS-DRG. We 
calculated the transfer-adjusted discharges for use in the calculation 
of the Version 36 MS-DRG relative weights using the statutory expansion 
of the postacute care transfer policy to include discharges to hospice 
care by a hospice program discussed in section IV.A.2.b. of the 
preamble of this proposed rule. For the purposes of calculating the 
normalization factor, we used the transfer-adjusted discharges with the 
expanded postacute care transfer policy for Version 35 as well. (When 
we calculate the normalization factor, we calculate the transfer-
adjusted case count for the prior GROUPER version (in this case Version 
35) and multiply by the weights of that GROUPER. We then compare that 
pool to the transfer-adjusted case count using the new GROUPER 
version.) The average cost for each proposed MS-DRG was then divided by 
the national average standardized cost per case to determine the 
proposed relative weight.
    The proposed FY 2019 cost-based relative weights were then 
normalized by a proposed adjustment factor of 1.760698 so that the 
average case weight after recalibration was equal to the average case 
weight before recalibration. The proposed normalization adjustment is 
intended to ensure that recalibration by itself neither increases nor 
decreases total payments under the IPPS, as required by section 
1886(d)(4)(C)(iii) of the Act.
    The proposed 19 national average CCRs for FY 2019 are as follows:

------------------------------------------------------------------------
                             Group                                 CCR
------------------------------------------------------------------------
Routine Days...................................................    0.451
Intensive Days.................................................    0.373
Drugs..........................................................    0.196
Supplies & Equipment...........................................    0.299
Implantable Devices............................................    0.321
Therapy Services...............................................    0.312
Laboratory.....................................................    0.116
Operating Room.................................................    0.185
Cardiology.....................................................    0.107
Cardiac Catheterization........................................    0.115
Radiology......................................................    0.149
MRIs...........................................................    0.076
CT Scans.......................................................    0.037
Emergency Room.................................................    0.165
Blood and Blood Products.......................................    0.306
Other Services.................................................    0.355
Labor & Delivery...............................................    0.363
Inhalation Therapy.............................................    0.163
Anesthesia.....................................................    0.081
------------------------------------------------------------------------

    Since FY 2009, the relative weights have been based on 100 percent 
cost weights based on our MS-DRG grouping system.
    When we recalibrated the DRG weights for previous years, we set a 
threshold of 10 cases as the minimum number of cases required to 
compute a reasonable weight. We are proposing to use that same case 
threshold in recalibrating the proposed MS-DRG relative weights for FY 
2019. Using data from the FY 2017 MedPAR file, there were 7 MS-DRGs 
that contain fewer than 10 cases. For FY 2019, because we do not have 
sufficient MedPAR data to set accurate and stable cost relative weights 
for these low[dash]volume MS-DRGs, we are proposing to compute relative 
weights for the proposed low-volume MS-DRGs by adjusting their final FY 
2018 relative weights by the percentage change in the average weight of 
the cases in other MS-DRGs. The crosswalk table is shown:

------------------------------------------------------------------------
    Low-volume MS-DRG          MS-DRG title        Crosswalk to MS-DRG
------------------------------------------------------------------------
789......................  Neonates, Died or    Final FY 2018 relative
                            Transferred to       weight (adjusted by
                            Another Acute Care   percent change in
                            Facility.            average weight of the
                                                 cases in other MS-
                                                 DRGs).
790......................  Extreme Immaturity   Final FY 2018 relative
                            or Respiratory       weight (adjusted by
                            Distress Syndrome,   percent change in
                            Neonate.             average weight of the
                                                 cases in other MS-
                                                 DRGs).
791......................  Prematurity with     Final FY 2018 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
792......................  Prematurity without  Final FY 2018 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
793......................  Full-Term Neonate    Final FY 2018 relative
                            with Major           weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
794......................  Neonate with Other   Final FY 2018 relative
                            Significant          weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
795......................  Normal Newborn.....  Final FY 2018 relative
                                                 weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
------------------------------------------------------------------------


[[Page 20276]]

    We are inviting public comments on our proposals.

H. Proposed Add-On Payments for New Services and Technologies for FY 
2019

1. Background
    Sections 1886(d)(5)(K) and (L) of the Act establish a process of 
identifying and ensuring adequate payment for new medical services and 
technologies (sometimes collectively referred to in this section as 
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the 
Act specifies that a medical service or technology will be considered 
new if it meets criteria established by the Secretary after notice and 
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act 
specifies that a new medical service or technology may be considered 
for new technology add-on payment if, based on the estimated costs 
incurred with respect to discharges involving such service or 
technology, the DRG prospective payment rate otherwise applicable to 
such discharges under this subsection is inadequate. We note that, 
beginning with discharges occurring in FY 2008, CMS transitioned from 
CMS-DRGs to MS-DRGs. The regulations at 42 CFR 412.87 implement these 
provisions and specify three criteria for a new medical service or 
technology to receive the additional payment: (1) The medical service 
or technology must be new; (2) the medical service or technology must 
be costly such that the DRG rate otherwise applicable to discharges 
involving the medical service or technology is determined to be 
inadequate; and (3) the service or technology must demonstrate a 
substantial clinical improvement over existing services or 
technologies. Below we highlight some of the major statutory and 
regulatory provisions relevant to the new technology add-on payment 
criteria, as well as other information. For a complete discussion on 
the new technology add-on payment criteria, we refer readers to the FY 
2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574).
    Under the first criterion, as reflected in Sec.  412.87(b)(2), a 
specific medical service or technology will be considered ``new'' for 
purposes of new medical service or technology add-on payments until 
such time as Medicare data are available to fully reflect the cost of 
the technology in the MS-DRG weights through recalibration. We note 
that we do not consider a service or technology to be new if it is 
substantially similar to one or more existing technologies. That is, 
even if a technology receives a new FDA approval or clearance, it may 
not necessarily be considered ``new'' for purposes of new technology 
add-on payments if it is ``substantially similar'' to a technology that 
was approved or cleared by FDA and has been on the market for more than 
2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 
43813 through 43814), we established criteria for evaluating whether a 
new technology is substantially similar to an existing technology, 
specifically: (1) Whether a product uses the same or a similar 
mechanism of action to achieve a therapeutic outcome; (2) whether a 
product is assigned to the same or a different MS-DRG; and (3) whether 
the new use of the technology involves the treatment of the same or 
similar type of disease and the same or similar patient population. If 
a technology meets all three of these criteria, it would be considered 
substantially similar to an existing technology and would not be 
considered ``new'' for purposes of new technology add-on payments. For 
a detailed discussion of the criteria for substantial similarity, we 
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 
43814).
    Under the second criterion, Sec.  412.87(b)(3) further provides 
that, to be eligible for the add-on payment for new medical services or 
technologies, the MS-DRG prospective payment rate otherwise applicable 
to discharges involving the new medical service or technology must be 
assessed for adequacy. Under the cost criterion, consistent with the 
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess 
the adequacy of payment for a new technology paid under the applicable 
MS-DRG prospective payment rate, we evaluate whether the charges for 
cases involving the new technology exceed certain threshold amounts. 
Table 10 that was released with the FY 2018 IPPS/LTCH PPS final rule 
contains the final thresholds that we used to evaluate applications for 
new medical service or technology add-on payments for FY 2019. We refer 
readers to the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Tables.html to download and view 
Table 10.
    As previously stated, Table 10 that is released with each proposed 
and final rule contains the thresholds that we use to evaluate 
applications for new medical service and technology add-on payments for 
the fiscal year that follows the fiscal year that is otherwise the 
subject of the rulemaking. For example, the thresholds in Table 10 
released with the FY 2018 IPPS/LTCH PPS final rule are applicable to FY 
2019 new technology applications. Beginning with the thresholds for FY 
2020 and future years, we are proposing to provide the thresholds that 
we previously included in Table 10 as one of our data files posted via 
the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, which is 
the same URL where the impact data files associated with the rulemaking 
for the applicable fiscal year are posted. We believe that this 
proposed change in the presentation of this information, specifically 
in the data files rather than in a Table 10, will clarify for the 
public that the listed thresholds will be used for new technology add-
on payment applications for the next fiscal year (in this case, for FY 
2020) rather than for the fiscal year that is otherwise the subject of 
the rulemaking (in this case, for FY 2019), while continuing to furnish 
the same information on the new technology add[dash]on payment 
thresholds for applications for the next fiscal year as has been 
provided in previous fiscal years. Accordingly, we would no longer 
include Table 10 as one of our IPPS tables, but would instead include 
the thresholds applicable to the next fiscal year (beginning with FY 
2020) in the data files associated with the prior fiscal year (in this 
case, FY 2019).
    In the September 7, 2001 final rule that established the new 
technology add-on payment regulations (66 FR 46917), we discussed the 
issue of whether the Health Insurance Portability and Accountability 
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims 
information that providers submit with applications for new medical 
service or technology add-on payments. We refer readers to the FY 2012 
IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this 
issue.
    Under the third criterion, Sec.  412.87(b)(1) of our existing 
regulations provides that a new technology is an appropriate candidate 
for an additional payment when it represents an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries. For example, a 
new technology represents a substantial clinical improvement when it 
reduces mortality, decreases the number of hospitalizations or 
physician visits, or reduces recovery time compared to the technologies 
previously available. (We

[[Page 20277]]

refer readers to the September 7, 2001 final rule for a more detailed 
discussion of this criterion (66 FR 46902).)
    The new medical service or technology add-on payment policy under 
the IPPS provides additional payments for cases with relatively high 
costs involving eligible new medical services or technologies, while 
preserving some of the incentives inherent under an average-based 
prospective payment system. The payment mechanism is based on the cost 
to hospitals for the new medical service or technology. Under Sec.  
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec.  412.84(h)) exceed the full 
DRG payment (including payments for IME and DSH, but excluding outlier 
payments), Medicare will make an add-on payment equal to the lesser of: 
(1) 50 percent of the estimated costs of the new technology or medical 
service (if the estimated costs for the case including the new 
technology or medical service exceed Medicare's payment); or (2) 50 
percent of the difference between the full DRG payment and the 
hospital's estimated cost for the case. Unless the discharge qualifies 
for an outlier payment, the additional Medicare payment is limited to 
the full MS-DRG payment plus 50 percent of the estimated costs of the 
new technology or medical service.
    Section 503(d)(2) of Public Law 108-173 provides that there shall 
be no reduction or adjustment in aggregate payments under the IPPS due 
to add-on payments for new medical services and technologies. 
Therefore, in accordance with section 503(d)(2) of Public Law 108-173, 
add-on payments for new medical services or technologies for FY 2005 
and later years have not been subjected to budget neutrality.
    In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we 
modified our regulations at Sec.  412.87 to codify our longstanding 
practice of how CMS evaluates the eligibility criteria for new medical 
service or technology add-on payment applications. That is, we first 
determine whether a medical service or technology meets the newness 
criterion, and only if so, do we then make a determination as to 
whether the technology meets the cost threshold and represents a 
substantial clinical improvement over existing medical services or 
technologies. We amended Sec.  412.87(c) to specify that all applicants 
for new technology add-on payments must have FDA approval or clearance 
for their new medical service or technology by July 1 of the year prior 
to the beginning of the fiscal year that the application is being 
considered.
    The Council on Technology and Innovation (CTI) at CMS oversees the 
agency's cross-cutting priority on coordinating coverage, coding and 
payment processes for Medicare with respect to new technologies and 
procedures, including new drug therapies, as well as promoting the 
exchange of information on new technologies and medical services 
between CMS and other entities. The CTI, composed of senior CMS staff 
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for 
Clinical Standards and Quality (CCSQ) and the Director of the Center 
for Medicare (CM), who is also designated as the CTI's Executive 
Coordinator.
    The specific processes for coverage, coding, and payment are 
implemented by CM, CCSQ, and the local Medicare Administrative 
Contractors (MACs) (in the case of local coverage and payment 
decisions). The CTI supplements, rather than replaces, these processes 
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same 
time, the CTI also works to streamline, accelerate, and improve 
coordination of these processes to ensure that they remain up to date 
as new issues arise. To achieve its goals, the CTI works to streamline 
and create a more transparent coding and payment process, improve the 
quality of medical decisions, and speed patient access to effective new 
treatments. It is also dedicated to supporting better decisions by 
patients and doctors in using Medicare[dash]covered services through 
the promotion of better evidence development, which is critical for 
improving the quality of care for Medicare beneficiaries.
    To improve the understanding of CMS' processes for coverage, 
coding, and payment and how to access them, the CTI has developed an 
``Innovator's Guide'' to these processes. The intent is to consolidate 
this information, much of which is already available in a variety of 
CMS documents and in various places on the CMS website, in a user 
friendly format. This guide was published in 2010 and is available on 
the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.pdf.
    As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we 
invite any product developers or manufacturers of new medical services 
or technologies to contact the agency early in the process of product 
development if they have questions or concerns about the evidence that 
would be needed later in the development process for the agency's 
coverage decisions for Medicare.
    The CTI aims to provide useful information on its activities and 
initiatives to stakeholders, including Medicare beneficiaries, 
advocates, medical product manufacturers, providers, and health policy 
experts. Stakeholders with further questions about Medicare's coverage, 
coding, and payment processes, or who want further guidance about how 
they can navigate these processes, can contact the CTI at 
[email protected].
    We note that applicants for add-on payments for new medical 
services or technologies for FY 2020 must submit a formal request, 
including a full description of the clinical applications of the 
medical service or technology and the results of any clinical 
evaluations demonstrating that the new medical service or technology 
represents a substantial clinical improvement, along with a significant 
sample of data to demonstrate that the medical service or technology 
meets the high-cost threshold. Complete application information, along 
with final deadlines for submitting a full application, will be posted 
as it becomes available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical 
services or technologies under review before the publication of the 
proposed rule for FY 2020, the CMS website also will post the tracking 
forms completed by each applicant. We note that the burden associated 
with this information collection requirement is the time and effort 
required to collect and submit the data in the formal request for add-
on payments for new medical services and technologies to CMS. The 
aforementioned burden is subject to the PRA; it is currently approved 
under OMB control number 0938-1347, which expires on December 31, 2020.
2. Public Input Before Publication of a Notice of Proposed Rulemaking 
on Add-On Payments
    Section 1886(d)(5)(K)(viii) of the Act, as amended by section 
503(b)(2) of Public Law 108-173, provides for a mechanism for public 
input before publication of a notice of proposed rulemaking regarding 
whether a medical service or technology represents a substantial 
clinical improvement or advancement. The process for evaluating new 
medical service and technology applications requires the Secretary to--

[[Page 20278]]

     Provide, before publication of a proposed rule, for public 
input regarding whether a new service or technology represents an 
advance in medical technology that substantially improves the diagnosis 
or treatment of Medicare beneficiaries;
     Make public and periodically update a list of the services 
and technologies for which applications for add-on payments are 
pending;
     Accept comments, recommendations, and data from the public 
regarding whether a service or technology represents a substantial 
clinical improvement; and
     Provide, before publication of a proposed rule, for a 
meeting at which organizations representing hospitals, physicians, 
manufacturers, and any other interested party may present comments, 
recommendations, and data regarding whether a new medical service or 
technology represents a substantial clinical improvement to the 
clinical staff of CMS.
    In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2019 prior 
to publication of this FY 2019 IPPS/LTCH PPS proposed rule, we 
published a notice in the Federal Register on December 4, 2017 (82 FR 
57275), and held a town hall meeting at the CMS Headquarters Office in 
Baltimore, MD, on February 13, 2018. In the announcement notice for the 
meeting, we stated that the opinions and presentations provided during 
the meeting would assist us in our evaluations of applications by 
allowing public discussion of the substantial clinical improvement 
criterion for each of the FY 2019 new medical service and technology 
add[dash]on payment applications before the publication of this FY 2019 
IPPS/LTCH PPS proposed rule.
    Approximately 150 individuals registered to attend the town hall 
meeting in person, while additional individuals listened over an open 
telephone line. We also live[dash]streamed the town hall meeting and 
posted the town hall on the CMS YouTube web page at: https://www.youtube.com/watch?v=9niqfxXe4oA&t=217s. We considered each 
applicant's presentation made at the town hall meeting, as well as 
written comments submitted on the applications that were received by 
the due date of February 23, 2018, in our evaluation of the new 
technology add[dash]on payment applications for FY 2019 in this FY 2019 
IPPS/LTCH PPS proposed rule.
    In response to the published notice and the February 13, 2018 New 
Technology Town Hall meeting, we received written comments regarding 
the applications for FY 2019 new technology add[dash]on payments. We 
note that we do not summarize comments that are unrelated to the 
``substantial clinical improvement'' criterion. As explained earlier 
and in the Federal Register notice announcing the New Technology Town 
Hall meeting (82 FR 57275 through 57277), the purpose of the meeting 
was specifically to discuss the substantial clinical improvement 
criterion in regard to pending new technology add-on payment 
applications for FY 2019. Therefore, we are not summarizing those 
written comments in this proposed rule. In section II.H.5. of the 
preamble of this proposed rule, we are summarizing comments regarding 
individual applications, or, if applicable, indicating that there were 
no comments received in response to the New Technology Town Hall 
meeting notice, at the end of each discussion of the individual 
applications.
    Comment: One commenter recommended that the specific criteria that 
CMS uses in making substantial clinical improvement determinations be 
codified in the regulations to more explicitly clarify that the new 
medical service or technology will meet the substantial clinical 
improvement criterion if it: (a) Results in a reduction of the length 
of a hospital stay; (b) improves patient quality of life; (c) creates 
long-term clinical efficiencies in treatment; (d) addresses patient-
centered objectives as defined by the Secretary; or (e) meets such 
other criteria as the Secretary may specify. The commenter stated that 
criteria similar to these were defined in the September 2001 New 
Technology Final Rule (66 FR 46913 through 46914). The commenter also 
recommended that final decisions on new technology add-on payment 
applications should explicitly discuss how a technology or treatment 
meets or fails to meet these specific criteria.
    Response: We appreciate the commenter's recommendation. However, in 
the September 2001 New Technology Final Rule (66 FR 46913 through 
46914), we explained how we evaluate if a new medical service or 
technology would meet the substantial clinical improvement criterion. 
Specifically, we stated that we evaluate a request for new technology 
payments against the following criteria to determine if the new medical 
service or technology would represent a substantial clinical 
improvement over existing technologies:
     The device offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatments.
     The device offers the ability to diagnose a medical 
condition in a patient population where that medical condition is 
currently undetectable or offers the ability to diagnose a medical 
condition earlier in a patient population than allowed by currently 
available methods. There must also be evidence that use of the device 
to make a diagnosis affects the management of the patient.
     Use of the device significantly improves clinical outcomes 
for a patient population as compared to currently available treatments.
    We typically require the applicant to submit evidence that the 
technology meets one or more of these standards. Regarding whether the 
use of the device significantly improves clinical outcomes for a 
patient population as compared to currently available treatments, we 
provided examples of improved clinical outcomes.
    In response to the commenter's recommendation that final decisions 
on new technology add-on applications explicitly discuss how a 
technology or treatment meets or fails to meet these specific 
standards, we believe that we provide this explanation when approving 
or denying an application for new technology add-on payments in the 
final rule.
    Comment: One commenter stated that the United States Food and Drug 
Administration Modernization Act (FDAMA) of 1997 established a category 
of medical devices and diagnostics that are eligible for priority FDA 
review. The commenter explained that, to qualify, products must be 
designated by the FDA as offering the potential for significant 
improvements in the diagnosis or treatment of the most serious 
illnesses, including those that are life-threatening or irreversibly 
debilitating. The commenter indicated that the processes by which 
products meeting the statutory standard for priority treatment are 
considered by the FDA are spelled out in greater detail in FDA's 
Expedited Access Program (EAP), and in the 21st Century Cures Act. The 
commenter believed that the criteria for priority FDA review are very 
similar to the substantial clinical improvement criteria and, 
therefore, devices used in the inpatient setting determined to be 
eligible for expedited review and approved by the FDA should 
automatically be considered as meeting the substantial clinical 
improvement criterion, without further consideration by CMS.

[[Page 20279]]

    Another commenter stated that CMS historically has noted that a new 
technology is an appropriate candidate for an additional payment ``when 
it represents an advance that substantially improves, relative to 
technologies previously available, the diagnosis or treatment of 
Medicare beneficiaries.'' The commenter believed that this standard was 
created for medical devices because they dominated new technology of 
the time. The commenter recommended that this standard not be applied 
to regenerative medicine therapies because it believed these criteria 
are likely outside Congressional intent and inconsistent with some of 
the congressionally[dash]created FDA approval rules related to 
expedited approval programs. The commenter explained that the FDA 
defines congressionally-created ``breakthrough therapy'' and designates 
a therapy as such if it ``may demonstrate substantial improvement over 
existing therapies.'' In addition, the commenter stated that the 
Regenerative Medicine Advanced Therapy (RMAT) designation is granted to 
products that are intended to treat, modify, reverse, or cure a serious 
or life-threatening disease or condition, and if clinical evidence 
shows that it has the potential to meet an unmet medical need.
    Response: The FDA provides a number of different types of approvals 
and designations for devices, drugs, and other medical products. As 
required by section 1886(d)(5)(K)(viii) of the Act, CMS provides a 
mechanism for public input, before the publication of the proposed 
rule, regarding whether a new service or technology represents an 
advance in medical technology that substantially improves the diagnosis 
or treatment of individuals entitled to benefits under Medicare Part A. 
We believe that the criteria explained in the September 2001 New 
Technology Final Rule (66 FR 46914) are consistent with the statutory 
requirements for evaluating new medical services and technologies and 
continue to be relevant to determining whether a new medical service or 
technology represents a substantial clinical improvement over existing 
technologies. If the technology has a status designated by the FDA that 
is similar to the standards and conditions required to demonstrate 
substantial clinical improvement under the new technology add-on 
payment criterion, or is designated as a breakthrough therapy, the 
technology should be able to demonstrate with evidence that it meets 
the new technology add-on payment substantial clinical improvement 
criterion. Finally, we do take FDA approvals into consideration in our 
evaluation and determination of approvals and denials of new technology 
add-on payment applications.
    Comment: One commenter stated that, for technologies without a 
special FDA designation, the substantial clinical improvement standard 
is an inappropriate clinical standard for the family of regenerative 
therapies because it creates a threshold that is too high and 
unrealistic to meet. The commenter believed that requiring a vague 
standard such as ``substantial clinical improvement'' ignores that 
innovation is achieved incrementally. The commenter asserted that by 
only approving new technologies that can achieve this standard for new 
technology add-on payments, CMS' policy is at cross-purposes with 
promoting innovation because many worthy technologies will not be 
approved by CMS, which denies the general population the opportunity of 
having the chance to learn and otherwise benefit from those 
technologies.
    The commenter also stated that CMS has questioned how substantial 
clinical improvement can be measured and achieved via small clinical 
trials with FDA approval. The commenter stated that it is concerned 
that this view sets a dangerous precedent by significantly undervaluing 
new transformative therapies. The commenter added that the FDA often 
only requires single-arm trials with small numbers of patients for 
these products because it is often not feasible for product developers 
to provide data on a large number of patients, especially those working 
in rare diseases as many regenerative and advanced therapeutic 
developers are. The commenter stated that, given the transformative 
nature of the products, this should not be a reason for CMS to deny a 
new medical service or technology add-on payment.
    Response: We believe that the September 2001 New Technology Final 
Rule (66 FR 46914) clearly defines the criteria that CMS uses to 
evaluate and determine if a new medical service or technology 
represents a substantial clinical improvement. In addition, we accept 
different types of data (for example, peer-reviewed articles, study 
results, or letters from major associations, among others) that 
demonstrate and support the substantial clinical improvement associated 
with the new medical service or technology's use. In addition to 
clinical data, we will consider any evidence that would support the 
conclusion of a substantial clinical improvement associated with a new 
medical service or technology. Therefore, we believe that we consider 
an appropriate range of evidence.
    Comment: One commenter stated that CMS should consider FDA approval 
and the associated evidence base leading to such an approval as a 
standard for meeting the substantial clinical improvement criterion. 
The commenter believed that additional factors such as improvements in 
patient quality of life, creation of long-term clinical efficiencies in 
care, reductions in the use of other healthcare services, or other such 
criteria should be incorporated into the CMS determination process for 
whether a new medical service or technology demonstrates or represents 
a substantial clinical improvement over existing technologies. The 
commenter believed that, by including these additional factors, CMS 
would align payment rates such that patients would have access to the 
highest standard of treatment for all transformative therapies 
representing a substantial clinical improvement for the patient 
populations they serve, and it would be recognized as such by the 
receipt of new technology add-on payments.
    Response: As stated earlier, one of the standards we use to 
determine whether a new medical service or technology represents a 
substantial clinical improvement over existing technologies is to 
evaluate whether the use of the device, drug, service, or technology 
significantly improves clinical outcomes for a patient population as 
compared to currently available treatments, and we provided examples of 
improved clinical outcomes in the September 2001 New Technology Final 
Rule (66 FR 46913 through 46914).
    Comment: One commenter encouraged CMS to ensure appropriate 
implementation of the substantial clinical improvement criterion under 
the applicable Medicare statutory provisions and regulations, as 
applied to radio pharma ceuticals and other nuclear medicine 
technologies that can lead to significant benefits and advances in the 
diagnosis and treatment of many diseases. The commenter recommended 
that CMS apply an appropriately flexible standard for purposes of 
assessing whether a technology represents a substantial clinical 
improvement over other existing, available therapies. The commenter 
asserted that a flexible standard for this purpose must include new 
products and new formulations of products that increase the safety or 
efficacy, or both, relative to current treatments. The commenter 
believed that failing to recognize a technology that enhances the 
safety and/or efficacy of existing options as both ``new'' and a

[[Page 20280]]

``substantial clinical improvement'' over existing options would be a 
disservice to Medicare beneficiaries and to the mission of the Medicare 
program.
    The commenter encouraged CMS to give consideration to the 
importance of technologies that make radiotherapies safer, as well as 
those that lead to increased efficacy. The commenter explained that 
minimizing a patient's exposure to radiation, while also maximizing the 
effectiveness of the radiotherapy dose results in highly significant 
clinical improvements for patients, including in specific areas that 
CMS has expressly identified as relevant to the substantial clinical 
improvement criterion.
    Response: As stated earlier, we believe that the criteria explained 
in the September 2001 New Technology Final Rule (66 FR 46914) are 
consistent with the statutory requirements for evaluating new medical 
services and technologies and continue to be relevant to determining 
whether a new medical service or technology represents a substantial 
clinical improvement over existing technologies.
    We believe that it is important to maintain an open dialogue 
regarding the IPPS new technology add-on payment process, and we 
appreciate all of the commenters' input and recommendations.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and 
Technologies
    As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the 
ICD-10-PCS includes a new section containing the new Section ``X'' 
codes, which began being used with discharges occurring on or after 
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section 
``X'' codes will be handled in the same manner as the decisions for all 
of the other ICD-10-PCS code changes. That is, proposals to create, 
delete, or revise Section ``X'' codes under the ICD-10-PCS structure 
will be referred to the ICD-10 Coordination and Maintenance Committee. 
In addition, several of the new medical services and technologies that 
have been, or may be, approved for new technology add-on payments may 
now, and in the future, be assigned a Section ``X'' code within the 
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes. 
We encourage providers to view the material provided on ICD-10-PCS 
Section ``X'' codes.
4. Proposed FY 2019 Status of Technologies Approved for FY 2018 Add-On 
Payments
a. Defitelio[reg] (Defibrotide)
    Jazz Pharmaceuticals submitted an application for new technology 
add-on payments for FY 2017 for defibrotide (Defitelio[reg]), a 
treatment for patients diagnosed with hepatic veno-occlusive disease 
(VOD) with evidence of multiorgan dysfunction. VOD, also known as 
sinusoidal obstruction syndrome (SOS), is a potentially life-
threatening complication of hematopoietic stem cell transplantation 
(HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of 
VOD range in severity from what has been classically defined as a 
disease limited to the liver (mild) and reversible, to a severe 
syndrome associated with multi-organ dysfunction or failure and death. 
Patients treated with HSCT who develop VOD with multi-organ failure 
face an immediate risk of death, with a mortality rate of more than 80 
percent when only supportive care is used. The applicant asserted that 
Defitelio[reg] improves the survival rate of patients diagnosed with 
VOD with multi-organ failure by 23 percent.
    Defitelio[reg] received Orphan Drug Designation for the treatment 
of VOD in 2003 and for the prevention of VOD in 2007. It has been 
available to patients as an investigational drug through an expanded 
access program since 2006. The applicant's New Drug Application (NDA) 
for Defitelio[reg] received FDA approval on March 30, 2016. The 
applicant confirmed that Defitelio[reg] was not available on the U.S. 
market as of the FDA NDA approval date of March 30, 2016. According to 
the applicant, commercial packaging could not be completed until the 
label for Defitelio[reg] was finalized with FDA approval, and that 
commercial shipments of Defitelio[reg] to hospitals and treatment 
centers began on April 4, 2016. Therefore, we agreed that, based on 
this information, the newness period for Defitelio[reg] begins on April 
4, 2016, the date of its first commercial availability.
    The applicant received approval to use unique ICD-10-PCS procedure 
codes to describe the use of Defitelio[reg], with an effective date of 
October 1, 2016. The approved ICD-10PCS procedure codes are: XW03392 
(Introduction of defibrotide sodium anticoagulant into peripheral vein, 
percutaneous approach); and XW04392 (Introduction of defibrotide sodium 
anticoagulant into central vein, percutaneous approach).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
Defitelio[reg] and consideration of the public comments we received in 
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved 
Defitelio[reg] for new technology add-on payments for FY 2017 (81 FR 
56906). With the new technology add-on payment application, the 
applicant estimated that the average Medicare beneficiary would require 
a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The 
recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion 
every 6 hours. Dosing should be based on a patient's baseline body 
weight, which is assumed to be 70 kg for an average adult patient. All 
vials contain 200 mg at a cost of $825 per vial. Therefore, we 
determined that cases involving the use of the Defitelio[reg] 
technology would incur an average cost per case of $151,800 (70 kg 
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial = 
184 vials per patient x $825 per vial = $151,800). Under Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment amount for a case involving the 
use of Defitelio[reg] is $75,900.
    Our policy is that a medical service or technology may continue to 
be considered ``new'' for purposes of new technology add-on payments 
within 2 or 3 years after the point at which data begin to become 
available reflecting the inpatient hospital code assigned to the new 
service or technology. Our practice has been to begin and end new 
technology add-on payments on the basis of a fiscal year, and we have 
generally followed a guideline that uses a 6-month window before and 
after the start of the fiscal year to determine whether to extend the 
new technology add-on payment for an additional fiscal year. In 
general, we extend new technology add-on payments for an additional 
year only if the 3-year anniversary date of the product's entry onto 
the U.S. market occurs in the latter half of the fiscal year (70 FR 
47362).
    With regard to the newness criterion for Defitelio[reg], we 
considered the beginning of the newness period to commence on the first 
day Defitelio[reg] was commercially available (April 4, 2016). Because 
the 3-year anniversary date of the entry of the Defitelio[reg] onto the 
U.S. market (April 4, 2019) will occur in the latter half of FY 2019, 
we are proposing to continue new technology add-on payments for this 
technology for FY 2019. We are

[[Page 20281]]

proposing that the maximum payment for a case involving Defitelio[reg] 
would remain at $75,900 for FY 2019. We are inviting public comments on 
our proposal to continue new technology add-on payments for 
Defitelio[reg] for FY 2019.
b. EDWARDS INTUITY EliteTM Valve System (INTUITY) and 
LivaNova Perceval Valve (Perceval)
    Two manufacturers, Edwards Lifesciences and LivaNova, submitted 
applications for new technology add-on payments for FY 2018 for the 
INTUITY EliteTM Valve System (INTUITY) and the Perceval 
Valve (Perceval), respectively. Both of these technologies are 
prosthetic aortic valves inserted using surgical aortic valve 
replacement (AVR). Aortic valvular disease is relatively common, 
primarily manifested by aortic stenosis. Most aortic stenosis is due to 
calcification of the valve, either on a normal tri-leaflet valve or on 
a congenitally bicuspid valve. The resistance to outflow of blood is 
progressive over time, and as the size of the aortic orifice narrows, 
the heart must generate increasingly elevated pressures to maintain 
blood flow. Symptoms such as angina, heart failure, and syncope 
eventually develop, and portend a very serious prognosis. There is no 
effective medical therapy for aortic stenosis, so the diseased valve 
must be replaced or, less commonly, repaired.
    According to both applicants, the INTUITY valve and the Perceval 
valve are the first sutureless, rapid deployment aortic valves that can 
be used for the treatment of patients who are candidates for surgical 
AVR. Because potential cases representing patients who are eligible for 
treatment using the INTUITY and the Perceval aortic valve devices would 
group to the same MS-DRGs, and we believe that these devices are 
intended to treat the same or similar disease in the same or similar 
patient population, and are purposed to achieve the same therapeutic 
outcome using the same or similar mechanism of action, we determined 
these two devices are substantially similar to each other and that it 
was appropriate to evaluate both technologies as one application for 
new technology add-on payments under the IPPS.
    With respect to the newness criterion, the INTUITY valve received 
FDA approval on August 12, 2016, and was commercially available on the 
U.S. market on August 19, 2016. The Perceval valve received FDA 
approval on January 8, 2016, and was commercially available on the U.S. 
market on February 29, 2016. In accordance with our policy, we stated 
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38120) that we believe 
it is appropriate to use the earliest market availability date 
submitted as the beginning of the newness period. Accordingly, for both 
devices, we stated that the beginning of the newness period is February 
29, 2016, when the Perceval valve became commercially available. The 
ICD-10-PCS code approved to identify procedures involving the use of 
both devices when surgically implanted is ICD-10-PCS code X2RF032 
(Replacement of aortic valve using zooplastic tissue, rapid deployment 
technique, open approach, new technology group 2).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the INTUITY 
and Perceval valves and consideration of the public comments we 
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved the INTUITY and Perceval valves for new technology add-on 
payments for FY 2018 (82 FR 38125). We stated that we believed that the 
use of a weighted-average of the cost of the standard valves based on 
the projected number of cases involving each technology to determine 
the maximum new technology add-on payment was most appropriate. To 
compute the weighted-cost average, we summed the total number of 
projected cases for each of the applicants, which equaled 2,429 cases 
(1,750 plus 679). We then divided the number of projected cases for 
each of the applicants by the total number of cases, which resulted in 
the following case-weighted percentages: 72 percent for the INTUITY and 
28 percent for the Perceval valve. We then multiplied the cost per case 
for the manufacturer specific valve by the case-weighted percentage 
(0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70 
for the Perceval valve). This resulted in a case-weighted average cost 
of $12,220.46 for the valves. Under Sec.  412.88(a)(2), we limit new 
technology add-on payments to the lesser of 50 percent of the average 
cost of the device or 50 percent of the costs in excess of the MS-DRG 
payment for the case. As a result, the maximum new technology add-on 
payment for a case involving the INTUITY or Perceval valves is 
$6,110.23 for FY 2018.
    With regard to the newness criterion for the INTUITY and Perceval 
valves, we considered the newness period for the INTUITY and Perceval 
valves to begin February 29, 2016. As discussed previously in this 
section, in general, we extend new technology add-on payments for an 
additional year only if the 3-year anniversary date of the product's 
entry onto the U.S. market occurs in the latter half of the upcoming 
fiscal year. Because the 3-year anniversary date of the entry of the 
technology onto the U.S. market (February 29, 2019) will occur in the 
first half of FY 2019, we are proposing to discontinue new technology 
add-on payments for the INTUITY and Perceval valves for FY 2019. We are 
inviting public comments on our proposal to discontinue new technology 
add-on payments for the INTUITY and Perceval valves.
c. GORE[reg] EXCLUDER[reg] Iliac Branch Endoprosthesis (Gore IBE 
Device)
    W. L. Gore and Associates, Inc. submitted an application for new 
technology add-on payments for the GORE[reg] EXCLUDER[reg] Iliac Branch 
Endoprosthesis (GORE IBE device) for FY 2017. The device consists of 
two components: The Iliac Branch Component (IBC) and the Internal Iliac 
Component (IIC). The applicant indicated that each endoprosthesis is 
pre-mounted on a customized delivery and deployment system allowing for 
controlled endovascular delivery via bilateral femoral access. 
According to the applicant, the device is designed to be used in 
conjunction with the GORE[reg] EXCLUDER[reg] AAA Endoprosthesis for the 
treatment of patients requiring repair of common iliac or aortoiliac 
aneurysms. When deployed, the GORE IBE device excludes the common iliac 
aneurysm from systemic blood flow, while preserving blood flow in the 
external and internal iliac arteries.
    With regard to the newness criterion, the applicant received pre-
market FDA approval of the GORE IBE device on February 29, 2016. The 
following procedure codes describe the use of this technology: 04VC0EZ 
(Restriction of right common iliac artery with branched or fenestrated 
intraluminal device, one or two arteries, open approach); 04VC3EZ 
(Restriction of right common iliac artery with branched or fenestrated 
intraluminal device, one or two arteries, percutaneous approach); 
04VC4EZ (Restriction of right common iliac artery with branched or 
fenestrated intraluminal device, one or two arteries, percutaneous 
approach); 04VD0EZ (Restriction of left common iliac artery with 
branched or fenestrated intraluminal device, one or two arteries, open 
approach); 04VD3EZ (Restriction of left common iliac artery with 
branched or fenestrated intraluminal device, one or two arteries, 
percutaneous approach); 04VD4EZ (Restriction of left common iliac 
artery with branched or fenestrated

[[Page 20282]]

intraluminal device, one or two arteries, percutaneous endoscopic 
approach).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the GORE 
IBE device and consideration of the public comments we received in 
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved the 
GORE IBE device for new technology add-on payments for FY 2017 (81 FR 
56909). With the new technology add-on payment application, the 
applicant indicated that the total operating cost of the GORE IBE 
device is $10,500. Under Sec.  412.88(a)(2), we limit new technology 
add-on payments to the lesser of 50 percent of the average cost of the 
device or 50 percent of the costs in excess of the MS-DRG payment for 
the case. As a result, the maximum new technology add-on payment for a 
case involving the GORE IBE device is $5,250.
    With regard to the newness criterion for the GORE IBE device, we 
considered the beginning of the newness period to commence when the 
GORE IBE device received FDA approval on February 29, 2016. As 
discussed previously in this section, in general, we extend new 
technology add-on payments for an additional year only if the 3-year 
anniversary date of the product's entry onto the U.S. market occurs in 
the latter half of the upcoming fiscal year. Because the 3-year 
anniversary date of the entry of the GORE IBE device onto the U.S. 
market (February 28, 2019) will occur in the first half of FY 2019, we 
are proposing to discontinue new technology add-on payments for this 
technology for FY 2019. We are inviting public comments on our proposal 
to discontinue new technology add-on payments for the GORE IBE device.
d. Idarucizumab
    Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application 
for new technology add-on payments for FY 2017 for Idarucizumab, a 
product developed as an antidote to reverse the effects of PRADAXAR 
(Dabigatran), which is also manufactured by Boehringer Ingelheim 
Pharmaceuticals, Inc.
    Dabigatran is an oral direct thrombin inhibitor currently 
indicated: (1) To reduce the risk of stroke and systemic embolism in 
patients who have been diagnosed with nonvalvular atrial fibrillation 
(NVAF); (2) for the treatment of deep venous thrombosis (DVT) and 
pulmonary embolism (PE) in patients who have been administered a 
parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of 
recurrence of DVT and PE in patients who have been previously treated; 
and (4) for the prophylaxis of DVT and PE in patients who have 
undergone hip replacement surgery. Currently, unlike the anticoagulant 
Warfarin, there is no specific way to reverse the anticoagulant effect 
of Dabigatran in the event of a major bleeding episode. Idarucizumab is 
a humanized fragment antigen binding (Fab) molecule, which specifically 
binds to Dabigatran to deactivate the anticoagulant effect, thereby 
allowing thrombin to act in blood clot formation. The applicant stated 
that Idarucizumab represents a new pharmacologic approach to 
neutralizing the specific anticoagulant effect of Dabigatran in 
emergency situations.
    Idarucizumab was approved by the FDA on October 16, 2015. 
Idarucizumab is indicated for the use in the treatment of patients who 
have been administered Pradaxa when reversal of the anticoagulant 
effects of dabigatran is needed for emergency surgery or urgent medical 
procedures or in life-threatening or uncontrolled bleeding.
    The applicant was granted approval to use unique ICD-10-PCS 
procedure codes that became effective October 1, 2016, to describe the 
use of this technology. The approved ICD-10-PCS procedure codes are: 
XW03331 (Introduction of Idarucizumab, Dabigatran reversal agent into 
peripheral vein, percutaneous approach, new technology group 1); and 
XW04331 (Introduction of Idarucizumab, Dabigatran reversal agent into 
central vein, percutaneous approach, new technology group 1).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
Idarucizumab and consideration of the public comments we received in 
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved 
Idarucizumab for new technology add-on payments for FY 2017 (81 FR 
56897). With the new technology add-on payment application, the 
applicant indicated that the total operating cost of Idarucizumab is 
$3,500. Under Sec.  412.88(a)(2), we limit new technology add-on 
payments to the lesser of 50 percent of the average cost of the 
technology or 50 percent of the costs in excess of the MS-DRG payment 
for the case. As a result, the maximum new technology add-on payment 
for a case involving Idarucizumab is $1,750.
    With regard to the newness criterion for Idarucizumab, we 
considered the beginning of the newness period to commence when 
Idarucizumab was approved by the FDA on October 16, 2015. As discussed 
previously in this section, in general, we extend new technology add-on 
payments for an additional year only if the 3-year anniversary date of 
the product's entry onto the U.S. market occurs in the latter half of 
the upcoming fiscal year. Because the 3-year anniversary date of the 
entry of Idarucizumab onto the U.S. market will occur in the first half 
of FY 2019 (October 15, 2018), we are proposing to discontinue new 
technology add-on payments for this technology for FY 2019. We are 
inviting public comments on our proposal to discontinue new technology 
add-on payments for Idarucizumab.
e. Ustekinumab (Stelara[reg])
    Janssen Biotech submitted an application for new technology add-on 
payments for the Stelara[reg] induction therapy for FY 2018. 
Stelara[reg] received FDA approval as an intravenous (IV) infusion 
treatment of Crohn's disease (CD) on September 23, 2016, which added a 
new indication for the use of Stelara[reg] and route of administration 
for this monoclonal antibody. IV infusion of Stelara[reg] is indicated 
for the treatment of adult patients (18 years and older) diagnosed with 
moderately to severely active CD who have: (1) Failed or were 
intolerant to treatment using immunomodulators or corticosteroids, but 
never failed a tumor necrosis factor (TNF) blocker; or (2) failed or 
were intolerant to treatment using one or more TNF blockers. 
Stelara[reg] for IV infusion has only one purpose, induction therapy. 
Stelara[reg] must be administered intravenously by a health care 
professional in either an inpatient hospital setting or an outpatient 
hospital setting.
    Stelara[reg] for IV infusion is packaged in single 130 mg vials. 
Induction therapy consists of a single IV infusion dose using the 
following weight-based dosing regimen: Patients weighing less than 
(<)55 kg are administered 260 mg of Stelara[reg] (2 vials); patients 
weighing more than (>)55 kg, but less than (<)85 kg are administered 
390 mg of Stelara[reg] (3 vials); and patients weighing more than (>)85 
kg are administered 520 mg of Stelara[reg] (4 vials). An average dose 
of Stelara[reg] administered through IV infusion is 390 mg (3 vials). 
Maintenance doses of Stelara[reg] are administered at 90 mg, 
subcutaneously, at 8-week intervals and may occur in the outpatient 
hospital setting.
    CD is an inflammatory bowel disease of unknown etiology, 
characterized by transmural inflammation of the gastrointestinal (GI) 
tract. Symptoms of CD may include fatigue, prolonged diarrhea with or 
without bleeding, abdominal pain, weight loss and fever. CD can affect 
any part of the GI tract

[[Page 20283]]

including the mouth, esophagus, stomach, small intestine, and large 
intestine. Conventional pharmacologic treatments of CD include 
antibiotics, mesalamines, corticosteroids, immunomodulators, tumor 
necrosis alpha (TNF[alpha]) inhibitors, and anti-integrin agents. 
Surgery may be necessary for some patients diagnosed with CD in which 
conventional therapies have failed.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
Stelara[reg] and consideration of the public comments we received in 
response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved 
Stelara[reg] for new technology add-on payments for FY 2018 (82 FR 
38129). Cases involving Stelara[reg] that are eligible for new 
technology add-on payments are identified by ICD-10-PCS procedure code 
XW033F3 (Introduction of other New Technology therapeutic substance 
into peripheral vein, percutaneous approach, new technology group 3). 
With the new technology add-on payment application, the applicant 
estimated that the average Medicare beneficiary would require a dosage 
of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial 
(for a total of $4,800). Under Sec.  412.88(a)(2), we limit new 
technology add-on payments to the lesser of 50 percent of the average 
cost of the technology or 50 percent of the costs in excess of the MS-
DRG payment for the case. As a result, the maximum new technology add-
on payment amount for a case involving the use of Stelara[reg] is 
$2,400.
    With regard to the newness criterion for Stelara[reg], we 
considered the beginning of the newness period to commence when 
Stelara[reg] received FDA approval as an IV infusion treatment of 
Crohn's disease (CD) on September 23, 2016. Because the 3-year 
anniversary date of the entry of Stelara[reg] onto the U.S. market 
(September 23, 2019) will occur after FY 2019, we are proposing to 
continue new technology add-on payments for this technology for FY 
2019. We are proposing that the maximum payment for a case involving 
Stelara[reg] would remain at $2,400 for FY 2019. We are inviting public 
comments on our proposal to continue new technology add-on payments for 
Stelara[reg] for FY 2019.
f. Vistogard\TM\ (Uridine Triacetate)
    BTG International Inc. submitted an application for new technology 
add-on payments for the VistogardTM for FY 2017. 
VistogardTM was developed as an emergency treatment for 
Fluorouracil toxicity.
    Chemotherapeutic agent 5-fluorouracil (5-FU) is used to treat 
specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and 
ribonucleic acid (RNA) in the body, as uracil is a naturally occurring 
building block for genetic material. Fluorouracil is a fluorinated 
pyrimidine. As a chemotherapy agent, Fluorouracil is absorbed by cells 
and causes the cell to metabolize into byproducts that are toxic and 
used to destroy cancerous cells. According to the applicant, the 
byproducts fluorodoxyuridine monophosphate (F-dUMP) and floxuridine 
triphosphate (FUTP) are believed to do the following: (1) Reduce DNA 
synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA 
synthesis. Fluorouracil is used to treat a variety of solid tumors such 
as colorectal, head and neck, breast, and ovarian cancer. With 
different tumor treatments, different dosages, and different dosing 
schedules, there is a risk for toxicity in these patients. Patients may 
suffer from fluorouracil toxicity/death if 5-FU is delivered in slight 
excess or at faster infusion rates than prescribed. The cause of 
overdose can happen for a variety of reasons including: Pump 
malfunction, incorrect pump programming or miscalculated doses, and 
accidental or intentional ingestion.
    VistogardTM is an antidote to Fluorouracil toxicity and 
is a prodrug of uridine. Once the drug is metabolized into uridine, it 
competes with the toxic byproduct FUTP in binding to RNA, thereby 
reducing the impact FUTP has on cell death.
    With regard to the newness criterion, VistogardTM 
received FDA approval on December 11, 2015. However, as discussed in 
the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), due to the delay in 
VistogardTM's commercial availability, we considered the 
newness period to begin March 2, 2016, instead of December 11, 2015. 
The applicant noted that the VistogardTM is the first 
FDA[dash]approved antidote used to reverse fluorouracil toxicity. The 
applicant submitted a request for a unique ICD-10-PCS procedure code 
and was granted approval for the following procedure code: XW0DX82 
(Introduction of Uridine Triacetate into Mouth and Pharynx, External 
Approach, new technology group 2). The new code became effective on 
October 1, 2016.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
VistogardTM and consideration of the public comments we 
received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we 
approved VistogardTM for new technology add-on payments for 
FY 2017 (81 FR 56912). With the new technology add-on payment 
application, the applicant stated that the total operating cost of 
VistogardTM is $75,000. Under Sec.  412.88(a)(2), we limit 
new technology add-on payments to the lesser of 50 percent of the 
average cost of the technology or 50 percent of the costs in excess of 
the MS-DRG payment for the case. As a result, the maximum new 
technology add-on payment for a case involving VistogardTM 
is $37,500.
    With regard to the newness criterion for the 
VistogardTM, we considered the beginning of the newness 
period to commence upon the entry of VistogardTM onto the 
U.S. market on March 2, 2016. As discussed previously in this section, 
in general, we extend new technology add-on payments for an additional 
year only if the 3-year anniversary date of the product's entry onto 
the U.S. market occurs in the latter half of the upcoming fiscal year. 
Because the 3-year anniversary date of the entry of the 
VistogardTM onto the U.S. market (March 2, 2019) will occur 
in the first half of FY 2019, we are proposing to discontinue new 
technology add-on payments for this technology for FY 2019. We are 
inviting public comments on our proposal to discontinue new technology 
add-on payments for the VistogardTM.
g. Bezlotoxumab (ZINPLAVA\TM\)
    Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVATM for FY 2018. 
ZINPLAVATM is indicated to reduce recurrence of Clostridium 
difficile infection (CDI) in adult patients who are receiving 
antibacterial drug treatment for a diagnosis of CDI who are at high 
risk for CDI recurrence. ZINPLAVATM is not indicated for the 
treatment of the presenting episode of CDI and is not an antibacterial 
drug.
    Clostridium difficile (C-diff) is a disease-causing anaerobic, 
spore forming bacteria that can affect the gastrointestinal (GI) tract. 
Some people carry the C-diff bacterium in their intestines, but never 
develop symptoms of an infection. The difference between asymptomatic 
colonization and pathogenicity is caused primarily by the production of 
an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of 
either or both toxins can lead to symptomatic CDI, which is defined as 
the acute onset of diarrhea with a documented infection with toxigenic 
C-diff, or the presence of either toxin A or B. The GI tract contains 
millions of bacteria, commonly referred to as ``normal flora'' or 
``good

[[Page 20284]]

bacteria,'' which play a role in protecting the body from infection. 
Antibiotics can kill these good bacteria and allow the C-diff bacteria 
to multiply and release toxins that damage the cells lining the 
intestinal wall, resulting in a CDI. CDI is a leading cause of 
hospital-associated gastrointestinal illnesses. Persons at increased 
risk for CDI include people who are treated with current or recent 
antibiotic use, people who have encountered current or recent 
hospitalization, people who are older than 65 years, immunocompromised 
patients, and people who have recently had a diagnosis of CDI. CDI 
symptoms include, but are not limited to, diarrhea, abdominal pain, and 
fever. CDI symptoms range in severity from mild (abdominal discomfort, 
loose stools) to severe (profuse, watery diarrhea, severe pain, and 
high fevers). Severe CDI can be life[dash]threatening and, in rare 
cases, can cause bowel rupture, sepsis and organ failure. CDI is 
responsible for 14,000 deaths per year in the United States.
    C-diff produces two virulent, pro-inflammatory toxins, Toxin A and 
Toxin B, which target host colonocytes (that is, large intestine 
endothelial cells) by binding to endothelial cell surface receptors via 
combined repetitive oligopeptide (CROP) domains. These toxins cause the 
release of inflammatory cytokines leading to intestinal fluid secretion 
and intestinal inflammation. The applicant asserted that 
ZINPLAVATM targets Toxin B sites within the CROP domain 
rather than the C-diff organism itself. According to the applicant, by 
targeting C-diff Toxin B, ZINPLAVATM neutralizes Toxin B, 
prevents large intestine endothelial cell inflammation, symptoms 
associated with CDI, and reduces the recurrence of CDI.
    ZINPLAVATM received FDA approval on October 21, 2016, 
for reduction of recurrence of CDI in patients receiving antibacterial 
drug treatment for CDI and who are at high risk of CDI recurrence. 
ZINPLAVATM became commercially available on February 10, 
2017. Therefore, the newness period for ZINPLAVATM began on 
February 10, 2017. The applicant submitted a request for a unique ICD-
10-PCS procedure code and was granted approval for the following 
procedure codes: XW033A3 (Introduction of bezlotoxumab monoclonal 
antibody, into peripheral vein, percutaneous approach, new technology 
group 3) and XW043A3 (Introduction of bezlotoxumab monoclonal antibody, 
into central vein, percutaneous approach, new technology group 3).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
ZINPLAVATM and consideration of the public comments we 
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved ZINPLAVATM for new technology add-on payments for 
FY 2018 (82 FR 38119). With the new technology add-on payment 
application, the applicant estimated that the average Medicare 
beneficiary would require a dosage of 10 mg/kg of ZINPLAVATM 
administered as an IV infusion over 60 minutes as a single dose. 
According to the applicant, the WAC for one dose is $3,800. Under Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment amount for a case involving the 
use of ZINPLAVATM is $1,900.
    With regard to the newness criterion for ZINPLAVATM, we 
considered the beginning of the newness period to commence on February 
10, 2017. Because the 3-year anniversary date of the entry of 
ZINPLAVATM onto the U.S. market (February 10, 2020) will 
occur after FY 2019, we are proposing to continue new technology add-on 
payments for this technology for FY 2019. We are proposing that the 
maximum payment for a case involving ZINPLAVATM would remain 
at $1,900 for FY 2019. We are inviting public comments on our proposal 
to continue new technology add-on payments for ZINPLAVATM 
for FY 2019.
5. FY 2019 Applications for New Technology Add-On Payments
    We received 15 applications for new technology add-on payments for 
FY 2019. In accordance with the regulations under Sec.  412.87(c), 
applicants for new technology add[dash]on payments must have FDA 
approval or clearance by July 1 of the year prior to the beginning of 
the fiscal year that the application is being considered. A discussion 
of the 15 applications is presented below.
a. KYMRIAH\TM\ (Tisagenlecleucel) and YESCARTA\TM\ (Axicabtagene 
Ciloleucel)
    Two manufacturers, Novartis Pharmaceuticals Corporation and Kite 
Pharma, Inc. submitted separate applications for new technology add-on 
payments for FY 2019 for KYMRIAHTM (tisagenlecleucel) and 
YESCARTATM (axicabtagene ciloleucel), respectively. Both of 
these technologies are CD-19-directed T[dash]cell immunotherapies used 
for the purposes of treating patients with aggressive variants of 
non[dash]Hodgkin lymphoma (NHL). We note that KYMRIAHTM was 
approved by the FDA on August 30, 2017, for use in the treatment of 
patients up to 25 years of age with B-cell precursor acute 
lymphoblastic leukemia (ALL) that is refractory or in second or later 
relapse, which is a different indication and patient population than 
the new indication and targeted patient population for which the 
applicant submitted a request for approval of new technology add-on 
payments for FY 2019. Specifically, and as summarized in the following 
table, the new indication for which Novartis Pharmaceuticals 
Corporation is requesting approval for new technology add-on payments 
for KYMRIAHTM is as an autologous T-cell immune therapy 
indicated for use in the treatment of patients with relapsed/refractory 
(R/R) Diffuse Large B[dash]Cell Lymphoma (DLBCL) not eligible for 
autologous stem cell transplant (ASCT). As of the time of the 
development of this proposed rule, Novartis Pharmaceuticals Corporation 
has been granted a Breakthrough Therapy designation by the FDA, and is 
awaiting FDA approval for the use of KYMRIAHTM under this 
new indication. We also note that Kite Pharma, Inc. previously 
submitted an application for approval for new technology add-on 
payments for FY 2018 for KTE-C19 for use as an autologous T[dash]cell 
immune therapy in the treatment of adult patients with R/R aggressive 
B-cell NHL who are ineligible for ASCT. However, Kite Pharma, Inc. 
withdrew its application for KTE-C19 prior to publication of the FY 
2018 IPPS/LTCH PPS final rule. Kite Pharma, Inc. has resubmitted an 
application for approval for new technology add-on payments for FY 2019 
for KTE-C19 under a new name, YESCARTATM, for the same 
indication. Kite Pharma, Inc. received FDA approval for this original 
indication and treatment use of YESCARTATM on October 18, 
2017. (We refer readers to the following table for a comparison of the 
indications and FDA approvals for KYMRIAHTM and 
YESCARTATM.)

[[Page 20285]]



                     Comparison of Indication and FDA Approval for KYMRIAHTM and YESCARTATM
----------------------------------------------------------------------------------------------------------------
                                            Description of indication for which new
    FY 2019 applicant technology name        technology add-on payments are being         FDA approval status
                                                           requested
----------------------------------------------------------------------------------------------------------------
KYMRIAHTM (Novartis Pharmaceuticals       KYMRIAHTM: Autologous T-cell immune         Breakthrough Therapy
 Corporation).                             therapy indicated for use in the            designation granted by
                                           treatment of patients with relapsed/        FDA; FDA approval
                                           refractory (R/R) Diffuse Large B Cell       pending.
                                           Lymphoma (DLBCL) not eligible for
                                           autologous stem cell transplant (ASCT).
YESCARTATM (Kite Pharma, Inc.)..........  YESCARTATM: Autologous T-cell immune        FDA approval received 10/
                                           therapy indicated for use in the            18/2017.
                                           treatment of adult patients with R/R
                                           large B-cell lymphoma after two or more
                                           lines of systemic therapy, including
                                           DLBCL not otherwise specified, primary
                                           mediastinal large B-cell, high grade B-
                                           cell lymphoma, and DLBCL arising from
                                           follicular lymphoma.
----------------------------------------------------------------------------------------------------------------


 
----------------------------------------------------------------------------------------------------------------
      Technology approved for other                                                      FDA approval of other
               indications                      Description of other indication               indication
----------------------------------------------------------------------------------------------------------------
KYMRIAHTM (Novartis Pharmaceuticals       KYMRIAHTM: CD-19[dash]directed T-cell       FDA approval received 8/30/
 Corporation).                             immunotherapy indicated for the use in      2017.
                                           the treatment of patients up to 25 years
                                           of age with B-cell precursor ALL that is
                                           refractory or in second or later relapse.
YESCARTATM (Kite Pharma, Inc.)..........  None......................................  N/A.
----------------------------------------------------------------------------------------------------------------

    We note that procedures involving the KYMRIAHTM and 
YESCARTATM therapies are both reported using the following 
ICD-10-PCS procedure codes: XW033C3 (Introduction of engineered 
autologous chimeric antigen receptor t-cell immunotherapy into 
peripheral vein, percutaneous approach, new technology group 3); and 
XW043C3 (Introduction of engineered autologous chimeric antigen 
receptor t-cell immunotherapy into central vein, percutaneous approach, 
new technology group 3). We further note that, in section II.F.2.d. of 
the preamble of this proposed rule, we are proposing to assign cases 
reporting these ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016 
(Autologous Bone Marrow Transplant with CC/MCC) for FY 2019. We refer 
readers to section II.F.2.d. of this proposed rule for a complete 
discussion of the proposed assignment of cases reporting these 
procedure codes to Pre-MDC MS-DRG 016, which also includes a proposal 
to revise the title of MS-DRG 016 to reflect the proposed assignments.
    According to the applicants, patients with NHL represent a 
heterogeneous group of B-cell malignancies with varying patterns of 
behavior and response to treatment. B-cell NHL can be classified as 
either an aggressive, or indolent disease, with aggressive variants 
including DLBCL; primary mediastinal large B[dash]cell lymphoma 
(PMBCL); and transformed follicular lymphoma (TFL). Within diagnoses of 
NHL, DLBCL is the most common subtype of NHL, accounting for 
approximately 30 percent of patients who have been diagnosed with NHL, 
and survival without treatment is measured in months.\4\ Despite 
improved therapies, only 50 to 70 percent of newly diagnosed patients 
are cured by standard first-line therapy alone. Furthermore, R/R 
disease continues to carry a poor prognosis because only 50 percent of 
patients are eligible for autologous stem cell transplantation (ASCT) 
due to advanced age, poor functional status, comorbidities, inadequate 
social support for recovery after ASCT, and provider or patient 
choice.5 6 7 8 Of the roughly 50 percent of patients that 
are eligible for ASCT, nearly 50 percent fail to respond to 
prerequisite salvage chemotherapy and cannot undergo 
ASCT.9 10 11 12 Second-line chemotherapy regimens studied to 
date include rituximab, ifosfamide, carboplatin and etoposide (R-ICE), 
and rituximab, dexamethasone, cytarabine, and cisplatin (R-DHAP), 
followed by consolidative high-dose therapy (HDT)/ASCT. Both regimens 
offer similar overall response rates (ORR) of 51 percent with 1 in 4 
patients achieving long-term complete response (CR) at the expense of 
increased toxicity.\13\ Second-line treatment with dexamethasone, high-
dose cytarabine, and cisplatin (DHAP) is considered a standard 
chemotherapy regimen, but is associated with substantial treatment-
related toxicity.\14\ For patients who experience disease progression 
during or after primary treatment, the combination of HDT/ASCT remains 
the only curative option.\15\ According to the applicants,

[[Page 20286]]

given the modest response to second[dash]line therapy and/or HDT/ASCT, 
the population of patients with the highest unmet need is those with 
chemorefractory disease, which include DLBCL, PMBCL, and TFL. These 
patients are defined as either progressive disease (PD) as best 
response to chemotherapy, stable disease as best response following 
greater than or equal to 4 cycles of first-line or 2 cycles of later-
line therapy, or relapse within less than or equal to 12 months of 
ASCT.\16\ Based on these definitions and available data from a 
multi[dash]center retrospective study (SCHOLAR-1), chemorefractory 
disease treated with current and historical standards of care has 
consistently poor outcomes with an ORR of 26 percent and median overall 
survival (OS) of 6.3 months.\17\
---------------------------------------------------------------------------

    \4\ Chaganti, S., et al., ``Guidelines for the management of 
diffuse large B-cell lymphoma,'' BJH Guideline, 2016. Available at: 
www.bit.do/bsh-guidelines.
    \5\ Matasar, M., et al., ``Ofatumumab in combination with ICE or 
DHAP chemotherapy in relapsed or refractory intermediate grade B-
cell lymphoma,'' Blood, 25 July 2013, vol. 122, No 4.
    \6\ Hitz, F., et al., ``Outcome of patients with chemotherapy 
refractory and early progressive diffuse large B cell lymphoma after 
R-CHOP treatment,'' Blood (American Society of Hematology (ASH) 
annual meeting abstracts, poster session), 2010, pp. 116 (abstract 
#1751).
    \7\ Telio, D., et al., ``Salvage chemotherapy and autologous 
stem cell transplant in primary refractory diffuse large B-cell 
lymphoma: outcomes and prognostic factors,'' Leukemia & Lymphoma, 
2012, vol. 53(5), pp. 836-41.
    \8\ Moskowitz, C.H., et al., ``Ifosfamide, carboplatin, and 
etoposide: a highly effective cytoreduction and peripheral-blood 
progenitor-cell mobilization regimen for transplant-eligible 
patients with non-Hodgkin's lymphoma,'' Journal of Clinical 
Oncology, 1999, vol. 17(12), pp. 3776-85.
    \9\ Crump, M., et al., ``Outcomes in patients with refractory 
aggressive diffuse large B-cell lymphoma (DLBCL): results from the 
international scholar-1 study,'' Abstract and poster presented at 
Pan Pacific Lymphoma Conference (PPLC), July 2016.
    \10\ Gisselbrecht, C., et al., ``Results from SCHOLAR-1: 
outcomes in patients with refractory aggressive diffuse large B-cell 
lymphoma (DLBCL),'' Oral presentation at European Hematology 
Association conference, July 2016.
    \11\ Iams, W., Reddy, N., ``Consolidative autologous 
hematopoietic stem-cell transplantation in first remission for non-
Hodgkin lymphoma: current indications and future perspective,'' Ther 
Adv Hematol, 2014, vol. 5(5), pp. 153-67.
    \12\ Kantoff, P.W., et al., ``Sipuleucel-T immunotherapy for 
castration-resistant prostate cancer,'' N Engl J Med, 2010, vol. 
363, pp. 411-422.
    \13\ Rovira, J., Valera, A., Colomo, L., et al., ``Prognosis of 
patients with diffuse large B cell lymphoma not reaching complete 
response or relapsing after frontline chemotherapy or 
immunochemotherapy,'' Ann Hematol, 2015, vol. 94(5), pp. 803-812.
    \14\ Swerdlow, S.H., Campo, E., Pileri, S.A., et al., ``The 2016 
revision of the World Health Organization classification of lymphoid 
neoplasms,'' Blood, 2016, vol. 127(20), pp. 2375-2390.
    \15\ Koristka, S., Cartellieri, M., Arndt, C., et al., ``Tregs 
activated by bispecific antibodies: killers or suppressors?,'' 
OncoImmunology, 2015, vol. (3):e994441, DOI: 10.4161/
2162402X.2014.994441.
    \16\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-69620.
    \17\ Ibid.
---------------------------------------------------------------------------

    According to Novartis Pharmaceuticals Corporation, upon FDA 
approval of the additional indication, KYMRIAHTM will also 
be used for the treatment of patients with R/R DLBCL who are not 
eligible for ASCT. Novartis Pharmaceuticals Corporation describes 
KYMRIAHTM as a CD[dash]19[dash]directed genetically modified 
autologous T[dash]cell immunotherapy which utilizes peripheral blood 
T[dash]cells, which have been reprogrammed with a transgene encoding, a 
chimeric antigen receptor (CAR), to identify and eliminate CD-19-
expressing malignant and normal cells. Upon binding to CD-19-expressing 
cells, the CAR transmits a signal to promote T-cell expansion, 
activation, target cell elimination, and persistence of 
KYMRIAHTM cells. The transduced T[dash]cells expand in vivo 
to engage and eliminate CD-19-expressing cells and may exhibit 
immunological endurance to help support long-lasting remission. 
18 19 20 21 According to the applicant, no other agent 
currently used in the treatment of patients with R/R DLBCL employs gene 
modified autologous cells to target and eliminate malignant cells.
---------------------------------------------------------------------------

    \18\ KYMRIAHTM [prescribing information], East 
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
    \19\ Kalos, M., Levine, B.L., Porter, D.L., et al., 
``T[dash]cells with chimeric antigen receptors have potent antitumor 
effects and can establish memory in patients with advanced 
leukemia,'' Sci Transl Med, 2011, vol. 3(95), pp, 95ra73.
    \20\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \21\ Wang, X., Riviere, I., ``Clinical manufacturing of CART 
cells: foundation of a promising therapy,'' Mol Ther Oncolytics, 
2016, vol. 3, pp. 16015.
---------------------------------------------------------------------------

    According to Kite Pharma, Inc., YESCARTATM is indicated 
for the use in the treatment of adult patients with R/R large B-cell 
lymphoma after two or more lines of systemic therapy, including DLBCL 
not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL 
arising from follicular lymphoma. YESCARTA is not indicated for the 
treatment of patients with primary central nervous system lymphoma. The 
applicant for YESCARTATM described the technology as a CD-
19-directed genetically modified autologous T[dash]cell immunotherapy 
that binds to CD-19-expressing cancer cells and normal B[dash]cells. 
These normal B[dash]cells are considered to be non-essential tissue, as 
they are not required for patient survival. According to the applicant, 
studies demonstrated that following anti-CD-19 CAR T[dash]cell 
engagement with CD-19-expressing target cells, the CD-28 and CD-3-zeta 
co-stimulatory domains activate downstream signaling cascades that lead 
to T-cell activation, proliferation, acquisition of effector functions 
and secretion of inflammatory cytokines and chemokines. This sequence 
of events leads to the elimination of CD-19-expressing tumor cells.
    Both applicants expressed that their technology is the first 
treatment of its kind for the targeted adult population. In addition, 
both applicants asserted that their technology is new and does not use 
a substantially similar mechanism of action or involve the same 
treatment indication as any other currently FDA-approved technology. We 
note that, at the time each applicant submitted its new technology add-
on payment application, neither technology had received FDA approval 
for the indication for which the applicant requested approval for the 
new technology add-on payment; KYMRIAHTM has been granted 
Breakthrough Therapy designation for the use in the treatment of 
patients for the additional indication that is the subject of its new 
technology add-on application and, as of the time of the development of 
this proposed rule, is awaiting FDA approval. However, as stated 
earlier, YESCARTATM received FDA approval for use in the 
treatment of patients and the indication stated in its application on 
October 18, 2017, after each applicant submitted its new technology 
add-on payment application.
    As noted, according to both applicants, KYMRIAHTM and 
YESCARTATM are the first CAR T immunotherapies of their 
kind. Because potential cases representing patients who may be eligible 
for treatment using KYMRIAHTM and YESCARTATM 
would group to the same MS-DRGs (because the same ICD-10-CM diagnosis 
codes and ICD-10-PCS procedures codes are used to report treatment 
using either KYMRIAHTM or YESCARTATM), and we 
believe that these technologies are intended to treat the same or 
similar disease in the same or similar patient population, and are 
purposed to achieve the same therapeutic outcome using the same or 
similar mechanism of action, we disagree with the applicants and 
believe these two technologies are substantially similar to each other 
and that it is appropriate to evaluate both technologies as one 
application for new technology add-on payments under the IPPS. For 
these reasons, and as discussed further below, we would intend to make 
one determination regarding approval for new technology add-on payments 
that would apply to both applications, and in accordance with our 
policy, would use the earliest market availability date submitted as 
the beginning of the newness period for both KYMRIAHTM and 
YESCARTATM. We are inviting public comments on whether 
KYMRIAHTM and YESCARTATM are substantially 
similar.
    With respect to the newness criterion, as previously stated, 
YESCARTATM received FDA approval on October 18, 2017. 
According to the applicant, prior to FDA approval, 
YESCARTATM had been available in the U.S. only on an 
investigational basis under an investigational new drug (IND) 
application. For the same IND patient population, and until commercial 
availability, YESCARTATM was available under an Expanded 
Access Program (EAP) which started on May 17, 2017. The applicant 
stated that it did not recover any costs associated with the EAP. 
According to the applicant, the first commercial shipment of 
YESCARTATM was received by a certified treatment center on 
November 22, 2017. As previously indicated, KYMRIAHTM is not 
currently approved by the FDA for use in the treatment of patients with 
R/R DLBCL that are not eligible for ASCT; the technology has been 
granted Breakthrough Therapy designation by the FDA. The applicant 
anticipates receipt of FDA approval to occur in the second quarter of 
2018. We believe that, in accordance with our policy, if these 
technologies are substantially similar to each other, it is appropriate 
to use the earliest market availability date submitted as the beginning 
of the newness period for both technologies. Therefore, based on

[[Page 20287]]

our policy, with regard to both technologies, if the technologies are 
approved for new technology add-on payments, we believe that the 
beginning of the newness period would be November 22, 2017.
    We previously stated that, because we believe these two 
technologies are substantially similar to each other, we believe it is 
appropriate to evaluate both technologies as one application for new 
technology add-on payments under the IPPS. The applicants submitted 
separate cost and clinical data, and we reviewed and discuss each set 
of data separately. However, we would intend to make one determination 
regarding new technology add-on payments that would apply to both 
applications. We believe that this is consistent with our policy 
statements in the past regarding substantial similarity. Specifically, 
we have noted that approval of new technology add-on payments would 
extend to all technologies that are substantially similar (66 FR 
46915), and we believe that continuing our current practice of 
extending new technology add-on payments without a further application 
from the manufacturer of the competing product, or a specific finding 
on cost and clinical improvement if we make a finding of substantial 
similarity among two products is the better policy because we avoid--
     Creating manufacturer-specific codes for substantially 
similar products;
     Requiring different manufacturers of substantially similar 
products to submit separate new technology add-on payment applications;
     Having to compare the merits of competing technologies on 
the basis of substantial clinical improvement; and
     Bestowing an advantage to the first applicant representing 
a particular new technology to receive approval (70 FR 47351).
    If substantially similar technologies are submitted for review in 
different (and subsequent) years, rather than the same year, we would 
evaluate and make a determination on the first application and apply 
that same determination to the second application. However, because the 
technologies have been submitted for review in the same year, and 
because we believe they are substantially similar to each other, we 
believe that it is appropriate to consider both sets of cost data and 
clinical data in making a determination, and we do not believe that it 
is possible to choose one set of data over another set of data in an 
objective manner. We are inviting public comments on our proposal to 
evaluate KYMRIAHTM and YESCARTATM as one 
application for new technology add-on payments under the IPPS.
    As stated earlier, we believe that KYMRIAHTM and 
YESCARTATM are substantially similar to each other for 
purposes of analyzing these two applications as one application. We 
also need to determine whether KYMRIAHTM and 
YESCARTATM are substantially similar to existing 
technologies prior to their approval by the FDA and their release onto 
the U.S. market. As discussed earlier, if a technology meets all three 
of the substantial similarity criteria, it would be considered 
substantially similar to an existing technology and would not be 
considered ``new'' for purposes of new technology add-on payments.
    With respect to the first criterion, whether a product uses the 
same or a similar mechanism of action to achieve a therapeutic outcome, 
the applicant for KYMRIAHTM asserted that its unique design, 
which utilizes features that were not previously included in 
traditional cytotoxic chemotherapeutic or immunotherapeutic agents, 
constitutes a new mechanism of action. The deployment mechanism allows 
for identification and elimination of CD-19-expressing malignant and 
non-malignant cells, as well as possible immunological endurance to 
help support long-lasting remission.22 23 24 25 The 
applicant provided context regarding how KYMRIAHTM's unique 
design contributes to a new mechanism of action by explaining that 
peripheral blood T-cells, which have been reprogrammed with a transgene 
encoding, a CAR, identify and eliminate CD[dash]19-expressing malignant 
and nonmalignant cells. As explained by the applicant, upon binding to 
CD-19-expressing cells, the CAR transmits a signal to promote T-cell 
expansion, activation, target cell elimination, and persistence of 
KYMRIAHTM cells.26 27 28 According to the 
applicant, transduced T[dash]cells expand in vivo to engage and 
eliminate CD-19-expressing cells and may exhibit immunological 
endurance to help support long-lasting remission.29 30 31
---------------------------------------------------------------------------

    \22\ KYMRIAH [prescribing information]. East Hanover, NJ: 
Novartis Pharmaceuticals Corp; 2017.
    \23\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, vol. 3(95), pp. 95ra73.
    \24\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \25\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric 
antigen receptor T cells for sustained remissions in leukemia,'' N 
Engl J Med, 2014, vol. 371(16), pp. 1507-1517.
    \26\ KYMRIAHTM [prescribing information], East 
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
    \27\ Kalos, M., Levine, B.L., Porter, D.L., et al., 
``T[dash]cells with chimeric antigen receptors have potent antitumor 
effects and can establish memory in patients with advanced 
leukemia,'' Sci Transl Med, 2011, 3(95), pp, 95ra73.
    \28\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \29\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, vol. 3(95), pp. 95rs73.
    \30\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \31\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric 
antigen receptor T[dash]cells for sustained remissions in 
leukemia,'' N Engl J Med, 2014, vol. 371(16), pp. 1507-1517.
---------------------------------------------------------------------------

    The applicant for YESCARTATM stated that 
YESCARTATM is the first engineered autologous cellular 
immunotherapy comprised of CAR T[dash]cells that recognizes CD-19 
express cancer cells and normal B-cells with efficacy in patients with 
R/R large B-cell lymphoma after two or more lines of systemic therapy, 
including DLBCL not otherwise specified, PMBCL, high grade B-cell 
lymphoma, and DLBCL arising from follicular lymphoma as demonstrated in 
a multi-centered clinical trial. Therefore, the applicant believed that 
YESCARTATM's mechanism of action is distinct and unique from 
any other cancer drug or biologic that is currently approved for use in 
the treatment of patients who have been diagnosed with aggressive B-
cell NHL, namely single-agent or combination chemotherapy regimens. The 
applicant also pointed out that YESCARTATM is the only 
available therapy that has been granted FDA approval for the treatment 
of adult patients with R/R large B-cell lymphoma after two or more 
lines of systemic therapy, including DLBCL not otherwise specified, 
PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular 
lymphoma.
    With respect to the second and third criteria, whether a product is 
assigned to the same or a different MS-DRG and whether the new use of 
the technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, the applicant for 
KYMRIAHTM indicated that the technology is used in the 
treatment of the same patient population, and potential cases 
representing patients that may be eligible for treatment using 
KYMRIAHTM would be assigned to the same MS-DRGs as cases 
involving

[[Page 20288]]

patients with a DLBCL diagnosis. Potential cases representing patients 
that may be eligible for treatment using KYMRIAHTM map to 
437 separate MS-DRGs, with the top 20 MS-DRGs covering approximately 68 
percent of all patients who have been diagnosed with DLBCL. For 
patients with DLBCL and who have received chemotherapy during their 
hospital stay, the target population mapped to 8 separate MS-DRGs, with 
the top 2 MS-DRGs covering over 95 percent of this population: MS-DRGs 
847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with 
CC), and 846 (Chemotherapy without Acute Leukemia as Secondary 
Diagnosis with MCC). The applicant for YESCARTATM submitted 
findings that potential cases representing patients that may be 
eligible for treatment using YESCARTATM span 15 unique MS-
DRGs, 8 of which contain more than 10 cases. The most common MS-DRGs 
were: MS-DRGs 840 (Lymphoma and Non-Acute Leukemia with MCC), 841 
(Lymphoma and Non-Acute Leukemia with CC), and 823 (Lymphoma and Non-
Acute Leukemia with other O.R. Procedures with MCC). These 3 MS-DRGs 
accounted for 628 (76 percent) of the 827 cases. While the applicants 
for KYMRIAHTM and YESCARTATM submitted different 
findings regarding the most common MS-DRGs to which potential cases 
representing patients who may be eligible for treatment involving their 
technology would map, we believe that, under the current MS-DRGs (FY 
2018), potential cases representing patients who may be eligible for 
treatment involving either KYMRIAHTM or 
YESCARTATM would map to the same MS-DRGs because the same 
ICD-10-CM diagnosis codes and ICD-10-PCS procedures codes would be used 
to report cases for patients who may be eligible for treatment 
involving KYMRIAHTM and YESCARTATM. Furthermore, 
as noted above, we are proposing that cases reporting these ICD-10-PCS 
procedure codes would be assigned to MS-DRG 016 for FY 2019. Therefore, 
under this proposal, for FY 2019, cases involving the utilization of 
KYMRIAHTM and YESCARTATM would continue to map to 
the same MS-DRGs.
    The applicant for YESCARTATM also addressed the concern 
expressed by CMS in the FY 2018 IPPS/LTCH PPS proposed rule regarding 
Kite Pharma Inc.'s FY 2018 new technology add-on payment application 
for the KTE-C19 technology (82 FR 19888). At the time, CMS expressed 
concern that KTE-C19 may use the same or similar mechanism of action as 
the Bi-Specific T-Cell engagers (BiTE) technology. The applicant for 
YESCARTATM explained that YESCARTATM has a unique 
and distinct mechanism of action that is substantially different from 
BiTE's or any other drug or biologic currently assigned to any MS-DRG 
in the FY 2016 MedPAR Hospital Limited Data Set. In providing more 
detail regarding how YESCARTATM is different from the BiTE 
technology, the applicant explained that the BiTE technology is not an 
engineered autologous T[dash]cell immunotherapy derived from a 
patient's own T[dash]cells. Instead, it is a bi-specific T[dash]cell 
engager that recognizes CD-19 and CD-3 cancer cells. Unlike engineered 
T[dash]cell therapy, BiTE does not have the ability to enhance the 
proliferative and cytolytic capacity of T-cells through ex-vivo 
engineering. Further, BiTE is approved for the treatment of patients 
who have been diagnosed with Philadelphia chromosome[dash]negative 
relapsed or refractory B-cell precursor acute lymphoblastic leukemia 
(ALL) and is not approved for patients with relapsed or refractory 
large B-cell lymphoma, whereas YESCARTATM is indicated for 
use in the treatment of adult patients with R/R aggressive B-cell NHL 
who are ineligible for ASCT.
    The applicant for YESCARTATM also indicated that its 
mechanism of action is not the same or similar to the mechanism of 
action used by KYMRIAHTM's currently available 
FDA[dash]approved CD-19-directed genetically modified autologous 
T[dash]cell immunotherapy indicated for use in the treatment of 
patients up to 25 years of age with B-cell precursor acute 
lymphoblastic leukemia (ALL) that is refractory or in second or later 
relapse.\32\ The applicant for YESCARTATM stated that the 
mechanism of action is different from KYMRIAHTM's 
FDA[dash]approved therapy because the spacer, transmembrane and co-
stimulatory domains of YESCARTATM are different from those 
of KYMRIAHTM. The applicant explained that 
YESCARTATM is comprised of a CD-28 co[dash]stimulatory 
domain and KYMRIAHTM has 4-1BB co-stimulatory domain. 
Further, the applicant stated the manufacturing processes of the two 
immunotherapies are also different, which may result in cell 
composition differences leading to possible efficacy and safety 
differences.
---------------------------------------------------------------------------

    \32\ Food and Drug Administration. Available at: 
www.accessdata.fda.gov/scripts/opdlisting/oopd/.
---------------------------------------------------------------------------

    While the applicant for YESCARTATM stated how its 
technology is different from KYMRIAHTM, because both 
technologies are CD-19-directed T[dash]cell immunotherapies used for 
the purpose of treating patients with aggressive variants of NHL, we 
believe that YESCARTATM and KYMRIAHTM are 
substantially similar treatment options. Furthermore, we also are 
concerned that there may be an age overlap (18 to 25) between the two 
different patient populations for the currently approved 
KYMRIAHTM technology and YESCARTATM technology. 
The currently approved KYMRIAHTM technology is indicated for 
use in the treatment of patients who are up to 25 years of age and 
YESCARTATM technology is indicated for use in the treatment 
of adult patients.
    As noted earlier, the applicant has asserted that 
YESCARTATM is not substantially similar to 
KYMRIAHTM. Under this scenario, if both 
YESCARTATM and KYMRIAHTM meet all of the new 
technology add-on payment criteria and are approved for new technology 
add-on payments for FY 2019, for purposes of making the new technology 
add[dash]on payment, because procedures utilizing either 
YESCARTATM or KYMRIAHTM CAR T-cell therapy drugs 
are reported using the same ICD-10-PCS procedure codes, in order to 
accurately pay the new technology add[dash]on payment to hospitals that 
perform procedures utilizing either technology, it may be necessary to 
use alternative coding mechanisms to make the new technology 
add[dash]on payments. CMS is inviting comments on alternative coding 
mechanisms to make the new technology add-on payments, if necessary.
    We are inviting public comments on whether KYMRIAHTM and 
YESCARTATM are substantially similar to existing 
technologies and whether the technologies meet the newness criterion.
    As we stated above, each applicant submitted separate analysis 
regarding the cost criterion for each of their products, and both 
applicants maintained that their product meets the cost criterion. We 
summarize each analysis below.
    With regard to the cost criterion, the applicant for 
KYMRIAHTM searched the FY 2016 MedPAR claims data file to 
identify potential cases representing patients who may be eligible for 
treatment using KYMRIAHTM. The applicant identified claims 
that reported an ICD-10-CM diagnosis code of: C83.30 (DLBCL, 
unspecified site); C83.31 (DLBCL, lymph nodes of head, face and neck); 
C83.32 (DLBCL, intrathoracic lymph nodes); C83.33 (DLBCL, intra-
abdominal lymph nodes); C83.34 (DLBCL, lymph nodes of axilla and upper 
limb); C83.35 (DLBCL, lymph nodes of inquinal region and lower

[[Page 20289]]

limb); C83.36 (DLBCL, intrapelvic lymph nodes); C83.37 (DLBCL, spleen); 
C83.38 (DLBCL, lymph nodes of multiple sites); or C83.39 (DLBCL, 
extranodal and solid organ sites). The applicant also identified 
potential cases where patients received chemotherapy using two 
encounter codes, Z51.11 (Antineoplastic chemotherapy) and Z51.12 
(Antineoplastic immunotherapy), in conjunction with DLBCL diagnosis 
codes.
    Applying the parameters above, the applicant for 
KYMRIAHTM identified a total of 22,589 DLBCL potential cases 
that mapped to 437 MS-DRGs. The applicant chose the top 20 MS-DRGs 
which made up a total of 15,451 potential cases at 68 percent of total 
cases. Of the 22,589 total DLBCL potential cases, the applicant also 
provided a breakdown of DLBCL potential cases where chemotherapy was 
used, and DLBCL potential cases where chemotherapy was not used. Of the 
6,501 DLBCL potential cases where chemotherapy was used, MS-DRGs 846 
and 847 accounted for 6,181 (95 percent) of the 6,501 cases. Of the 
16,088 DLBCL potential cases where chemotherapy was not used, the 
applicant chose the top 20 MS-DRGs which made up a total of 9,333 
potential cases at 58 percent of total cases. The applicant believed 
the distribution of patients that may be eligible for treatment using 
KYMRIAHTM will include a wide variety of MS-DRGs. As such, 
the applicant conducted an analysis of three scenarios: Potential DLBCL 
cases, potential DLBCL cases with chemotherapy, and potential DLBCL 
cases without chemotherapy.
    The applicant removed reported historic charges that would be 
avoided through the use of KYMRIAHTM. Next, the applicant 
removed 50 percent of the chemotherapy pharmacy charges that would not 
be required for patients that may be eligible to receive treatment 
using KYMRIAHTM. The applicant standardized the charges and 
then applied an inflation factor of 1.09357, which is the 2[dash]year 
inflation factor in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), 
to update the charges from FY 2016 to FY 2018. The applicant did not 
add charges for KYMRIAHTM to its analysis. However, the 
applicant provided a cost analysis related to the three categories of 
claims data it previously researched (that is, potential DLBCL cases, 
potential DLBCL cases with chemotherapy, and potential DLBCL cases 
without chemotherapy). The applicant's analysis showed the inflated 
average case[dash]weighted standardized charge per case for potential 
DLBCL cases, potential DLBCL cases with chemotherapy, and potential 
DLBCL cases without chemotherapy was $63,271, $39,723, and $72,781, 
respectively. The average case-weighted threshold amount for potential 
DLBCL cases, potential DLBCL cases with chemotherapy, and potential 
DLBCL cases without chemotherapy was $58,278, $48,190, and $62,355 
respectively. While the inflated average case-weighted standardized 
charge per case ($39,723) is lower than the average case-weighted 
threshold amount ($48,190) for potential DLBCL cases with chemotherapy, 
the applicant expects the cost of KYMRIAHTM to be higher 
than the new technology add-on payment threshold amount for all three 
cohorts. Therefore, the applicant maintained that it meets the cost 
criterion.
    We note that, as discussed earlier, in section II.F.2.d. of the 
preamble of this proposed rule, we are proposing to assign the ICD-10-
PCS procedure codes that describe procedures involving the utilization 
of these CAR T-cell therapy drugs and cases representing patients 
receiving treatment involving CAR T-cell therapy procedures to Pre-MDC 
MS-DRG 016 for FY 2019. Therefore, in addition to the analysis above, 
we compared the inflated average case[dash]weighted standardized charge 
per case from all three cohorts above to the average case-weighted 
threshold amount for MS-DRG 016. The average case-weighted threshold 
amount for MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final 
rule is $161,058. Although the inflated average case-weighted 
standardized charge per case for all three cohorts ($63,271, $39,723, 
and $72,781) is lower than the average case-weighted threshold amount 
for MS-DRG 016, similar to above, the applicant expects the cost of 
KYMRIAHTM to be higher than the new technology add-on 
payment threshold amount for MS-DRG 016. Therefore, it appears that 
KYMRIAHTM would meet the cost criterion under this scenario 
as well.
    We appreciate the applicant's analysis. However, we note that the 
applicant did not provide information regarding which specific historic 
charges were removed in conducting its cost analysis. Nonetheless, we 
believe that even if historic charges were identified and removed, the 
applicant would meet the cost criterion because, as indicated, the 
applicant expects the cost of KYMRIAHTM to be higher than 
the new technology add-on payment threshold amounts listed earlier.
    We are inviting public comments on whether KYMRIAHTM 
meets the cost criterion.
    With regard to the cost criterion in reference to 
YESCARTATM, the applicant conducted the following analysis. 
The applicant examined FY 2016 MedPAR claims data restricted to 
patients discharged in FY 2016. The applicant included potential cases 
reporting an ICD-10 diagnosis code of C83.38. Noting that only MS-DRGs 
820 (Lymphoma and Leukemia with Major O.R. Procedure with MCC), 821 
(Lymphoma and Leukemia with Major O.R. Procedure with CC), 823 and 824 
(Lymphoma and Non[dash]Acute Leukemia with Other O.R. Procedure with 
MCC, with CC, respectively), 825 (Lymphoma and Non Acute Leukemia with 
Other O.R Procedure without CC/MCC), and 840, 841 and 842 (Lymphoma and 
Non-Acute Leukemia with MCC, with CC and without CC/MCC, respectively) 
consisted of 10 or more cases, the applicant limited its analysis to 
these 8 MS-DRGs. The applicant identified 827 potential cases across 
these MS-DRGs. The average case-weighted unstandardized charge per case 
was $126,978. The applicant standardized charges using FY 2016 
standardization factors and applied an inflation factor of 1.09357 from 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). The applicant for 
YESCARTATM did not include the cost of its technology in its 
analysis.
    Included in the average case-weighted standardized charge per case 
were charges for the current treatment components. Therefore, the 
applicant for YESCARTATM removed 20 percent of radiology 
charges to account for chemotherapy, and calculated the adjusted 
average case-weighted standardized charge per case by subtracting these 
charges from the standardized charge per case. Based on the 
distribution of potential cases within the eight MS-DRGs, the applicant 
case-weighted the final inflated average case-weighted standardized 
charge per case. This resulted in an inflated average case-weighted 
standardized charge per case of $118,575. Using the FY 2018 IPPS Table 
10 thresholds, the average case-weighted threshold amount was $72,858. 
Even without considering the cost of its technology, the applicant 
maintained that because the inflated average case-weighted standardized 
charge per case exceeds the average case-weighted threshold amount, the 
technology meets the cost criterion.
    We note that, as discussed earlier, in section II.F.2.d. of the 
preamble of this proposed rule, we are proposing to assign the ICD-10-
PCS procedure codes that describe procedures involving the utilization 
of these CAR T-cell therapy

[[Page 20290]]

drugs and cases representing patients receiving treatment involving CAR 
T-cell therapy procedures to Pre-MDC MS-DRG 016 for FY 2019. Therefore, 
in addition to the analysis above, we compared the inflated average 
case-weighted standardized charge per case ($118,575) to the average 
case-weighted threshold amount for MS-DRG 016. The average case-
weighted threshold amount for MS-DRG 016 from Table 10 in the FY 2018 
IPPS/LTCH PPS final rule is $161,058. Although the inflated average 
case-weighted standardized charge per case is lower than the average 
case-weighted threshold amount for MS-DRG 016, the applicant expects 
the cost of YESCARTATM to be higher than the new technology 
add-on payment threshold amount for MS-DRG 016. Therefore, it appears 
that YESCARTATM would meet the cost criterion under this 
scenario as well.
    We are inviting public comments on whether YESCARTATM 
technology meets the cost criterion.
    With regard to substantial clinical improvement for 
KYMRIAHTM, the applicant asserted that several aspects of 
the treatment represent a substantial clinical improvement over 
existing technologies. The applicant believed that KYMRIAHTM 
allows access for a treatment option for those patients who are unable 
to receive standard of care treatment. The applicant stated in its 
application that there are no currently FDA-approved treatment options 
for patients with R/R DLBCL who are ineligible for or who have failed 
ASCT. Additionally, the applicant maintained that KYMRIAHTM 
significantly improves clinical outcomes, including ORR, CR, OS, and 
durability of response, and allows for a manageable safety profile. The 
applicant asserted that, when compared to the historical control data 
(SCHOLAR-1) and the currently available treatment options, it is clear 
that KYMRIAHTM significantly improves clinical outcomes for 
patients with R/R DLBCL who are not eligible for ASCT. The applicant 
conveyed that, given that the patient population has no other available 
treatment options and an expected very short lifespan without therapy, 
there are no randomized controlled trials of the use of 
KYMRIAHTM in patients with R/R DLBCL and, therefore, 
efficacy assessments must be made in comparison to historical control 
data. The SCHOLAR-1 study is the most comprehensive evaluation of the 
outcome of patients with refractory DLBCL. SCHOLAR-1 includes patients 
from two large randomized controlled trials (Lymphoma Academic Research 
Organization-CORAL and Canadian Cancer Trials Group LY.12) and two 
clinical databases (MD Anderson Cancer Center and University of Iowa/
Mayo Clinic Lymphoma Specialized Program of Research Excellence).\33\
---------------------------------------------------------------------------

    \33\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

    The applicant for KYMRIAHTM conveyed that the PARMA 
study established high-dose chemotherapy and ASCT as the standard 
treatment for patients with R/R DLBCL.\34\ However, according to the 
applicant, many patients with R/R DLBCL are ineligible for ASCT because 
of medical frailty. Patients who are ineligible for ASCT because of 
medical frailty would also be adversely affected by high-dose 
chemotherapy regimens.\35\ Lowering the toxicity of chemotherapy 
regimens becomes the only treatment option, leaving patients with 
little potential for therapeutic outcomes. According to the applicant, 
the lack of efficacy of these aforementioned salvage regimens was 
demonstrated in nine studies evaluating combined chemotherapeutic 
regimens in patients who were either refractory to first[dash]line or 
first salvage. Chemotherapy response rates ranged from 0 percent to 23 
percent with OS less than 10 months in all studies.\36\ For patients 
who do not respond to combined therapy regimens, the National 
Comprehensive Cancer Network (NCCN) offers only clinical trials or 
palliative care as therapeutic options.\37\
---------------------------------------------------------------------------

    \34\ Philip, T., Guglielmi, C., Hagenbeek, A., et al., 
``Autologous bone marrow transplantation as compared with salvage 
chemotherapy in relapses of chemotherapy-sensitive non-Hodgkin's 
lymphoma,'' N Engl J Med, 1995, vol. 333(23), pp. 1540-1545.
    \35\ Friedberg, J.W., ``Relapsed/refractory diffuse large B-cell 
lymphoma,'' Hematology AM Soc Hematol Educ Program, 2011, vol. (1), 
pp. 498-505.
    \36\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
    \37\ National Comprehensive Cancer Network, NCCN Clinical 
Practice Guidelines in Oncology (NCCN GuidelinesR), ``B-cell 
lymphomas: Diffuse large b-cell lymphoma and follicular lymphoma 
(Version 3.2017),'' May 25, 2017. Available at: https://www.nccn.org/professionals/physician_gls/pdf/b-cell_blocks.pdf.
---------------------------------------------------------------------------

    According to the applicant for KYMRIAHTM, the 
immunomodulatory agent Lenalidomide was only able to show an ORR of 30 
percent, a CR rate of 8 percent, and a 4.6-month median duration of 
response.\38\ M[dash]tor inhibitors such as Everolimus and Temserolimus 
have been studied as single agents, or in combination with Rituximab, 
as have newer monoclonal antibodies Dacetuzumab, Ofatumomab and 
Obinutuzumab. However, none induced a CR rate higher than 20 percent or 
showed a median duration of response longer than 1 year.\39\
---------------------------------------------------------------------------

    \38\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., 
``Allogeneic hematopoietic cell transplantation for diffuse large B 
cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014, 
vol. 49(1), pp. 1-7.
    \39\ Ibid.
---------------------------------------------------------------------------

    According to the applicant, although controversial, allogeneic stem 
cell transplantation (allo-SCT) has been proposed for patients who have 
been diagnosed with R/R disease. It is hypothesized that the malignant 
cell will be less able to escape the immune targeting of allogenic T-
cells--known as the graft-vs-lymphoma effect.\40\ \41\ The use of allo-
SCT is limited in patients who are not eligible for ASCT because of the 
high rate of morbidity and mortality. This medically frail population 
is generally excluded from participation. The population most impacted 
by this is the elderly, who are often excluded based on age alone. In 
seven studies evaluating allo-SCT in patients with R/R DLBCL, the 
median age at transplant was 43 years old to 52 years old, considerably 
lower than the median age of patients with DLBCL of 64 years old. Only 
two studies included any patients over 66 years old. In these studies, 
allo-SCT provided OS rates ranging from 18 percent to 52 percent at 3 
to 5 years, but was accompanied by treatment-related mortality rates 
ranging from 23 percent to 56 percent.\42\ According to the applicant, 
this toxicity and efficacy profile of allo-SCT substantially limits its 
use, especially in patients 65 years old and older. Given the high 
unmet medical need, the applicant maintained that KYMRIAHTM 
represents a substantial clinical improvement by offering a treatment 
option for a patient population unresponsive to, or ineligible for, 
currently available treatments.
---------------------------------------------------------------------------

    \40\ Ibid.
    \41\ Maude, S.L., Teachey, D.T., Porter, D.L., Grupp, S.A., 
``CD19-targeted chimeric antigen receptor T-cell therapy for acute 
lymphoblastic leukemia,'' Blood, 2015, vol. 125(26), pp. 4017-4023.
    \42\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., 
``Allogeneic hematopoietic cell transplantation for diffuse large B 
cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014, 
vol. 49(1), pp. 1-7.
---------------------------------------------------------------------------

    To express how KYMRIAHTM has improved clinical outcomes, 
including ORR, CR rate, OS, and durability of response, the applicant 
referenced clinical trials in which KYMRIAHTM was tested. 
Study 1 was a single[dash]arm, open[dash]label, multi[dash]site, global 
Phase II study to determine the safety and efficacy of tisagenlecleucel 
in patients

[[Page 20291]]

with R/R DLBCL (CCTL019C2201/CT02445248/`JULIET' study).\43\ \44\ \45\ 
Key inclusion criteria included patients who were 18 years old and 
older, patients with refractory to at least two lines of chemotherapy 
and either relapsed post ASCT or who were ineligible for ASCT, 
measurable disease at the time of infusion, and adequate organ and bone 
marrow function. The study was conducted in three phases. In the 
screening phase patient eligibility was assessed and patient cells 
collected for product manufacture. Patients were also able to receive 
bridging, cytotoxic chemotherapy during this time. In the pre-treatment 
phase patients underwent a restaging of disease followed by 
lymphodepleting chemotherapy with fludarabine 25mg/m2 x3 and 
cyclophosphamide 250mg/m2/d x3 or bendamustine 90mg/m2/d x2 days. The 
treatment and follow[dash]up phase began 2 to 14 days after 
lymphodepleting chemotherapy, when the patient received a single 
infusion of tisagenlecleucel with a target dose of 5x10\8\ CTL019 
transduced viable cells. The primary objective was to assess the 
efficacy of tisagenlecleucel, as measured by the best overall response 
(BOR), which was defined as CR or partial response (PR). It was 
assessed on the Chesson 2007 response criteria amended by Novartis 
Pharmaceutical Corporation as confirmed by an Independent Review 
Committee (IRC). One hundred forty-seven patients were enrolled, and 99 
of them were infused with tisagenlecleucel. Forty-three patients 
discontinued prior to infusion (9 due to inability to manufacture and 
34 due to patient[dash]related issues).\46\ The median age of treated 
patients was 56 years old with a range of 24 to 75; 20 percent were 
older than 65 years old. Patients had received 2 to 7 prior lines of 
therapy, with 60 percent receiving 3 or more therapies, and 51 percent 
having previously undergone ASCT. A primary analysis was performed on 
81 patients infused and followed for more than or at least 3 months. In 
this primary analysis, the BOR was 53 percent; the study met its 
primary objective based on statistical analysis (that is, testing 
whether BOR was greater than 20 percent, a clinically relevant 
threshold chosen based on the response to chemotherapy in a patient 
with R/R DLBCL). Forty-three percent (43 percent) of evaluated patients 
reached a CR, and 14 percent reached a PR. ORR evaluated at 3 months 
was 38 percent with a distribution of 32 percent CR and 6 percent PR. 
All patients in CR at 3 months continued to be in CR. ORR was similar 
across subgroups including 64.7 percent response in patients who were 
older than 65 years old, 61.1 percent response in patients with Grade 
III/IV disease at the time of enrollment, 58.3 percent response in 
patients with Activated B[dash]cell, 52.4 percent response in patients 
with Germinal Center B[dash]cell subtype, and 60 percent response in 
patients with double and triple hit lymphoma. Durability of response 
was assessed based on relapse free survival (RFS), which was estimated 
at 74 percent at 6 months.
---------------------------------------------------------------------------

    \43\ Data on file, Oncology clinical trial protocol 
CCTL019C2201: ``A Phase II, single[dash]arm, multi[dash]center trial 
to determine the efficacy and safety of CTL019 in adult patients 
with relapsed or refractory diffuse large Bcell lymphoma (DLBCL),'' 
Novartis Pharmaceutical Corp, 2015.
    \44\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
    \45\ ClinicalTrials.gov, ``Study of efficacy and safety of 
CTL019 in adult DLBCL patients (JULIET).'' Available at: https://clinicaltrials.gov/ct2/show/NCT02445248.
    \46\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

    The applicant for KYMRIAHTM reported that Study 2 was a 
supportive Phase IIa single institution study of adults who were 
diagnosed with advanced CD19+ NHL conducted at the University of 
Pennsylvania.\47\ \48\ Tisagenlecleucel cells were produced at the 
University of Pennsylvania using the same genetic construct and a 
similar manufacturing technique as employed in Study 1. Key inclusion 
criteria included patients who were at least 18 years old, patients 
with CD19+ lymphoma with no available curative options, and measurable 
disease at the time of enrollment. Tisagenlecleucel was delivered in a 
single infusion 1 to 4 days after restaging and lymphodepleting 
chemotherapy. The median tisagenlecleucel cell dose was 5.0 x 108 
transduced cells. The study enrolled 38 patients; of these, 21 were 
diagnosed with DLBCL and 13 received treatment involving 
KYMRIAHTM. Patients ranged in age from 25 to 77 years old, 
and had a median of 4 prior therapies. Thirty-seven percent had 
undergone ASCT and 63 percent were diagnosed with Grade III/IV disease. 
ORR at 3 months was 54 percent. Progression free survival was 43 
percent at a median follow[dash]up of 11.7 months. Safety and efficacy 
results are similar to those of the multi-center study.
---------------------------------------------------------------------------

    \47\ ClinicalTrials.gov, ``Phase IIa study of redirected 
autologous T[dash]cells engineered to contain anti-CD19 attached to 
TCRz and 4-signaling domains in patients with chemotherapy relapsed 
or refractory CD19+ lymphomas,'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
    \48\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., 
``Sustained remissions following chimeric antigen receptor modified 
T-cells directed against CD-19 (CTL019) in patients with relapsed or 
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of 
the American Society of Hematology, December 6, 2015, Orlando, FL.
---------------------------------------------------------------------------

    The applicant for KYMRIAHTM reported that Study 3 was a 
supportive, patient[dash]level meta-analysis of historical outcomes in 
patients who were diagnosed with refractory DLBCL (SCHOLAR-1).\49\ This 
study included a pooled data analysis of two Phase III clinical trials 
(Lymphoma Academic Research Organization-CORAL and Canadian Cancer 
Trials Group LY.12) and two observational cohorts (MD Anderson Cancer 
Center and University of Iowa/Mayo Clinic Lymphoma Specialized Program 
of Research Excellence). Refractory disease was defined as progressive 
disease or stable disease as best response to chemotherapy (received 
more than or at least 4 cycles of first-line therapy or 2 cycles of 
later[dash]line therapy, respectively) or relapse in less than or at 12 
months post-ASCT. Of 861 abstracted records, 636 were included based on 
these criteria. All patients from each data source who met criteria for 
diagnosis of refractory DLBCL, including TFL and PMBCL, who went on to 
receive subsequent therapy were considered for analysis. Patients who 
were diagnosed with TFL and PMBCL were included because they are 
histologically similar and clinically treated as large cell lymphoma. 
Response rates were similar across the 4 datasets, ranging from 20 
percent to 31 percent, with a pooled response rate of 26 percent. CR 
rates ranged from 2 percent to 15 percent, with a pooled CR rate of 7 
percent. Subgroup analyses including patients with primary refractory, 
refractory to second or later[dash]line therapy, and relapse in less 
than 12 months post-ASCT revealed response rates similar to the pooled 
analysis, with worst outcomes in the primary refractory group (20 
percent). OS from the commencement of therapy was 6.3 months and was 
similar across subgroup analyses. Achieving a CR after last salvage 
chemotherapy predicted a longer OS of 14.9 months compared to 4.6 
months in nonresponders. Patients who had not undergone ASCT had an OS 
of 5.1

[[Page 20292]]

months with a 2 year OS rate of 11 percent.
---------------------------------------------------------------------------

    \49\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

    The applicant asserted that KYMRIAHTM provides a 
manageable safety profile when treatment is performed by trained 
medical personnel and, as opposed to ASCT, KYMRIAHTM 
mitigates the need for high-dose chemotherapy to induce response prior 
to infusion. Adverse events were most common in the 8 weeks following 
infusion and were manageable by a trained staff. Cytokine Relapse 
Syndrome (CRS) occurred in 58 percent of patients with 23 percent 
having Grade III or IV events as graded on the University of 
Pennsylvania grading system.\50\ \51\ Median time to onset of CRS was 3 
days and median duration was 7 days with a range of 2 to 30 days. 
Twenty[dash]four percent of the patients required ICU admission. CRS 
was managed with supportive care in most patients. However, 16 percent 
required anti-cytokine therapy including tocilizumab (15 percent) and 
corticosteroids (11 percent). Other adverse events of special interest 
include infection in 34 percent (20 percent Grade III or IV) of 
patients, cytopenias not resolved by day 28 in 36 percent (27 percent 
Grade III or IV) of patients, neurologic events in 21 percent (12 
percent Grade III or IV) of patients, febrile neutropenia in 13 percent 
(13 percent Grade III or IV) of patients, and tumor lysis syndrome 1 
percent (1 percent Grade III). No deaths were attributed to 
tisagenlecleucel including no fatal cases of CRS or neurologic events. 
No cerebral edema was observed.\52\ Study 2 safety results were 
consistent to those of Study 1.\53\
---------------------------------------------------------------------------

    \50\ ClinicalTrials.gov, ``Phase IIa study of redirected 
autologous T-cells engineered to contain anti-CD19 attached to TCRz 
and 4-signaling domains in patients with chemotherapy relapsed or 
refractory CD19+ lymphomas.'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
    \51\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., 
``Sustained remissions following chimeric antigen receptor modified 
T-cells directed against CD-19 (CTL019) in patients with relapsed or 
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of 
the American Society of Hematology, December 6, 2015, Orlando, FL.
    \52\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
    \53\ Ibid.
---------------------------------------------------------------------------

    After reviewing the studies provided by the applicant, we are 
concerned that the applicant included patients who were diagnosed with 
TFL and PMBCL in the SCHOLAR-1 data results for their comparison 
analysis, possibly skewing results. Furthermore, the discontinue rate 
of the JULIET trial was high. Of 147 patients enrolled for infusion 
involving KYMRIAHTM, 43 discontinued prior to infusion (9 
discontinued due to inability to manufacture, and 34 discontinued due 
to patient[dash]related issues). Finally, the rate of patients who 
experienced a diagnosis of CRS was high, 58 percent.\54\
---------------------------------------------------------------------------

    \54\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

    The applicant for YESCARTATM stated that 
YESCARTATM represents a substantial clinical improvement 
over existing technologies when used in the treatment of patients with 
aggressive B-cell NHL. The applicant asserted that 
YESCARTATM can benefit the patient population with the 
highest unmet need, patients with R/R disease after failure of first-
line or second-line therapy, and patients who have failed or who are 
ineligible for ASCT. These patients, otherwise, have adverse outcomes 
as demonstrated by historical control data.
    Regarding clinical data for YESCARTATM, the applicant 
stated that historical control data was the only ethical and feasible 
comparison information for these patients with chemorefractory, 
aggressive NHL who have no other available treatment options and who 
are expected to have a very short lifespan without therapy. According 
to the applicant, based on meta-analysis of outcomes in patients with 
chemorefractory DLBCL, there are no curative options for patients with 
aggressive B-cell NHL, regardless of refractory subgroup, line of 
therapy, and disease stage with their median OS being 6.6 months.\55\
---------------------------------------------------------------------------

    \55\ Seshardi, T., et al., ``Salvage therapy for relapsed/
refractory diffuse large B-cell lymphoma,'' Biol Blood Marrow 
Transplant, 2008 Mar, vol. 14(3), pp. 259-67.
---------------------------------------------------------------------------

    In the applicant's FY 2018 new technology add-on payment 
application for the KTE-C19 technology, which was discussed in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 19889), the applicant cited 
ongoing clinical trials. The applicant provided updated data related to 
these ongoing clinical trials as part of its FY 2019 application for 
YESCARTATM.\56\ \57\ \58\ The updated analysis of the 
pivotal Study 1 (ZUMA-1, KTE-C19-101), Phase I and II occurred when 
patients had been followed for 12 months after infusion of 
YESCARTATM. Study 1 is a Phase I-II multi[dash]center, 
open[dash]label study evaluating the safety and efficacy of the use of 
YESCARTATM in patients with aggressive refractory NHL. The 
trial consists of two distinct phases designed as Phase I (n=7) and 
Phase II (n=101). Phase II is a multi-cohort open[dash]label study 
evaluating the efficacy of YESCARTATM.\59\ The applicant 
noted that, as of the analysis cutoff date for the interim analysis, 
the results of Study 1 demonstrated rapid and substantial improvement 
in objective, or ORR. After 6 and 12 months, the ORR was 82 and 83 
percent, respectively. Consistent response rates were observed in both 
Study 1, Cohort 1 (DLBCL; n=77) and Cohort 2 (PMBCL or TFL; n=24) and 
across covariates including disease stage, age, IPI scores, CD-19 
status, and refractory disease subset. In the updated analysis, results 
were consistent across age groups. In this analysis, 39 percent of 
patients younger than 65 years old were in ongoing response, and 50 
percent of patients at least 65 years old or older were in ongoing 
response. Similarly, the survival rate at 12 months was 57 percent 
among patients younger than 65 years old and 71 percent among patients 
at least 65 years old or older versus historical control of 26 percent. 
The applicant further stated that evidence of substantial clinical 
improvement regarding the efficacy of YESCARTATM for the 
treatment of patients with chemorefractory, aggressive B-cell NHL is 
supported by the CR of YESCARTATM in Study 1, Phase II (54 
percent) versus the historical control (7 percent).\60\ \61\ \62\ \63\

[[Page 20293]]

The applicant noted that CR rates were observed in both Study 1, Cohort 
1. The applicant reported that, in the updated analysis, results were 
in ongoing response (46 percent of patients at least 65 years old or 
older were in ongoing response). Similarly, the survival rate at 12 
months was 57 percent among patients younger than 65 years old and 71 
percent among patients at least 65 years old or older.\64\ \65\ \66\ 
\67\ The applicant also provided the following tables to depict data to 
support substantial clinical improvement (we refer readers to the two 
tables below).
---------------------------------------------------------------------------

    \56\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
1 of ZUMA-1: A phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \57\ Locke, F.L., et al., ``Primary results from ZUMA-1: A 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \58\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \59\ Neelapu, S.S., Locke, F.L., et al., 2016, ``KTE-C19 (anti-
CD19 CAR T cells) induces complete remissions in patients with 
refractory diffuse large B-cell lymphoma (DLBCL): Results from the 
pivotal Phase II ZUMA-1,'' Abstract presented at American Society of 
Hematology (ASH) 58th Annual Meeting, December 2016.
    \60\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \61\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \62\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \63\ Crump, et al., 2017, ``Outcomes in refractory diffuse large 
B-cell lymphoma: Results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
    \64\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: A phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \65\ Locke, F.L., et al., ``Primary results from ZUMA-1: A 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \66\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \67\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: Results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

                      Overall Response Rates Across All YESCARTA\TM\ Studies vs. SCHOLAR-1
----------------------------------------------------------------------------------------------------------------
                                        Study 1, Phase                                               Scholar-1
                   %                         I n=7               Study 1, Phase II n=101               n=529
----------------------------------------------------------------------------------------------------------------
Overall Response Rate (%).............              71  83......................................              26
Month 6 (%)...........................              43  41......................................  ..............
Ongoing with >15 Months of follow-up                43  42......................................  ..............
 (%).
Ongoing with >18 Months of follow-up                43  Follow-up ongoing.......................  ..............
 (%).
----------------------------------------------------------------------------------------------------------------


      Results for YESCARTA\TM\ Study 1, Phase II: Complete Response
------------------------------------------------------------------------
                                               Study 1, Phase II n=101
------------------------------------------------------------------------
Complete Response (%) (95 Percent           54 (44,64).
 Confidence Interval).
Duration of Response, median (range in      not reached.
 months).
Ongoing Responses, CR (%); Median 8.7       39.
 months follow-up; median overall survival
 has not been reached.
Ongoing Responses, CR (%); Median 15.3      40.
 months follow-up; median overall survival
 has not been reached.
------------------------------------------------------------------------

    According to the applicant, the 6-month and 12-month survival rates 
(95 percent CI) for patients enrolled in the SCHOLAR-1 study were 53 
percent (49 percent, 57 percent) and 28 percent (25 percent, 32 
percent).\68\ In contrast, the 6-month and 12-month survival rates (95 
percent CI) in the Study 1 updated analysis were 79 percent (70 
percent, 86 percent) and 60 percent (50 percent, 69 percent).\69\ \70\ 
\71\
---------------------------------------------------------------------------

    \68\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
    \69\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \70\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \71\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
---------------------------------------------------------------------------

    The applicant also cited safety results from the pivotal Study 1, 
Phase II. According to the applicant, the clinical trial protocol 
stipulated that patients were infused with YESCARTATM in the 
hospital inpatient setting and were monitored in the inpatient setting 
for at least 7 days for early identification and treatment involving 
YESCARTATM-related toxicities, which primarily included CRS 
diagnoses and neurotoxicities. The applicant noted that the interim 
analysis showed the length of stay following infusion of 
YESCARTATM was a median of 15 days. Ninety-three percent of 
patients experienced CRS diagnoses, 13 percent of whom experienced 
Grade III or higher (severe, life threatening or fatal) CRS diagnoses. 
The median time to onset of CRS diagnosis was 2 days (range 1 to 12 
days) and the median time to resolution was 8 days. Ninety-eight 
percent of patients recovered from CRS diagnosis. Neurologic events 
occurred in 64 percent of patients, 28 percent of whom experienced 
Grade III or higher (severe or life threatening) events. The median 
time to onset of neurologic events was 5 days (range 1 to 17 days). The 
median time to resolution was 17 days. Nearly all patients recovered 
from neurologic events. The medications most often used to treat these 
complications included growth factors, blood products, anti-infectives, 
steroids, tocilizumab, and vasopressors. Two patients died from 
YESCARTATM-related adverse events (hemophagocytic 
lymphohistiocytosis and cardiac arrest in the hospital setting as a 
result of CRS diagnoses). According to the applicant, there were no 
clinically important differences in adverse event rates across age 
groups (younger than 65 years old; 65 years old or older), including 
CRS diagnoses and neurotoxicity.\72\ \73\
---------------------------------------------------------------------------

    \72\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \73\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
---------------------------------------------------------------------------

    The applicant for YESCARTATM provided information 
regarding a safety expansion cohort, Study 1 Phase II Safety Expansion 
Cohort 3 that was created and carried out in 2017.

[[Page 20294]]

According to the applicant, this Safety Expansion Cohort investigated 
measures to mitigate the incidence and/or severity of anti-CD-19 CAR T 
therapy and evaluated an adverse event mitigation strategy by 
prophylactically using levetiracetam (Keppra), an anticonvulsant, and 
tocilizumab, an IL-6 receptor inhibitor. Of the 30 patients treated, 2 
patients experienced Grade III CRS diagnoses; 1 of the 2 patients 
recovered. In late April 2017, the other patient also experienced 
multi-organ failure and a neurologic event that subsequently progressed 
to a fatal Grade V cerebral edema that was deemed related to 
YESCARTATM treatment. This case of cerebral edema was 
observed in a 21 year-old male with refractory, rapidly progressive, 
symptomatic, stage IVB PMBCL. Analysis of the baseline serum and 
cerebrospinal fluid (CSF) obtained prior to any study treatment 
demonstrated high cytokine and chemokine levels. According to the 
applicant, this suggests a significant preexisting underlying 
inflammatory process, both systemically and within the central nervous 
system. Rapidly progressing disease, recent mediastinal XRT (external 
beam radiation therapy) and/or CMV (cytomegalovirus) reactivation may 
have contributed to the pre-existing state. There were no prior cases 
of cerebral edema in the 200 patients who have been treated with 
YESCARTATM in the ZUMA clinical development program. The 
single patient event from the Study 1 Phase II Safety Expansion Cohort 
3 was the first Grade V cerebral edema event.\74\ \75\
---------------------------------------------------------------------------

    \74\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \75\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (aci-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
---------------------------------------------------------------------------

    After reviewing the information submitted by the applicant as part 
of its FY 2019 new technology add-on payment application for 
YESCARTATM, we are concerned that it does not appear to 
include patient mortality data that was included as part of the 
applicant's FY2018 new technology add-on payment application for the 
KTE-C19 technology. In that application, as discussed in the FY 2018 
IPPS/LTCH PPS proposed rule (82 FR 19890), the applicant provided that 
by an earlier cutoff date for the interim analysis of Study 1, among 
all KTE-C19 treated patients, 12 patients in Study 1, Phase II, 
including 10 from Cohort 1, and 2 from Cohort 2, died. Eight of these 
deaths were due to disease progression. One patient had disease 
progression after receiving KTE-C19 treatment and subsequently had 
ASCT. After ASCT, the patient died due to sepsis. Two patients (3 
percent) died due to KTE-C19[dash]related adverse events (Grade V 
hemophagocytic lymphohistiocytosis event and Grade V anoxic brain 
injury), and one died due to an adverse event deemed unrelated to 
treatment involving KTE-C19 (Grade V pulmonary embolism), without 
disease progression. We believe it would be relevant to include this 
information because it is related to the same treatment that is the 
subject of the applicant's FY 2019 new technology add-on payment 
application.
    We also are concerned that there are few published results showing 
any survival benefits from the use of this treatment. In addition, we 
are concerned with the limited number of patients (n=108) that were 
studied after infusion involving YESCARTATM T-cell 
immunotherapy. Finally, we are concerned about the data related to the 
percentage of patients who experience complications or toxicities 
related to YESCARTATM treatment. According to the applicant, 
of the patients who participated in YESCARTATM clinical 
trials, 93 percent developed CRS diagnoses and 64 percent experienced 
neurological adverse events.
    We are inviting public comments on whether KYMRIAHTM and 
YESCARTATM meet the substantial clinical improvement 
criterion.
    Finally, we believe that in the context of these pending new 
technology add-on payment applications, there may also be merit in the 
suggestions from the public to create a new MS-DRG for the assignment 
of procedures involving the utilization of CAR T-cell therapy drugs and 
cases representing patients who receive treatment involving CAR 
T[dash]cell therapy as an alternative to our proposed MS-DRG assignment 
to MS-DRG 016 for FY 2019, or the suggestions to allow hospitals to 
utilize a CCR specific to procedures involving the utilization of 
KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs 
for FY 2019 as part of the determination of the cost of a case for 
purposes of calculating outlier payments for individual FY 2019 cases, 
new technology add-on payments, if approved, for individual FY 2019 
cases, and payments to IPPS-excluded cancer hospitals beginning in FY 
2019. If as discussed in section II.F.2.d. of the preamble of this 
proposed rule a new MS-DRG were to be created, then consistent with 
section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for 
a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of 
the Act. With respect to an alternative considered for the use of a CCR 
specific to procedures involving the utilization of 
KYMRIAHTM and YESCARTATM CAR T[dash]cell therapy 
drugs for FY 2019 as part of the determination of the cost of a case 
for purposes of calculating outlier payments for individual FY 2019 
cases, new technology add-on payments, if approved, for individual FY 
2019 cases, and payments to IPPS-excluded cancer hospitals beginning in 
FY 2019, we refer readers to the discussion in section II.A.4.g.2. of 
the Addendum to this proposed rule.
    We are inviting public comments regarding the most appropriate 
mechanism to provide payment to hospitals for new technologies such as 
CAR T[dash]cell therapy drugs, including through the use of new 
technology add[dash]on payments.
    We also are inviting public comments on how these payment 
alternatives would affect access to care, as well as how they affect 
incentives to encourage lower drug prices, which is a high priority for 
this Administration. In addition, we are considering alternative 
approaches and authorities to encourage value-based care and lower drug 
prices. We solicit comments on how the payment methodology alternatives 
may intersect and affect future participation in any such alternative 
approaches.
    We did not receive any written public comments in response to the 
New Technology Town Hall meeting notice published in the Federal 
Register regarding the application of KYMRIAHTM for new 
technology add-on payments for FY 2019.
    Below we summarize and respond to a written public comment we 
received during the open comment period regarding YESCARTATM 
in response to the New Technology Town Hall meeting notice published in 
the Federal Register.
    Comment: The applicant commented that the use of 
YESCARTATM as a treatment option has resulted in 
unprecedented and consistent treatment for patients with refractory 
large B[dash]cell lymphoma who previously did not have a curative 
option. In addition, the applicant summarized the substantial clinical 
improvement differences between YESCARTATM and the results 
of KYMRIAHTM's SCHOLAR-1 study. The applicant noted that, 
for the patients enrolled in the SCHOLAR-1 study, the median overall 
survival was 6 months and complete remission was

[[Page 20295]]

7 percent. Conversely, the applicant conveyed that, for the patients 
enrolled in YESCARTATM's Study 1, at median 15.4 months 
follow-up, responses were ongoing in 42 percent of the patients and 40 
percent of the patients were in complete remission.
    Response: We appreciate the applicant's input. We will take these 
comments into consideration when deciding whether to approve new 
technology add-on payments for YESCARTATM for FY 2019.
    We note that the applicant also provided comments that were 
unrelated to the substantial clinical improvement criterion. As stated 
earlier, the purpose of the new technology town hall meeting is 
specifically to discuss the substantial clinical improvement criterion 
in regard to pending new technology add-on payment applications for FY 
2019. Therefore, we are not summarizing these additional comments in 
this proposed rule. However, the applicant may resubmit its comments in 
response to proposals presented in this proposed rule.
b. VYXEOSTM (Cytarabine and Daunorubicin Liposome for 
Injection)
    Jazz Pharmaceuticals, Inc. submitted an application for new 
technology add-on payments for the VYXEOSTM technology for 
FY 2019. (We note that Celator Pharmaceuticals, Inc. submitted an 
application for new technology add[dash]on payments for 
VYXEOSTM for FY 2018. However, Celator Pharmaceuticals did 
not receive FDA approval by the July 1, 2017 deadline for applications 
for FY 2018.) VYXEOSTM was approved by FDA on August 3, 
2017, for the treatment of adults with newly diagnosed therapy-related 
acute myeloid leukemia (t[dash]AML) or AML with myelodysplasia-related 
changes (AML-MRC).
    AML is a type of cancer in which the bone marrow makes abnormal 
myeloblasts (immature bone marrow white blood cells), red blood cells, 
and platelets. If left untreated, AML progresses rapidly. Normally, the 
bone marrow makes blood stem cells that develop into mature blood cells 
over time. Stem cells have the potential to develop into many different 
cell types in the body. Stem cells can act as an internal repair 
system, dividing, essentially without limit, to replenish other cells. 
When a stem cell divides, each new cell has the potential to either 
remain a stem cell or become a specialized cell, such as a muscle cell, 
a red blood cell, or a brain cell, among others. A blood stem cell may 
become a myeloid stem cell or a lymphoid stem cell. Lymphoid stem cells 
become white blood cells. A myeloid stem cell becomes one of three 
types of mature blood cells: (1) Red blood cells that carry oxygen and 
other substances to body tissues; (2) white blood cells that fight 
infection; or (3) platelets that form blood clots and help to control 
bleeding. In patients diagnosed with AML, the myeloid stem cells 
usually become a type of myeloblast. The myeloblasts in patients 
diagnosed with AML are abnormal and do not become healthy white blood 
cells. Sometimes in patients diagnosed with AML, too many stem cells 
become abnormal red blood cells or platelets. These abnormal cells are 
called leukemia cells or blasts.
    AML is defined by the World Health Organization (WHO) as greater 
than 20 percent blasts in the bone marrow or blood. AML can also be 
diagnosed if the blasts are found to have a chromosome change that 
occurs only in a specific type of AML diagnosis, even if the blast 
percentage does not reach 20 percent. Leukemia cells can build up in 
the bone marrow and blood, resulting in less room for healthy white 
blood cells, red blood cells, and platelets. When this occurs, 
infection, anemia, or increased risk for bleeding may result. Leukemia 
cells can spread outside the blood to other parts of the body, 
including the central nervous system (CNS), skin, and gums.
    Treatment of AML diagnoses usually consists of two phases; 
remission induction and post-remission therapy. Phase one, remission 
induction, is aimed at eliminating as many myeloblasts as possible. The 
most common used remission induction regimens for AML diagnoses are the 
``7+3'' regimens using an antineoplastic and an anthracycline. 
Cytarabine and daunorubicin are two commonly used drugs for ``7+3'' 
remission induction therapy. Cytarabine is continuously administered 
intravenously over the course of 7 days, while daunorubicin is 
intermittently administered intravenously for the first 3 days. The 
``7+3'' regimen typically achieves a 70 to 80 percent complete 
remission (CR) rate in most patients under 60 years of age.
    High rates of CR are not generally seen in older patients for a 
number of reasons, such as different leukemia biology, much higher 
incidence of adverse cytogenetic abnormalities, higher rate of 
multidrug resistant leukemic cells, and comparatively lower patient 
performance status (the standard criteria for measuring how the disease 
impacts a patient's daily living abilities). Intensive induction 
therapy has worse outcomes in this patient population.\76\ The 
applicant asserted that many older adults diagnosed with AML have a 
poor performance status \77\ at presentation and multiple medical 
comorbidities that make the use of intensive induction therapy quite 
difficult or contraindicated altogether. Moreover, the CR rates of 
poor-risk patients diagnosed with AML are substantially lower in 
patients over 60 years of age; owing to a higher proportion of 
secondary AML, disease developing in the setting of a prior myeloid 
disorder, or prior cytotoxic chemotherapy. Therefore, less than half of 
older adults diagnosed with AML achieve CR with combination induction 
regimens.\78\
---------------------------------------------------------------------------

    \76\ Juliusson, G., Lazarevic, V., Horstedt, A.S., Hagberg, O., 
Hoglund, M., ``Acute myeloid leukemia in the real world: why 
population-based registries are needed'', Blood, 2012 Apr 26; vol. 
119(17), pp. 3890-9.
    \77\ Stone, R.M., et al., (2004), ``Acute myeloid leukemia. 
Hematology'', Am Soc Hematol Educ Program, 2004, pp. 98-117.
    \78\ Appelbaum, F.R., Gundacker, H., Head, D.R., ``Age and acute 
myeloid leukemia'', Blood 2006, vol. 107, pp. 3481-3485.
---------------------------------------------------------------------------

    According to the applicant, the combination of cytarabine and an 
anthracycline, either as ``7+3'' regimens or as part of a different 
regimen incorporating other cytotoxic agents, may be used as 
so[dash]called ``salvage'' induction therapy in the treatment of adults 
diagnosed with AML who experience relapse in an attempt to achieve CR. 
According to the applicant, while CR rates of success vary widely 
depending on underlying disease biology and host factors, there is a 
lower success rate overall in achievement of CR with ``7+3'' regimens 
compared to VYXEOSTM therapy. According to the applicant, 
``7+3'' regimens produce a CR rate of approximately 50 percent in 
younger adult patients who have relapsed, but were in CR for at least 1 
year.\79\
---------------------------------------------------------------------------

    \79\ Kantarjian, H., Rayandi, F., O'Brien, S., et al., 
``Intensive chemotherapy does not benefit most older patients (age 
70 years and older) with acute myeloid leukemia,'' Blood, 2010, vol. 
116(22), pp. 4422.
---------------------------------------------------------------------------

    VYXEOSTM is a nano-scale liposomal formulation 
containing a fixed combination of cytarabine and daunorubicin in a 5:1 
molar ratio. This formulation was developed by the applicant using a 
proprietary system known as CombiPlex. According to the applicant, 
CombiPlex addresses several fundamental shortcomings of conventional 
combination regimens, specifically the conventional ``7+3'' free drug 
dosing, as well as the challenges inherent in combination drug 
development, by identifying the most effective synergistic molar ratio 
of the

[[Page 20296]]

drugs being combined in vitro, and fixing this ratio in a nano-scale 
drug delivery complex to maintain the optimized combination after 
administration and ensuring exposure of this ratio to the tumor.
    Cytarabine and daunorubicin are co-encapsulated inside the 
VYXEOSTM liposome at a fixed ratiometrically, optimized 5:1 
cytarabine:daunorubicin molar ratio. According to the applicant, 
encapsulation maintains the synergistic ratios, reduces degradation, 
and minimizes the impact of drug transporters and the effect of known 
resistant mechanisms. The applicant stated that the 5:1 molar ratio has 
been shown, in vitro, to maximize synergistic antitumor activity across 
multiple leukemic and solid tumor cell lines, including AML, and in 
animal model studies to be optimally efficacious compared to other 
cytarabine:daunorubicin ratios. In addition, the applicant stated that 
in clinical studies, the use of VYXEOSTM has demonstrated 
consistently more efficacious results than the conventional ``7+3'' 
free drug dosing. VYXEOSTM is intended for intravenous 
administration after reconstitution with 19 mL sterile water for 
injection. VYXEOSTM is administered as a 90[dash]minute 
intravenous infusion on days 1, 3, and 5 (induction therapy), as 
compared to the ``7+3'' free drug dosing, which consists of two 
individual drugs administered on different days, including 7 days of 
continuous infusion.
    With regard to the newness criterion, as discussed earlier, if a 
technology meets all three of the substantial similarity criteria, it 
would be considered substantially similar to an existing technology and 
would not be considered ``new'' for purposes of new technology add-on 
payments.
    With regard to the first criterion, whether a product uses the same 
or a similar mechanism of action to achieve a therapeutic outcome, the 
applicant asserted that VYXEOSTM does not use the same or 
similar mechanism of action to achieve a therapeutic outcome as any 
other drug assigned to the same or a different MS-DRG. The applicant 
stated that no other AML treatment is designed, nor is able, to deliver 
a fixed, ratiometrically optimized and synergistic drug:drug ratio of 
5:1 cytarabine to daunorubicin, and selectively target and accumulate 
at the site of malignancy, while minimizing unwanted exposure, which 
the applicant based on the data results of preclinical and clinical 
studies of the use of VYXEOSTM. The applicant indicated that 
VYXEOSTM is a nano-scale liposomal formulation of a fixed 
combination of cytarabine and daunorubicin. Further, the applicant 
stated that the rationale for the development of VYXEOSTM is 
based on prolonged delivery of synergistic drug ratios utilizing the 
applicant's proprietary, ratiometric CombiPlex technology. According to 
the applicant, conventional ``7+3'' free drug dosing has no delivery 
complex, and these individual drugs are administered without regard to 
their ratio dependent interaction. According to the applicant, 
enzymatic inactivation and imbalanced drug efflux and transporter 
expression reduce drug levels in the cell. Further, decreased 
cytotoxicity leads to cell survival, emergence of drug resistant cells, 
and decreased overall survival.
    The applicant provided the results of clinical studies to 
demonstrate that the CombiPlex technology and the ratiometric dosing of 
VYXEOSTM represent a shift in anticancer agent delivery, 
whereby the fixed, optimized dosing provides less drug to achieve 
improved efficacy, while maintaining a favorable risk-benefit profile. 
The results of this ratiometric dosing approach are in contrast to the 
typical combination chemotherapy development that establishes the 
recommended dose of one agent and then adds subsequent drugs to the 
combination at increasing concentrations until the aggregate effects of 
toxicity are considered to be limiting (the ``7+3'' drug regimen). 
According to the applicant, this current approach to combination 
chemotherapy development assumes that maximum therapeutic activity will 
be achieved with maximum dose intensity for all drugs in the 
combination, and ignores the possibility that more subtle 
concentration-dependent drug interactions could result in frankly 
synergistic outcomes.
    The applicant maintained that, while VYXEOSTM contains 
no novel active agents, its innovative drug delivery mechanism appears 
to be a superior way to deliver the two active compounds in an effort 
to optimize their efficacy in killing leukemic blasts. However, we are 
concerned it is possible that VYXEOSTM may use a similar 
mechanism of action compared to currently available treatment options 
because both the current treatment regimen and VYXEOSTM are 
used in the treatment of AML by intravenous administration of 
cytarabine and daunorubicin. We are concerned that the mechanism of 
action of the ratiometrically fixed liposomal formulation of 
VYXEOSTM is the same or similar to that of the current 
intravenous administration of cytarabine and daunorubicin.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, we believe that potential cases 
representing patients who may be eligible for treatment involving 
VYXEOSTM would be assigned to the same MS[dash]DRGs as cases 
representing patients who receive treatment for diagnoses of AML.
    With respect to the third criterion, whether the new use of the 
technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, the applicant 
asserted that VYXEOSTM is indicated for use in the treatment 
of patients who have been diagnosed with high-risk AML. The applicant 
also asserted that VYXEOSTM is the first and only approved 
fixed combination of cytarabine and daunorubicin and is designed to 
uniquely control the exposure using a nano-scale drug delivery vehicle 
leading to statistically significant improvements in survival in 
patients who have been diagnosed with high-risk AML compared to the 
conventional ``7+3'' free drug dosing. We believe that 
VYXEOSTM involves the treatment of the same patient 
population as other AML treatment therapies.
    The following unique ICD-10-PCS codes were created to describe the 
administration of VYXEOSTM: XW033B3 (Introduction of 
cytarabine and caunorubicin liposome antineoplastic into peripheral 
vein, percutaneous approach, new technology group 3) and XW043B3 
(Introduction of cytarabine and daunorubicin liposome antineoplastic 
into central vein, percutaneous approach, new technology group 3).
    We are inviting public comments on whether VYXEOSTM is 
substantially similar to existing technology, including whether the 
mechanism of action of VYXEOSTM differs from the mechanism 
of action of the currently available treatment regimen. We also are 
inviting public comments on whether VYXEOSTM meets the 
newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis. The applicant used the FY 2016 MedPAR Hospital 
Limited Data Set (LDS) to assess the MS-DRGs to which cases 
representing potential patient hospitalizations that may be eligible 
for treatment involving VYXEOSTM would most likely be 
assigned. These potential cases representing patients who may be 
VYXEOSTM candidates were identified if they: (1) Were 
diagnosed with acute myeloid leukemia (AML); and (2) received 
chemotherapy during their

[[Page 20297]]

hospital stay. The cohort was further limited by excluding patients who 
had received bone marrow transplants. The cohort used in the analysis 
is referred to in this discussion as the primary cohort.
    According to the applicant, the primary cohort of cases spans 131 
unique MS-DRGs, 16 of which contained more than 10 cases. The most 
common MS-DRGs are MS-DRG 837, 834, 838, and 839. These 4 MS-DRGs 
account for 4,457 (81 percent) of the 5,483 potential cases in the 
cohort.
    The case-weighted unstandardized charge per case is approximately 
$185,844. The applicant then removed charges related to other 
chemotherapy agents because VYXEOSTM would replace the need 
for the use of current chemotherapy agents. The applicant explained 
that charges for chemotherapy drugs are grouped with charges for 
oncology, diagnostic radiology, therapeutic radiology, nuclear 
medicine, CT scans, and other imaging services in the ``Radiology 
Charge Amount.'' According to the applicant, removing 100 percent of 
the ``Radiology Charge Amount'' would understate the cost of care for 
treatment involving VYXEOSTM for patients who may be 
eligible because treatment involving VYXEOSTM would be 
unlikely to replace many of the services captured in the ``Radiology 
Charge Amount'' category. The applicant found that chemotherapy charges 
represent less than 20 percent of the charges associated with revenue 
centers grouped into the ``Radiology Charge Amount'' and removed 20 
percent of the radiology charge amount in order to capture the effect 
of removing chemotherapy pharmacy charges. The applicant noted that 
regardless of the type of induction chemotherapy, patients being 
treated for AML have AML-related complications, such as bleeding or 
infection that require supportive care drug therapy. For this reason, 
it is expected that eligible patients receiving treatment involving 
VXYEOSTM will continue to incur other pharmacy and IV 
therapy charges for AML[dash]related complications.
    After removing the charges for the prior technology, the applicant 
standardized the charges. The applicant then applied an inflation 
factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38527) to update the charges from FY 2016 to FY 2018. 
According to the applicant, for the primary new technology add-on 
payment cohort, the cost criterion was met without consideration of 
VYXEOSTM charges. The average case-weighted standardized 
charge was $170,458, which exceeds the average case[dash]weighted Table 
10 MS-DRG threshold amount of $82,561 by $87,897.
    The applicant provided additional analyses with the inclusion of 
VYXEOSTM charges under 3-vial, 4-vial, 6-vial, and 10-vial 
treatment scenarios. According to the applicant, the cost criterion was 
satisfied in each of these scenarios, with charges in excess of the 
average case-weighted threshold amount.
    Finally, the applicant also provided the following sensitivity 
analyses (that did not include charges for VYXEOSTM) using 
the methodology above:
     Sensitivity Analysis 1--limits the cohort to patients who 
have been diagnosed with AML without remission (C92.00 or C92.50) who 
received chemotherapy and did not receive bone marrow transplant.
     Sensitivity Analysis 2--the modified cohort was limited to 
patients who have been diagnosed with relapsed AML who received 
chemotherapy and did not receive bone marrow transplant.
     Sensitivity Analysis 3--the modified cohort was limited to 
patients who have been diagnosed with AML and who did not receive bone 
marrow transplant.
     Sensitivity Analysis 4--the primary cohort was maintained, 
but 100 percent of the charges for revenue centers grouped into the 
``Pharmacy Charge Amount'' were excluded.
     Sensitivity Analysis 5--identifies patients who have been 
diagnosed with AML in remission.
    The applicant noted that, in all of the sensitivity analysis 
scenarios, the average case[dash]weighted standardized charge per case 
exceeded the average case-weighted Table 10 MS-DRG threshold amount. 
Based on all of the analyses above, the applicant maintained that 
VYXEOSTM meets the cost criterion. We are inviting public 
comments on whether VYXEOSTM meets the cost criterion.
    With regard to substantial clinical improvement, according to the 
applicant, clinical data results have shown that the use of 
VYXEOSTM represents a substantial clinical improvement for 
the treatment of AML in newly diagnosed high[dash]risk, older (60 years 
of age and older) patients, marked by statistically significant 
improvements in overall survival, event free survival and response 
rates, and in relapsed patients age 18 to 65 years of age, where a 
statistically significant improvement in overall survival has been 
documented for the poor[dash]risk subset of patients as defined by the 
European Prognostic Index. In both groups of patients, the applicant 
stated that there was significant improvement in survival for the 
high[dash]risk patient group. The applicant provided the following 
specific clinical data results.
     The applicant stated that clinical data results show that 
treatment with VYXEOSTM for older patients (60 years of age 
and older) who have been diagnosed with untreated, high-risk AML will 
result in superior survival rates, as compared to patients treated with 
conventional ``7+3'' free drug dosing. The applicant provided a summary 
of the pivotal Phase III Study 301 in which 309 patients were enrolled, 
with 153 patients randomized to the VYXEOSTM treatment arm 
and 156 to the ``7+3'' free drug dosing treatment arm. Among patients 
who were 60 to 69 years old, there were 96 patients in the 
VYXEOSTM treatment arm and 102 in the ``7+3'' free drug 
dosing treatment arm. For patients who were 70 to 75 years old, there 
were 57 and 54 patients in each treatment arm, respectively. The 
applicant noted that the data results from the Phase III Study 301 
demonstrated that first-line treatment of patients diagnosed with high-
risk AML in the VYXEOSTM treatment arm resulted in 
substantially greater median overall survival of 9.56 months versus 
5.95 months in the ``7+3'' free drug dosing treatment arm (hazard ratio 
of 0.69; p =0.005).
     The applicant further asserted that high-risk, older 
patients (60 years old and older) previously untreated for diagnoses of 
AML will have a lower risk of early death when treated with 
VYXEOSTM than those treated with the conventional ``7+3'' 
free drug dosing. The applicant cited Medeiros, et al.,\80\ which 
reported a large observational study of Medicare beneficiaries and 
noted the following: The data result of the study showed that 50 to 60 
percent of elderly patients diagnosed with AML remain untreated 
following diagnosis; treated patients were more likely younger, male, 
and married, and less likely to have secondary diagnoses of AML, poor 
performance indicators, and poor comorbidity scores compared to 
untreated patients; and in multivariate survival analyses, treated 
patients exhibited a significant 33 percent lower risk of death 
compared to untreated patients.
---------------------------------------------------------------------------

    \80\ Medeiros, B., et al., ``Big data analysis of treatment 
patterns and outcomes among elderly acute myeloid leukemia patients 
in the United States'', Ann Hematol, 2015, vol. 94(7), pp. 1127-
1138.
---------------------------------------------------------------------------

    Based on data from the Phase III Study 301,\81\ the applicant cited 
the

[[Page 20298]]

following results: The rate of 60-day mortality was less in the 
VYXEOSTM treatment arm (13.7 percent) versus the ``7+3'' 
free drug dosing treatment arm (21.2 percent); the reduction in early 
mortality was due to fewer deaths from refractory AML (3.3 percent 
versus 11.3 percent), with very similar rates of 60-day mortality due 
to adverse events (10.4 percent versus 9.9 percent); there were fewer 
deaths in the VYXEOSTM treatment arm versus the ``7+3'' free 
drug dosing treatment arm during the treatment phase (7.8 percent 
versus 11.3 percent); and there were fewer deaths in the 
VYXEOSTM treatment arm during the follow-up phase than in 
the ``7+3'' free drug dosing treatment arm (59.5 percent versus 71.5 
percent).
---------------------------------------------------------------------------

    \81\ Lancet, J., et al., ``Final results of a Phase III 
randomized trial of VYXEOS (CPX-351) versus 7+3 in older patients 
with newly diagnosed, high-risk (secondary) AML''. Abstract and oral 
presentation at American Society of Clinical Oncology (ASCO), June 
2016.
---------------------------------------------------------------------------

     The applicant asserted that high-risk, older patients (60 
years old and older) previously untreated for a diagnosis of AML 
exhibited statistically significant improvements in response rates 
after treatment with VYXEOSTM versus treatment with the 
conventional ``7+3'' free drug chemotherapy dosing, suggesting that the 
use of VYXEOSTM is a superior pre-transplant induction 
treatment versus ``7+3'' free drug dosing. Restoration of normal 
hematopoiesis is the ultimate goal of any therapy for AML diagnoses. 
The first phase of treatment consists of induction chemotherapy, in 
which the goal is to ``empty'' the bone marrow of all hematopoietic 
elements (both benign and malignant), and to allow repopulation of the 
marrow with normal cells, thereby yielding remission. According to the 
applicant, post-induction response rates were significantly higher 
following the use of VYXEOSTM, which elicited a 47.7 percent 
total response rate and a 37.3 percent rate for CR, whereas the total 
response and CR rates for the ``7+3'' free drug dosing arm were 33.3 
percent and 25.6 percent, respectively. The CR + CRi rates for patients 
who were 60 to 69 years of age were 50.0 percent in the 
VYXEOSTM treatment arm and 36.3 percent in the ``7+3'' free 
drug dosing treatment arm, with an odds ratio of 1.76 (95 percent CI, 
1.00-3.10). For patients who were 70 to 75 years old, the rates of CR + 
CRi were 43.9 percent in the VYXEOSTM treatment arm and 27.8 
percent in the ``7+3'' free drug dosing treatment arm.
     The applicant asserted that VYXEOSTM treatment 
will enable high[dash]risk, older patients (60 years old and older) to 
bridge to allogeneic transplant, and VYXEOSTM treated 
responding patients will have markedly better outcomes following 
transplant. The applicant stated that diagnoses of secondary AML are 
considered incurable with standard chemotherapy approaches and, as with 
other high[dash]risk hematological malignancies, transplantation is a 
useful treatment alternative. The applicant further stated that 
autologous HSCT has limited effectiveness and at this time, only 
allogeneic HSCT with full intensity conditioning has been reported to 
produce long[dash]term remissions. However, the applicant stated that 
the clinical study by Medeiros, et al. reported that, while the use of 
allogeneic HSCT is considered a potential cure for AML, its use is 
limited in older patients because of significant baseline comorbidities 
and increased transplant-related morbidity and mortality. Patients in 
either treatment arm of the Phase III Study 301 responding to induction 
with a CR or CR+CRi (n=125) were considered for allogeneic 
hematopoietic cell transplant (HCT) when possible. In total, 91 
patients were transplanted: 52 (34 percent) from the 
VYXEOSTM treatment arm and 39 (25 percent) from the ``7+3'' 
free drug dosing treatment arm. Patient and AML characteristics were 
similar according to randomized arm, including percentage of patients 
in each treatment arm that underwent transplant in CR+CRi status. 
However, the applicant noted that the VYXEOSTM treatment arm 
contained a higher percentage of older patients (70 years old or older) 
who were transplanted (VYXEOSTM, 31 percent; ``7+3'' free 
drug dosing, 15 percent).\82\
---------------------------------------------------------------------------

    \82\ Stone Hematology 2004; Gordon AACR 2016; NCI. Available at: 
www.cancer.gov.
---------------------------------------------------------------------------

    According to the applicant, patient outcome following transplant 
strongly favored patients in the VYXEOSTM treatment arm. The 
Kaplan-Meier analysis of the 91 transplanted patients landmarked at the 
time of HCT showed that patients in the VYXEOSTM treatment 
arm had markedly better overall survival (hazard ratio 0.46; p=0.0046). 
The time-dependent Adjustment Model (Cox proportional hazard ratio) was 
used to evaluate the contribution of VYXEOSTM treatment to 
overall survival rate after adjustment for transplant and showed that 
VYXEOSTM treatment remained a significant contributor, even 
after adjusting for transplant. The time-dependent Cox hazard ratio for 
overall survival rates in the VYXEOSTM treatment arm versus 
the ``7+3'' free drug dosing treatment arm was 0.51 (95 percent CI, 
0.35-0.75; p=.0007).
     The applicant asserted that VYXEOSTM treatment 
of previously untreated older patients (60 years old and older) 
diagnosed with high-risk AML increases the response rate and improves 
survival compared to conventional ``7+3'' free drug dosing treatment in 
patients diagnosed with FLT3 mutation. The applicant noted the 
following: Approximately 20 to 30 percent of AML patients harbor some 
form of FLT3 mutation, AML patients with a FLT3 mutation have a higher 
relapse rate and poorer prognosis than the overall population diagnosed 
with AML, and the most common type of mutation is internal tandem 
duplication (ITD) mutation localized to a membrane region of the 
receptor.
    The applicant cited Gordon, et al., 2016,\83\ which reported on the 
significant anti-leukemic activity of VYXEOSTM treatment in 
AML blasts exhibiting high-risk characteristics, including FLT3-ITD, 
that are typically associated with poor outcomes when treated with 
conventional ``7+3'' free drug dosing treatment. To determine whether 
the improved complete remission and overall survival rates of treatment 
using VYXEOSTM as compared to conventional ``7+3'' free drug 
dosing treatment are attributable to liposome-mediated altered drug PK 
or direct cellular interactions with specific AML blast samples, the 
authors evaluated cytotoxicity in 53 AML patient specimens. 
Cytotoxicity results were correlated with patient characteristics, as 
well as VYXEOSTM treatment cellular uptake and molecular 
phenotype status including FLT3-ITD, which is a predictor of poor 
patient outcomes to conventional ``7+3'' free drug dosing treatment. 
The applicant stated that a notable result from this research was the 
observation that AML blasts exhibiting the FLT3-ITD phenotype exhibited 
some of the lowest IC50 (the 50 percent inhibitory 
concentration) values and, as a group, were five-fold more sensitive to 
the VYXEOSTM treatment than those with wild type FLT3. In 
addition, there was evidence that increased sensitivity to 
VYXEOSTM treatment was associated with increased uptake of 
the drug-laden liposomes by the patient-derived AML blasts. The 
applicant noted that Gordon, et al. 2016, concluded taken together, the 
data are consistent with clinical observations where 
VYXEOSTM treatment retains significant anti-

[[Page 20299]]

leukemic activity in AML patients exhibiting high-risk characteristics. 
The applicant also noted that a subanalysis of Phase III Study 301 
identified 22 patients who had been diagnosed with FLT3 mutation in the 
VYXEOSTM treatment arm and 20 in the ``7+3'' free drug 
dosing treatment arm, which resulted in the following response rates of 
FLT3 mutated patients, which were higher with VYXEOSTM 
treatments (15 of 22, 68.2 percent) versus ``7+3'' free drug dosing 
treatments (5 of 20, 25.0 percent); and the Kaplan-Meier analysis of 
the 42 FLT3 mutated patients showed that patients in the 
VYXEOSTM treatment arm had a trend towards better overall 
survival rates (hazard ratio 0.57; p=0.093).
---------------------------------------------------------------------------

    \83\ Gordon, M., Tardi, P., Lawrence, M.D., et al., ``CPX-351 
cytotoxicity against fresh AML blasts increased for FLT3-ITD+ cells 
and correlates with drug uptake and clinical outcomes,'' Abstract 
287 and poster presented at AACR (American Association for Cancer 
Research), April 2016.
---------------------------------------------------------------------------

     The applicant asserted that younger patients (18 to 65 
years old) with poor risk first relapse AML have shown higher response 
rates with VYXEOSTM treatment versus conventional 
``salvage'' chemotherapy. Overall, the applicant stated that the use of 
VYXEOSTM had an acceptable safety profile in this patient 
population based on 60-day mortality data. Study 205 \84\ was a 
randomized study comparing VYXEOSTM treatment against the 
investigator's choice of first ``salvage'' chemotherapy in patients who 
had been diagnosed with relapsed AML after a first remission lasting 
greater than 1 month (VYXEOSTM treatment arm, n=81 and 
``7+3'' free drug dosing treatment arm, n=44; 18 to 65 years old). 
Investigator's choice was almost always based on cytarabine + 
anthracycline, usually with the addition of one or two new agents. 
According to the applicant, treatment involving VYXEOSTM 
demonstrated a higher rate of morphological leukemia clearance among 
all patients, 43.2 percent versus 40.0 percent, and the advantage was 
most apparent in poor[dash]risk patients, 78.7 percent versus 44.4 
percent, as defined by the European Prognostic Index (EPI). In the 
subset analysis of this EPI poor[dash]risk patient subset, the 
applicant stated there was a significant improvement in survival rate 
(6.6 versus 4.2 months median, hazard ratio=0.55, p=0.02) and improved 
response rate (39.3 percent versus 27 percent). The applicant also 
noted the following: the safety profile for the use of 
VYXEOSTM was qualitatively similar to that of control 
``salvage'' therapy, with nearly identical 60-day mortality rates (14.8 
percent versus 15.9 percent); among VYXEOSTM treated 
patients, those with no history of prior HSCT (n=59) had higher 
response rates (54.2 percent versus 37.8 percent) and lower 60-day 
mortality (10.2 percent versus 16.2 percent); overall, the use of 
VYXEOSTM had acceptable safety based on 60-day mortality 
data, with somewhat higher frequency of neutropenia and 
thrombocytopenia-related grade III-IV adverse events. Even though these 
patients are younger (18 to 65 years old) than the population studied 
in Phase III Study 301 (60 years old and older), Study 205 patients 
were at a later stage of the disease and almost all had responded to 
first-line therapy (cytarabine + anthracycline) and had relapsed. The 
applicant also cited Cortes, et al. 2015,\85\ which reported that 
patients who have been diagnosed with first relapse AML have limited 
likelihood of response and short expected survival following 
``salvage'' treatment with the results from literature showing that:
---------------------------------------------------------------------------

    \84\ Cortes, J., et al., ``Significance of prior HSCT on the 
outcome of salvage therapy with CPX-351 or conventional chemotherapy 
among first relapse AML patients.'' Abstract and poster presented at 
ASH 2011.
    \85\ Cortes, J., et al., (2015), ``Phase II, multicenter, 
randomized trial of CPX-351 (cytarabine:daunorubicin) liposome 
injection versus intensive salvage therapy in adults with first 
relapse AML,'' Cancer, January 2015, pp. 234-42.
---------------------------------------------------------------------------

     Mitoxantrone, etoposide, and cytarabine induced response 
in 23 percent of patients, with median overall survival of only 2 
months.
     Modulation of deoxycitidine kinase by fludarabine led to 
the combination of fludarabine and cytarabine, resulting in a 36 
percent CR rate with median remission duration of 39 weeks.
     First salvage gemtuzumab ozogamicin induced CR+CRp (or 
CR+CRi) response in 30 percent of patients with CD33+ AML and, for 
patients with short first CR durations, appeared to be superior to 
cytarabine-based therapy.
    The applicant noted that Study 205 results showed the use of 
VYXEOSTM retained greater anti-leukemic efficacy in patients 
who have been diagnosed with poor[dash]risk first relapse AML, and 
produced higher morphological leukemia clearance rates (78.7 percent) 
compared to conventional ``salvage'' therapy (44 percent). The 
applicant further noted that, overall, the use of VYXEOSTM 
had acceptable safety profile in this patient population based on 60-
day mortality data.
    Based on all of the data presented above, the applicant concluded 
that VYXEOSTM represents a substantial clinical improvement 
over existing technologies. However, we are concerned that, although 
there was an improvement in a number of outcomes in Phase III Study 
301, specifically overall survival rate, lower risk of early death, 
improved response rates, better outcomes following transplant, 
increased response rate and overall survival in patients diagnosed with 
FLT3 mutation, and higher response rates versus conventional 
``salvage'' chemotherapy in younger patients diagnosed with 
poor[dash]risk first relapse, the improved outcomes may not be 
statistically significant. Furthermore, we are concerned that the 
overall improvement in survival from 5.95 months to 9.56 months may not 
represent a substantial clinical improvement. In addition, the rate of 
adverse events in both treatment arms of Study 205, given the 
theoretical benefit of reduced toxicity with the liposomal formulation, 
was similar for both the VYXEOSTM and ``7+3'' free drug 
treatment groups. Therefore, we also are concerned that there is a 
similar rate of adverse events, such as febrile neutropenia (68 percent 
versus 71 percent), pneumonia (20 percent versus 15 percent), and 
hypoxia (13 percent versus 15 percent), with the use of 
VYXEOSTM as compared with the conventional ``7+3'' free drug 
regimen.
    We are inviting public comments on whether VYXEOSTM 
meets the substantial clinical improvement criterion.
    Below we summarize and respond to a written public comment we 
received regarding the VYXEOSTM during the open comment 
period in response to the New Technology Town Hall meeting notice 
published in the Federal Register.
    Comment: The applicant provided a written comment to provide 
notification of the addition of VYXEOSTM to the Category 1 
Clinical Practice Guidelines in Oncology recommendation by the National 
Comprehensive Cancer Network. The applicant reported that the resources 
made available by NCCN are the NCCN Clinical Practice Guidelines in 
Oncology (NCCN Guidelines[reg]). The intent of the guidelines is to 
assist in the decision-making process of individuals involved in cancer 
treatment and care. According to the NCCN Guidelines[reg], Category 1 
clinical practices are based upon high[dash]level evidence, and there 
is uniform NCCN consensus that the intervention is appropriate. The 
February 7, 2018 NCCN Guidelines[reg] for Acute Myeloid Leukemia 
include a recommendation for cytarabine and daunorubicin for the 
treatment of adult patients 60 years of age or older who have been 
newly diagnosed with therapy-related AML (t-AML) or AML with 
myelodysplasia-related changes

[[Page 20300]]

(AML-RMC) to be included as a Category 1 clinical practice.\86\
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    \86\ NCCN Clinical Practice Guidelines in Oncology (NCCN 
Guidelines[reg]), Acute Myeloid Leukemia, Version I--2018, February 
7, 2018, https://www.nccn.org/professionals/physician_gls/pdf/aml.pdf.
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    Response: We appreciate the applicant's submission of additional 
information. We will take these comments into consideration when 
deciding whether to approve new technology add-on payments for 
VYXEOSTM for FY 2019.
c. VABOMERETM (Meropenem-Vaborbactam)
    Melinta Therapeutics, Inc., submitted an application for new 
technology add-on payments for VABOMERETM for FY 2019. 
VABOMERETM is indicated for use in the treatment of adult 
patients who have been diagnosed with complicated urinary tract 
infections (cUTIs), including pyelonephritis, caused by specific 
bacteria. VABOMERETM received FDA approval on August 29, 
2017.
    Complicated urinary tract infections (cUTIs) are defined as chills, 
rigors, or fever (temperature of greater than or equal to 38.0[deg]C); 
elevated white blood cell count (greater than 10,000/mm\3\), or left 
shift (greater than 15 percent immature PMNs); nausea or vomiting; 
dysuria, increased urinary frequency, or urinary urgency; lower 
abdominal pain or pelvic pain. Acute pyelonephritis is defined as 
chills, rigors, or fever (temperature of greater than or equal to 
38.0[deg]C); elevated white blood cell count (greater than 10,000/
mm\3\), or left shift (greater than 15 percent immature PMNs); nausea 
or vomiting; dysuria, increased urinary frequency, or urinary urgency; 
flank pain; costo[dash]vertebral angle tenderness on physical 
examination. Risk factors for infection with drug-resistant organisms 
do not, on their own, indicate a cUTI.\87\ The increasing incidence of 
multidrug-resistant gram-negative bacteria, such as carbapenem-
resistant Enterobacteriacea (CRE), has resulted in a critical need for 
new antimicrobials.
---------------------------------------------------------------------------

    \87\ Hooton, T. and Kalpana, G., 2018, ``Acute complicated 
urinary tract infection (including pyelonephritis) in adults,'' In 
A. Bloom (Ed.), UpToDate. Available at: https://www.uptodate.com/contents/acute-complicated-urinary-tract-infection-including-pyelonephritis-in-adults.
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    The applicant reported that it has developed a beta-lactamase 
combination antibiotic, VABOMERETM, to treat cUTIs, 
including those caused by certain carbapenem[dash]resistant organisms. 
By combining the carbapenem class antibiotic meropenem with 
vaborbactam, VABOMERETM protects meropenem from degradation 
by certain CRE strains.
    The applicant stated that meropenem, a carbapenem, is a broad 
spectrum beta[dash]lactam antibiotic that works by inhibiting cell wall 
synthesis of both gram-positive and gram-negative bacteria through 
binding of penicillin-binding proteins (PBP). Carbapenemase producing 
strains of bacteria have become more resistant to beta-lactam 
antibiotics, such as meropenem. However, meropenem in combination with 
vaborbactam, inhibits the carbapenemase activity, thereby allowing the 
meropenem to bind PBP and kill the bacteria.
    According to the applicant, vaborbactam, a boronic acid inhibitor, 
is a first-in class beta-lactamase inhibitor. Vaborbactam blocks the 
breakdown of carbapenems, such as meropenem, by bacteria containing 
carbapenemases. Although vaborbactam has no antibacterial properties, 
it allows for the treatment of resistant infections by increasing 
bacterial sensitivity to meropenem. New carbapenemase producing strains 
of bacteria have become more resistant to beta-lactam antibiotics. 
However, meropenem in combination with vaborbactam, can inhibit the 
carbapenemase enzyme, thereby allowing the meropenem to bind PBP and 
kill the bacteria. The applicant stated that the vaborbactem component 
of VABOMERETM helps to protect the meropenem from 
degradation by certain beta-lactamases, such as Klebsiella pneumonia 
carbapenemase (KPC). According to the applicant, VABOMERETM 
is the first of a novel class of beta[dash]lactamase inhibitors. The 
applicant asserted that VABOMERETM's use of vaborbactam to 
restore the efficacy of meropenem is a novel approach to fighting 
antimicrobial resistance.
    The applicant stated that VABOMERETM is indicated for 
use in the treatment of adult patients 18 years old and older who have 
been diagnosed with cUTIs, including pyelonephritis. The recommended 
dosage of VABOMERETM is 4 grams (2 grams of meropenem and 2 
grams of vaborbactam) administered every 8 hours by intravenous (IV) 
infusion over 3 hours with an estimated glomerular filtration rate 
(eGFR) greater than or equal to 50 mL/min/1.73 m\2\. The recommended 
dosage of VABOMERETM for patients with varying degrees of 
renal function is included in the prescribing information. The duration 
of treatment is for up to 14 days.
    As discussed earlier, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would not be considered ``new'' 
for purposes of new technology add-on payments.
    With regard to the first criterion, whether a product uses the same 
or a similar mechanism of action to achieve a therapeutic outcome, 
according to the applicant, VABOMERETM is designed primarily 
for the treatment of gram-negative bacteria that are resistant to other 
current antibiotic therapies. The applicant stated that 
VABOMERETM does not use the same or similar mechanism of 
action to achieve a therapeutic outcome. The applicant asserted that 
the vaborbactam component of VABOMERETM is a new class of 
beta-lactamase inhibitor that protects meropenem from degradation by 
certain enzymes such as carbapenamases. The applicant indicated that 
the structure of vaborbactam is distinctly optimized for inhibition of 
serine carbapenamases and for combination with a carbapenem antibiotic. 
Beta-lactamase inhibitors are agents that inhibit bacterial enzymes--
enzymes that destroy beta-lactam antibiotics and result in resistance 
to first[dash]line as well as ``last defense'' antimicrobials used in 
hospitals. According to the applicant, in order for carbapenems to be 
effective these enzymes must be inhibited. The applicant stated that 
the addition of vaborbactam as a potent inhibitor against Class A and C 
serine beta-lactamases, particularly KPC, represents a new mechanism of 
action. According to the applicant, VABOMERETM's use of 
vaborbactam to restore the efficacy of meropenem is a novel approach 
and that the FDA's approval of VABOMERETM for the treatment 
of cUTIs represents a significant label expansion because mereopenem 
alone (without the addition of vaborbactam) is not indicated for the 
treatment of patients with cUTI infections. Therefore, the applicant 
maintained that this technology and resistance-fighting mechanism 
involved in the therapeutic effect achieved by VABOMERETM is 
distinct from any other existing product. The applicant noted that 
VABOMERETM was designated as a qualified infectious disease 
product (QIDP) in January 2014. This designation is given to 
antibacterial products that treat serious or life[dash]threatening 
infections under the Generating Antibiotic Incentives Now (GAIN) title 
of the FDA Safety and Innovation Act.
    We believe that, although the molecular structure of the 
vaborbactam component of VABOMERETM is unique, the 
bactericidal action of VABOMERETM is the same as meropenem 
alone. In

[[Page 20301]]

addition, we note that there are other similar beta-lactam/beta-
lactamase inhibitor combination therapies currently available as 
treatment options. We are inviting public comments on whether 
VABOMERETM's mechanism of action is similar to other 
existing technologies.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant asserted that patients 
who may be eligible to receive treatment involving 
VABOMERETM include hospitalized patients who have been 
diagnosed with a cUTI. These potential cases can be identified by a 
variety of ICD-10-CM diagnosis codes. Therefore, potential cases 
representing patients who have been diagnosed with a cUTI who may be 
eligible for treatment involving VABOMERETM can be mapped to 
multiple MS-DRGs. The following are the most commonly used MS-DRGs for 
patients who have been diagnosed with a cUTI: MS-DRG 690 (Kidney and 
Urinary Tract Infections without MCC); MS-DRG 853 (Infectious and 
Parasitic Diseases with O.R. Procedure with MCC); MS-DRG 870 
(Septicemia or Sever Sepsis with Mechanical Ventilation 96+ Hours); MS-
DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ 
Hours with MCC); and MS-DRG 872 (Septicemia or Severe Sepsis without 
Mechanical Ventilation 96+ Hours without MCC). Potential cases 
representing patients who may be eligible for treatment with 
VABOMERETM would be assigned to the same MS-DRGs as cases 
representing hospitalized patients who have been diagnosed with a cUTI.
    With respect to the third criterion, whether the use of the 
technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, the applicant 
asserted that the use of VABOMERETM would treat a different 
patient population than existing and currently available treatment 
options. According to the applicant, VABOMERETM's use of 
vaborbactam to restore the efficacy of meropenem is a novel approach to 
fighting the global and national public health crisis of antimicrobial 
resistance, and as such, the use of VABOMERETM reaches 
different and expanded patient populations. The applicant further 
asserted that future patient populations are saved as well because the 
growth of resistant infections is slowed. The applicant believed that, 
because of the threat posed by gram-negative bacterial infections and 
the limited number of available treatments currently on the market or 
in development, the combination structure and development of 
VABOMERETM and its potential expanded use is new. While the 
applicant believes that VABOMERETM treats a different 
patient population, we note that VABOMERETM is only approved 
for use in the treatment of adult patients who have been diagnosed with 
cUTIs. Therefore, it appears that VABOMERETM treats the same 
population (adult patients with a cUTI) and there are already other 
treatment options available for diagnoses of cUTIs.
    We are concerned that VABOMERETM may be substantially 
similar to existing beta[dash]lactam/beta-lactamase inhibitor 
combination therapies. As noted above, we are concerned that 
VABOMERETM may have a similar mechanism of action, treats 
the same population (patients with a cUTI) and would be assigned to the 
same MS-DRGs (similar to existing beta[dash]lactam/beta-lactamase 
inhibitor combination therapies currently available as treatment 
options). We are inviting public comments on whether 
VABOMERETM meets the substantial similarity criteria and the 
newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. In order to identify the range of MS-DRGs to which cases 
representing potential patients who may be eligible for treatment using 
VABOMERETM may map, the applicant used the Premier Research 
Database from 2nd Quarter 2015 to 4th Quarter 2016. According to the 
applicant, Premier is an electronic laboratory, pharmacy, and billing 
data repository that collects data from over 600 hospitals and captures 
nearly 20 percent of U.S. hospitalizations. The applicant's list of 
most common MS-DRGs is based on data regarding CRE from the Premier 
Research Database. According to the applicant, approximately 175 member 
hospitals also submit microbiology data, which allowed the applicant to 
identify specific pathogens such as CRE infections. Using the Premier 
Research Database, the applicant identified over 350 MS-DRGs containing 
data for 2,076 cases representing patients who had been hospitalized 
for CRE infections. The applicant used the top five most common MS-
DRGs: MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical 
Ventilation >96 Hours with MCC), MS-DRG 853 (Infectious and Parasitic 
Disease with O.R. Procedure with MCC), MS-DRG 870 (Septicemia or Severe 
Sepsis with Mechanical Ventilation >96 Hours), MS-DRG 872 (Septicemia 
or Severe Sepsis without Mechanical Ventilation >96 Hours without MCC), 
and MS-DRG 690 (Kidney and Urinary Tract Infections without MCC), to 
which 627 cases representing potential patients who may be eligible for 
treatment involving VABOMERETM, or approximately 30.2 
percent of the total cases identified, mapped.
    The applicant reported that the resulting 627 cases from the 
identified top 5 MS-DRGs have an average case-weighted unstandardized 
charge per case of $74,815. We note that, instead of using actual 
charges from the Premier Research Database, the applicant computed this 
amount based on the average case-weighted threshold amounts in Table 10 
from the FY 2018 IPPS/LTCH PPS final rule. For the rest of the 
analysis, the applicant adjusted the average case-weighted threshold 
amounts (referred to above as the average case[dash]weighted 
unstandardized charge per case) rather than the actual average 
case[dash]weighted unstandardized charge per case from the Premier 
Research Database. According to the applicant, based on the Premier 
data, $1,999 is the mean antibiotic costs of treating patients 
hospitalized with CRE infections with current therapies. The applicant 
explained that it identified 69 different regimens that ranged from 1 
to 4 drugs from a study conducted to understand the current management 
of patients diagnosed with CRE infections. Accordingly, the applicant 
estimated the removal of charges for a prior technology of $1,999. The 
applicant then standardized the charges. The applicant applied an 
inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38527) to inflate the charges. The applicant noted that it 
does not yet have sufficient charge data from hospitals and will work 
to supplement its application with the information once it is 
available. However, for purposes of calculating charges, the applicant 
used the average charge as the wholesale acquisition cost (WAC) price 
for a treatment duration of 14 days and added this amount to the 
average charge per case. Using this estimate, the applicant calculated 
the final inflated case[dash]weighted standardized charge per case as 
$91,304, which exceeds the average case[dash]weighted threshold amount 
of $74,815. Therefore, the applicant asserted that 
VABOMERETM meets the cost criterion.
    We are concerned that, as noted earlier, instead of using actual 
charges from the Premier Research Database, the applicant computed the 
average case[dash]weighted unstandardized charge per case based on the 
average case-weighted threshold amounts in Table 10

[[Page 20302]]

from the FY 2018 IPPS/LTCH PPS final rule. Because the applicant did 
not demonstrate that the average case-weighted standardized charge per 
case for VABOMERETM (using actual charges from the Premier 
Research Database) would exceed the average case-weighted threshold 
amounts in Table 10, we are unable to determine if the applicant meets 
the cost criterion. We are inviting public comments on whether 
VABOMERETM meets the cost criterion, including with respect 
to the concern regarding the applicant's analysis.
    With regard to the substantial clinical improvement criterion, the 
applicant believed that the results from the VABOMERETM 
clinical trials clearly establish that VABOMERETM represents 
a substantial clinical improvement for treatment of deadly, antibiotic 
resistant infections. Specifically, the applicant asserted that 
VABOMERETM offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatments, and the use of VABOMERETM significantly improves 
clinical outcomes for a patient population as compared to currently 
available treatments. The applicant provided the results of the 
Targeting Antibiotic Non-sensitive Gram-Negative Organisms (TANGO) I 
and II clinical trials to support its assertion. TANGO[dash]I \88\ was 
a prospective, randomized, double-blinded trial of 
VABOMERETM versus piperacillin-tazobactam in patients with 
cUTIs and acute pyelonephritis (A/P). TANGO[dash]I is also a 
noninferiority (NI) trial powered to evaluate the efficacy, safety, and 
tolerability of VABOMERETM compared to piperacillin-
tazobactam in the treatment of cUTI, including AP, in adult patients. 
There were two primary endpoints for this study, one for the FDA, which 
was cure or improvement and microbiologic outcome of eradication at the 
end[dash]of[dash]treatment (EOT) (day 5 to 14) in the proportion of 
patients in the Microbiologic Evaluable Modified Intent-to-Treat (m-
MITT) population who achieved overall success (clinical cure or 
improvement and eradication of baseline pathogen to <104 CFU/mL), and 
one for the European Medicines Agency (EMA), which was the proportion 
of patients in the co-primary m-MITT and Microbiologic Evaluable (ME) 
populations who achieve a microbiologic outcome of eradication 
(eradication of baseline pathogen to <103 CFU/mL) at the 
test[dash]of[dash]cure (TOC) visit (day 15 to 23). The trial enrolled 
550 adult patients who were randomized 1:1 to receive 
VABOMERETM as a 3-hour IV infusion every 8 hours, or 
piperacillin 4g-tazobactam 500mg as a 30 minute IV infusion every 8 
hours, for at least 5 days for the treatment of a cUTI. Therapy was set 
at a minimum of 5 days to fully assess the efficacy and safety of 
VABOMERETM. After a minimum of 5 days of IV therapy, 
patients could be switched to oral levofloxacin (500 mg once every 24 
hours) to complete a total of 10-day treatment course (IV + oral), if 
they met pre-specified criteria. Treatment was allowed for up to 14 
days, if clinically indicated.
---------------------------------------------------------------------------

    \88\ Vabomere Prescribing Information, Clinical Studies (August 
2017), available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/209776lbl.pdf.
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    Patient demographic and baseline characteristics were balanced 
between treatment groups in the m-MITT population.
     Approximately 93 percent of patients were Caucasian and 66 
percent were females in both treatment groups.
     The mean age was 54 years old with 32 percent and 42 
percent of the patients 65 years old and older in the 
VABOMERETM and piperacillin/tazobactam treatment groups, 
respectively.
     Mean body mass index was approximately 26.5 kg/m\2\ in 
both treatment groups.
     Concomitant bacteremia was identified in 12 (6 percent) 
and 15 (8 percent) of the patients at baseline in the 
VABOMERETM and piperacillin/tazobactam treatment groups, 
respectively.
     The proportion of patients who were diagnosed with 
diabetes mellitus at baseline was 17 percent and 19 percent in the 
VABOMERETM and piperacillin/tazobactam treatment groups, 
respectively.
     The majority of the patients (approximately 90 percent) 
were enrolled from Europe, and approximately 2 percent of the patients 
were enrolled from North America. Overall, in both treatment groups, 59 
percent of the patients had pyelonephritis and 40 percent had a cUTI, 
with 21 percent and 19 percent of the patients having a 
non[dash]removable and removable source of infection, respectively.
    Mean duration of IV treatment in both treatment groups was 8 days 
and mean total treatment duration (IV and oral) was 10 days; patients 
with baseline bacteremia could receive up to 14 days of therapy (IV and 
oral). Approximately 10 percent of the patients in each treatment group 
in the m-MITT population had a levofloxacin-resistant pathogen at 
baseline and received levofloxacin as the oral switch therapy. 
According to the applicant, this protocol violation may have impacted 
the assessment of the outcomes at the TOC visit. These patients were 
not excluded from the analysis of adverse reactions (headache, 
phlebitis, nausea, diarrhea, and others) occurring in 1 percent or more 
of the patients receiving VABOMERETM, as the decision to 
switch to oral levofloxacin was based on post-randomization factors.
    Regarding the FDA primary endpoint, the applicant stated the 
following:
     Overall success rate at the end of IV treatment (day 5 to 
14) was 98.4 percent and 94 percent for the VABOMERETM and 
piperacillin/tazobactam treatment groups, respectively.
     The TOC--7 days post IV therapy was 76.5 percent (124 of 
162 patients) for the VABOMERETM group and 73.2 percent (112 
of 153 patients) for the piperacillin/tazobactam group.
     Despite being an NI trial, TANGO-I showed a statistically 
significant difference favoring VABOMERETM in the primary 
efficacy endpoint over piperacillin/tazobactam (a commonly used agent 
for gram-negative infections in U.S. hospitals).
     VABOMERETM demonstrated statistical superiority 
over piperacillin-tazobactam with overall success of 98.4 percent of 
patients treated with VABOMERETM in the TANGO-I clinical 
trial compared to 94.0 percent for patients treated with piperacillin/
tazobactam, with a treatment difference of 4.5 percent and 95 percent 
CI of (0.7 percent, 9.1 percent).
     Because the lower limit of the 95 percent CI is also 
greater than 0 percent, VABOMERETM was statistically 
superior to piperacillin/tazobactam.
     Because non-inferiority was demonstrated, then superiority 
was tested. Further, the applicant asserted that a noninferiority 
design may have a ``superiority'' hypothesis imbedded within the study 
design that is appropriately tested using a non[dash]inferiority design 
and statistical analysis. As such, according to the applicant, 
superiority trials concerning antibiotics are impractical and even 
unethical in many cases because one cannot randomize patients to 
receive inactive therapies. The applicant stated that it would be 
unethical to leave a patient with a severe infection without any 
treatment.
     The EMA endpoint of eradication rates at TOC were higher 
in the VABOMERETM group compared to the piperacillin/
tazobactam group in both the m-MITT (66.7 percent versus 57.7 percent) 
and ME (66.3 percent and 60.4 percent) populations; however, it was

[[Page 20303]]

not a statistically significant improvement.
    We note that the eradication rates of the EMA endpoint were not 
statistically significant. We are inviting public comments with respect 
to our concern as to whether the FDA endpoints demonstrating 
noninferiority are statistically sufficient data to support that 
VABOMERETM is a substantial clinical improvement in the 
treatment of patients with a cUTI.
    In TANGO-I the applicant offers data comparing 
VABOMERETM to piperacillin-tazobactam EOT/TOC rates in the 
setting of cUTIs/AP, but does not offer a comparison to other 
antibiotic treatments of cUTIs known to be effective against gram-
negative uropathogens, specifically other carbapenems.\89\ We also note 
that the study population is largely European (98 percent), and given 
the variable geographic distribution of antibiotic resistance we are 
concerned that the use of piperacillin/tazobactam as the comparator may 
have skewed the eradication rates in favor of VABOMERETM, or 
that the favorable results would not be applicable to patients in the 
United States. We are inviting public comments regarding the lack of a 
comparison to other antibiotic treatments of cUTIs known to be 
effective against gram-negative uropathogens, whether the comparator 
the applicant used in its trial studies may have skewed the eradication 
rates in favor of VABOMERETM, and if the favorable results 
would be applicable to patients in the United States to allow for 
sufficient information in evaluating substantial clinical improvement.
---------------------------------------------------------------------------

    \89\ Golan, Y., 2015, ``Empiric therapy for hospital-acquired, 
Gram-negative complicated intra-abdominal infection and complicated 
urinary tract infections: a systematic literature review of current 
and emerging treatment options,'' BMC Infectious Diseases, vol. 15, 
pp. 313. http://doi.org/10.1186/s12879-015-1054-1.
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    The applicant asserted that the TANGO[dash]II study \90\ of 
monotherapy with VABOMERETM compared to best available 
therapy (BAT) (salvage care of cocktails of toxic/poorly efficacious 
last resort agents) for the treatment of CRE infections showed 
important differences in clinical outcomes, including reduced 
mortality, higher clinical cure at EOT and TOC, benefit in important 
patient subgroups of HABP/VABP, bacteremia, renal impairment, and 
immunocompromised and reduced AEs, particularly lower nephrotoxicity in 
the study group. TANGO[dash]II is a multi[dash]center, randomized, 
Phase III, open-label trial of patients with infections due to known or 
suspected CRE, including cUTI, AP, HABP/VABP, bacteremia, or 
complicated intra-abdominal infection (cIAI). Eligible patients were 
randomized 2:1 to monotherapy with VABOMERETM or BAT for 7 
to 14 days. There were no consensus BAT regimes, it could include 
(alone or in combination) a carbapenem, aminoglycoside, polymyxin B, 
colistin, tigecycline or ceftazidime-avibactam.
---------------------------------------------------------------------------

    \90\ Alexander, et al., ``CRE Infections: Results From a 
Retrospective Series and Implications for the Design of Prospective 
Clinical Trials,'' Open Forum Infectious Diseases.
---------------------------------------------------------------------------

    A total of 72 patients were enrolled in the TANGO[dash]II trial. Of 
these, 50 of the patients (69.4 percent) had a gram-negative baseline 
organism (m-MITT population), and 43 of the patients (59.7 percent) had 
a baseline CRE (mCRE-MITT population). Within the mCRE-MITT population, 
20 of the patients had bacteremia, 15 of the patients had a cUTI/AP, 5 
of the patients had HABP/VABP, and 3 of the patients had a cIAI. The 
most common baseline CRE pathogens were K. pneumoniae (86 percent) and 
Escherichia coli (7 percent). Cure rates of the mCRE-MITT population at 
EOT for VABOMERETM and BAT groups were 64.3 percent and 40 
percent, respectively, TOC, 7 days after EOT, were 57.1 percent and 
26.7 percent, respectively, 28-day mortality was 17.9 percent (5 of 28 
patients) and 33.3 percent (5 of 15 patients), respectively. The 
applicant asserted that with further sensitivity analysis, taking into 
account prior antibiotic failures among the VABOMERETM study 
arm, the 28[dash]day all-cause mortality rates were even lower among 
VABOMERETM versus BAT patients (5.3 percent (1 of 19 
patients) versus 33.3 percent (5 of 15 patients)). Additionally, in 
July 2017, randomization in the trial was stopped early following a 
recommendation by the TANGO[dash]II Data Safety Monitoring Board (DSMB) 
based on risk-benefit considerations that randomization of additional 
patients to the BAT comparator arm should not continue.
    According to the applicant, subgroup analyses of the TANGO[dash]II 
studies include an analysis of adverse events in which 
VABOMERETM compared to BAT demonstrated the following:
     VABOMERETM was associated with less severe 
treatment emergent adverse events of 13.3 percent versus 28 percent.
     VABOMERETM was less likely to be associated 
with a significant increase in creatinine 3 percent versus 26 percent.
     Efficacy results of the TANGO[dash]II trial cUTI/AP 
subgroup demonstrated VABOMERETM was associated with an 
overall success rate at EOT for the mCRE-MITT populations of 72 percent 
(8 of 11 patients) versus 50 percent (2 of 4 patients) and an overall 
success rate at TOC of 27.3 percent (3 of 7 patients) versus 50 percent 
(2 of 4 patients).
    We note that many of the TANGO[dash]II trial outcomes showing 
improvements in the use of VABOMERETM over BAT are not 
statistically significant. We also note that the TANGO[dash]II study 
included a small number of patients; the study population in the 
mCRE[dash]MITT only included 43 patients. Additionally, the cUTI/AP 
subgroup analysis only included a total of 15 patients and did not show 
an increased overall success rate at TOC (27.3 percent versus 50 
percent) over the BAT group. We are inviting public comments with 
respect to our concern as to whether the lack of statistically 
significant outcomes and the small number of study participants allows 
for enough information to evaluate substantial clinical improvement.
    We are inviting public comments on whether the 
VABOMERETM technology meets the substantial clinical 
improvement criterion, including with respect to the specific concerns 
we have raised.
    Below we summarize and respond to written public comments we 
received regarding VABOMERETM during the open comment period 
in response to the New Technology Town Hall meeting notice published in 
the Federal Register.
    Comment: The applicant submitted information regarding the 
comparison of VABOMERETM to other antibiotic treatments for 
a cUTI known to be effective against gram[dash]negative uropathogens. 
The applicant asserted that doripenem is a carbapenem antibiotic and, 
therefore, is subject to degradation and inactivation by 
carbapenemases, including the Klebsiella pneumoniae carbapenemase 
(KPC). The applicant stated that doripenem has been shown to have poor 
activity in vitro against CRE and VABOMERETM, in contrast, 
takes a novel, first in class beta-lactamase inhibitor, vaborbactam, 
and combines it with the carbapenem drug meropenem in a manner that--
because of the unique, novel, and new properties of vaborbactam when 
combined with meropenem to create VABOMERETM--to effectively 
restore the effectiveness of meropenem (a carbapenem) in fighting 
against carbapenem-resistant bacteria. The applicant indicated that 
extensive in vitro studies have been conducted and show that 
carbapenems such as doripenem have poor activity in vitro against KPC-
producing CRE. Because the in vitro data show that doripenem has poor 
activity against KPC-producing CRE, the applicant stated that no 
comparative clinical efficacy data

[[Page 20304]]

between doripenem and VABOMERETM exists.
    Response: We appreciate the applicant's comments. However, we 
believe that because the study population for VABOMERETM is 
patients with cUTIs and not UTIs with KPCs, we are concerned that the 
applicant does not offer comparison data to other antibiotic treatments 
of cUTIs known to be effective against gram[dash]negative uropathogens. 
As noted, we are inviting public comments on whether the 
VABOMERETM technology meets the substantial clinical 
improvement criterion, including with respect to the specific concerns 
we have raised.
d. DURAGRAFT[reg] Vascular Conduit Solution
    Somahlution, Inc. submitted an application for new technology add-
on payments for DURAGRAFT[reg] for FY 2019. DURAGRAFT[reg] is designed 
to protect the endothelium of the vein graft following harvesting and 
prior to grafting to prevent vascular graft disease (VGD) and vein 
graft failure (VGF), and to reduce the clinical complications 
associated with graft failure. These complications include myocardial 
infarction and repeat revascularization. DURAGRAFT[reg] is formulated 
into a solution that is used during standard graft handling, flushing, 
and bathing steps.
    VGD is the principal cause of both early (within 30 days) and 
intermediate/late (months to years) VGF. The principal mediator of VGD 
following grafting in bypass surgeries is damage that occurs during 
intra-operative vascular graft harvesting and handling.91 92 
Endothelium can be destroyed or damaged intraoperatively through the 
acute physical stress of harvesting, storage, and handling, and through 
more insidious processes such as those associated with ischemic injury, 
metabolic stress and oxidative damage. According to the applicant, more 
recently, it has been demonstrated that damage associated with graft 
storage solution has the highest correlation with the development of 
12-month VGF.93 94 This is likely due not only to the active 
tissue damage associated with commonly used storage solutions, but also 
to their inability to protect against ischemic 
injury.95 96 97 VGD encompasses the pathophysiological 
changes that occur in damaged vein grafts following their use in 
surgical grafting. These changes, apparent within minutes to hours of 
grafting, are manifested as endothelial dysfunction, death and/or 
denudation and include pro-inflammatory, pro-thrombogenic and 
proliferative changes within the graft. These initial responses to 
damage cause even more damage in a domino-like effect, thereby 
perpetuating the response-damage cycle that is the basis of VGD 
progression.
---------------------------------------------------------------------------

    \91\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, 
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation 
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft 
Surgery: follow-up from the PREVENT IV randomized clinical trial'', 
Jama Surg, 2014, vol. 149(8), pp. 798-805.
    \92\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein Graft 
Disease: `Never Ending Story' of the Eternal Return,'' Res 
Cardiovasc Med, 2014, vol. 3(3), pp. e21092.
    \93\ Ibid.
    \94\ Ibid.
    \95\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive 
deendothelialization and thrombogenicity in routinely prepared vein 
grafts for coronary bypass operations: facts and remedy,'' Century 
Publishing Corporation, International Journal of Clinical 
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
    \96\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ``Even 
short-time storage in physiological saline solution impairs 
endothelial vascular function of saphenous vein grafts,'' Elsevier 
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, 
vol. 40(4), pp. 811-815.
    \97\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its 
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann 
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

    The applicant further noted that endothelial dysfunction and 
inflammation also result in the diminished ability of the graft to 
respond appropriately to new blood flow patterns and adaptive positive 
remodeling may be thwarted. This is because proper remodeling is 
dependent upon a functional endothelial response to shear stress that 
involves the production of remodeling factors by the endothelium 
including nitro vasodilators, prostaglandins, lipoxyoxygenases, 
hyperpolarizing factors and other growth factors. Therefore, damaged, 
missing and/or dysfunctional endothelial cells prevent, to varying 
extents, graft adaption which makes the graft susceptible to shear-
mediated endothelial damage. The collective damage results in intimal 
hyperplasia or graft wall thickening that is the basis for atheroma 
development and subsequent lumen narrowing and graft failure, which is 
the end state of VGD. The applicant pointed to several references to 
highlight pathologic changes leading to VGD, occlusion and loss of 
vasomotor function.98 99 100 101 102 103 104 105 The 
applicant summarized, that when the damaged luminal surface of a vein 
graft is presented to the bloodstream at time of reperfusion, a 
domino[dash]effect of further damage is triggered through inflammatory, 
thrombogenic and aberrant hyper-proliferative processes that lead to 
both early and late VGF. Presenting an intact functional endothelial 
layer at the time of grafting is, therefore, tantamount to protecting 
the graft and its associated endothelium from damage that occurs post-
grafting, in turn conferring protection against graft failure. Given 
the low success rate of failed graft intervention, addressing graft 
endothelial protection at the time of surgery is critical.\106\
---------------------------------------------------------------------------

    \98\ Verrier, E.D., Boyle, E.M., ``Endothelial cell injury in 
cardiovascular surgery: an overview,'' Ann Thorac Surg, 1997, vol. 
64, pp. S2-S8.
    \99\ Harskamp, R.E., Lopes, R.D., Baisden, C.E., et al., 
``Saphenous vein graft failure after coronary artery bypass surgery: 
pathophysiology, management, and future directions,'' Ann Thorac 
Surg., 2013 May, vol. 257(5), pp. 824-33.
    \100\ Hess, C.N., Lopes, R.D., Gibson, C.M., et al., ``Saphenous 
vein graft failure after coronary artery bypass surgery: insights 
from PREVENT IV,'' Circulation 2014 Oct 21, vol. 130(17), pp. 1445-
51.
    \101\ Sellke, F.W., Boyle, E.M., Verrier, E.D., ``The 
pathophysiology of vasomotor dysfunction,'' Ann Thorac Surg, 1997, 
vol. 64, pp. S9-S15.
    \102\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein 
graft disease: pathogenesis, predisposition and prevention,'' 
Circulation 1998, vol. 97(9), pp. 916-31.
    \103\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr 
Opin Cardiol, 1995, vol. 10, pp. 562-8.
    \104\ Davies, M.G., Hagen, P.O., ``Pathophysiology of vein graft 
failure: a review,'' Eur J Vasc Endovasc Surg, 1995, vol. 9, pp. 7-
18.
    \105\ Edmunds, L.H., ``Techniques of myocardial 
revascularization. In: Edmunds LH, ed. Cardiac surgery in the 
adult,'' New York: McGraw-Hill, 1997, pp. 481-534.
    \106\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., 
``Saphenous vein graft disease: review of pathophysiology, 
prevention, and treatment,'' Cardiol, Rev 2013, vol. 21(2), pp. 101-
9.
---------------------------------------------------------------------------

    With respect to the newness criterion, DURAGRAFT[reg] has not 
received FDA approval at the time of the development of this proposed 
rule. The applicant indicated that it anticipates FDA approval of its 
premarket application by the second quarter of 2018. The applicant also 
indicated that ICD-10-PCS code XY0VX83 (Extracorporeal introduction of 
endothelial damage inhibitor to vein graft, new technology group 3) 
would identify procedures involving the use of the DURAGRAFT[reg] 
technology.
    As discussed earlier, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would not be considered ``new'' 
for purposes of new technology add-on payments.
    With regard to the first criterion, whether a product uses the same 
or similar mechanism of action to achieve a therapeutic outcome, 
according to the applicant, there are currently no other treatment 
options available with the

[[Page 20305]]

same mechanism of action as that of DURAGRAFT[reg]. Moreover, the 
applicant conveyed there are currently no commercial solutions approved 
for treating arteries or veins intended for bypass surgery. The 
applicant explained that the DURAGRAFT[reg] treatment has been 
formulated into a solution so that it can be used to treat grafts 
during handling, flushing, and bathing steps without changing surgical 
practice to perform the treatment. According to the applicant, 
DURAGRAFT[reg] is specifically designed to inhibit endothelial cell 
damage and death, as well as prevent damage to other cells of the 
vascular conduit, which achieves a superior clinical outcome in 
coronary artery bypass grafting (CABG).
    The applicant did not directly address within its application the 
second and third criteria; whether a product is assigned to the same or 
a different MS-DRG and whether the new use of the technology involves 
the treatment of the same or similar type of disease and the same or 
similar patient population. However, the applicant stated, as 
previously indicated, that there are currently no other treatment 
options available that utilize the same mechanism of action as that of 
the DURAGRAFT[reg].
    Based on the applicant's statements presented above, we are 
concerned that the mechanism of action of the DURAGRAFT[reg] may be the 
same or similar to other vein graft storage solutions. We also are 
concerned with the lack of information regarding how the technology 
meets the substantial similarity criteria. Specifically, we understand 
that there are other vein graft storage solutions available, such as 
various saline, blood, and electrolyte solutions. We believe that 
additional information would be helpful regarding whether the use of 
the technology treats the same or similar patient population or type of 
disease, and whether the product is assigned to the same or different 
MS-DRG as compared to the other storage solutions. We are inviting 
public comments on whether DURAGRAFT[reg] meets the substantial 
similarity criteria and the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. In order to identify the range of MS-DRGs that cases 
representing potential patients who may be eligible for treatment using 
DURAGRAFT[reg] may map to, the applicant identified all MS-DRGs for 
patients who underwent coronary artery bypass grafting (CABG). 
Specifically, the applicant searched the FY 2016 MedPAR file for claims 
that included IPPS patients and identified potential cases by the 
following ICD-10-PCS procedure codes:

------------------------------------------------------------------------
 ICD-10-PCS procedure code                   Code title
------------------------------------------------------------------------
021009W...................  Bypass coronary artery, one artery from
                             aorta with autologous venous tissue, open
                             approach.
02100AW...................  Bypass coronary artery, one artery from
                             aorta with autologous arterial tissue, open
                             approach.
021049W...................  Drainage of intracranial subdural space,
                             percutaneous approach
02104AW...................  Bypass cerebral ventricle to cerebral
                             cisterns, percutaneous approach.
021109W...................  Bypass coronary artery, two arteries from
                             aorta with autologous venous tissue, open
                             approach.
02110AW...................  Bypass coronary artery, two arteries from
                             aorta with autologous arterial tissue, open
                             approach.
021149W...................  Bypass coronary artery, two arteries from
                             aorta with autologous venous tissue,
                             percutaneous endoscopic approach.
02114AW...................  Bypass coronary artery, two arteries from
                             aorta with autologous arterial tissue,
                             percutaneous endoscopic approach.
021209W...................  Bypass coronary artery, three arteries from
                             aorta with autologous venous tissue, open
                             approach.
02120AW...................  Bypass coronary artery, three arteries from
                             aorta with autologous arterial tissue, open
                             approach.
021249W...................  Bypass coronary artery, three arteries from
                             aorta with autologous venous tissue,
                             percutaneous endoscopic approach.
02124AW...................  Bypass coronary artery, three arteries from
                             aorta with autologous arterial tissue,
                             percutaneous endoscopic approach.
021309W...................  Bypass coronary artery, four or more
                             arteries from aorta with autologous venous
                             tissue, open approach.
02130AW...................  Bypass coronary artery, four or more
                             arteries from aorta with autologous
                             arterial tissue, open approach.
021349W...................  Bypass coronary artery, four or more
                             arteries from aorta with autologous venous
                             tissue, percutaneous endoscopic approach.
02134AW...................  Bypass coronary artery, four or more
                             arteries from aorta with autologous
                             arterial tissue, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    This resulted in potential cases spanning 98 MS-DRGs, with 
approximately 93 percent of all potential cases, 59,139, mapping to the 
following 10 MS-DRGs:

------------------------------------------------------------------------
          MS-DRG                            MS-DRG title
------------------------------------------------------------------------
MS-DRG 3.................  Extracorporeal Membrane Oxygenation (ECMO) or
                            Tracheostomy with Mechanical Ventilation 96+
                            Hours or Principal Diagnosis Except Face,
                            Mouth & Neck with Major Operating Room.
MS-DRG 216...............  Cardiac Valve and Other Major Cardiothoracic
                            Procedure with Cardiac Catheterization with
                            MCC.
MS-DRG 219...............  Cardiac Valve and Other Major Cardiothoracic
                            Procedure without Cardiac Catheterization
                            with MCC.
MS-DRG 220...............  Cardiac Valve and Other Major Cardiothoracic
                            Procedure without Cardiac Catheterization
                            with CC.
MS-DRG 228...............  Other Cardiothoracic Procedures with MCC.
MS-DRG 229...............  Other Cardiothoracic Procedures without CC.
MS-DRG 233...............  Coronary Bypass with Cardiac Catheterization
                            with MCC.
MS-DRG 234...............  Coronary Bypass with Cardiac Catheterization
                            without MCC.
MS-DRG 235...............  Coronary Bypass without Cardiac
                            Catheterization with MCC.
MS-DRG 236...............  Coronary Bypass without Cardiac
                            Catheterization without MCC.
------------------------------------------------------------------------

    Using the 59,139 identified cases, the average case-weighted 
unstandardized charge per case was $200,886. The applicant then 
standardized the charges. The applicant did not remove charges for any 
current treatment because, as

[[Page 20306]]

discussed above, the applicant indicated there are no other current 
treatment options available. The applicant noted that it did not 
provide an inflation factor to project future charges. The applicant 
added charges for the DURAGRAFT[reg] technology. This charge was 
created by applying the national average CCR for implantable devices of 
0.332 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103) to the 
cost of the device. According to the applicant, no further charges or 
related charges were added. Based on the FY 2018 IPPS/LTCH PPS Table 10 
thresholds, the average case-weighted threshold amount was $164,620. 
The final average case-weighted standardized charge per case was 
$185,575. Because the final average case-weighted standardized charge 
per case exceeds the average case-weighted threshold amount, the 
applicant maintained that the technology meets the cost criterion. We 
are inviting public comments on whether DURAGRAFT[reg] meets the cost 
criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that the substitutional use of DURAGRAFT[reg] 
significantly reduces clinical complications associated with VGF 
following CABG surgery.
    According to the applicant, DURAGRAFT[reg] provides a benefit by 
protecting vascular grafts and their fragile luminal endothelial layer 
from the point of harvest until the point of grafting; an 
intra[dash]operative ischemic interval lasting from about 10 minutes to 
3 hours depending on the complexity of the surgery. According to the 
applicant, there are currently no products available to protect 
vascular grafts during this time interval. The current standard 
practice is to place grafts in heparinized saline or heparinized 
autologous blood to keep them wet; a practice which has been shown to 
cause significant damage to the graft within minutes, and which has 
been shown to clinically and statistically correlate with the 
development of 12-month VGF.107 108 109 110 Therefore, 
neglecting to protect the endothelial layer prior to implantation can 
have long-term consequences.
---------------------------------------------------------------------------

    \107\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, 
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation 
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft 
Surgery: follow-up from the PREVENT IV randomized clinical trial'', 
Jama Surg, 2014, vol. 149(8), pp. 798-805.
    \108\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive 
deendothelialization and thrombogenicity in routinely prepared vein 
grafts for coronary bypass operations: facts and remedy,'' Century 
Publishing Corporation, International Journal of Clinical 
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
    \109\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., 
``Even short-time storage in physiological saline solution impairs 
endothelial vascular function of saphenous vein grafts,'' Elsevier 
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, 
vol. 40(4), pp. 811-815.
    \110\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its 
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann 
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

    When a damaged luminal surface (endothelium) of a vascular graft is 
presented to the bloodstream at the time of reperfusion, a 
domino[dash]effect of further damage is triggered in vivo through 
inflammatory, thrombogenic, and aberrant adaptive responses including 
hyper-proliferative processes that lead to VGF. These pathophysiologic 
responses occur within minutes of reperfusion of a graft that has 
received sub-optimal treatment/handling initiating a cascade of 
exacerbating damage that can continue for years later. Presenting an 
intact functional endothelial layer at the time of grafting is, 
therefore, tantamount to protecting the graft from damage that occurs 
post-grafting, in turn conferring protection against graft failure. 
Given the low success rate of failed graft intervention addressing the 
graft, endothelial protection at the time of surgery is critical.\111\
---------------------------------------------------------------------------

    \111\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., 
``Saphenous vein graft disease: review of pathophysiology, 
prevention, and treatment,'' Cardiol Rev 2013, vol. 21(2), pp. 101-
9.
---------------------------------------------------------------------------

    The combined PREVENT IV sub-analyses of Hess and Harskamp 
demonstrate that from dozens of factors evaluated for impact on the 
development of 12-month VGF, exposure to solutions used for 
intra[dash]operative graft wetting and storage have the largest 
correlation with the development of VGF.112, 113 Short-term 
exposure of free vascular grafts to these solutions is routine in CABG 
operations, where 10 minutes to 3 hours may elapse between the vein 
harvest and reperfusion.114, 115 According to the applicant, 
standard of care solutions are heparinized saline and heparinized 
autologous blood, which were never designed to protect vascular grafts 
and have also demonstrated an inability to protect against ischemic 
injury, actively harming the graft endothelium as 
well.116 117 118 119 According to the applicant, given the 
criticality of presenting an intact functional endothelium at the time 
of reperfusion, it should not be surprising that the use of these 
solutions is so highly associated with 12-month VGF. Based on these 
data, DURAGRAFT[reg] treatment has been designed to be a fully 
protective solution. DURAGRAFT[reg] is formulated into a flushing, 
wetting, and storage solution replacing solutions traditionally used 
for this purpose and, therefore, does not change surgical practice.
---------------------------------------------------------------------------

    \112\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, 
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation 
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft 
Surgery: follow-up from the PREVENT IV randomized clinical trial'', 
Jama Surg, 2014, vol. 149(8), pp. 798-805.
    \113\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein 
Graft Disease: `Never Ending Story' of the Eternal Return,'' Res 
Cardiovasc Med, 2014, vol. 3(3), pp. e21092.
    \114\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein 
graft disease: pathogenesis, predisposition and prevention,'' 
Circulation 1998, vol. 97(9), pp. 916-31.
    \115\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr 
Opin Cardiol, 1995, vol. 10, pp. 562-8.
    \116\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, 
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation 
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft 
Surgery: follow-up from the PREVENT IV randomized clinical trial,'' 
Jama Surg, 2014, vol. 149(8), pp. 798-805.
    \117\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive 
deendothelialization and thrombogenicity in routinely prepared vein 
grafts for coronary bypass operations: facts and remedy,'' Century 
Publishing Corporation, International Journal of Clinical 
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
    \118\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., 
``Even short-time storage in physiological saline solution impairs 
endothelial vascular function of saphenous vein grafts,'' Elsevier 
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, 
vol. 40(4), pp. 811-815.
    \119\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its 
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann 
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

    The applicant noted that retrospective studies designed to assess 
clinical effectiveness and safety were conducted based on the readily 
available databases already in existence as a result of the use of 
DURAGRAFT[reg] treatment in two hospitals that had noncommercial access 
to the product through hospital pharmacies. These studies evaluated the 
effect of DURAGRAFT[reg] use during CABG surgery on post-CABG clinical 
complications associated with VGF, including myocardial infarction (MI) 
and repeat revascularization. The applicant conveyed that because of 
the time, resources and funding required for randomized studies 
evaluating clinical outcomes following CABG surgery, conducting such a 
study was not a viable approach for a small company such as 
Somahlution.
    The first retrospective study (Protocol 001), an unpublished, 
independent Physician Investigator (PI), single-center, multi-surgeon 
retrospective,

[[Page 20307]]

comparative study (DURAGRAFT[reg] vs. Saline or Blood Solutions), was a 
pilot study conducted at the University of CHU in Angers France, which 
followed patients for 5 years post-CABG surgery. This pilot study was 
conducted to assess the safety and effect of DURAGRAFT[reg] treatment 
on both short and long-term clinical outcomes. This study also served 
as the basis for the design of a larger retrospective study conducted 
at the U.S. Department of Veterans Affairs (VA) Medical Centers, 
discussed later. The objective of this single[dash]center clinical 
study in CABG patients was to evaluate the potential benefits of 
DURAGRAFT[reg] treatment as compared to a no[dash]treatment control 
group (saline). The investigator who prepared the analysis remained 
blinded to individual patient data. Eligibility criteria included 
patients with first[dash]time CABG surgery in which at least one vein 
graft was used. Patients with in-situ internal mammary artery (IMA) 
graft(s) only (no saphenous vein or free arterial grafts) and 
concomitant valve surgery and/or aortic aneurysm repair were excluded. 
The institutional review board of the University Health Alliance (UHA) 
approved the protocol, and patients gave written informed consent for 
their follow-up. A total of 630 patients who underwent elective and 
isolated CABG surgery with at least one saphenous vein graft at a 
single[dash]center in Europe between January 2002 and December 2008 
were included. The no-treatment control group (saline) included 375 
patients who underwent CABG surgery from January 2002 to May 2005 and 
the DURAGRAFT[reg] treatment group included 255 patients who underwent 
CABG surgery from June 2005 to December 2008. At long-term follow-up 
(greater than 30 days and up to 5 years), 5 patients were lost to 
follow-up (10 died before the 30-day follow[dash]up). Therefore, a 
total of 247 patients from the DURAGRAFT[reg] treatment group (97 
percent) and 368 patients from the no-treatment control group (saline) 
(98 percent) were available for the long-term analysis. Patients 
undergoing CABG surgery whose vascular grafts were treated 
intraoperatively with DURAGRAFT[reg] demonstrated no statistically 
significant differences in major adverse cardiac events (MACE) within 
the first 30 days following CABG surgery. According to the applicant, 
these data suggest that DURAGRAFT[reg] treatment is at least as safe as 
the standard of care used in CABG surgeries in that long-term outcomes 
between the two groups were not statistically different. However, also 
according to the applicant, a consistent numerical trend toward 
improved clinical effectiveness outcomes for the DURAGRAFT[reg] 
treatment group compared to the no-treatment control (saline) group was 
clearly identified. Although statistically insignificant, there was a 
consistent reduction observed in the rates for multiple endpoints such 
as all-cause death, MI, MACE, and revascularization. This study found 
reductions in DURAGRAFT[reg]-treated grafts relative to saline for 
revascularization (57 percent), MI (70 percent), MACE (37 percent) and 
all[dash]cause death (23 percent) compared to standard of care 
(heparinized saline/blood) through 5 years follow[dash]up. Based on the 
small sample-size for this evaluation of only 630 patients, and the 
known frequencies of these events following CABG surgeries, statistical 
differences were not expected. A subsequent post-hoc analysis also was 
performed by the researchers at CHU-Angers to evaluate whether any 
long-term clinical variables (such as dual antiplatelet therapy, beta-
blockers, angiotensin receptor-blockers, statins, diabetes, lifestyle 
and other factors) had any impact on the study endpoints. The 
conclusions of the post-hoc analyses were that the assessed clinical 
variables did not impact the clinical study findings and so any 
differences between groups were likely due to ``test article'' effect. 
According to the applicant, importantly, the data collected from this 
feasibility study are consistent with data collected in the 
statistically[dash]powered VA study in which statistically significant 
reductions of MI, repeat revascularization, and MACE were observed in 
the DURAGRAFT[reg] treatment group, lending confidence that the 
observed trends in this study, as well as the VA study, represent real 
differences associated with DURAGRAFT[reg] use.
    The second study, the U.S. VA Hospital Study (Protocol 002), was an 
unpublished, independent PI initiated, single-center, multi-surgeon, 
retrospective, comparative (DURAGRAFT[reg] vs. Saline) clinical trial, 
which was conducted to assess the safety and impact of DURAGRAFT[reg] 
treatment on both short and long-term clinical outcomes in patients who 
underwent isolated CABG surgery with saphenous vein grafts (SVGs) at 
the Boston (West Roxbury) VA Medical Center between 1996 and 2004. The 
time interval from 1996 through 1999 represents a time period when 
DURAGRAFT[reg] treatment was not available and heparinized saline was 
routinely used to wet and store grafts, while 2001 through 2004 
represents a time period after the center began exclusively using 
DURAGRAFT[reg], which was prepared by the hospital's pharmacy. The year 
2000 was omitted from this analysis by the PI due to the transition of 
the implementation of DURAGRAFT[reg] treatment into the clinic and the 
uncertainty of its use in CABG patients during the transition period. 
Data were extracted from a total of 2,436 patients who underwent a CABG 
procedure with at least one SVG from 1996 through 1999 (Control n=1,400 
pts.) and 2001 through 2004 (DURAGRAFT[reg] treatment n=1,036 pts.). 
The median age was 66 years old for the control treatment group and 67 
years old for the DURAGRAFT[reg] treatment group. Patients were 
excluded from the study if they had a prior history of CABG procedures, 
had no use of SVG, or underwent additional procedures during the CABG 
surgery. Mean follow-up in the DURAGRAFT[reg] treatment group was 
8.54.2 years and 9.95.6 years in the control 
treatment group. According to the applicant, this study supports not 
only safety, but also improved long-term clinical outcomes in 
DURAGRAFT[reg][dash]treated CABG patients. Thirty-day MI also was 
significantly reduced in this study. The VA study found statistically 
significant reductions in DURAGRAFT[reg]-treated grafts relative to 
saline for revascularization (35 percent), MI (45 percent), and MACE 
(19 percent) from the follow-up period of 1,000 days to 15 years post-
surgery.
    According to the applicant, in addition to the retrospective 
studies, a multi[dash]center, within-patient randomized, prospective 
study utilizing multidetector computed tomography (MDCT) angiography 
was conducted to assess safety and the effect of the use of 
DURAGRAFT[reg] on the graft by assessing early anatomic markers of VGD 
such as graft wall thickening and early stenotic events. The study was 
based on an ``in-patient control'' design in which both the control 
saline exposed vascular graft and a DURAGRAFT[reg][dash]treated graft 
were grafted within the same patient to reduce patient bias and allow a 
paired analysis of the grafts. The study was conducted under two 
protocols. The first study protocol evaluated patients up to 3 months 
post-CABG and included 1[dash] and 3-month protocol driven MDCT scans 
in 125 patients (250 grafts). The second study, a longer-term safety 
and efficacy study of 97 patients, included a 12-month protocol driven 
angiogram. The 3 month (full data set) and 12 month (interim data set) 
data demonstrate that safety and efficacy appear to be equivalent for

[[Page 20308]]

DURAGRAFT[reg] and standard of care (SoC) at 3 months, but between 3 
months and 9 months a separation between DURAGRAFT[reg] and SoC begins 
to emerge and by 12 months DURAGRAFT[reg] use is associated with a 
numerical trend towards improved safety relative to SoC. Furthermore by 
12 months, the interim analysis demonstrated that differences in 
markers of early graft disease were able to be discerned between 
DURAGRAFT[reg][dash]treated grafts and SoC. Reductions in both wall 
thickness and degree of stenosis were observed in 
DURAGRAFT[reg][dash]treated grafts relative to SoC grafts. These 
reductions were observed when the entire graft was assessed and were 
more profound when the proximal region of the graft was specifically 
evaluated. According to the applicant, this is of note because the 
proximal region of the graft is the region in which early graft disease 
has been shown to more frequently manifest in many grafting 
indications, including CABG, peripheral bypass, aortic grafting, and AV 
fistula grafting indications, and is thought to be due to hemodynamic 
perturbations that occur in this region where arterial flow is just 
entering the venous environment. While there are no notable differences 
at 3 months in either safety or efficacy, there are trends towards 
better safety at 12 months in patients in the DURAGRAFT[reg] treatment 
group compared to the control group.\120\ The efficacy results of the 
prospective study were presented at the October 2017 meeting of the TCT 
Congress in Denver.
---------------------------------------------------------------------------

    \120\ Perrault, L., ``SOMVC001 (DuraGraft) Vascular Graft 
Treatment in Patients Undergoing Coronary Artery Bypass Grafting,'' 
American Heart Association, Inc, Circulation, 2016, vol. 134, pp. 
A23242, originally published November 11, 2016.
---------------------------------------------------------------------------

    The retrospective studies demonstrated an association of reduced 
risk of non-fatal myocardial infarction, repeat revascularization, and 
MACE with DURAGRAFT[reg] treatment. However, we have a number of 
concerns relating to these studies. In addition to the studies being 
unpublished, we are concerned that they leave too many variables 
unaccounted for that could affect vein integrity such as method of vein 
harvest, vein distention pressure, and post-operative care (including 
use of anti-platelet and anti-lipid treatments). Also, control groups 
underwent CABG procedures many years earlier than the DURAGRAFT[reg] 
treatment groups in both studies. Over the years, with advances in 
medical management and surgical techniques, long-term survival and risk 
of cardiac events are expected to improve. Finally, it may be helpful 
to gain more insight from data that will be available upon completion 
and results of the multi-center, prospective, randomized, double-blind, 
comparative, within[dash]person (DURAGRAFT[reg] vs. Saline) control 
trial that is currently ongoing.
    We are inviting public comments on whether DURAGRAFT[reg] meets the 
substantial clinical improvement criterion.
    Below we summarize and respond to written public comments we 
received regarding the DURAGRAFT[reg] during the open comment period in 
response to the New Technology Town Hall meeting notice published in 
the Federal Register.
    Comment: One commenter, a cardiothoracic surgeon, stated that after 
practicing cardiac surgery for over 30 years, authoring 
peer[dash]reviewed publications in Cardiac Surgery, and participating 
in several clinical studies, it supported the approval of new 
technology add-on payments for the DURAGRAFT[reg] technology. The 
commenter indicated that one of the reasons why vein grafts get 
occluded could be because of poor handling during and after harvest. 
The commenter expressed that there are currently no other solutions 
used in treatment options available that protect vascular conduits once 
they are harvested aside from the standard practice of storing them in 
saline or blood-based solutions until they are ready for implantation. 
The commenter stated that saline and blood-based solutions are very 
damaging to vein segments, and the damage that occurs is linked to poor 
clinical outcomes including increased risk of myocardial infarction 
(MI) and increased rates of repeat revascularization. The commenter 
indicated that it had many years of first-hand experience with the use 
of DURAGRAFT[reg] because the commenter served as the Principal 
Investigator for a retrospective clinical study that evaluated the 
DURAGRAFT[reg]'s effect on clinical outcomes compared to standard-of-
care treatment options. The commenter conveyed that the results of the 
retrospective clinical study included statistically significant 
reductions in MI and repeat revascularization rates. The commenter also 
pointed out its awareness of a prospective clinical study the 
DURAGRAFT[reg]'s manufacturer has conducted evaluating radiologic 
assessments to analyze graft disease, which precedes loss of patency. 
According to the commenter, the study demonstrated increased wall 
thickness and increased stenosis in grafts stored in saline compared to 
grafts stored using the DURAGRAFT[reg]. The commenter stated that this 
finding from the prospective clinical study is very consistent with the 
clinical results of the retrospective study. The commenter concluded by 
stating that it supported the commercial availability and use of the 
DURAGRAFT[reg], including use in the treatment of its own patients.
    Response: We appreciate the commenter's input. We will take these 
comments into consideration when deciding whether to approve new 
technology add-on payment for the DURAGRAFT[reg] for FY 2019.
    Comment: Another commenter, a cardiovascular and thoracic surgeon 
with clinical expertise in coronary artery bypass grafting surgery 
(CABG) who has been involved in endothelial dysfunction as a primary 
field of study and the Principal Investigator for the 
multi[dash]center, within-patient, randomized, prospective study that 
Somahlution submitted to the FDA in support of U.S. product clearance, 
supported the approval of new technology add-on payments for the 
DURAGRAFT[reg]. The commenter indicated that as an author and co-author 
of more than 250 articles in peer-reviewed publications, a senior 
author of more than 75 papers and writer of several book chapters, and 
having delivered over 40 conference presentations worldwide, the study 
results, specifically of the 12-month multidector computed tomography 
(MDCT) imaging showing less lumen narrowing or stenosis, and less wall 
thickening as a resulting outcome of the DURAGRAFT[reg][dash]treated 
veins compared to heparinized-saline, are critically important from a 
clinical perspective. According to the commenter, the primary mechanism 
of the DURAGRAFT[reg] technology is to protect the endothelial cells in 
the vein graft and this has been repeatedly demonstrated in pre-
clinical studies. The commenter explained that the findings of the 
clinical anatomic changes in the graft demonstrated in the prospective 
study are consistent with the pre-clinical findings and the literature 
that has clearly pointed to damaged endothelium of the graft as the 
starting insult for later development of poor patient outcomes from 
graft disease and failure. Finally, the commenter noted that surgeons 
in all countries currently use a variety of graft storage and 
preservation solutions during a CABG procedure because there has been 
no other available solution used in treatment options, aside from the 
DURAGRAFT[reg], with systematic evaluation demonstrating a clear safety

[[Page 20309]]

profile and benefit to patient outcomes. The commenter encouraged CMS 
to approve new technology add-on payments for the DURAGRAFT[reg] 
technology to provide additional support for this new preservation 
solution to become available to surgeons in the United States.
    Response: We appreciate the commenter's input. We will take these 
comments into consideration when deciding whether to approve new 
technology add-on payments for DURAGRAFT[reg] for FY 2019.
e. remed[emacr][reg] System
    Respicardia, Inc. submitted an application for new technology add-
on payments for the remed[emacr][reg] System for FY 2019. According to 
the applicant, the remed[emacr][reg] System is indicated for use as a 
transvenous phrenic nerve stimulator in the treatment of adult patients 
who have been diagnosed with moderate to severe central sleep apnea. 
The remed[emacr][reg] System consists of an implantable pulse 
generator, and a stimulation and sensing lead. The pulse generator is 
placed under the skin, in either the right or left side of the chest, 
and it functions to monitor the patient's respiratory signals. A 
transvenous lead for unilateral stimulation of the phrenic nerve is 
placed either in the left pericardiophrenic vein or the right 
brachiocephalic vein, and a second lead to sense respiration is placed 
in the azygos vein. Both leads, in combination with the pulse 
generator, function to sense respiration and, when appropriate, 
generate an electrical stimulation to the left or right phrenic nerve 
to restore regular breathing patterns.
    The applicant's application describes central sleep apnea (CSA) as 
a chronic respiratory disorder characterized by fluctuations in 
respiratory drive, resulting in the cessation of respiratory muscle 
activity and airflow during sleep.\121\ The applicant reported that 
CSA, as a primary disease, has a low prevalence in the United States 
population; and it is more likely to occur in those individuals who 
have cardiovascular disease, heart failure, atrial fibrillation, 
stroke, or chronic opioid usage. The apneic episodes which occur in 
patients with CSA cause hypoxia, increased blood pressure, increased 
preload and afterload, and promotes myocardial ischemia and 
arrhythmias. In addition, CSA ``enhances oxidative stress, causing 
endothelial dysfunction, inflammation, and activation of neurohormonal 
systems, which contribute to progression of underlying diseases.'' 
\122\
---------------------------------------------------------------------------

    \121\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, 
A., Khayat, R., Abraham, W.T., 2016, ``Transvenous Stimulation of 
the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 
months' experience with the remede[reg]system,'' European Journal of 
Heart Failure, pp. 1-8.
    \122\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, 
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous 
Neurostimulation for Centra Sleep Apnoea: A randomised controlled 
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
---------------------------------------------------------------------------

    According to the applicant, prior to the introduction of the 
remed[emacr][reg] System, typical treatments for CSA took the form of 
positive airway pressure devices. Positive airway pressure devices, 
such as continuous positive airway pressure (CPAP), have previously 
been used to treat patients diagnosed with obstructive sleep apnea. 
Positive airway devices deliver constant pressurized air via a mask 
worn over the mouth and nose, or nose alone. For this reason, positive 
airway devices may only function when the patient wears the necessary 
mask. Similar to CPAP, adaptive servo-ventilation (ASV) provides 
noninvasive respiratory assistance with expiratory positive airway 
pressure. However, ASV adds servo-controlled inspiratory pressure, as 
well, in an effort to maintain airway patency.\123\
---------------------------------------------------------------------------

    \123\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., 
d'Ortho, M.P., Erdmann, E., Teschler, H., ``Adaptive Servo-
Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N 
Eng Jour of Med, 2015, pp. 1-11.
---------------------------------------------------------------------------

    On October 6, 2017, the remed[emacr][reg] System was approved by 
the FDA as an implantable phrenic nerve stimulator indicated for the 
use in the treatment of adult patients who have been diagnosed with 
moderate to severe CSA. The device was available commercially upon FDA 
approval. Therefore, the newness period for the remed[emacr][reg] 
System is considered to begin on October 6, 2017. The applicant has 
indicated that the device also is designed to restore regular breathing 
patterns in the treatment of CSA in patients who also have been 
diagnosed with heart failure.
    The applicant was approved for two unique ICD-10-PCS procedure 
codes for the placement of the leads: 05H33MZ (Insertion of 
neurostimulator lead into right innominate (brachiocephalic) vein) and 
05H03MZ (Insertion of neurostimulator lead into azygos vein), effective 
10/01/2016. The applicant indicated that implantation of the pulse 
generator is currently reported using ICD-10-PCS procedure code 0JH60DZ 
(Insertion of multiple array stimulator generator into chest 
subcutaneous tissue).
    As discussed above, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would not be considered ``new'' 
for the purposes of new technology add-on payments.
    With regard to the first criterion, whether a product uses the same 
or a similar mechanism of action to achieve a therapeutic outcome, 
according to the applicant, the remed[emacr][reg] System provides 
stimulation to nerves to stimulate breathing. Typical treatments for 
hyperventilation CSA include supplemental oxygen and CPAP. Mechanical 
ventilation also has been used to maintain a patent airway. The 
applicant asserted that the remed[emacr][reg] System is a 
neurostimulation device resulting in negative airway pressure, whereas 
devices such as CPAP and ASV utilize positive airway pressure.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant stated that the 
remed[emacr][reg] System is assigned to MS-DRGs 040 (Peripheral, 
Cranial Nerve and Other Nervous System Procedures with MCC), 041 
(Peripheral, Cranial Nerve and Other Nervous System Procedures with CC 
or Peripheral Neurostimulator), and 042 (Peripheral, Cranial Nerve and 
Other Nervous System Procedures without CC/MCC). The current procedures 
for the treatment options of CPAP and ASV are not assigned to these MS-
DRGs.
    With respect to the third criterion, whether the new use of the 
technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, according to the 
applicant, the remed[emacr][reg] System is indicated for the use as a 
transvenous unilateral phrenic nerve stimulator in the treatment of 
adult patients who have been diagnosed with moderate to severe CSA. The 
applicant stated that the remed[emacr][reg] System reduces the negative 
symptoms associated with CSA, particularly among patients who have been 
diagnosed with heart failure. The applicant asserted that patients who 
have been diagnosed with heart failure are particularly negatively 
affected by CSA and currently available CSA treatment options of CPAP 
and ASV. According to the applicant, the currently available treatment 
options, CPAP and ASV, have been found to have worsened mortality and 
morbidity outcomes for patients who have been diagnosed with both CSA 
and heart failure. Specifically, ASV is currently contraindicated in 
the treatment of CSA in patients who have been diagnosed with heart 
failure.
    The applicant also suggested that the remed[emacr][reg] System is 
particularly suited for the treatment of CSA in patients who

[[Page 20310]]

also have been diagnosed with heart failure. We are concerned that, 
while the remed[emacr][reg] System may be beneficial to patients who 
have been diagnosed with both CSA and heart failure, the FDA approved 
indication is for use in the treatment of adult patients who have been 
diagnosed with moderate to severe CSA. We note that the applicant's 
clinical analyses and data results related to patients who specifically 
were diagnosed with CSA and heart failure. We are inviting public 
comments on whether the remed[emacr][reg] System meets the newness 
criterion.
    With regard to the cost criterion, the applicant provided the 
following analysis to demonstrate that the technology meets the cost 
criterion. The applicant identified cases representing potential 
patients who may be eligible for treatment involving the 
remed[emacr][reg] System within MS-DRGs 040, 041, and 042. Using the 
Standard Analytical File (SAF) Limited Data Set (MedPAR) for FY 2015, 
the applicant included all claims for the previously stated MS-DRGs for 
its cost threshold calculation. The applicant stated that typically 
claims are selected based on specific ICD-10-PCS parameters, however 
this is a new technology for which no ICD-10-PCS procedure code and 
ICD-10-CM diagnosis code combination exists. Therefore, all claims for 
the selected MS-DRGs were included in the cost threshold analysis. This 
process resulted in 4,462 cases representing potential patients who may 
be eligible for treatment involving the remed[emacr][reg] System 
assigned to MS-DRG 040; 5,309 cases representing potential patients who 
may be eligible for treatment involving the remed[emacr][reg] System 
assigned to MS-DRG 041; and 2,178 cases representing potential patients 
who may be eligible for treatment involving the remed[emacr][reg] 
System assigned to MS-DRG 042, for a total of 11,949 cases.
    Using the 11,949 identified cases, the applicant determined that 
the average unstandardized case-weighted charge per case was $85,357. 
Using the FY 2015 MedPAR dataset to identify the total mean charges for 
revenue code 0278, the applicant removed charges associated with the 
current treatment options for each MS-DRG as follows: $9,153.83 for MS-
DRG 040; $12,762.31 for MS-DRG 041; and $21,547.73 for MS-DRG 042. The 
applicant anticipated that no other related charges would be eliminated 
or replaced. The applicant then standardized the charges and applied a 
2-year inflation factor of 1.104055 obtained from the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38524). The applicant then added charges for the 
new technology to the inflated average case-weighted standardized 
charges per case. No other related charges were added to the cases. The 
applicant calculated a final inflated average case-weighted 
standardized charge per case of $175,329 and a Table 10 average case-
weighted threshold amount of $78,399. Because the final inflated 
average case-weighted standardized charge per case exceeded the average 
case-weighted threshold amount, the applicant maintained that the 
technology meets the cost criterion. With regard to the analysis above, 
we are concerned that all cases in MS-DRGs 040, 041, and 042 were used 
in the analysis. We are unsure if all of these cases represent patients 
that may be truly eligible for treatment involving the 
remed[emacr][reg] System. We are inviting public comments on whether 
the remed[emacr][reg] System meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that the remed[emacr][reg] System meets the 
substantial clinical improvement criterion. The applicant stated that 
the remed[emacr][reg] System offers a treatment option for a patient 
population unresponsive to, or ineligible for, treatment involving 
currently available options. According to the applicant, patients who 
have been diagnosed with CSA have no other available treatment options 
than the remed[emacr] System. The applicant stated that published 
studies on both CPAP and ASV have proven that primary endpoints have 
not been met for treating patients who have been diagnosed with CSA. In 
addition, according to the ASV study, there was an increase in 
cardiovascular mortality.
    According to the applicant, the remed[emacr][reg] System will prove 
to be a better treatment for the negative effects associated with CSA 
in patients who have been diagnosed with heart failure, such as 
cardiovascular insults resulting from sympathetic nervous system 
activation, pulmonary hypertension, and arrhythmias, which ultimately 
contribute to the downward cycle of heart failure,\124\ when compared 
to the currently available treatment options. The applicant also 
indicated that prior studies have assessed CPAP and ASV as options for 
the treatment of diagnoses of CSA primarily in patients who have been 
diagnosed with heart failure.
---------------------------------------------------------------------------

    \124\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., 
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve 
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart 
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

    The applicant shared the results from two studies concerning the 
effects of positive airway pressure ventilation treatment:
     The Canadian Continuous Positive Airway Pressure for 
Patients with Central Sleep Apnea and Heart Failure trial found that, 
while CPAP managed the negative symptoms of CSA, such as improved 
nocturnal oxygenation, increased ejection fraction, lower 
norepinephrine levels, and increased walking distance, it did not 
affect overall patient survival; \125\ and
---------------------------------------------------------------------------

    \125\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., 
Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive 
Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Eng 
Jour of Med, vol. 353(19), pp. 2025-2033.
---------------------------------------------------------------------------

     In a randomized trial of 1,325 patients who had been 
diagnosed with heart failure who received treatment with ASV plus 
standard treatment or standard treatment alone, ASV was found to 
increase all-cause and cardiovascular mortality as compared to the 
control treatment.\126\
---------------------------------------------------------------------------

    \126\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., 
d'Ortho, M.-P., Erdmann, E., Teschler, H., ``Adaptive Servo-
Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N 
Eng Jour of Med, 2015, pp. 1-11.
---------------------------------------------------------------------------

    The applicant also stated that published literature indicates that 
currently available treatment options do not meet primary endpoints 
with concern to the treatment of CSA; patients treated with ASV 
experienced an increased likelihood of mortality,\127\ and patients 
treated with CPAP experienced alleviation of symptoms, but no change in 
survival.\128\ The applicant provided further research, which suggested 
that a primary drawback of CPAP in the treatment of diagnoses of CSA is 
a lack of patient adherence to therapy.\129\
---------------------------------------------------------------------------

    \127\ Ibid.
    \128\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., 
Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive 
Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Engl 
Jour of Med, vol. 353(19), pp. 2025-2033.
    \129\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, 
B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous 
Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea 
in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-
894.
---------------------------------------------------------------------------

    The applicant also stated that the remed[emacr] System represents a 
substantial clinical improvement over existing technologies because of 
the reduction in the number of future hospitalizations, few 
device[dash]related complications, and improvement in CSA symptoms and 
quality of life. Specifically, the applicant stated that the clinical 
data has shown a statistically significant reduction in Apnea-hypopnea 
index (AHI), improvement in quality of life, and significantly improved 
Minnesota Living with Heart Failure Questionnaire score. In addition, 
the applicant

[[Page 20311]]

indicated that study results showed the remed[emacr] System 
demonstrated an acceptable safety profile, and there was a trend toward 
fewer heart failure hospitalizations.
    The applicant provided six published articles as evidence. All six 
articles were prospective studies. In three of the six studies, the 
majority of patients studied had been diagnosed with CSA with a heart 
failure comorbidity, while the remaining three studies only studied 
patients who had been diagnosed with CSA with a heart failure 
comorbidity. The first study \130\ assessed the treatment of patients 
who had been diagnosed with CSA in addition to heart failure. According 
to the applicant, as referenced in the results of the published study, 
Ponikowski, et al., assessed the treatment effects of 16 of 31 enrolled 
patients with evidence of CSA within 6 months prior to enrollment who 
met inclusion criteria (apnea-hypopnea index of greater than or equal 
to 15 and a central apnea index of greater than or equal to 5) and who 
did not meet exclusion criteria (a baseline oxygen saturation of less 
than 90 percent, being on supplemental oxygen, having evidence of 
phrenic nerve palsy, having had severe chronic obstructive pulmonary 
disease (COPD), having hard angina or a myocardial infarction in the 
past 3 months, being pacemaker dependent, or having inadequate capture 
of the phrenic nerve during neurostimulation). Of the 16 patients whose 
treatment was assessed, all had various classifications of heart 
failure diagnoses: 3 (18.8 percent) were classified as class I on the 
New York Heart Association classification scale (No limitation of 
physical activity. Ordinary physical activity does not cause undue 
fatigue, palpitation, dyspnea (shortness of breath)); 8 (50 percent) 
were classified as a class II (Slight limitation of physical activity. 
Comfortable at rest. Ordinary physical activity results in fatigue, 
palpitation, dyspnea (shortness of breath)); and 5 (31.3 percent) were 
classified as class III (Marked limitation of physical activity. 
Comfortable at rest. Less than ordinary activity causes fatigue, 
palpitation, or dyspnea).\131\ After successful surgical implantation 
of a temporary transvenous lead for unilateral phrenic nerve 
stimulation, patients underwent a control night without nerve 
stimulation and a therapy night with stimulation, while undergoing 
polysomnographic (PSG) testing. Comparison of both nights was 
performed.
---------------------------------------------------------------------------

    \130\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, 
B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous 
Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea 
in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-
894.
    \131\ ``Classes of Heart Failure,'' 2017, May 8, Retrieved from 
American Heart Association: Available at: http://www.heart.org/HEARTORG/Conditions/HeartFailure/AboutHeartFailure/Classes-of-Heart-Failure_UCM_306328_Article.jsp#.WmE2rlWnGUk.
---------------------------------------------------------------------------

    According to the applicant, some improvements of CSA symptoms were 
identified in statistical analyses. Sleep time and efficacy were not 
statistically significantly different for control night and therapy 
night, with median sleep times of 236 minutes and 245 minutes and sleep 
efficacy of 78 percent and 71 percent, respectively. There were no 
statistical differences across categorical time spent in each sleep 
stage (for example, N1, N2, N3, and REM) between control and therapy 
nights. The average respiratory rate and hypopnea index did not differ 
statistically across nights. Marginal positive statistical differences 
occurred between control and therapy nights for the baseline oxygen 
saturation median values (95 and 96 respectively) and obstructive apnea 
index (OAI) (1 and 4, respectively). Beneficial statistically 
significant differences occurred from control to therapy nights for the 
average heart rate (71 to 70, respectively), arousal index events per 
hour (32 to 12, respectively), apnea-hypopnea index (AHI) (45 to 23, 
respectively), central apnea index (CAI) (27 to 1, respectively), and 
oxygen desaturation index of 4 percent (ODI = 4 percent) (31 to 14, 
respectively). Two adverse events were noted: (1) Lead tip thrombus 
noted when lead was removed; the patient was anticoagulated without 
central nervous system sequelae; and (2) an episode of ventricular 
tachycardia upon lead placement and before stimulation was initiated. 
The episode was successfully treated by defibrillation of the patient's 
implanted ICD. Neither adverse event was directly related to the 
phrenic nerve stimulation therapy.
    The second study \132\ was a prospective, multi-center, 
nonrandomized study that followed patients diagnosed with CSA and other 
underlying comorbidities. According to the applicant, as referenced in 
the results of the published study, Abraham, et al., 49 of the 57 
enrolled patients who were followed indicated a primary endpoint of a 
reduction of AHI with secondary endpoints of feasibility and safety of 
the therapy. Patients were included if they had an AHI of 20 or greater 
and apneic events that were related to CSA. Among the study patient 
population, 79 percent had diagnoses of heart failure, 2 percent had 
diagnoses of atrial fibrillation, 13 percent had other cardiac etiology 
diagnoses, and the remainder of patients had other cardiac unrelated 
etiology diagnoses. Exclusion criteria were similar to the previous 
study (that is, (Ponikowski P., 2012)), with the addition of a 
creatinine of greater than 2.5 mg/dl. After implantation of the 
remed[emacr][reg] System, patients were assessed at baseline, 3 months 
(n=47) and 6 months (n=44) on relevant measures. At 3 months, 
statistically nonsignificant results occurred for the OAI and hypopnea 
index (HI) measures. The remainder of the measures showed statistically 
significant differences from baseline to 3 months: AHI with a -27.1 
episodes per hour of sleep difference; CAI with a -23.4 episodes per 
hour of sleep difference; MAI with a -3 episodes per hour of sleep 
difference; ODI = 4 percent with a -23.7 difference; arousal index with 
-12.5 episodes per hour of sleep difference; sleep efficiency with a 
8.4 percent increase; and REM sleep with a 4.5 percent increase. 
Similarly, among those assessed at 6 months, statistically significant 
improvements on all measures were achieved, including OAI and HI. 
Regarding safety, a data safety monitoring board (DSMB) adjudicated and 
found the following 3 of 47 patients (6 percent) as having serious 
adverse events (SAE) related to the device, implantation procedure or 
therapy. None of the DSMB adjudicated SAEs was due to lead 
dislodgement. Two SAEs of hematoma or headache were related to the 
implantation procedure and occurred as single events in two patients. A 
single patient experienced atypical chest discomfort during the first 
night of stimulation, but on reinitiation of therapy on the second 
night no further discomfort occurred.
---------------------------------------------------------------------------

    \132\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., 
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve 
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart 
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

    The third study \133\ assessed the safety and feasibility of 
phrenic nerve stimulation for 6 monthly follow-ups of 8 patients 
diagnosed with heart failure with CSA. Of the eight patients assessed, 
one was lost to follow-up and one died from pneumonia. According to the 
applicant, as referenced in the results in the published study, Zheng, 
et al. (2015), no unanticipated serious adverse events were found to be 
related to the therapy; in one patient, a lead became dislodged and 
subsequently successfully repositioned. Three

[[Page 20312]]

patients reported improved sleep quality, and all patients reported 
increased energy. A reduction in sleep apneic events and decreases in 
AHI and CAI were related to application of the treatment. Gradual 
increases to the 6-minute walking time occurred through the study.
---------------------------------------------------------------------------

    \133\ Zhang, X., Ding, N., Ni, B., Yang, B., Wang, H., & Zhang, 
S.J., 2015, ``Satefy and Feasibility of Chronic Transvenous Phrenic 
Nerve Stimulation for Treatment of Central Sleep Apnea in Heart 
Failure Patients,'' The Clinical Respiratory Journal, pp. 1-9.
---------------------------------------------------------------------------

    The fourth study \134\ extended the previous Phase I study \135\ 
from 6 months to 12 months, and included only 41 of the original 49 
patients continuing in the study. Of the 57 patients enrolled at the 
time of the Phase I study, 41 were evaluated at the 12-month follow-up. 
Of the 41 patients examined at 12 months, 78 percent had diagnoses of 
CSA related to heart failure, 2 percent had diagnoses of atrial 
fibrillation with related CSA, 12 percent had diagnoses of CSA related 
to other cardiac etiology diagnoses, and the remainder of patients had 
diagnoses of CSA related to other noncardiac etiology diagnoses. At 12 
months, 6 sleep parameters remained statistically different and 3 were 
no longer statistically significant. The HI, OAI, and arousal indexes 
were no longer statistically significantly different from baseline 
values. A new parameter, time spent with peripheral capillary oxygen 
saturation (SpO2) below 90 percent was not statistically 
different at 12 months (31.4 minutes) compared to baseline (38.2 
minutes). The remaining 6 parameters showed maintenance of improvements 
at the 12-month time point as compared to the baseline: AHI from 49.9 
to 27.5 events per hour; CAI from 28.2 to 6.0 events per hour; MAI from 
3.0 to 0.5 events per hour; ODI = 4 percent from 46.1 to 26.9 events 
per hour; sleep efficiency from 69.3 percent to 75.6 percent; and REM 
sleep from 11.4 percent to 17.1 percent. At the 3-month, 6-month, and 
12-month time points, patient quality of life was assessed to be 70.8 
percent, 75.6 percent, and 83.0 percent, respectively, indicating that 
patients experienced mild, moderate, or marked improvement. Seventeen 
patients were followed at 18 months with statistical differences from 
baseline for AHI and CAI. Three patients died over the 12-month follow-
up period: 2 died of end-stage heart failure and 1 died from sudden 
cardiac death. All three deaths were adjudicated by the DSMB and none 
were related to the procedure or to phrenic nerve stimulation therapy. 
Five patients were found to have related serious adverse events over 
the 12-month study time. Three events were previously described in the 
results referenced in the published study, Abraham, et al., and an 
additional 2 SAEs occurred during the 12-month follow-up. One patient 
experienced impending pocket perforation resulting in pocket revision, 
and another patient experienced lead failure.
---------------------------------------------------------------------------

    \134\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, 
A., Khayat, R., & Abraham, W.T., 2016, ``Transvenous Stimulation of 
the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 
months' experience with the remede[reg]system,'' European Journal of 
Heart Failure, 2016, pp. 1-8.
    \135\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., 
Kreuger, S., Kolodziej, A., Ponikowski, P., 2015, ``Phrenic Nerve 
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart 
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

    The fifth study \136\ was a randomized control trial with a primary 
outcome of achieving a reduction in AHI of 50 percent or greater from 
baseline to 6 months enrolling 151 patients with the neurostimulation 
treatment (n=73) and no stimulation control (n=78). Of the total 
sample, 96 (64 percent) of the patients had been diagnosed with heart 
failure; 48 (66 percent) of the treated patients had been diagnosed 
with heart failure, and 48 (62 percent) of the control patients had 
been diagnosed with heart failure. Sixty-four (42 percent) of all of 
the patients included in the study had been diagnosed with atrial 
fibrillation and 84 (56 percent) had been diagnosed with coronary 
artery disease. All of the patients had been treated with the 
remed[emacr][reg] System device implanted; the system was activated in 
the treatment group during the first month. ``Over about 12 weeks, 
stimulation was gradually increased in the treatment group until 
diaphragmatic capture was consistently achieved without disrupting 
sleep.'' \137\ While patients and physicians were unblinded, the 
polysomnography core laboratory remained blinded. The per-protocol 
population from which statistical comparisons were made is 58 patients 
treated with the remed[emacr][reg] System and 73 patients in the 
control group. The authors appropriately controlled for Type I errors 
(false positives), which arise from performing multiple tests. Thirty-
five treated patients and 8 control patients met the primary end point, 
the number of patients with a 50 percent or greater reduction in AHI 
from baseline; the difference of 41 percent is statistically 
significant. All seven of the secondary endpoints were assessed and 
found to have statistically significant difference in change from 
baseline between groups at the 6-month follow-up after controlling for 
multiple comparisons: CAI of -22.8 events per hour lower for the 
treatment group; AHI (continuous) of -25.0 events per hour lower for 
the treatment group; arousal events per hour of -15.2 lower for the 
treatment group; percent of sleep in REM of 2.4 percent higher for the 
treatment group; patients with marked or moderate improvement in 
patient global assessment was 55 percent higher in the treatment group; 
ODI = 4 percent was -22.7 events per hour lower for the treatment 
group; and the Epworth sleepiness scale was -3.7 lower for the 
treatment group. At 12 months, 138 (91 percent) of the patients were 
free from device, implant, and therapy related adverse events.
---------------------------------------------------------------------------

    \136\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, 
R., Goldberg, L., Holcomb, R., Abraham, W.T.,''Transvenous 
Neurostimulation for Centra Sleep Apnoea: A randomised controlled 
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
    \137\ Ibid.
---------------------------------------------------------------------------

    The final study data was from the pivotal study with limited 
information in the form of an abstract \138\ and an executive 
summary.\139\ The executive summary detailed an exploratory analysis of 
the 141 patients enrolled in the pivotal trial which were patients 
diagnosed with CSA. The abstract indicated that the 141 patients from 
the pivotal trial were randomized to either the treatment arm (68 
patients) in which initiation of treatment began 1 month after 
implantation of the remed[emacr][reg] System device with a 6[dash]month 
follow[dash]up period, or to the control group arm (73 patients) in 
which the initiation of treatment with the remed[emacr][reg] System 
device was delayed for 6 months after implantation. Randomization 
efficacy was compared across baseline polysomnography and associated 
respiratory indices in which four of the five measures showed no 
statistical differences between those treated and controls; treated 
patients had an average MAI score of 3.1 as compared to control 
patients with an average MAI score of 2.2 (p=0.029). Patients included 
in the trial must have been medically stable, at least 18 years old, 
have had an electroencephalogram within 40 days of scheduled 
implantation, had an apnoea-hypopnoea index (AHI) of 20 events per hour 
or greater, a central apnoea index at least 50 percent of all apneas, 
and an obstructive apnea index less than or equal to 20 percent.\140\ 
Primary exclusion criteria were CSA caused by pain medication, heart 
failure of state D from the American Heart Association, a

[[Page 20313]]

new implantable cardioverter defibrillator, pacemaker dependent 
subjects without any physiologic escape rhythm, evidence of phrenic 
nerve palsy, documented history of psychosis or severe bipolar 
disorder, a cerebrovascular accident within 12 months of baseline 
testing, limited pulmonary function, baseline oxygen saturation less 
than 92 percent while awake and on room air, active infection, need for 
renal dialysis, or poor liver function.\141\ Patients included in this 
trial were primarily male (89 percent), white (95 percent), with at 
least one comorbidity with cardiovascular conditions being most 
prevalent (heart failure at 64 percent), with a concomitant implantable 
cardiovascular stimulation device in 42 percent of patients at 
baseline. The applicant stated that, after randomization, there were no 
statistically significant differences between the treatment and control 
groups, with the exception of the treated group having a statistically 
higher rate of events per hour on the mixed apnea index (MAI) at 
baseline than the control group.
---------------------------------------------------------------------------

    \138\ Goldberg, L., Ponikowski, P., Javaheri, S., Augostini, R., 
McKane, S., Holcomb, R., Costanzo, M.R., ``In Heart Failure Patients 
with Central Sleep Apnea, Transvenous Stimulation of the Phrenic 
Nerve Improves Sleep and Quality of Life,'' Heart Failure Society of 
America, 21st annual meeting. 2017.
    \139\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
    \140\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
    \141\ Ibid.
---------------------------------------------------------------------------

    The applicant asserted that the results from the pivotal trial 
\142\ allow for the comparison of heart failure status in patients; we 
note that patients with American Heart Association objective assessment 
Class D (Objective evidence of severe cardiovascular disease. Severe 
limitations. Experiences symptoms even while at rest) were excluded 
from this pivotal trial. The primary endpoint in the pivotal trial was 
the proportion of patients with an AHI reduction greater than or equal 
to 50 percent at 6 months. When controlling for heart failure status, 
both treated groups experienced a statistically greater proportion of 
patients with AHI reductions than the controls at 6 months (58 percent 
more of treated patients with diagnoses of heart failure and 35 percent 
more of treated patients without diagnoses of heart failure as compared 
to their respective controls). The secondary endpoints assessed were 
the CAI average events per hour, AHI average events per hour, arousal 
index (ArI) average events per hour, percent of sleep in REM, and 
oxygen desaturation index 4 percent (ODI = 4 percent) average events 
per hour. Excluding the percent of sleep in REM, the treatment groups 
for both patients with diagnoses of heart failure and non-heart failure 
conditions experienced statistically greater improvements at 6 months 
on all secondary endpoints as compared to their respective controls. 
Lastly, quality of life secondary endpoints were assessed by the 
Epworth sleepiness scale (ESS) average scores and the patient global 
assessment (PGA). For both the ESS and PGA assessments, both treatment 
groups of patients with diagnoses of heart failure and non-heart 
failure conditions had statistically beneficial changes between 
baseline and 6 months as compared to their respective control groups.
---------------------------------------------------------------------------

    \142\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
---------------------------------------------------------------------------

    The applicant provided analyses from the above report focusing on 
the primary and secondary polysomnography endpoints, specifically, 
across patients who had been diagnosed with CSA with heart failure and 
non-heart failure. Eighty patients included in the study from the 
executive summary report had comorbid heart failure, while 51 patients 
did not. Of those patients with heart failure, 35 were treated while 45 
patients were controls. Of those patients without heart failure, 23 
were treated and 28 patients were controls. The applicant did not 
provide baseline descriptive statistical comparisons between treated 
and control groups controlling for heart failure status. Across all 
primary and secondary endpoints, the patient group who were diagnosed 
with CSA and comorbid heart failure experienced statistically 
significant improvements. Excepting percent of sleep in REM, the 
patient group who were diagnosed with CSA without comorbid heart 
failure experienced statistically significant improvements in all 
primary and secondary endpoints. We are inviting public comments on 
whether this current study design is sufficient to support substantial 
clinical improvement of the remed[emacr][reg] System with respect to 
all patient populations, particularly the non-heart failure population.
    As previously noted, the applicant also contends that the 
technology offers a treatment option for a patient population 
unresponsive to, or ineligible for, currently available treatment 
options. Specifically, the applicant stated that the remed[emacr][reg] 
System is the only treatment option for patients who have been 
diagnosed with moderate to severe CSA; published studies on positive 
pressure treatments like CPAP and ASV have not met primary endpoints; 
and there was an increase in cardiovascular mortality according to the 
ASV study. According to the applicant, approximately 40 percent of 
patients who have been diagnosed with CSA have heart failure. The 
applicant asserted that the use of the remed[emacr] System not only 
treats and improves the symptoms of CSA, but there is evidence of 
reverse remodeling in patients with reduced left ventricular ejection 
fraction (LVEF).
    We are concerned that the remed[emacr][reg] System is not directly 
compared to the CPAP or ASV treatment options, which, to our 
understanding, are the current treatment options available for patients 
who have been diagnosed with CSA without heart failure. We note that 
the FDA indication for the implantation of the remed[emacr][reg] System 
is for use in the treatment of adult patients who have been diagnosed 
with CSA. We also note that the applicant's supporting studies were 
directed primarily at patients who had been treated with the 
remed[emacr][reg] System who also had been diagnosed with heart 
failure. The applicant asserted that it would not be appropriate to use 
CPAP and ASV treatment options when comparing CPAP and ASV to the 
remed[emacr][reg] System in the patient population of heart failure 
diagnoses because these treatment options have been found to increase 
mortality outcomes in this population. In light of the limited length 
of time in which the remed[emacr][reg] System has been studied, we are 
concerned that any claims on mortality as they relate to treatment 
involving the use of the remed[emacr][reg] System may be limited. 
Therefore, we are concerned as to whether there is sufficient data to 
determine that the technology represents a substantial clinical 
improvement with respect to patients who have been diagnosed with CSA 
without heart failure.
    The applicant has shown that, among the subpopulation of patients 
who have been diagnosed with CSA and heart failure, the 
remed[emacr][reg] System decreases morbidity outcomes as compared to 
the CPAP and ASV treatment options. We understand that not all patients 
evaluated in the applicant's supporting clinical trials had been 
diagnosed with CSA with a comorbidity of heart failure. However, in all 
of the supporting studies for this application, the vast majority of 
study patients did have this specific comorbidity of CSA and heart 
failure. Of the three studies which enrolled both patients diagnosed 
with CSA with and without heart failure,143 144 145 146 only 
two studies

[[Page 20314]]

performed analyses controlling for heart failure 
status.147 148 The data from these two studies, the 
Costanzo, et al. (2016) and the Respicardia, Inc. executive report, are 
analyses based on the same pivotal trial data and, therefore, do not 
provide results from two separate samples. Descriptive comparisons are 
made in the executive summary of the pivotal trial \149\ between all 
treated and control patients. However, we are unable to determine the 
similarities and differences between patients with heart failure and 
non-heart failure treated versus controlled groups. Because 
randomization resulted in one difference between the overall treated 
and control groups (MAI events per hour), it is possible that further 
failures of randomization may have occurred when controlling for heart 
failure status in unmeasured variables. Finally, the sample size 
analyzed and the subsample sizes of the heart failure patients (80) and 
non-heart failure patients (51) are particularly small. It is possible 
that these results are not representative of the larger population of 
patients who have been diagnosed with CSA.
---------------------------------------------------------------------------

    \143\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
    \144\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, 
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous 
Neurostimulation for Centra Sleep Apnoea: A randomised controlled 
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
    \145\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
    \146\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, 
A., Khayat, R., & Abraham, W.T., ``Transvenous Stimulation of the 
Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months' 
experience with the remede[reg]system,'' European Journal of Heart 
Failure, 2016, pp. 1-8.
    \147\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
    \148\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, 
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous 
Neurostimulation for Centra Sleep Apnoea: A randomised controlled 
trial,'' Lacet, 2016, vol. 388, pp. 974-982.
    \149\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. 
https://clinicaltrials.gov/ct2/show/NCT01816776.
---------------------------------------------------------------------------

    Therefore, we are concerned that differences in morbidity and 
mortality outcomes between CPAP, ASV, and the remed[emacr][reg] System 
in the general CSA patient population have not adequately been tested 
or compared. Specifically, the two patient populations, those who have 
been diagnosed with heart failure and CSA versus those who have been 
diagnosed with CSA alone, may experience different symptoms and 
outcomes associated with their disease processes. Patients who have 
been diagnosed with CSA alone present with excessive sleepiness, poor 
sleep quality, insomnia, poor concentration, and inattention.\150\ 
Conversely, patients who have been diagnosed with the comorbid 
conditions of CSA as a result of heart failure experience significant 
cardiovascular insults resulting from sympathetic nervous system 
activation, pulmonary hypertension, and arrhythmias, which ultimately 
contribute to the downward cycle of heart failure.\151\
---------------------------------------------------------------------------

    \150\ Badr, M.S., 2017, Dec 11, ``Central sleep apnea: Risk 
factors, clinical presentation, and diagnosis,'' Available at: 
https://www.uptodate.com/contents/central-sleep-apnea-risk-factors-clinical-presentation-and-diagnosis?csi=d3a535e6-1cca-4cd5-ab5e-50e9847bda6c&source=contentShare.
    \151\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., 
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve 
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart 
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

    We also note that the clinical study had a small patient population 
(n=151), with follow[dash]up for 6 months. We are interested in longer 
follow[dash]up data that would further validate the points made by the 
applicant regarding the beneficial outcomes seen in patients who have 
been diagnosed with CSA who have been treated using the 
remed[emacr][reg] System. We also are interested in additional 
information regarding the possibility of electrical stimulation of 
unintended targets and devices combined with the possibility of 
interference from outside devices. Furthermore, we are unsure with 
regard to the longevity of the implanted device, batteries, and leads 
because it appears that the technology is meant to remain in use for 
the remainder of a patient's life. We are inviting public comments on 
whether the remed[emacr][reg] System represents a substantial clinical 
improvement over existing technologies.
    We did not receive any public comments in response to the published 
notice in the Federal Register regarding the substantial clinical 
improvement criterion for the remed[emacr][reg] System or at the New 
Technology Town Hall Meeting.
f. Titan Spine nanoLOCK[reg] (Titan Spine nanoLOCK[reg] Interbody 
Device)
    Titan Spine submitted an application for new technology add-on 
payments for the Titan Spine nanoLOCK[reg] Interbody Device (the Titan 
Spine nanoLOCK[reg]) for FY 2019. (We note that the applicant 
previously submitted an application for new technology add-on payments 
for this device for FY 2017.) The Titan Spine nanoLOCK[reg] is a 
nanotechnology-based interbody medical device with a dual acid-etched 
titanium interbody system used to treat patients diagnosed with 
degenerative disc disease (DDD). One of the key distinguishing features 
of the device is the surface manufacturing technique and materials, 
which produce macro, micro, and nano[dash]surface textures. According 
to the applicant, the combination of surface topographies enables 
initial implant fixation, mimics an osteoclastic pit for bone growth, 
and produces the nano-scale features that interface with the integrins 
on the outside of the cellular membrane. Further, the applicant noted 
that these features generate better osteogenic and angiogenic responses 
that enhance bone growth, fusion, and stability. The applicant asserted 
that the Titan Spine nanoLOCK[reg]'s clinical features also reduce 
pain, improve recovery time, and produce lower rates of device 
complications such as debris and inflammation.
    On October 27, 2014, the Titan Spine nanoLOCK[reg] received FDA 
clearance for the use of five lumbar interbody devices and one cervical 
interbody device: The nanoLOCK[reg] TA--Sterile Packaged Lumbar ALIF 
Interbody Fusion Device with nanoLOCK[reg] surface, available in 
multiple sizes to accommodate anatomy; the nanoLOCK[reg] TAS--Sterile 
Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with 
nanoLOCK[reg] surface, available in multiple sizes to accommodate 
anatomy; the nanoLOCK[reg] TL--Sterile Packaged Lumbar Lateral Approach 
Interbody Fusion Device with nanoLOCK[reg] surface, available in 
multiple sizes to accommodate anatomy; the nanoLOCK[reg] TO--Sterile 
Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with 
nanoLOCK[reg] surface, available in multiple sizes to accommodate 
anatomy; the nanoLOCK[reg] TT--Sterile Packaged Lumbar TLIF Interbody 
Fusion Device with nanoLOCK[reg] surface, available in multiple sizes 
to accommodate anatomy; and the nanoLOCK[reg] TC--Sterile Packaged 
Cervical Interbody Fusion Device with nanoLOCK[reg] surface, available 
in multiple sizes to accommodate anatomy.
    The applicant received FDA clearance on December 14, 2015, for the 
nanoLOCK[reg] TCS-- Sterile Package Cervical Stand Alone Interbody 
Fusion Device with nanoLOCK[reg] surface, available in multiple sizes 
to accommodate anatomy. According to the applicant, July 8, 2016 was 
the first date that the nanotechnology production facility completed 
validations and clearances needed to manufacture the nanoLOCK[reg] 
interbody fusion devices. Once validations and clearances were 
completed, the technology was available on the U.S. market on October 
1, 2016. Therefore, the applicant believes that the newness period for 
nanoLOCK[reg] would begin on October 1, 2016. Procedures involving the 
Titan Spine nanoLOCK[reg] technology can be identified by the following 
ICD-10-PCS Section ``X'' New Technology codes:
     XRG0092 (Fusion of occipital-cervical joint using 
nanotextured

[[Page 20315]]

surface interbody fusion device, open approach);
     XRG1092 (Fusion of cervical vertebral joint using 
nanotextured surface interbody fusion device, open approach);
     XRG2092 (Fusion of 2 or more cervical vertebral joints 
using nanotextured surface interbody fusion device, open approach);
     XRG4092 (Fusion of cervicothoracic vertebral joint using 
nanotextured surface interbody fusion device, open approach);
     XRG6092 (Fusion of thoracic vertebral joint using 
nanotextured surface interbody fusion device, open approach);
     XRG7092 (Fusion of 2 to 7 thoracic vertebral joints using 
nanotextured surface interbody fusion device, open approach);
     XRG8092 (Fusion of 8 or more thoracic vertebral joints 
using nanotextured surface interbody fusion device, open approach);
     XRGA092 (Fusion of thoracolumbar vertebral joint using 
nanotextured surface interbody fusion device, open approach);
     XRGB092 (Fusion of lumbar vertebral joint using 
nanotextured surface interbody fusion device, open approach);
     XRGC092 (Fusion of 2 or more lumbar vertebral joints using 
nanotextured surface interbody fusion device, open approach); and
     XRGD092 (Fusion of lumbosacral joint using nanotextured 
surface interbody fusion device, open approach).
    We note that the applicant expressed concern that interbody fusion 
devices that have failed to gain or apply for FDA clearance with 
nanoscale features could confuse health care providers with marketing 
and advertising using terms related to nanotechnology and ultimately 
adversely affect patient outcomes. Therefore, the applicant believed 
that there is a need for additional clarity to the current ICD-10-PCS 
Section ``X'' codes previously identified for health care providers 
regarding interbody fusion nanotextured surface devices. The applicant 
submitted a request for code revisions at the March 2018 ICD-10 
Coordination and Maintenance Meeting regarding the ICD-10-PCS Section 
``X'' New Technology codes used to identify procedures involving the 
Titan Spine nanoLOCK[reg] technology.
    As discussed previously, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would not be considered ``new'' 
for the purposes of new technology add-on payments. We note that the 
substantial similarity discussion is applicable to both the lumbar and 
the cervical interbody devices because all of the devices use the Titan 
Spine nanoLOCK[reg] technology.
    With regard to the first criterion, whether a product uses the same 
or a similar mechanism of action to achieve a therapeutic outcome, the 
applicant stated that, for both interbody devices (the lumbar and the 
cervical interbody device), the Titan Spine nanoLOCK[reg]'s surface 
stimulates osteogenic cellular response to assist in bone formation 
during fusion. According to the applicant, the mechanism of action 
exhibited by the Titan Spine's nanoLOCK[reg] surface technology 
involves the ability to create surface features that are meaningful to 
cellular regeneration at the nano-scale level. During the manufacturing 
process, the surface produces macro, micro, and nano-surface textures. 
The applicant believes that this unique combination and use of these 
surface topographies represents a new approach to stimulating 
osteogenic cellular response. The applicant further asserted that the 
macro-scale textured features are important for initial implant 
fixation; the micro-scale textured features mimic an osteoclastic pit 
for supporting bone growth; and the nano-scale textured features 
interface with the integrins on the outside of the cellular membrane, 
which generates the osteogenic and angiogenic (mRNA) responses 
necessary to promote healthy bone growth and fusion. The applicant 
stated that when correctly manufactured, an interbody fusion device 
includes a hierarchy of complex surface features, visible at different 
levels of magnification, that work collectively to impact cellular 
response through mechanical, cellular, and biochemical properties. The 
applicant stated that Titan Spine's proprietary and unique surface 
technology, the Titan Spine nanoLOCK[reg] interbody devices, contain 
optimized nano[dash]surface characteristics, which generate the 
distinct cellular responses necessary for improved bone growth, fusion, 
and stability. The applicant further stated that the Titan Spine 
nanoLOCK[reg]'s surface engages with the strongest portion of the 
vertebral endplate, which enables better resistance to subsidence 
because a unique dual acid-etched titanium surface promotes earlier 
bone in-growth. According to the applicant, the Titan Spine 
nanoLOCK[reg]'s surface is created by using a reductive process of the 
titanium itself. The applicant asserted that use of the Titan Spine 
nanoLOCK[reg] significantly reduces the potential for debris generated 
during impaction when compared to treatments using Polyetheretherketone 
(PEEK)-based implants coated with titanium. According to the results of 
an in vitro study \152\ (provided by the applicant), which examined 
factors produced by human mesenchymal stem cells on spine implant 
materials that compared angiogenic factor production using PEEK-based 
versus titanium alloy surfaces, osteogenic production levels were 
greater with the use of rough titanium alloy surfaces than the levels 
produced using smooth titanium alloy surfaces. Human mesenchymal stem 
cells were cultured on tissue culture polystyrene, PEEK, smooth TiAlV, 
or macro-/micro-/nanotextured rough TiAlV (mmnTiAlV) disks. 
Osteoblastic differentiation and secreted inflammatory interleukins 
were assessed after 7 days. The results of an additional study \153\ 
provided by the applicant examined whether inflammatory 
microenvironment generated by cells as a result of use of titanium 
aluminum-vanadium (Ti-alloy, TiAlV) surfaces is effected by surface 
micro[dash]texture, and whether it differs from the effects generated 
by PEEK-based substrates. This in vitro study compared angiogenic 
factor production and integrin gene expression of human osteoblast-like 
MG63 cells cultured on PEEK or titanium-aluminum vanadium (titanium 
alloy). Based on these study results, the applicant asserted that the 
use of micro[dash]textured surfaces has demonstrated greater promotion 
of osteoblast differentiation when compared to use of PEEK-based 
surfaces.
---------------------------------------------------------------------------

    \152\ Olivares-Navarrete, R., Hyzy, S., Gittens, R., ``Rough 
Titanium Alloys Regulate Osteoblast Production of Angiogenic 
Factors,'' The Spine Journal, 2013, vol. 13(11), pp. 1563-1570.
    \153\ Olivares-Navarrete, R., Hyzy, S., Slosar, P., et al., 
``Implant Materials Generate Different Peri-implant Inflammatory 
Factors,'' SPINE, 2015, vol. 40(6), pp. 339-404.
---------------------------------------------------------------------------

    The applicant maintains that the nanoLOCK[reg] was the first, and 
remains the only, device in spinal fusion, to apply for and 
successfully obtain a clearance for nanotechnology from the FDA. 
According to the applicant, in order for a medical device to receive a 
nanotechnology FDA clearance, the burden of proof includes each of the 
following to be present on the medical device in question: (1) Proof of 
specific nano scale features, (2) proof of capability to manufacture 
nano-scale features with repeatability and documented frequency across 
an entire

[[Page 20316]]

device, and (3) proof that those nano-scale features provide a 
scientific benefit, not found on devices where the surface features are 
not present. The applicant further stated that many of the commercially 
available interbody fusion devices are created using additive 
manufacturing processes to mold or build surface from the ground up. 
Conversely, Titan Spine applied a subtractive surface manufacturing to 
remove pieces of a surface. The surface features that remain after this 
subtractive process generate features visible at magnifications that 
additive manufacturing has not been able to produce. According to the 
applicant, this subtractive process has been validated by the White 
House Office of Science and Technology, the National Nanotechnology 
Initiative, and the FDA that provide clearances to products that 
exhibit unique and repeatable features at predictive frequency due to a 
manufacturing technique.
    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, cases representing patients that may 
be eligible for treatment involving the Titan Spine nanoLOCK[reg] 
technology would map to the same MS-DRGs as other (lumbar and cervical) 
interbody devices currently available to Medicare beneficiaries and 
also are used for the treatment of patients who have been diagnosed 
with DDD (lumbar or cervical).
    With regard to the third criterion, whether the new use of the 
technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, the applicant 
stated that the Titan Spine nanoLOCK[reg] can be used in the treatment 
of patients who have been diagnosed with similar types of diseases, 
such as DDD, and for a similar patient population receiving treatment 
involving both lumbar and cervical interbody devices.
    In summary, the applicant maintained that the Titan Spine 
nanoLOCK[reg] technology has a different mechanism of action when 
compared to other spinal fusion devices. Therefore, the applicant did 
not believe that the Titan Spine nanoLOCK[reg] technology is 
substantially similar to existing technologies.
    We are concerned that the Titan Spine nanoLOCK[reg] interbody 
devices may be substantially similar to currently available titanium 
interbody devices because other roughened[dash]surface interbody 
devices also stimulate bone growth. While there is a uniqueness to the 
nanotechnology used by the applicant, other devices also stimulate bone 
growth such as PEEK-based surfaces and, therefore, we remain concerned 
that the Titan Spine nanoLOCK[reg] interbody devices use the same or 
similar mechanism of action as other devices.
    We are inviting public comments on whether the Titan Spine 
nanoLOCK[reg] interbody devices are substantially similar to existing 
technologies and whether these devices meet the newness criterion.
    The applicant provided three analyses of claims data from the FY 
2016 MedPAR file to demonstrate that the Titan Spine nanoLOCK[reg] 
interbody devices meet the cost criterion. We note that cases reporting 
procedures involving lumbar and cervical interbody devices would map to 
different MS-DRGs. As discussed in the Inpatient New Technology 
Add[dash]On Payment Final Rule (66 FR 46915), two separate reviews and 
evaluations of the technologies are necessary in this instance because 
cases representing patients receiving treatment for diagnoses 
associated with lumbar procedures that may be eligible for use of the 
technology under the first indication would not be expected to be 
assigned to the same MS-DRGs as cases representing patients receiving 
treatment for diagnoses associated with cervical procedures that may be 
eligible for use of the technology under the second indication. 
Specifically, cases representing patients who have been diagnosed with 
lumbar DDD and who have received treatment that involved implanting a 
lumbar interbody device would map to MS-DRG 028 (Spinal Procedures with 
MCC), MS-DRG 029 (Spinal Procedures with CC or Spinal 
Neurostimulators), MS-DRG 030 (Spinal Procedures without CC/MCC), MS-
DRG 453 (Combined Anterior/Posterior Spinal Fusion with MCC), MS-DRG 
454 (Combined Anterior/Posterior Spinal Fusion with CC), MS-DRG 455 
(Combined Anterior/Posterior Spinal Fusion without CC/MCC), MS-DRG 456 
(Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or 
Infection or Extensive Fusions with MCC), MS-DRG 457 (Spinal Fusion 
Except Cervical with Spinal Curvature or Malignancy or Infection or 
Extensive Fusion without MCC), MS-DRG 458 (Spinal Fusion Except 
Cervical with Spinal Curvature or Malignancy or Infection or Extensive 
Fusions without CC/MCC), MS-DRG 459 (Spinal Fusion Except Cervical with 
MCC), and MS-DRG 460 (Spinal Fusion Except Cervical without MCC). Cases 
representing patients who have been diagnosed with cervical DDD and who 
have received treatment that involved implanting a cervical interbody 
device would map to MS-DRG 471 (Cervical Spinal Fusion with MCC), MS-
DRG 472 (Cervical Spinal Fusion with CC), and MS-DRG 473 (Cervical 
Spinal Fusion without CC/MCC). Procedures involving the implantation of 
lumbar and cervical interbody devices are assigned to separate MS-DRGs. 
Therefore, the devices categorized as lumbar interbody devices and the 
devices categorized as cervical interbody devices must distinctively 
(each category) meet the cost criterion and the substantial clinical 
improvement criterion in order to be eligible for new technology 
add[dash]on payments beginning in FY 2019.
    The first analysis searched for any of the ICD-10-PCS procedure 
codes within the code series Lumbar--0SG [body parts 0 1 3] [open 
approach only 0] [device A only] [anterior column only 0, J], which 
typically are assigned to MS-DRGs 028, 029, 030, and 453 through 460. 
The average case-weighted unstandardized charge per case was $153,005. 
The applicant then removed charges related to the predicate technology 
and then standardized the charges. The applicant then applied an 
inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY 
2018. The applicant added charges related to the Titan Spine 
nanoLOCK[reg] lumbar interbody devices. This resulted in a final 
inflated average case-weighted standardized charge per case of 
$174,688, which exceeds the average case-weighted Table 10 MS-DRG 
threshold amount of $83,543.
    The second analysis searched for any of the ICD-10-PCS procedure 
codes within the code series Cervical--0RG [body parts 0--A] [open 
approach only 0] [device A only] [anterior column only 0, J], which 
typically are assigned to MS-DRGs 028, 029, 030, 453 through 455, and 
471 through 473. The average case-weighted unstandardized charge per 
case was $88,034. The methodology used in the first analysis was used 
for the second analysis, which resulted in a final inflated average 
case-weighted standardized charge per case of $101,953, which exceeds 
the average case-weighted Table 10 MS-DRG threshold amount of $83,543.
    The third analysis was a combination of the first and second 
analyses described earlier that searched for any of the ICD-10-PCS 
procedure codes within the Lumbar and Cervical code series listed above 
that are assigned to the MS-DRGs in the analyses above. The average 
case[dash]weighted unstandardized charge per case was $127,736. The 
methodology used for the first and second analysis was used for the 
third analysis, which resulted in a

[[Page 20317]]

final inflated average case-weighted standardized charge per case of 
$149,915, which exceeds the average case-weighted Table 10 MS-DRG 
threshold amount of $104,094.
    Because the final inflated average case-weighted standardized 
charge per case exceeds the average case-weighted threshold amount in 
all of the applicant's analyses, the applicant maintained that the 
technology meets the cost criterion.
    We are inviting public comments on whether the Titan Spine 
nanoLOCK[reg] meets the cost criterion.
    With regard to the substantial clinical improvement criterion for 
the Titan Spine nanoLOCK[reg] Interbody Lumbar and Cervical Devices, 
the applicant submitted the results of two clinical evaluations. The 
first clinical evaluation was a case series and the second was a case 
control study. Regarding the case series, 4 physicians submitted 
clinical information on 146 patients. The 146 patients resulted from 2 
surgery groups: a cervical group of 73 patients and a lumbar group of 
73 patients. The division into cervical and lumbar groups was due to 
differences in surgical procedure and expected recovery time. 
Subsequently, the collection and analyses of data were presented for 
lumbar and cervical nanoLOCK[reg] device implants. Data was collected 
using medical record review. Patient baseline characteristics, the 
reason for cervical and lumbar surgical intervention, inclusion and 
exclusion criteria, details on the types of pain medications and the 
pattern of usage preoperatively and postoperatively were not provided. 
We note that the applicant did not provide an explanation of why the 
outcomes studied in the case series were chosen for review. However, 
the applicant noted that the case series data were restricted to 
patients treated with the Titan Spine nanoLOCK[reg] device, with both 
retrospective and prospective data collection. These data appeared to 
be clinically related and included: (1) Pain medication usage; (2) 
extremity and back pain (assessed using the Numeric Pain Rating Scale 
(NPRS)); and (3) function (assessed using the Oswestry Disability Index 
(ODI)). Clinical data collection began with time points defined as 
``Baseline (pre-operation), Month 1 (0-4 weeks), Month 2 (5-8 weeks), 
Month 3 (9-12 weeks), Month 4 (13-16 weeks), Month 5 (17-20 weeks) and 
Month 6+ (>20 weeks)''. The n, mean, and standard deviation were 
presented for continuous variables (NPRS extremity pain, back pain, and 
ODI scores), and the n and percentage were presented for categorical 
variables (subjects taking pain medications). All analyses compared the 
time point (for example, Month 1) to the baseline.
    Pain scores for extremities (leg and arm) were assessed using the 
NPRS, an 11[dash]category ordinal scale where 0 is the lowest value and 
10 is the highest value and, therefore, higher scores indicate more 
severe pain. Of the 73 patients in the lumbar group, the applicant 
presented data on 18 cases for leg or arm pain at baseline that had a 
mean score of 6.4, standard deviation (SD) 2.3. Between Month 1 and 
Month 6+ the number of lumbar patients for which data was submitted for 
leg or arm pain ranged from 3 patients (Month 5, mean score 3.7, SD 
3.5) to 15 patients (Month 6+, mean score 2.5, SD 2.4), with varying 
numbers of patients for each of the other defined time points of Month 
1 through Month 4. None of the defined time points of Month 1 through 
Month 4 had more than 14 patients or less than 3 patients that were 
assessed.
    Of the 73 patients in the cervical group, 7 were assessed for leg 
or arm pain at baseline and had a mean score of 5.1, SD 3.5. Between 
Month 1 and Month 6+ the number of cervical patients assessed for leg 
or arm pain ranged from 0 patients (Month 5, no scores) to 5 patients 
(Month 1, mean score 4.2, SD 2.6), with varying numbers of patients for 
each of the other defined time points of Month 1 through Month 4. None 
of the defined time points of Month 1 through Month 4 had more than 5 
patients or less than 2 patients that were assessed.
    Back pain scores were also assessed using the NPRS, where 0 is the 
lowest value and 10 is the highest value and, therefore, higher scores 
indicate more severe pain. Of the 73 patients in the lumbar group, 66 
were assessed for back pain at baseline and had a mean score of 7.9, SD 
1.8. Between Month 1 and Month 6+ the number of lumbar patients 
assessed for back pain ranged from 4 patients (Month 5, mean score 4.0, 
SD 2.7) to 43 patients (Month 1, mean score 4.5, SD 2.7), with varying 
numbers of patients for each defined time point.
    Of the 73 patients in the cervical group, 71 were assessed for back 
pain at baseline and had a mean score of 7.5, SD 2.3. Between Month 1 
and Month 6+ the number of cervical patients assessed for back pain 
ranged from 2 patients (Month 5, mean score 7.0, SD 2.8) to 47 patients 
(Month 1, mean score 4.4, SD 2.9), with varying numbers of patients for 
each defined time point.
    Function was assessed using the ODI, which ranges from 0 to 100, 
with higher scores indicating increased disability/impairment. Of the 
73 patients in the lumbar group, 59 were assessed for ODI scores at 
baseline and had a mean score of 52.5, SD 18.7. Between Month 1 and 
Month 6+ the number of lumbar patients assessed for ODI scores ranged 
from 3 patients (Month 5, mean score 33.3, SD 19.8) to 38 patients 
(Month 1, mean score 48.1, SD 19.7), with varying numbers of patients 
for each defined time point. Of the 73 patients in the cervical group, 
56 were assessed for ODI scores at baseline and had a mean score of 
53.6, SD 18.2. Between Month 1 and Month 6+ the number of cervical 
patients assessed for ODI score ranged from 1 patient (Month 5, mean 
score 80, no SD noted) to 41 patients (Month 1, mean score 48.6, SD 
20.5), with varying numbers of patients for each defined time point.
    The percentages of patients not taking pain medicines per day for 
the lumbar and cervical groups over time were assessed. Of the 73 
patients in the lumbar group, 69 were assessed at baseline and 27.5 
percent of the 69 patients were not taking pain medication. Between 
Month 1 and Month 6+ the number of lumbar patients assessed for not 
taking pain medicines ranged from 5 patients (Month 5, 80 percent were 
not taking pain medicines) to 46 patients (Month 1, 54.3 percent were 
not taking pain medicines), with varying numbers of patients for each 
defined time point. Of the 73 patients in the cervical group, 72 were 
assessed and 22.2 percent of the 72 patients were not taking pain 
medicines at baseline. Between Month 1 and Month 6+ the number of 
cervical patients assessed for not taking pain medicines ranged from 2 
patients (Month 5, 100 percent were not taking pain medicines) to 50 
patients (Month 1, 70 percent were not taking pain medicines), with 
varying numbers of patients for each defined time point.
    According to the applicant, both the lumbar and cervical groups 
showed a trend of improvement in all four clinical outcomes over time 
for which they collected data in their case series. However, the 
applicant also indicated that the trend was difficult to assess due to 
the relatively limited number of subjects with available assessments 
more than 4 months post-implant. The applicant shared that it had 
missing values for over 80 percent of the subjects in the study after 
the 4th post-operative month. According to the applicant and its 
results of the clinical evaluation, which was based on data from less 
than 20 percent of subjects, there was a statistically significant 
reduction in back pain for nanoLOCK[reg] patients from ``Baseline,'' 
based on improvement at earlier than standard time points.

[[Page 20318]]

    We are concerned that the small sample size of patients assessed at 
each timed follow-up point for each of the clinical outcomes evaluated 
in the case series limits our ability to draw meaningful conclusions 
from these results. The applicant provided t-test results for the 
lumbar and cervical groups assessed for pain (back, leg, and arm). We 
are concerned that the t-test resulting from small sample sizes (for 
example, 2 of 73 patients in Month 5, and 5 of 73 patients in Month 6+) 
does not indicate a statistically meaningful improvement in pain 
scores.
    Based on the results of the case ser